Trade association Interferry highlighted the operational, technical and commercial influences on global ferry development at its 37th annual conference in Dubai, which marked the event’s Middle East debut.
Hosted by the Dubai Roads & Transport Authority and officially opened by the Crown Prince, the four-day event attracted a near-record attendance of 299 top level delegates to hear the latest initiatives and solutions in a fast-changing sector of shipping.
CEO Len Roueche commented: “Around the world there seems to be no end of opportunities and challenges for domestic and international ferry services. With 25 new recruits this year, we now have 235 members in 38 countries, which suggests they see value in working together to protect and enhance the industry’s future.”
Green and clean
Keynote speaker Andreas Chrysostomou, chairman of the IMO Marine Environment Protection Committee (MEPC), outlined six major environmental issues for shipping – then faced a question from the floor that underlined the scale of the latest challenges.
Mr Chrysostomou’s regulatory update covered air emissions, ship recycling, antifouling coatings, aquatic species transfer, marine protected areas and climate change.
“We are the only industry in the whole world to have a proposal on climate change, ” he declared after describing a two-pronged approach. Technical and operational standards were being addressed via the Energy Efficiency Design Index (EEDI), the Energy Efficiency Operational Index and the Energy Efficiency Management Plan. If these were not developed fast enough, regulations would require the use of Market Based Measures (MBM) such as emissions trading and a compensation fund based on the amount of fuel used.
“What are the consequences of the EEDI for the existing fleet?” asked one delegate. Stressing the complexity of finding a solution, Mr Chrysostomou replied: “The EEDI is only for newbuilds but we need reductions now and MBM is the only way to achieve that and will apply to existing ships. On the other hand, work on MBM is not going as fast as we want.”
He suggested that the existing fleet might be asked to develop different technical measures, predict emissions for a year and buy credits if they exceeded the forecast. “In short I don’t know yet, ” he admitted, “but by next year we should have a clearer picture.”
On air emissions, Mr Chrysostomou confirmed that the switch to low-sulphur fuel due by 2020 would be subject to an availability review in 2015 and could be delayed by five years – but warned “that doesn’t mean an indefinite postponement”.
On the Hong Kong recycling convention adopted in 2009, he said a few guidelines needed further refinement but the requirement to provide an inventory of hazardous materials before ship-breaking was now well established. The same was true regarding the convention on TBT-free antifoulings and the establishment of marine protected areas, the latest of which concerned sewage disposal in the Baltic. Meanwhile the aquatic species convention adopted in 2004 – requiring ships to carry equipment to prevent invasive transfers of alien marine life – required additional tonnage to come into force but could be implemented by 2014.
As Mr Chrysostomou noted: “Environmental issues have never been higher on the shipping agenda – the industry is under increasing pressure to become cleaner and greener. Shipping has not seen this mix of issues in recent memory and certainly not at such pace.”
He acknowledged Interferry’s role in helping to persuade the IMO to postpone EEDI implementation – due in force next year for most ship types – to allow consideration of a sector-specific methodology for ro-ro and ro-pax vessels that did not penalise their specialised power requirements.
Johan Roos, Interferry executive director of EU and IMO affairs, later told delegates: “We have spent the last three years trying to get this right. A few weeks ago we won MEPC approval to proceed with a formula that introduces correction factors. This underlines the value of attending IMO meetings so that we can affect solutions.”
Lessons from the Costa Concordia sinking in January prompted a stark warning from special guest speaker Charles ‘Bud’ Darr, vice president of technical and regulatory affairs at the Cruise Lines International Association (CLIA). “Safety is not a destination, it’s a journey, ” he stressed. “If you believe you ever got to the destination, you don’t understand the concept. It must be a continual process of lessons learned over time.”
Recalling that the ship was carrying a total of 4, 229 passengers and crew, Mr Darr stated: “No death can be acceptable in our line of work but it’s remarkable that only 32 souls were lost, which suggests a lot of things did go right.” He praised the heroism of crew members during the rescue and pointed out that 23 of the 26 lifeboats were successfully launched.
