ABS Seminar ‚Trading in US Waters‘

Shipowners‘ Perspective

Capt. Wolfgang Hintzsche

Marine Director
05. December 2014
 German Shipowners
 German Shipowners
# 4 worldwide
# 1 in Containerfleet
 About 3500 ships under
management with 80 Mio. GRT
 Total Number of Shipowners
> 4.000 GRT 213
< 4.000 GRT 120
Passenger / Ferry 58
Tugs, Dredger, etc. 37
Total: 428

 Ø 9 Ships / Company
 50% < 5 Ships
ABS Seminar Trading in US Waters 2014 2
 Development German Merchant Fleet
Crisis !!
BRZ Number of Ships
100 3784 4000
3671
3523
90 3500
88.7 89,1
80 86.383
3000
Mio. GRT

70

Number of Ships
60 2500

50 2000
40 1850
1500
30
1000
20
19,9 500
10
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Quelle: BSH/ VDR, jew. 31.12.

ABS Seminar Trading in US Waters 2014 3

 0
10000
12000
14000
16000

2000
4000
6000
8000
2007-10-11
2007-12-04
2008-02-05
2008-03-27
2008-05-22
2008-07-15
2008-09-04
2008-10-28
2008-12-18
2009-02-19
2009-04-14
2009-06-09
2009-07-30
2009-09-22
2009-11-12

ABS Seminar Trading in US Waters 2014

2010-01-14
2010-03-09
2010-04-29
2010-06-24
2010-08-17
2010-10-07
2010-11-30
2011-01-27
2011-03-22
2011-05-12
2011-07-07
2011-08-30
2011-10-20
2011-12-13
2012-02-09
2012-04-03
2012-05-31
2012-07-24
2012-09-13
2012-11-08
2013-01-08
2013-02-28
2013-04-23
2013-06-18
Crisis: 1.100 TEU: CAPEX + OPEX vs. Charter-Income

2013-08-08
2013-10-01
2013-11-26
2014-01-30
CAPEX
BK 1100
"Type 1100"

4
 Development of World Merchant Fleet
Mio. GRT GRT Number of Ships Ships
1,200

1169
1,100 60,000
1,000
50,000

983
900
800
40,000
700
600
30,000
500
400 20,000
300
200 10,000
100
0 0
Source: IHS Fairplay, 2012

jew. 31.12

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 International Marketposition
Japan Greece Germany

160 China USA South Korea

140

120

100
Mio. GT

80

60

40

20

0
19992000200120022003200420052006200720082009201020112012201320142015

Quelle: IHS Fairplay, ab 2014 Prognose auf Basis Daten 15.07.14

ABS Seminar Trading in US Waters 2014 6

 International Trade – international legislation !
As a specialized agency of the United Nations, IMO is the global standard-setting authority for the
safety, security and environmental performance of international shipping. Its main role is to
create a regulatory framework for the shipping industry that is fair and effective, universally
adopted and universally implemented.
Shipping is a truly international industry, and it can only operate effectively if the regulations and
standards are themselves agreed, adopted and implemented on an international basis. And IMO is
the forum at which this process takes place.
International shipping transports about 90 per cent of global trade to peoples and communities all
over the world. Shipping is the most efficient and cost-effective method of international
transportation for most goods; it provides a dependable, low-cost means of transporting goods
globally, facilitating commerce and helping to create prosperity among nations and peoples.
The world relies on a safe, secure and efficient international shipping industry – and this is
provided by the regulatory framework developed and maintained by IMO.
IMO measures cover all aspects of international shipping – including ship design, construction,
equipment, manning, operation and disposal – to ensure that this vital sector for remains safe,
environmentally sound, energy efficient and secure.
Energy efficiency, new technology and innovation, maritime education and training, maritime
security, maritime traffic management and the development of the maritime infrastructure: the
development and implementation, through IMO, of global standards covering these and other
issues will underpin IMO's commitment to provide the institutional framework necessary for a
green and sustainable global maritime transportation system.
ABS Seminar Trading in US Waters 2014 7
 Four pillars of international shipping

 SOLAS
 MARPOL
 STCW
 MLC

 binding global standards

 Port State and Flag State Controls

ABS Seminar Trading in US Waters 2014 8

 Regional legislation – increasing bureaucracy onboard !

