2012 - ics-shipping.org · 2012 representing the global shipping industry ics (the international...
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2012International Chamber of Shipping Representing the Global Shipping Industry
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We acknowledge with thanks the use of photos from the following associations and their member shipping companies:
ANAVE, Spain BW Shipping, Singapore Canadian Shipowners’ AssociationChamber of Shipping of AmericaChina Ocean Going (Group) Co Confitarma, ItalyCyprus Shipping ChamberDanish Shipowners’ AssociationFinnish Shipowners’ AssociationHong Kong Shipowners’ AssociationInterferryIrish Chamber of ShippingJapanese Shipowners’ AssociationRoyal Association of Netherlands ShipownersSwedish Shipowners’ AssociationTurkish Chamber of ShippingUnion of Greek ShipownersVerband Deutscher Reeder, Germany
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AnnualReview2012
Representing the Global Shipping Industry
ICS (the International Chamber of Shipping) is the principal international trade association for shipowners, concerned with all regulatory, operational and legal issues. ISF (the International Shipping Federation) is the identity used by ICS when representing the industry on employment affairs issues. The membership of ICS (and ISF) comprises national shipowners’ associations representing all sectors and trades from 36 countries, covering more than 80% of the world merchant fleet.
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page Contents 4 Chairman’sOverview 5 OfficeBearersandSecretariat
6 KeyIssuesin2012 6 The‘CostaConcordia’Disaster 8 ThePiracyCrisisContinues 10 NavigatingthePoliticsofClimateChange
15 TheYearinReview 15 LowSulphurFuel 16 BallastWaterManagement 17 ChangestoMARPOL 18 ShipRecycling 18 ShipbuildingStandards 19 CargoSafety 21 TankerSafety 22 MalaccaandSingaporeStraits 24 E-NavigationandECDIS 24 TrainingStandards 27 WorkHourRegulations 27 EmploymentRelations 29 MaritimeLabourStandards 30 ILOMinimumWage
page
31 AsianDevelopments 32 EUDevelopments 34 USDevelopments 34 TradeSanctions 38 LLMCIncreases 39 PassengerShipLiability 40 EnvironmentalSalvageAwards 41 RotterdamRules 42 CompetitionIssues 44 InvestigationofIGofP&IClubs 45 FlagStatePerformance 45 ShippingPolicyandFreeTrade 46 ShipbuildingPolicy 49 CanalIssues 50 IndustryRepresentationandCo-operation 52 Publications 54 OrganisationalMatters 55 ICSBoardofDirectors 56 CommitteeStructure Membership
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ICSChairman,SpyrosMPolemisGreece
THISICSANNUALREVIEWprovidesagoodopportunitytotakestockofeventsduringthelast12monthsthatmayhelptoshapethefuturedirectionofourgreatindustry,andofsomeofthemajorchallengesthatlieahead.Sadly,thiswillbethelastoccasiononwhichIprovidetheopeningremarkstothiscomprehensivereviewofICS’sactivitiesonbehalfoftheglobalshippingindustry.TheinfluencethatICSbringstobearonmaritimeregulatoryaffairsisconsiderable;somethingwhich-despitethehugepoliticalandtechnicalcomplexitiesinvolved-ICSdoeswithconsiderablesuccess,butwithcharacteristicallyquietefficiency.
However,inaworldofmassmedia,andwithaplethoraofdifferentinterestgroupsvyingforattention,falsemodestyisnolongerseenasavirtue.Therefore,assoonasIcametoappreciatetheremarkablebreadthofICS’sactivities,thedepthofitsexpertiseandtherespectwhichitenjoysamongstgovernmentsworldwide,oneofmytasksasChairmanhasbeentotrytoincreaseunderstandingandawarenessofICS’svitalrolewithintheshippingindustryatlarge.IhopethatthisexpandedICSAnnualReviewwillcontributetothattask.Likemostthingsinlifewhichwetakeforgranted,theserviceprovidedbyICSissomethingthattheindustrywouldfindveryhardindeedtodowithout.
ICS,itsmembernationalshipowners’associationsandtheindustrywhichtheyrepresenthavewitnessedagreatdealofchangesinceIwasfirstelectedChairmansixyearsago,againstabackdropofboomingshippingmarketswhichthenplungedintodeeprecession,aswellasmajorchallengesontheregulatoryfront.
