STUDY OF STRATEGY USES OF MAERSK TANKER

CONTENT: SNO 01 INTRODUTION HISTORY BUSINESS AREAs OF MAERSK TYPES OF TANKER 02 03 04 TANKER DEMAND & SUPPLY STUDY OF MAERSK TANKER BUSINESS RESEARCH METHOLOGY SUSTAINABILITY STUDY OF MAERSK TANKER TECHNICAL OPRATION MISSION SUSTAINABILITY STRATEGY SUSTAINABILITY COMPASS:
1. Health, Safety and Security, 2. Environment, Corporate Social Responsibility,

SUBJECT

PAGE NO. 02 02 03 13 21

26

3. Quality.

Overview: Maersk Tankers Industry:Maersk Tankers owns and operates a large fleet of crude oil carriers, product tankers, and gas carriers all built and operated in accordance with the highest standards for quality and reliability.

Maersk acquired our first dedicated tanker in 1928, and we have been expanding and improving our fleet to meet changing customer needs ever since. Today, the Maersk Tankers fleet is one of the largest, most modern and most diversified independent fleets in the world. Driven by our innovative spirit and

commitment to first-class service, never stop striving to offer safer, more of more cost-effective transport solutions for our customers around the world.

At Maersk Tankers, safety and environmental protection are always our top concern. To ensure safety, our state-of-the-art tankers are all double hulled and comply with the latest industry standards and demands. Maersk Tankers' fleet of product tankers is managed under three different brands: LR2 tankers through the LR2 Pool with Torm, handy and medium range tankers through Handy tankers, 100% owned, and small and intermediate tankers through Brostrm, the Swedish tanker company acquired in 2009.

Employees: On shore: 401 Seafarers: 2,865

Offices: Maersk have 9 offices globally:

Copenhagen, Gothenburg, Singapore, Paris, Tokyo, New York, Seoul, Paris, London and Rio

CHAPTER: - 1

INTRODUCTION
A. P. Moller-Maersk, Group is based in Copenhagen, Denmark with subsidiaries and offices in more than 130 countries worldwide and it is one of the worlds largest shipping companies. Operate over 500 container, 56 supply, 32 tankers and 9 gas carriers and employ over 108,000 people worldwide. It ranked 147 on the Fortune Global 500 list for 2010, down from 106 in 2009 & It is the largest container ship operator and supply vessel operator in the world. A.P. Moller - Maersk is a publicly traded corporation with some 68,000 shareholders. Our controlling shareholder is the A.P. Moller and Chastine Mc-Kinney Moller Foundation, which was set up by the companys founder in 1953. Maersk shares are traded on the Copenhagen Stock Exchange.

History: Founded in 1904

The company was founded in 1904, when Arnold Peter Moller partnered with his father in their hometown of Svendborg, Denmark to tpurchase a second-hand steamship. A.P. Moller set a course of carefully managed expansion that would eventually see the family business grow into a major player in global shipping and energy. A.P. Moller's second child was Arnold Maersk McKinney Moller (born 13 July 1913). In 1939, Maersk Mc-Kinney Moller became a partner in the company. Following the death of A.P. Moller in June 1965, he became CEO of the company and held this post until 1993, when he was succeeded by Jess Soderberg. Beginning in 1965, Maersk Mc-Kinney Moller also served as company chairman and did not relinquish this position until December 2003 (90 years old), when the chairmanship was taken over by Michael Pram Rasmussen. Maersk Mc-Kinney Moller is still one of the "managing owners" of the company and was chairman of Odense Steel Shipyard until 2 May 2006 Business Areas of Maersk:- A.P. Moller Maersk's activities are organized into four main business segments:

1) 2) 3) 4) 5) 6) 7) 8) 9)

MAERSK LINE (including Safmarine Container Lines) DAMCO APM TERMINAL CONTAINER INLAND SERVICE MAERSK OIL MAERSK TANKERS MAERSK LNG MAERSK FPSOs MAERSK DRILLING

10) MAERSK SUPPLY CHAIN SERVICES 11) SVITZER 12) DANSK SUPER MARKET

1.

MAERSK LINE: - The worlds largest container shipping company and a customer-focused leader in reliable, eco-efficient transport. As part of the A.P. Moller - Maersk Group, Maersk also offer customers access to a global network of feeder vessels and onshore logistics services.

Reliable, eco-efficient shipping Reliability is a top priority for Maersk Line. Maersk Line Frequently ranked by independent third parties as the most reliable carrier among the worlds 20 Largest shipping lines. In addition, Maersk Line also leaders in eco-efficiency, which is fast becoming a major differentiator in the container shipping industry. Maersk Line considerably more efficient than the industry average and this enables our customers to reduce the CO2 footprint of their logistics solutions and supply chains. key figures: Maersk Line

Employees Number of offices Number of countries Number of vessels CEO

: : : : :

16,900 325 125 500 Eivind Kolding

2.