IMO
US Coast Guard and EPA MARPOL V - Garbage
COLREG
Paris MoU EU Commission
OPRC – Oil Pollution Response
Port State Controls
MARPOL I – Oil Spills
LOAD LINES
EU Sulphur Directive
CSC
FAL
MARPOL II
SUA IMSO
SOLAS
MARPOL III

AFS – Anti Fouling MARPOL IV - Sewage

STCW Basel Convention
Ballast Water Convention
London Convention
Oil pollution Convention
CLC MARPOL VI – Air Emissions
Ship Recycling Convention HNS
Athens Convention

ABS Seminar Trading in US Waters 2014 9

 Increasing environmental regulation

ABS Seminar Trading in US Waters 2014 10

 Trading in US Waters – Shipowners‘ perspective

 Container handling
 Security and Visa requirements
 EPA 2013 VGP
 Non-Tank VRPs
 Ballast Water Management
 Biofouling
 Air Emissions
 Future Fuels – LNG
 Piracy
 Marine litter
 Ebola disease

ABS Seminar Trading in US Waters 2014 11

 Container handling
Safe Transport of Containers
 100% Container Screening – still under
discussion??
 Container weight verification – certified
method in US ports acc. SOLAS VI/2

ABS Seminar Trading in US Waters 2014 12

 Security and Visa requirements

 US Customs and Border Protection Agency screens each

crew member for US Visa status (C1/D) and nationality.
Screening results determine if a crewmember is a high-risk
crewmember who must be detained onboard
 Vsl determined accordingly are required to develop and
implement a Crew Security Plan and to add additional
safety guards
 Visa Waiver program only for exclusive participants
 Additional Security actions requested by arrival from
countries as listed in Maritime Transportation Security Act
of 2002 (MTSA)
 Working permit (B-1 Visa) required for crew during
drydocking

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 EPA 2013 VGP
 Since 19. Dezember 2013 - New VGP 2.0
 Electronic NOI at least 7 days prior to operating in US waters
 Discharge coverage of 27 (!) types incidental to the normal
operation
 Requires vessel owner operators to perform training,
inspections and monitoring
 CG PSCOs will examine vessel records, interview vessel
personnel and during walk through, examine the vessel‘s
housekeeping on deck (drip pans and spill rails). Deficiencies
noted will be reported to the US EPA
 Graywater monitoring & sampling for some vsl
 Requires the use of Environmentally acceptable lubricants
(EALs) for all oil to sea interfaces, including wire ropes and
other mechanical equipment subject to immersion. Use of
EALs is required unless it is found to be technically infeasible –
what does it mean ?

ABS Seminar Trading in US Waters 2014 14

 Non Tank Vessel Response Plan (NTVRP)

 Publication of Final Rule for the Non-Tank Vessel

requirements – effective since Oct. 30, 2013

Any experiences ?

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 IMO BWMC – USCG/EPA - California
IMO Schedule: by 1st IOPP renewal survey (after the anniversary of the delivery of the ship)*
BW-Capacity 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0 - 1500 New Vessels only Retrofit & New
1500 - 5000 New Vessels only Retrofit & New
5000+ New Vessels only Retrofit & New
* If the convention does not enter into force before 01. Jan
2017, the applicable date of compliance is the 1st IOPP renewal
final ratification ? survey for all ships. Ships built after EIF to have a treatment
system installed at delivery
entry into force ?
USCG Schedule: by 1st scheduled drydocking (Extension requests to be submitted at least 12 month prior to vsl's scheduled implementation date)
BW-Capacity 2009 2010 2011 2012 1 Dec 2013 2014 2015 2016 2017 2018 2019 2020 2021
0 - 1500 New Vessels only Retrofit & New
1500 - 5000 Retrofit & New
5000+ New Vessels only Retrofit & New

CALIFORNIA Schedule: by fixed date 1 Jan 2016 or 1 Jan 2018 (CAUTION: CA has different standard than D2 !)
BW-Capacity 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0 - 1500 New Vessels* only Retrofit All Vessels
1500 - 5000 Retrofit & New* All Vessels
5000+ New Vessels* only Retrofit All Vessels
*New Vsl: built on or after 1 Jan 2016
Today

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 Options for complying with USCG BWM requirements

…. apply for extension, until USCG type approved BWMS are available !