But he went on to admit that the industry as a whole was ‘not as fully prepared for this as we would like to be’ in terms of incident response and the need to address wider policy, regulatory and communications issues.
In the first instance it was extremely important to have local communications specialists in place to coordinate liaison with authorities – ‘to get your message into their processes as soon as possible’ – and to ensure transparent communication of the actions being taken.
A subsequent industry-wide operational safety review by CLIA members and a task force of independent experts had produced best practice recommendations such as holding passenger safety musters before departure. “We didn’t see much about ship design because in this instance the ship didn’t fail the people, the people failed the ship, ” said Mr. Darr.
Initial outputs from the review had been shared with the IMO and governments and final modifications were now about to be circulated throughout the industry. “What emerges might not become policy, ” he added, “but to see ideas being shared among fierce competitors is very gratifying – because safety is not an area where it does any good to be in competition.”
Answering a question on safety culture, Mr Darr suggested that the ‘unquestionable word’ of a ship’s master was giving way to a team approach trend. “It’s important that crew members are properly trained and confident enough to raise queries if they think things are going wrong, ” he asserted. “In aviation there is a specific procedure for the co-pilot to question the captain in these circumstances. However, that’s easy to conceptualise but hard to change into a pattern of behaviour.”
Predicting key economic, financial and political trends for the rest of 2012, Deutsche Bank’s Nordic region CEO Jan Olsson argued that the world economy was moving in the right direction. “In my opinion austerity packages have peaked and there are some signs of recovery, ” he suggested, pointing to indicators such as an upward curve in commodities and equities and a decline from 6.5% to 4.9% in the global fiscal deficit.
He added that government and central bank intervention had seen risk reduce sharply. Quantitative easing had prompted 3% GDP growth and two million new jobs in the US. He conceded that unemployment looked much worse in Europe – notably with 24.4% out of work in Greece – but maintained that the risk of European recession was limited.
“The European Central Bank’s bond buying facility has been the major positive development in Europe in the past few years and will continue to be very, very positive, ” said Mr Olsson, who suggested that further positives would follow in the coming years through a unified banking system and the integrated supervision of more than 6, 000 banks.
However Mr Olsson said there was a surprising slowdown in emerging economies and pinpointed China as a potential problem area. “Manufacturing has suffered significantly in the last few months and there is some uncertainty in terms of leadership change, ” he explained. A forecast slowdown from 7.9% to 7.7% in GDP growth was not a major change but marked China’s first drop in 15 years.
Alex Panagopulos, former Interferry president, gave an impassioned personal view of the economic crisis in Greece, where he was co-founder of Superfast Ferries, CEO of parent group Attica and a director of the Blue Star subsidiary before leaving to form Arista Shipping and venture capital firm Alpanco.
“In the early 2000’s our economy was booming and optimism was high, ” he recalled. “But we were deluded and now Greece is gasping for breath, dying of insolvency in a death spiral of borrowing more to repay debt.”
Highlighting a sign of the nation’s woes, Mr Panagopulos said Greece was best known for controlling the world’s biggest merchant fleet and for its tourism industry – yet first-half port authority statistics for ferry traffic from Italy showed 32% fewer passengers and freight down 16% compared with last year.
Alfred Baird, professor of maritime business at the UK’s Edinburgh Napier University, outlined the development trends identified in a project by the European Union Maritime Transport Cluster, which has now published a paper on future policies.
He said that four main themes topped the agenda – sustainable development, intermodality and modal shift, supply chain optimisation and harmonisation of regulations. The findings boiled down to ‘how companies play the game and deliver services in a sustainable, cost-effective way’.
Prof. Baird emphasised the need to ‘put ferries on the map’, stating: “In our research we found much focus on making container ships more efficient, yet ferries carry more and it’s important they are on the funding programme. The ferry is the main vehicle of integration to grow trade.”