DAMCO: - (Worldwide freight forwarding and supply chain management). Damco is a global logistics company that empowers customers to access new markets, sourcing options and business opportunities via supply chain management solutions, ocean, air and landside transport services, and specialized logistics solutions. With offices in 90 countries, Damco is a global player that keeps things moving for more than 10,000 businesses worldwide.

key figures: Damco Employees Number of offices Number of countries Ocean freight total volumes (TEUs) Air freight total export volumes (tonnes) Supply chain management total volumes (1000 cbm) Reefer logistics total volumes (FFEs) : 70,000 : 45,000 : 60,000 : 545,000 : : : 10,500 280 90

CEO

Rolf Habben-Jansen

3.

APM TERMINALS: - (Strength, stability and leadership in port operations). APM Terminals is evolving to meet the growing need for state of- the-art terminal services. APM Terminal helped develop the worlds first container terminal in Port Elizabeth, New Jersey in 1975, and we continue to lead today serving some 60 lines from a widely recognized position of strength and stability.

APM Terminals is well represented in established ports in North America, Western Europe and Japan. We enjoy a strong position in the Mediterranean and China, and APM Terminals playing a critical role in port and terminal development in key emerging markets such as Africa and South America.

key figures: APM Terminals Employees Number of offices Number of countries Annual TEU CEO : : : : : 18,000 54 34 32,000,000 Kim Fejfer

4.

CONTAINER INLAND SERVICE: - (Global container management, transport and maintenance). Closely integrated with APM Terminals, Container Inland Services is a group of over 80 local companies that specialize in container availability. As well as offering cargo support services and buying, selling and modifying containers, Container Inland Services manage move and maintain containers and other shipyard equipment for many of the worlds top carriers, transport companies and a wide range of other customers worldwide. key figures: Container Inland Services

Employees Number of countries CEO

: : :

6,000 70 Nigel Pusey

5.

MAERSK OIL: - (An independent oil and gas company with global operations). Turning marginal and challenging fields into a commercial success has been the cornerstone of Maersk Oils business since the company was founded in 1962. Maersk Oil developed ground breaking technologies while working with tight chalk reservoirs in the Danish North Sea and enabled Denmark to become an oil and gas producing country. Later, we deployed these technologies around the globe to become a truly global player in the upstream business. Today, Maersk Oil operate some 700,000 barrels of oil equivalent per day, with production in Denmark, the UK, Qatar, Algeria, and Kazakhstan, and exploration activities in Angola, Brazil, Norway, Oman and the U.S. Gulf of Mexico.

key figures: Maersk Oil Employees Number of platforms/FPSOs Barrels a day CEO : : : : 3,500 80/3 700,000 Jakob Thomasen

6.

MAERSK TANKERS: - (A leading independent tanker company with a modern, diversified fleet). Maersk Tankers owns and operates a large, modern fleet of crude oil, product, and gas tankers all built and operated in accordance with the highest standards for quality and reliability. Tankers are an important part of the energy industrys infrastructure, transporting oil from one end

of the world to the other. Maersk Tanker have been transporting oil since 1928, and today Maersk Tanker offer our customers one of the most diversified independent fleets in the world. Four distinct brands: In addition to our crude and gas tankers trading under the Maersk Tankers brand, Maersk Tanker offer product tanker services under three brands. The LR2 Pool operates double hull coated Aframaxes, primarily carrying naptha and gasoil from the Arabian Gulf to East Asia. Handytankers is one of the worlds largest pool managers of vessels between 25,000 and 51,000 dwt. And Brostrm, which we acquired in 2009, is a leading tanker company specializing in vessels below 25,000 dwt. key figures: Maersk Tanker Employees Number of offices Number of countries Number of vessels and newbuildings) CEO : Soren Skou : : : : 2,400 7 7 230 (incl. T/C-in, Bareboat

7.

MAERSK LNG: - (Safe, innovative global transport of liquid natural gas). With reserves normally located far away from consumer markets, transport is critical part of the entire liquid natural gas (LNG) business. Maersk LNG meets the worlds LNG transport needs by combining a modern, ultra-efficient fleet with the high safety standards required by our industry. In-house innovation: Maersks in-house technological department, Maersk Maritime Technology, oversees our new buildings from design to delivery. We work closely with our customers to ensure that our

vessels will meet their expectations, and we constantly seek new solutions for improving operational performance and efficiency. For example, we developed a new gas cooler technology for our DFDE vessels that has helped to significantly reduce the natural boil-off of the cargo carry. This reduces the amount of cargo lost during sea passage, while enabling vessels to travel at more flexible speeds.

key figures: Maersk LNG Employees Number of offices Number of vessels CEO : : : : 290 1 8 Stig Hoffmeyer

8.

MAERSK FPSOs: - (Mobile production, storage and offloading capabilities for the oil and gas industry). Maersk FPSOs develops, constructs and operates technologically advanced, purposebuilt FPSOs, or floating production, storage and offloading vessels contracted by offshore oil and gas companies. Matching performance with needs and conditions: Maersk production units ensure the safe and profitable exploitation of offshore oil and gas fields, and meet the highest standards in some of the worlds most strictly regulated and harshest offshore areas. Two of our vessels, the Maersk Curlew and the North Sea Producer, are purposebuilt for the North Sea and have been producing since 1997 with capacities of up to 76,000 barrels of oil and 110 million standard cubic feet of gas per day. The Maersk Ngujima-Yin was designed and constructed for use in Australian fields and has a production capacity of 120,000 barrels of oil and 100 million standard cubic feet of gas per day. Maersk FPSOs also operates the Maersk

Inspirer production unit. With its very efficient process system it can produce up to 75,000 barrels of oil per day sitting on top of one of the worlds largest jack-up drilling rigs.

key figures: Maersk FPOSs Employees Number of offices Number of countries Number of vessels CEO : : : : : 823 7 5 5 Stig Hoffmeyer

9.