ABS Seminar Trading in US Waters 2014 17

 Ballast Water Management - Facts about IMO-BWMC

 Ratification by 17. Oct. 2014: 43 Staates with 32,54%,

expected by end of 2014: 46 Staates with 34,2 %
 By 17. Oct. 2014: 51 Type approved BWMT-Systems,
approx. 20 more to come
 Time schedule IMO acc. Assembly Resolution A.1088(28)
Application of the International Convention for the Control
and Management of Ships' Ballast Water and Sediments,
2004
 Approx 1.500 BWMT-Systems currently installed worldwide
 Approx 65.000 ships to be fitted until 2021 … (tbd)
 Installation costs for shipowners between 0,3 and 2 Million
USD per Ship

ABS Seminar Trading in US Waters 2014 18

 Uncertainties about BWMC
 Finalization of ratification process and coming into force one year later of BWMC - by early
2016 ??
 Implementation schedule IMO impossible to meet (65.000 ships/5 years)
 Robustness of the type approval procedure in Guidelines (G8); the ability of some type
approved ballast water management systems to meet the strict stipulated efficacy
standards at all times and under all environmental uptake conditions that may be
encountered in normal operation of the ship
 Only 40% of 51 Type approved systems are supposed to operate worldwide under all
water qualities and conditions
 Implementation schedule USCG by 2016 – no US type approved BWTS. Introduction of the
alternate type approval test protocols by the United States, which are generally accepted
as somewhat more thorough than the current Guidelines (G8) demands – how many IMO-
Type approved BWMTS will survive the additional laboratory costs involved and
requirements of fresh water testing etc ?
 Effluent limits California
 Continuing uncertainty that any current approved ballast water management systems
purchased and installed now will not need replacing prematurely, with the consequent
need to provide assurance to promote the timely installation of ballast water management
systems by "grandfathering" first generation systems.
 PSC and Sampling – no quick test available
ABS Seminar Trading in US Waters 2014 19
 Conclusions for Shipowners

 Owner is the only party that is made responsible for proper

choice of BWTS.

 The future is uncertain.

 Apply for USCG-extension and purchase / install only USCG-

type approved system (available approx. midth 2016 ??).
AMS is NO solution – only temporary for 5 years time !

 No proper testing procedures are in place.

 Any investment in BWTS is out-of-pocket money.

ABS Seminar Trading in US Waters 2014 20

 How to minimize the risk ?
1. Calculate for each vessel in your fleet the application date (IMO & USCG).
Make use of grace periods for dry-docking/IOPP-renewal to delay as much as
possible.
2. Determine for which vessels it is not worth anymore to install BWTS.
Create a proper exit scenario for those vessels.
3. Read BWTS documentation of ABS and LRS etc
4. Determine capacity of BWTS for each vessel
One ballast pump only
Complete pump capacity (i.e. bulkers)
5. Determine company policy regarding BWTS
Filter or no-filter
Poison or no-poison
HSE danger for crew (Ozone, Hydrogen)
Proven technology or not
6. For systems using active substances read the IMO documentation for basic
and final approval.
7. Make a shortlist of systems you expect they may work.
Reliability of supplier, Reference list, BWTS connection to AMS system,
Operational simplicity, Logistics of “active substances”
ABS Seminar Trading in US Waters 2014 21
 How to minimize the risk ?
8. Discuss with short-list-makers about your needs and their capabilities.
 How was system tested (fresh-water is a MUST !)
 Make sure they can connect their system to the ship’s automation system
 Discuss the start-stop procedures
 Discuss what happens if disinfection part is not working
 Discuss alarm management
 Discuss capital costs and operational costs
 Discuss the space needed and the flexibility of installation
 Discuss the scope of supply (incl. laser measurements?)
 Discuss crew training
 Discuss implications on tank coating (if any)
9. Create and distribute a questionnaire
10. Evaluate the answers and produce KPI’s for each system i.e.: Price x Pressure drop x
Power
11. Produce your own operational cost calculation with your own fleet data.
12. Study space requirements
13. Reduce your shortlist to max 6 systems
14. Throw a dime and decide which system(s) will be used in your fleet
15. Make arrangements for a test-installation
ABS Seminar Trading in US Waters 2014 22
 Upcoming problem Biofouling
 Only Guidelines up to now - MEPC.207(62))
 Biofouling Management Plan & Record Book
 Identification of „niche areas“ i.e. bow-thruster tunnel,
Seachests etc.
 Stringent enforcement in Australia and NZ
 California and US – Underwater cleaning of Passengerships ??