Ship design innovation
What are class society rules trying to achieve? The question was posed by Vince Jenkins, global marine risk advisor at Lloyd’s Register, in a paper on the benefits and challenges of risk/goal-based design – an approach which he noted was starting to be used within the IMO and marine industry.
Mr Jenkins suggested that class rules were prescriptive and left no room for innovation in meeting safety levels and other standards. In contrast, risk-based design set very clear goals without specifying how they were to be achieved. The two approaches should be seen as complementary and building on each other.
“Goals can be set at various levels that get progressively more complex, ” he explained. “A huge effort is required but we are talking about removing the excess safety net and using active hazard management. This is an opportunity to optimise designs and be at the cutting edge in improving performance.”
He acknowledged there were challenges with setting goals, the associated modelling and defining the crew numbers and competence levels appropriate to the design. Lloyd’s Register would address these issues under a new approach in which all rules would include design goals and principles, although clients could still choose the straight prescriptive option.
Masanori Onzuka, a naval architect at Japan’s Mitsubishi Heavy Industries, described a new righting system that enhances the damage stability of ro-ro/ro-pax ships and car carriers. The system transfers floodwater into void spaces in the ship’s bottom, quickly lowering the centre of gravity to reduce the capsize risk. A 170-metre long ro-ro newbuild due for delivery next March will be the first ship equipped with the system.
Thomas Ritte from German shipbuilder Flensburger presented further solutions for hull damage survivability – notably a ro-pax subdivision concept where water ingress is diverted to a cofferdam straddling the lower hold; and a honeycomb structure double hull that absorbs kinetic energy to reduce flood risk by 70%.
Jan-Erik Rasanen, energy solutions manager at ABB Marine of Finland, outlined a DC grid system that merges electric power distribution through a single 1, 000V circuit and eliminates the need for main AC switchboards. He revealed: “We expect the grid to increase a vessel’s energy efficiency by up to 20% and reduce the electrical equipment footprint and weight by up to 30%.”
The pros and cons of LNG featured in a session on alternative fuels, with a shipbuilder describing the environmental attractions for Viking Line’s current newbuild and an operator explaining the financial barriers to converting the existing fleet.
Hakan Enlund, vice president sales with STX Finland, noted that the 57, 000gt cruise ferry Viking Grace – due for delivery from the company’s Turku yard next January – would be the world’s most environmentally friendly big passenger ship.
It would generate no marine emissions and extremely low air emissions in the delicate and shallow waters between Turku and Stockholm. The LNG would be stored on the aft deck in twin 200m3 tanks – equivalent to two 160-tonne diesel tanks – allowing the ship to be refuelled every two days.
Mike Corrigan, president and CEO of Canada’s BC Ferries, said LNG was a ‘foregone conclusion’ for company newbuilds – an average of one per year is planned over the next 15 years – because it was 50-70% cheaper than the ultra low sulphur diesel currently in use at an annual cost of more than $120 million. Natural gas was competitively priced in western Canada due to an oversupply and the storage infrastructure already existed.
The company was keen to convert many of its existing 35 vessels but had shelved an initial project because the estimated cost of $12m went to $18m and the payback period doubled to ten years. In addition, the fleet was already fully utilised so it was logistically challenging to take a ship out of service. “We continue to work with suppliers and manufacturers to reduce the timeline risk and drive down the design spiral to the point where we are comfortable, ” Mr Corrigan concluded.
Christos Chryssakis, senior innovation researcher at DNV, said biodiesel could be blended with diesel to meet low-sulphur requirements – providing a more readily available alternative to the 300 million tonnes per year of distillates that would be needed globally by 2025. Maersk Line and the US Navy had already tested biofuels but a change in regulations was required to allow their use on ships.
Daniel Povel, risk assessment team leader at Germanischer Lloyd, described a zero emissions ferry design concept for Scandlines combining liquid hydrogen and fuel cell/battery systems. The solution might be competitive if marine gas oil reached a price of $2, 000 per tonne – but that compared with a current price of $900 per tonne and a peak of $1, 300 in 2008.