MAERSK DRILLING: - (Innovative technology and expertise in offshore drilling). With Maersk fleet of jack-up rigs, deep water semi-submersibles and cantilevered drilling barges Maersk Drilling is always ready to take on a tough new challenge. Maersk Drilling currently drilling in the North Sea, the Middle East, Brunei, Egypt, the Gulf of Mexico, Australia, the Caspian Sea and Venezuela applying efficient, high-performance equipment to break new ground in the global energy business. key figures: Maersk Drilling Employees Number of offices Number of countries Number of vessels CEO : : : : : 3,150 11 10 26 Claus V. Hemmingsen

10.

MAERSK SUPPLY CHAIN SERVICES: - (An integral part of the offshore industry).

Offshore oil or gas operations are more complex than just the rig or platform itself. Maersk Supply Service is an integral part of these operations and supports the oil and gas industry around the world with a large fleet of modern, advanced supply vessels.

A diverse fleet of support vessels: At Maersk Supply Service have the technology and know-how to meet almost any need our customers have. Our diverse and highly specialized fleet of modern vessels includes platform supply, powerful anchor handling, tug supply, craned and light subsea support vessels. Since 2008 Maersk introduced a total of 18 new ships to our fleet, and all our vessels are operated by our own officers and crews.

Broad expertise Maersk capabilities cover all areas of offshore supply services, from towing, installation work, anchor handling and pipeline ploughing to supply services, iceberg management, subsea construction work, offshore firefighting and pollution control. Maersk can tow, move and install virtually any kind of rig or offshore installation and have particular expertise in deep water operations.

Employees Number of offices Number of countries Number of vessels CEO

: : : : :

2,025 13 including Port Captains 20 More than 60 Carsten Plougmann Andersen

11.

SVITZER: - (Providing safety and support at sea for more than 175 years). With a fleet of about 525 vessels and operations in some 40 countries around the world, we are the global market leader in marine towage and emergency response. Towage

We provide harbor, terminal and ocean towage services, as well as pilotage, firefighting, pollution response and escort assistance always taking the greatest care to protect lives, the environment and our customers assets. To make sure Maersk prepared to meet any towage need, our crews train in advanced tug simulators that replicate real-life port situations. Simulator training also prepares Maersk crews to navigate around terminals even before they are built so Maersk ready to deliver safe operations from Day 1. key figures: Svitzer Employees Number of countries Number of vessels CEO : : : : 4,500 40 525 Jesper T. Lok

12.

DANSK SUPER MARKET: - (Parent company of six retail chains with operations in Denmark and several European countries). Dansk Super market is a group of six retail chains, five

operating primarily in Denmark, and one represented with some 1,100 outlets in Denmark, Germany, Poland and Sweden. The company was founded in 1906 as Ferdinand Selling, a drapery shop in Aarhus, Denmark. Maersk acquired a 50 per cent stake in the growing retailer in 1964, and has owned a majority stake in the company since 2007. Today, our Fotex super markets and Bilka hypermarkets are market-leading players in Denmark, making Dansk Supermarked the countrys most profitable retailer by far.

key figures: Dansk Super Market Employees Number of shops Number of countries : : : 40,000 1,100 4

CEO

Erling Jensen

CHAPTER: - 2 RESEARCH METHODOLOGY RESEARCH METHODOLOGY Research is an art of scientific investigation. The advanced Learners Dictionary of current English lays down the meaning of research as A careful investigation or inquiry specially through search for new facts in any branch of knowledge. Research is an academic activity and as such the term should be used in a technical sense. According to Cliffor Woody Research comprises defining and redefining problems, Formulating hypothesis of suggested solutions; collecting, organizing and evaluating data, making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis. A. RESEARCH OBJECTIVES To understand the overall process of MaerskTanker Industry. To understand the Types of Tankers and Maersk Tanker Business. To analyze the sustainability strategy of Maersk Tanker. To understand the Technical Operations of Maersk Tanker. To understand the sustainability compass of Maersk Tanker- Health safety and security, Environment, Corporate Social Responsibility and quality.

B. RESEARCH DESIGN

A research design is the arrangement for the collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure.In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blue print for the collection, measurement and analysis of data.

A. Type of research Type of research is exploratory. The objective of the exploratory research is the development of hypothesis rather than their testing.

C. SOURCE AND TYPE OF DATA Sources of data can be classified into two types. They are Primary data Secondary data

a. Primary data The primary data are those, which are collected afresh and for the first time, and thus happen to be original in character. In this research primary data is not collected becouse the research topic is extreamly wide and the time and area give is not sufficient for the research.