ABS Seminar Trading in US Waters 2014 23

 Air Emissions

North-American 200 NM ECA

 0,10% from 01.01.2015
 US Caribbean ECA since 01. Jan. 2014
 MEPC.1/Circ.637 – ‚Fuel Availability‘

ABS Seminar Trading in US Waters 2014 24

 .. and California …. !

 Since 01. Jan 2014:

CARB – 24nm (DMA or DMB ≤ 0,1% S)
 Since 01. Jan 2014:
CARB – Onshore Power for 50% Ships calls of
Container-, Reefer- and Passengerships or
alternative 50% Emission reduction in Californian
Ports (San Diego, Hueneme, Long Beach & Los
Angeles, Oakland, San Francisco

 No allowance for alternatives to low sulphur fuels

>> Scrubber only to be used under a testing
scheme !

ABS Seminar Trading in US Waters 2014 25

 MARPOL VI Fuel Quality & Sampling Problems
 Because of stricter limit values reference should be made to ISO 8217:2012
 Any infringement of ISO 8217 regarding Fuel Quality (CatFines etc) is a direct
infringement of MARPOL VI in the responsibility of relevant Port State
 Bunkering should take place in the port area under the jurisdiction of the Port State
 No low sulphur fuel with a sulphur content stated on the BDN above 0,10% should be
accepted
 If no compliant fuel is available then according to Regulation 18.2.4 of MARPOL Annex VI
the ship shall notify its Administration and the competent authority of the relevant port
of destination as well as the Authorities of the bunkering port
 Before entering into a SECA this should also be reported to the first port of call. For US
waters this Fuel Oil Non-Availability Report should be filed with EPA 96 hours before
entering US-waters at the latest. Efforts to buy compliant fuel must be detailed and filed
 In the first port of call non-compliant fuel may result in the requirement not to use this
fuel anymore and to bunker compliant fuel
 In the analysis of the MARPOL sample by the Port State, Regulation 18.8.2 detailed in
Appendix VI to MARPOL Annex VI should be followed
 If the Port State takes an extra fuel sample, the fuel temperature at the sampling point
should be documented since the pressure difference between the fuel line and the
ambient pressure may lead to vaporization of fuel components and consequently to
misleading results. Also in this case Regulation 18.8.2 of MARPOL Annex VI should be
followed
ABS Seminar Trading in US Waters 2014 26
 Recommendations for Fuel Switching
Summary of changeover risks and consequence
 Clogging filters – loss of propulsion (LOP)
 Increased leakages –fire risk/ fail to start / LOP
 Overheating of MDO – low viscosity -increased wear of
fuel system components, loss of power LOP
 Insufficient flush through time – noncompliance (NC)
 Cross contamination from residues of HSRFO possible
 Poor crew awareness increases consequence of NC
Experiences in California reported by the US Coast Guard
 Fuel changeover nearly doubled the number of LOPs;
 This only reduced with increasing experience of vessels
crew;
 On average 1 LOP occurred every 3 to 5 days in
Californian waters.
New LSF-Fuels
 Currently there is a tendency to introduce new fuels into
ship operation. To our knowledge EXXON, Shell and Lukoil
offer fuels with viscosities between MDO/MGO and HFO
the comply with the sulfur requirements of MARPOL.
However, it is sensitive to mixture with low sulphur
residual fuels. Above 2% of residual fuel precipitation of
asphaltenes may occur. Temperature control of the fuel
may be required to prevent paraffines to fall out.
ABS Seminar Trading in US Waters 2014 27
 Future Fuels - LNG