IT & maritime communications
Ole-Kristian Sivertsen, senior VP of business development & sales at Norway’s market-leading Maritime Communications Partner, called Smartphones ‘the fastest-spreading technology in human history’ when explaining how shipowners could boost revenues, influence customer behaviour and enrich the onboard experience. The MCP system in use on some 140 vessels allowed users to roam into the shipboard network via their regular agreement. Owners took a share of the profit and could also pro-actively contact passengers with promotional messages to support the onboard yield.
John Steen-Mikkelsen, CEO of Danish ferry operator Danske Faerger, hailed the ten-minute check-in benefits of a booking and ticketing system supplied by Carus. “It’s about fast shipping because our main competitors are bridges and also, due to oil prices, we need to minimise our time in port, ” he explained.
Vassilis Spitadakis, founder and CEO of Greece-based reservations systems provider FORTHcrs, described a destination marketing package developed for Italy’s Alilauro, which operates 32 high speed ferries on island services from Naples and Sorrento. As he noted: “The system enhances local development and the sustainability of the service by integrating ticketing with accommodation, local transport and entertainment.”
Sunil Gopalankrishnan, capacity control manager at Emirates SkyCargo, said his company used an automated load optimisation system from US firm Revenue Technology Services to maximise yield according to availability. “Capacity is perishable so if you don’t use it the opportunity is gone, ” he stressed. “We realise the best return by selling at the right price at the right time. Fuel represents 30% of our costs and that eats into profitability, so identifying the controllable elements is crucial for effective cost management.”
Jim Leveau, head of traffic and security at leading Swedish ro-ro port Trelleborg, said 97% of all bookings were now automated via a terminal information platform developed by Hogia Transport Systems. All related businesses could talk through the system, which handled 700, 000 bookings a year and required no additional administrative staffing.
Presentations on widely varying ferry operations around the world included updates on opportunities in developing countries and a review of the marine transport system run by Interferry conference hosts the Dubai Roads & Transport Authority (RTA).
The RTA’s $20 billion spend on transport infrastructure since 2006 stems from a strategic plan in which marine transport is a key element in an integrated mobility network linked to bus and metro services. Delegates heard that 14 million passengers a year travel on a fleet that features ten ferries and ten water taxis built by Dutch yard Damen as well as nine water buses and 149 motorised abras.
Christopher Pastrana, founder of Archipelago Philippine Ferries, made a return appearance two years after presenting a shocking indictment of the nation’s domestic maritime safety record – 5, 000 dead in 30 major incidents over three decades – which he attributed to ageing second-hand tonnage. In the first-ever order for purpose-built Philippines ferries, his company had launched a fleet renewal project with ten ships designed by Australia’s Sea Transport due for completion before December next year. “This will be the youngest fleet in South East Asia and the first step towards a revolutionised maritime industry in the Philippines, ” he declared.
Olumuyiwa Omololu, a Nigerian-born US entrepreneur, followed up his presentation at last year’s conference, when he described plans to launch Eko Water Bus as a congestion-beating commuter service in Lagos. The service was now imminent thanks to a partnership formed with Interferry members. An initial 20-knot, 200-passenger catamaran built by Aluminium Boats of Australia was due on sea trials in December. “The next batch of five vessels should then be ordered for delivery in Q2 next year and after that we will scale up intelligently as demand and route opportunities emerge, ” said Mr Omololu.
Gordon Rankine, a partner in UK-based port design specialist Beckett Rankine, described India’s first ro-ro project, a scheme aimed at truck traffic serving three major industrial hubs along the Gujarat coastline. With tenders to operate the service due by late November, Mr Rankine suggested it was a ‘real opportunity’ for a joint venture between local and international partners.
Harsh Gupta, a senior investment officer at the International Finance Corporation – which supports private sector development in emerging markets as part of the World Bank – said the ferry sector was of growing interest due to its high impact potential. The IFC could fund up to 25% of greenfield project costs and up to 50% on the expansion of existing facilities. Interferry had provided assistance in identifying potential investment projects.