B. Secondary data Secondary data means data that are readily available i.e., they refer to the data, which have already been collected and analyzed by someone else. In this research secondary data is mainly collected through Reports prepared by research scholars Public records and statistics Reports and publications journals Books, Magazines and newspapers Internet

D. RESEARCH TOOL The reaseach tools means the way or the technique or the equipments which all are used in the research of the perticular subject like questionnaire, interview, etc. E. DATA ANALYSIS Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with the goal of highlighting useful information, suggesting conclusions, and supporting decision making. Data analysis has multiple facets and approaches, encompassing diverse techniques under a variety of names, in different business, science, and social science domains. All the data given in the report is mainly exploratory data so all the data analysis is done by exploratory method of data analysis.

F. LIMITATIONS OF THE STUDY There were certain limitations to the research that the researcher has forced: Lack of sufficient data Companies do not ready to share their information The Time was the major constraint for the researcher in collecting the data. The topic of the study is really wide so that individual could not able to get appropriate data.

TYPES OF TANKER

While no standardized system for the classification of oil tankers exists; the fleet is typically divided into four major categories based on carrying capacity. These categories are ULCCs and VLCCs, Suezmax, Aframax, and Panamax and Handysize tankers. To benefit from economies of scale charterers typically charter the largest possible vessel that can be accommodated in a particular voyages arrival and discharge ports. The four main categories of vessels are:

ULCCs (Ultra Large Crude Carrier) and VLCCs (Very Large Crude Carrier)

These are the largest vessels in the world tanker fleet. They carry cargos of 200,000 dwt or greater and typically transport oil in long-haul trades mainly from the Arabian Gulf to Western Europe and the United States via the Cape of Good Hope and Asia. General Maritime currently owns and operates 2 VLCCs. The large carrying capacity of ULCCs and VLCCs make them attractive to traders, however, this large size limits their access into some of the worlds ports.

Suezmax:-

Suezmax are midsized tankers with displacement between 120,000 and 200,000 dwt. Suezmax tankers offer the relative economies of scale that can be achieved with VLCCs; however, their slightly smaller size offers increased versatility and access to a majority of the worlds ports. Suezmax tankers primarily operate in the Atlantic Basin delivering cargoes from West Africa, the North Sea, and the former FSU. General Maritime currently owns and operates a fleet of 11 Suezmax vessels.

 Aframax:-

Aframax vessels are mid-size tankers with displacement between 80,000 and 120,000 metric tons. Aframax vessels typically engage in medium to short haul oil trades in nearly all operating regions and can carry cargos of 80,000 to 120,000 dwt. Widely considered to be the work horses of the fleet, their size makes them ideally suited to operate in areas of lower crude production or where draft and size restrictions prevent the use of larger vessels. General Maritime currently owns and operates a fleet of 12 Aframax tankers. Panamax and Handysize:-

These tankers are primarily used for both the transportation of crude oil and petroleum products. Panamax tankers have displacement between 50,000 and 80,000 dwt and trade in short haul. Handysize tankers have displacement between 50,000 and 10,000 dwt. They primarily carry finished petroleum products as their smaller size makes them less economic for the transport of crude. General Maritime currently owns a fleet of 2 Panamax and 4 Handysize vessels.

CHAPTER :- 3 REVIEW OF LITERATURE: TANKER DEMAND AND SUPPLY

Tanker demand is expressed in "ton-miles" which are measured as the product of (a) the amount of oil transported in tankers, multiplied by (b) the distance over which this oil is transported. Tonnage of oil shipped is primarily a function of global oil consumption, which is driven by economic activity as well as the long-term impact of oil prices on the location and related volume of oil production. In addition the tonnage of oil shipped is also influenced by factors such as pipelines, political events and risk, as well as weather. The distance over which oil is transported is the more variable element of the ton-mile demand equation. It is determined by seaborne trading and distribution patterns, which are principally influenced by the locations of production and the optimal economic distribution of the production to destinations for refining and consumption. Seaborne trading patterns are also periodically influenced by geo-political events that divert tankers from normal trading patterns, as well as by inter-regional oil trading activity created by oil supply and demand imbalances.

FACTORS DRIVING GROWTH

Growth in the seaborne crude transportation industry is principally driven by three factors: Global oil consumption, import dependency, and voyage lengths. Growing Oil Consumption:- Global oil consumption has witnessed substantial increases in the past several decades. The traditional core of the worlds major oil consumers, the United States, Japan, and Western Europe, is expanding with new economic powers, most notably China and India, playing an increasingly important role in global consumption. In the period prior to 2008-2009, U.S. oil consumption increased an aggregate 5%. In this same period global oil consumption increased 11.9%. Growing Import Dependency:- Demand for crude oil has grown faster than domestic supply in major consuming regions such as the United States, Japan, Western Europe, and South-East Asia. As a result these regions have been forced to rely more and more upon foreign crude exports to fuel economic expansion. Oil consumption in the world two largest emerging economies, China and India, has grown 70% and 40% respectively since 2000. This trend of increasing import dependency will continue far into the foreseeable future further contributing to growth within the tanker industry. Growing Voyage Lengths:- The Worlds largest and fastest expanding exporters are currently located in the Middle East, Caspian Sea, Black Sea, and Africa. On the other hand production in areas in closer proximity to major consuming regions such as the North Sea, and Gulf of Mexico, have currently already reached or are nearing output decline. Production in the Norway, the UK, and Mexico has decreased by 27.9%, 38.3%, and 10.7% respectively. This global shift in the source of production contributes to increasing import dependency, but also serves to increase the ton-mile ratio for tanker owners.