ABS Seminar Trading in US Waters 2014 28

 Drivers for alternative fuels in shipping

ABS Seminar Trading in US Waters 2014 29

29
 First Target Ships – mainly Newbuilds !
 Inshore & National Traffic
 Short-Sea Traffic
– Ferries
– RoRo
– Offshore Wind & Oil/Gas
– Containerfeeder

ABS Seminar Trading in US Waters 2014 30

 Notable Activity in North America

ABS Seminar Trading in US Waters 2014 31

 Requirements for shipowners

 International standardized Port Operations & Rules

International standardized requirements for Ship
Connections
 International standardized Safety Equipment
 International requirements for Crew and personal
 Standardized procedures for the definition of gas
quality & sampling (Energy Content !)
 Reliable LNG-Bunkering Price structure

ABS Seminar Trading in US Waters 2014 32

 Comparison of LNG-Fuel prices

mmbtu = Million British Thermal Units

1m³ LNG = 21,04 mmbtu
1m³ LNG = 0,464 metric tons

ABS Seminar Trading in US Waters 2014 33

 Common approach on Piracy – increasing threat Golf of Guinea

ABS Seminar Trading in US Waters 2014 34

 Common approach on Marine debris
Revised MARPOL V - Regulation 3
General prohibition on discharge of garbage into the sea
1. Discharge of all garbage into the sea is prohibited, ….
2. …, discharge into the sea of all plastics, including but not limited to synthetic ropes,
synthetic fishing nets, plastic garbage bags and incinerator ashes from plastic
products is prohibited.
The United Nations Joint Group of Experts on
the Scientific Aspects of Marine Pollution
(GESAMP), estimated that land-based
sources account for up to 80 percent of
the world’s marine pollution, 60 to 95 percent
of the waste being plastics debris. The vast
majority of remaining 20 percents has it’s
origin in fishing gears, boxes and nets.
However, most of the littered plastic waste
worldwide ultimately ends up at sea. Swirled
by currents, plastic litter accumulates over
time at the center of major ocean vortices
forming “garbage patches”, i.e. larges masses
of ever-accumulating floating debris fields
across the seas. The most well known of these
“garbage patches” is the Great North Pacific
Garbage Patch, discovered and brought to
media and public attention in 1997 by Captain
Charles Moore. Yet some others large garbage
patches are highly expected to be discovered
elsewhere, as we’ll see further.

ABS Seminar Trading in US Waters 2014 35

 Common approach on Ebola disease

Useful links:

WHO:
http://www.who.int/mediacentre/factsheets/fs103/en/
http://www.who.int/ith/updates/20140421/en/

IMO:
Circular Letters No. 3484, No. 3485 No. 3497;
http://www.imo.org/MediaCentre/HotTopics/ebola/Pag
es/default.a spx

BG Verkehr:
http://www.deutsche-
flagge.de/de/medizin/gesundheitsthemen/ebola/ebola#
merkblatt

HPHC
Hafen- und Flughafenärztlicher Dienst
Beltgens Garten 2
20537 Hamburg
+49 40 42845-2209
+49 40 42731-1250
hphc@hu.hamburg.de
Doctor on call; 24h/7d : 0173-2322871

ABS Seminar Trading in US Waters 2014 36

 Active Environmental Protection !

ABS Seminar Trading in US Waters 2014 37

 Thank You !!
hintzsche@reederverband.de

Verband Deutscher Reeder | Burchardstraße 24 | 20095 Hamburg | www.reederverband.de