CONSOLIDATION
The seaborne crude oil transportation business is highly fragmented and is generally comprised of two types of operators: independent ship owners and captive fleets of privately and state owned oil companies.

o Within the industry, independent owners account for approximately 80.4% of the tanker capacity, and the top ten owners account for 27% of the world tanker fleet. The continued concern among oil companies to secure safe modern tonnage by dealing with large trusted owners has facilitated consolidation within the industry. The drive towards consolidation has provided larger owners with leverage to better control operating costs by taking advantage of economies of scale. Through consolidation of the mid-size tanker market, General Maritime has created a sector specific focus.

FOCOUS ON SAFTY

Environmental protection has been a major focus of the tanker industry over the past years. Regulations such as OPA 90 have caused tanker owners to take extra care in the maintenance of their vessels and plan ahead to the time their vessels will no longer be allowed to trade.

o Oil pollution incidents have led to legislation forcing charterers to exercise caution in hiring only the most modern and well-maintained vessel to trade to trade within U.S water.

o With oil majors seeking exclusively modern double hull vessels, the demand for single hull vessels has decreased, increasing demolition rates for single hull vessels and demand for the double hulled fleet. With a modern fleet of double hull VLCC, Suezmax, Aframax, Panamax,

and Handysize vessels, General Maritime is well positioned to take advantage of the phase out of single hulled vessels.

STUDY OF MAERSK TANKER BUSINESS

Oil is the worlds major energy resource and is normally produced far from where its refined and consumed. Because of this, tankers and pipelines are critical infrastructure in the energy value chain. Generally speaking, tankers are used for trade between regions, while pipelines are used within a given region. A very simplified version of the energy value chain is illustrated below. It has three main steps: exploration/production, refining and consumption. Tanker shipping connects these three steps.

There are two types of oil tankers: Crude carriers for unrefined products and product carriers for refined products.

Crude tankers are mainly used for the deep sea transport of crude oil from production sites to refineries. They range in size from 55,000 DWT* up to around 450,000 DWT. The main trading routes are from the production areas in the Arabian Gulf and West Africa to Asia, Europe and the USA

Product tankers are used to transport refined oil products (gasoline, diesel, kerosene, jet or fuel oil) to the market. They range in size from 5,000 DWT to around 80,000 DWT. One traditional trading route for product tankers is between North America and Europe, where gasoline is carried to the US and diesel fuel is transport back to Europe.

*DWT = deadweight, which is the maximum weight of cargo, bunkers and stores that a vessel can carry.

PLAYERS AND ROLES: Tankers are often compared to taxis, as tankers take on new assignments with new customers whenever they are available unlike container ships, which are more like buses travelling on a fixed schedule. The nature of the tanker business is characterized by a trading mindset involving 3 parties: the charterer, the ship owner and the broker.

I.

The charterer of the vessel has cargo that needs to be shipped as safely, quickly and affordably as possible.

II.

The ship owner owns and operates the vessel and wants to maximize freight but with reliable and solvent customers and at best possible contract terms.

III. The broker bridges the gap between the charterer and the ship owner by using market knowledge to guide both parties

 INDUSTRY DYNAMICS Energy transport is driven by global economic growth and dislocation of consumption and production. This is reflected in cyclical freight rates that vary in accordance with vessel supply and demand.

Factors That Affect The Transport Business:FACTORS DRIVING DEMAND FACTORS DRIVING SUPPLY

MACRO ECONOMICS AND POLTICAL FACTOR

ECONOMIC GROTH, - INDUSTRIAL PRODUCTION, - TRADE PATTERN, ENERGY & ENV. POLICES, TRADE POLICIES, - WAR & CONFLICTS.

NEW SHIPBUILDING
SHIPYARD CAPACITY, LABOUR COST, - PRICES OFINPUT GASS, - VESSEL PRICES, - INTERNET RATES ACCESS TO CAPITAL

TRANSPORT CAPACITY ENERGY MARKET

OIL, - COAL, - NATURAL GASS, NUCLEAR POWER, HIDROELECTRIC POWER SIZE OF GLOBAL FLEET, NEW BUILDING RATES, SCRAPING RATES, AGE OF STRUCTURE, ENVIORMENTAL & SFFTY ISSUE

OIL MARKET
REFINERY UTILISATION, - REFINERY LOCATION REGIONAL IMBALANCE, - STOCK LEVEL, SPOT & FORWARD PRICES INDUSTRY STRUCTURE

SHIPOWNER & LOGISTIC OPRATION SERVICE OFFER, - CONTRACT FORM, - GEOGRAPHIC CONSENTRATION, OWNERSHIP

THE TANKER SHIPPING MARKET

CHAPTER: - 4 SUSTAINABILITY STUDY OF MAERSK TANKER:

In an ever challenging economic environment the rules of doing business have permanently changed. Looking ahead we must focus on keeping a competitive edge through maximizing the performance of our existing assets. This will be obtained through getting better rates, increased utilization, and outperforming our competitors on cost and efficiency. These new market conditions also call for new ideas to improve work processes, reduce bureaucracy and retain valuable employees. With the financial results for 2010 in hand and the outlook for 2011 not living up to the past, its important to recognize what will keep Maersk Tankers ahead of competitors. The highest safety and quality standards are pivotal to operating successfully and the sustainable development of Maersk Tanker business unit recognizes that we must be committed to developing environmentally sound solutions to the challenge on environment and climate change. Not only do these offer a competitive edge to Maersk Tanker business, but equally important are the benefits they bring to Maersk Tanker employees, the environment and the communities operate in. Sustainability is the new way of doing Maersk Tanker business and delivering Maersk Tanker services. It sums up quite well the approach necessary to ensure o Maersk Tanker competitive edge in maintaining Maersk Tanker strong customer base, attracting new customers and more importantly ensuring all employees feel engaged and active in Maersk Tanker business. In all areas of operations it needs to strive for continuous, socially responsible improvement in Maersk Tanker performance.

1. TECHNICAL OPERATIONS MISSION:

Maersk Tankers Technical Operations consists of a Marine Standards division - providing support on matters related to Sustainability, and a Technical Operations Division focusing on daily technical operations issues of the fleet.

Maersk Tankers deliver best in class technical management by meeting or exceeding customer and industry requirements. Maersk Tankers fleet will be operated cost-effectively with focus on reducing it environmental footprint and ensuring the health and safety of our employees.

Maersk Tanker Management Fulfill Our Mission By:

Focusing on Sustainable Business Continuously improving our Health, Safety and Security performance Providing high Quality technical services Showing Cost leadership compared to peers within the industry Organizational development

2. SUSTAINABILITY STRATEGY:
Q. What do I think about when developing the Values and principles Which issues are materials to Maersk Tanker business? - Environment, safety, CSR, employment and labor Sustainability Strategy?

Maersk need to priorities areas where most at risk and have the best business opportunities to support Maersk Tanker Business Strategies?

What are Maersk Tanker customers priorities? - Safety, environment, cost Stakeholder engagement Who are our most important stakeholders? - Employees, customers - Class.

How do we ensure that we understand their priorities and concerns? And that they understand ours? - Employee engagement surveys, vetting management systems, tenders. Accountability and transparency Which metrics will measure performance of our strategy priorities? Accident stats, environmental damage, audits, vettings, retention rates, sustainability compass.

 What is Maersk strategy is a long term one in line with the BU strategy.

The integration of Brostrm Tankers has provided an opportunity to relay onto those vessels all the good projects and operations that Maersk Tankers has been running for years, such as implementation of the Maersk Ship Performance System. For an overview its been decided that the following five areas will be prioritized during the coming years. These areas when addressed, will give us the competitive edge required by showing true sustainable leadership.

A.

Management Commitment:

Clear communication of environmental/ CSR commitment from Top Management to all employees Top Management externally communicate environmental/CSR targets

B.

Supplier Management:

Collaborate with strategic partners Minimum sustainable requirements to suppliers Ensure we have an influence on New Build Management

C.

Integrate sustainability as a part of our business:

Set and achieve high safety standards. Establish local integrated environmental organization Total business impacts taken into account in the decision making process Set high but achievable targets such as 15% relative CO2 reduction by 2015

D.

Partnerships with customers, academia & clean-tech companies:

Be in the forefront with new technologies. Strong collaboration with innovation departments.

E.

Internal and external communication:

Continuously enhance our communication on good sustainable performance.

 Benefits from proposed strategy: 1. Cost savings and cost avoidance Proposed investments will save fuel, lower climate impacts and avoid compliance costs.

2. Competitive edge Moving cargo more cost effective and more sustainability friendly.

3. Positioning Recognized as a sustainable leader in the tanker business. Assist governing bodies on developing future regulations.

4. Creates business opportunities Ensure our strategy and operations support the Business Strategy and continuously work in accord with the commercial departments to leverage opportunities.

5. Engaged employees Sustainable development will attract and retain skilled employees. Our employees have many ideas and solutions and we need to ensure that we have the right people in the right positions to influence New-build Design and Management.

3. SUSTAINABILITY COMPASS:
I am introducing a new and aligned performance measurement system for Maersk Tankers. This will include 'balanced scorecards' to measure the overall performance by Maersk Tanker Vessels, Fleet Groups and Marine Standards. To help increase focus in Key areas for a sustainable business, the compass is being introduced to visualize the Marine Standards Performance. This sustainability Compass represent the following four main areas of our Sustainability strategy 4. Health, Safety and Security, 5. Environment, Corporate Social Responsibility, 6. Quality. It acts as a Balanced Scorecard which consists of some of the KPIs listed below and will show our progress towards our targets. It is also a useful tool for recognizing areas that require increased focus or a strategic change during the year. As most of the Key Performance Indicator included has a risk element, the compass also gives us an overview of Maersk Tanker risk from a sustainability point of view where a high performance indicates a low risk.

Past performance and future targets Quality

KPIs Key Performance Performance 2008 Indicators LTI Lost Time 16 Incidents LTIF Lost Time 1.38 Incidents frequency TRCF Total Recordable Case Frequency Incidents (excluding 41 spills) Near Misses report 26.7 per vessel Oil Spill 3 (Overboard) Oil Spill (Contained) APMM Valid Average 5.0 observations from SIRE inspections High Risk 0.3 Observation from 0.3 0.3 0.3 5 4.2 4.5 4 0 9 0 0 2 0 24 28.4 36 0 32 0 3.53 2.50 3.19 3 0.6 1.06 0.6 0 9 0 2009 2009 2010 Targets Performance Targets

SIRE

PSC Port State 0 Control Detentions PSC Port State Control Def. per inspection Sea Staff Attrition 11.1% rate MLC Maritime New KPI Labor Convention* New KPI New KPI 4.5 9% 9.20% 8% 0.4 0.5 0.6 0.3 0 1 0

 Health, Safety and Security:- Key success causing actions 2008/2009. Several achievements in regard to Health, Safety and Security performance were made in 2008/2009:

One key success factor since the release of the last HSE Action Plan (07/08) has been the dramatic all round improvement in reporting and the responses to reports.

One area that has befitted is Near Miss reporting with an impressive increase of nearly 70% since year end 2007. This equates to an increase in hazard spotting and safety awareness, which in turn leads to all round improved organizational safety culture.

Equally instrumental to a successful safety philosophy is timely and valuable responses to submitted reports. During 2008, Maersk Tankers designated responsible parties to review, investigate and impart constructive responses to submitted reports; this in turn reduced the large number of open, unclaimed and waiting reports within the Safety Reporting System.

As part of the last HSE Action Plan, vessels were encouraged to formulate their own safety initiatives. This has been successful in fostering a proactive onboard approach to safety concepts and ideas.

Focus on knowledge sharing has been a key issue during this time scale. Maersk Tankers have both partaken in industry knowledge sharing events such as the Informal Tanker Operators Safety Forum (ITOSF). The valuable information gleaned from this forum has often been cascaded down to our vessels in the form of Controlled Fleet Information Notices (C-FINS) and Fleet Circulars.

Health, Safety and Security Strategy for Future To adopt a Proactive Approach to our Safety Performance by encouraging the continuous search for innovative ideas, areas of improvement and ensuring that all appropriate information within Maersk reporting structure is utilized. This will be achieved by good cooperation between both our personnel working ashore and those working on board our vessels. The number of pirate attacks this year has already overtaken the number of attacks recorded in 2008, according to the latest figure from the International Maritime Bureau (IMB). The reason: An unprecedented increase in piracy activity off the Somali Coast. At Maersk Tankers we are monitoring the situation off the coast of Somalia very closely and we are in constant contact with the relevant authorities on how best to deal with the situation. Maersk Tankers has policies and procedures in place for sailing in the area, which are updated based on available civilian and military intelligence as well as best practices recommended by the relevant authorities, maritime and other organizations Part of the procedures for sailing in the area includes training, drills and reviewing security plans onboard before entering into the area as well as instructions for transiting and dealing with an attack.

Health, Safety and Security Plan for Future: TITLE OBJECTIVES TARGETS Investigate the standards Analyse and then of the - Working 1 Health Campaign improve the impact that environment life on board a vessel Recreational has on seafarers health. environment - Food Give sea farers an Accident Analysis has 2 Mooring Campaign identified Mooring Operations as an area for improvement. improved knowledge AMooring Campaign into the safety aspects DVDwill be distributed relating to Mooring to the fleet. Operations, therefore reducing the accidents. Provide all Officers and Cadets with a training Fleet feedback has tool that will detail the 3 Ship Safety Officer Course requested further task involved in the role information regarding of Safety Officer and the roles of Ship Safety give them guidance in Officer. how to carry out the role. Improve safety 4 Behavioural Safety Adopt the concept of Behavioural Safety. performance and reduce the number of accidents that occur. In addition to the current hardware and software tools in place to maintain safety performance, fleet. will be distributed to the An interactive CD-Rom improvement. guidance for analysis performed with Provide a report on the ACTIONS

Behaviour will be analysed and used to improve safety performance. - Achieve a LTIF of 0.6 - Achieve a TRCF of 3.0 Maintain a high level of 5 Safety Performance Safety Performance KPIs. - nified Safety Performance Brostrm vessels meet our performance targets. Use the rest hour analysis Achieve a continually Reduce the number of 6 Rest Hour Violations Rest Hour Violations experienced by the fleet. over 2010. violations experienced. An interactive CD-rom Ensure that abs and All on board have on 8 Security Training officers receive onboard board security training CBT(Computer Based certificate. Training). not have one already). Ensure that all personnel All crew passing onboard the vessels 9 going through high risk Security Training areas have been trained relative CBT certificate. in Surviving piracy and areas. risk areas have the vessel transiting the Owners identified High will be distributed to the An interactive CD-rom Security Officer) does vessel (if the SSO (Ship will be distributed to the violations per month number of rest hour improving number of fleet to minimise the and feedback from the 3/vessel/month all Maersk Tanker and - ear Miss Reports the organisation so that Knowledge sharing will be performed throughout

armed robbery Course (SPAR). Quarterly security drill (tabletop) involving the 10 CSO(Company Security Security Drill Officer) from each office. Environment: vessels. SSO. locations involving training check list to their Drill for all office Vessel provide Security

The general trend of our performance is that Maersk improved the scale of our environmental impact from 2007 to 2008. The main contributing factors to the improvement in our performance are a range of focused efforts to limit for instance fuel consumption. The trend in emissions of SOx, NOx, and PM from ships under the Maersk Tankers control is stable, even though the numbers reported have grown due to improvements in the amount and quality of data.

Key Success Causing Actions: Several achievements in regard to environmental performance were made in 2008/2009:

ISO14001 training has been distributed to all vessels and very positively met. More than 900 officers, cadets and shore staff have completed the training.

The US environmental compliance programed successfully completed with great satisfaction from the US requirements.

 A sludge/garbage reporting system for all tanker vessels was launched in order to ensure environmentally responsible waste landing facilities in ports. More than 70 ports have been environmentally rated.

Green Passport has become part of the new specification on all tanker vessels except LNG carriers.

Internal audits/ surveys have been initiated, e.g. Maersk Global Fleet Support, Gallagher Marine Systems and Selected new building shipyards.

Key office personnel have been trained in oil spill response in order to improve shore-based preparedness in case of a major incident.

First group wide APMM HSSE report was published externally.

Green award granted to Maersk.

Reduced the total Specific Cylinder Lube Oil consumption by 5 % in 2 months.

Reduced CPH and Paris Brostrm Vessels Cylinder Lube Oil consumption by 12 % in 2 months.

Base Load reductions of 25 % = 0,8 MTHFO = 2,56 MTCO2 pr day achieved on test vessels by optimizing procedures.

CLT propeller Fitted on Roy Maersk. Expected emission reduction of 5-7 %.

 VTG Turbo Charger installed on Maersk. Expected emission reduction of 3 %.

uel Oil Sliding valves retrofitted on 12 Vessels. NOX emission reduction of 30 %

Electrical Steam generators fitted on 7 Vessels, approximately 30 more to come. Expect 35 % reduction of emission during Port stay.

Future Targets Environmental Strategy.

To ensure a continuous improvement of Maersk Tanker environmental performance, objectives and targets are established and revised on an annual basis. The environmental objectives and targets involve everyone in the MTTO, and those on board the vessels. Employees must work together to achieve Maersk common goal, which is to reduce consumption of resources, emissions and pollution and aid in its aim for Eco-Efficiency. In addition to the environmental objectives and targets below, all vessels have established vesselspecific objectives and targets for improvements. Maersk long term strategy will focus on the following goals. They will work hard to become a true environmental leader through the integration of sustainability as a part of our business. Focus areas are: Air Emission Reduction Targets Waste Management Sustainable use of Resources Chemical Management ISO14001 for combined fleet Increased Environmental Management and Awareness (shore and seafarers).

Q. What defines Eco-Efficiency?

Maersk Tankers aspires to go beyond compliance in order to gain competitive advantage through a systematic approach to identify potentials for more efficient use of resources, lower emissions and optimize cost and also a proactive mitigation of environmental risk Maersk Tankers will place itself to anticipate regulatory changes as well as customers' and competitors' moves.

 Corporate Social Responsibility: The Global Compact is an international initiative launched by the UN for the purpose of promoting corporate citizenship. The UN wants to involve private companies in tackling some of the major social and environmental challenges that arise from increasing globalization. The Global Compact provides an opportunity for companies all over the world to actively participate in tackling these challenges. The core of the Global Compact is ten principles that are based on internationally agreed conventions and treaties on human rights, labour standards, environmental protection and anti-corruption. The Global Compact aims at making the ten principles an integral part of business strategy and operation.

The ten principles of the Global Compact Under the Global Compact, companies are asked to embrace support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anticorruption. The principles are listed here.

The Ten Principles of Maersk Tanker: Human Rights 1 Businesses should support and respect the protection of internationally proclaimed human rights; and 2 Make sure that they are not complicit in human rights abuses. Labour Standards Businesses should uphold the freedom of association and the 3 effective recognition of the right to collective bargaining. 4 5 The elimination of all forms of forced and compulsory labour; the effective abolition of child labour; and The elimination of discrimination in respect of employment 6 and occupation. Environment Businesses should support a precautionary approach to 7 environmental challenges; Undertake initiatives to promote greater environmental 8 responsibility; and Encourage the development and diffusion of environmentally 9 friendly technologies. Anti-Corruption 10 Businesses should work against corruption in all its forms,

including extortion and bribery.

BIBLIOGRAPHY

A) Books
C.R.Kothari, Research Methodology,2nd Revised edition 2004

B) Magazines, Journals and Newspapers

The Hindu Business Line Economic Times Times Shipping Journal

C) Online Sources
http://www.generalmaritimecorp.com/ http://www.maersktankers.com http://www.shipping.nic.in/

D) Reports
ICRA Rating Feature Sep 2011(Shipping And Ports) ICRA Rating Feature Aug 2010(Shipping And Ports)
ICRA Research Analysis 2006(Shipping And Ports)