Thelattersometimesplacedstrainonthemaintenanceoftheglobalregulatoryframeworkonwhichtheshippingindustrydependstooperateefficiently.Iamverypleasedtoreportthatthisframework,underpinnedbyIMOConventions,remainsfirmlyintactandisstillstronglysupportedworldwide,bygovernmentsandindustryalike.Buttherecontinuestobeaneedtobevigilantagainstunilateralorregionalregulation,notleastwithrespecttomeasurestoaddressshipping’sCO2emissions.DuringmytenureatICS,wehaveseentheadoptionofaradicalIMOagreementthatwilldramaticallyreduceairpollutionand,inJuly2011,thefirsteverglobalagreementcoveringanentireindustrialsectorthatwillensurethatshippingreducesitsCO2emissionsby20%pertonne/kmby2020,withfurthersignificantimprovementsinenergyefficiencygoingforward.Withrespecttothesafetyandwelfareoftheseafarersthatweemploy,andonwhomtheworlddependsfortheefficienttransportationof90%ofworldtrade,wehaveseenmajoradjustmentstotheInternationalSafetyManagement(ISM)CodeandtheIMOSTCWregimegoverningtrainingstandards,aswellastheadoptionoftheILOMaritimeLabourConvention.Thisisinadditiontotheincrementalbutnumerouschangestodetailedregulationsgoverningshipconstructionandequipment,maritimelawandinsurance,andthesmoothoperationofshippingmarkets,whichallhelptoensurethatshippingremainssafe,cleanandremarkablyefficient.TheseareallimportantdevelopmentsinwhichICS,anditsmembers,haveplayedacrucialpart,helpingtoensurethatthebestinterestsoftheindustryandsociety
arereconciledsofaraspossibleinasoundandpracticalmanner.
AsthisAnnualReviewmakesclear,thenextfewyearswillbeverydifficult,withglobaleconomicuncertainty,achronicoversupplyoftonnage,andtrulyenormouscostpressures,notleastwithrespecttobunkers,aswemovetowardsburninglowsulphurfuel.Shipownersalsofacetheprospectofbeingchargedbillionsofdollarsperyearforcarbonemissions,despitebeingbyfarthemostenergyefficientmodeofcommercialtransport.Newrequirementsforballastwatermanagementalsopresentaseriouschallenge,withrespecttoboththeirtechnicalandeconomicviability.
Ofmoreimmediateconcern,shipownersandtheircrewscontinuetofacethewhollyunacceptablescourgeofpiracy,offthecoastofSomaliaandelsewhere.IhavesaiditbeforeandIwillsayitagain,itreallyistimefortheinternationalcommunitytomakeitclear,andforgovernmentstounderstand,thatcriminalattacksagainstinternationalshippingcannotandwillnotbetolerated.
Meanwhile,thedangersofcomplacencywithrespecttotheindustry’sotherwisegenerallyexcellentsafetyrecordhavebeenputintothespotlightbythe‘CostaConcordia’tragedyandotherrecentaccidentsthatwillinevitablyresultwitharobustresponsefromtheregulators.Itmustbehopedthatthisresponsewillbemeasuredandbasedonathoroughanalysisofthefacts,aswellasaproperdebateaboutthetechnicalmeritsofargumentsforanyproposedchangestorulesorprocedures.ICSwillofcoursecontributeactivelytothisdebateintheyearahead.
Chairman’sOverview
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IamverypleasedthatmylastfewmonthsinofficehavecoincidedwiththeappointmentofMrKojiSekimizuasthenewSecretary-GeneralofIMO.Iamespeciallypleasedthat,whilstsharingICS’sultimategoalofzeroaccidentsandzeroimpactfromshippingontheenvironment,hetoobelievesthatmoreshouldbedonetoexplaintheimpressiveperformanceoftheindustrytoitsinternationalregulators,topoliticiansandtohighlevelpolicymakers.ICSlooksforwardtoparticipatingalongsideIMOatthe‘Rio+20’UnitedNationsSummitonSustainableDevelopmentinJune2012.IthastrulybeenapleasuretoserveastheChairmanofICS,aswellasagreatresponsibility.Ihaveverymuchenjoyedmycontactwiththemembernationalassociations,andImustexpressmydeepappreciationtotheICSBoardofDirectors,andtothosewhocontributewithsuchdedicationtothevitalworkofICS’sexpertcommitteeswhichproduceICSpolicypositionsanddevelopinvaluableguidanceonindustrybestpractice.Iwishmysuccessorwell,andIamveryconfidentthatunderhisleadershipICSwillcontinuetoservethebestinterestsofourindustryinthehighlyconsideredandprofessionalmannertowhichwehavebecomesoaccustomed.SpyrosMPolemisChairman
MrFrankLeonhardtGermany
ICSViceChairman2011/12
MrGerardoBorromeoPhilippines
MrTrygveSeglemNorway
CaptainDirkFryCyprus
SecretariatMrPeterHinchliffeSecretary General
*positionheldjointly
MrSimonBennettDirectorExternalRelationsMsLindaHowlettDirectorLegalAffairs*MsKiranKhoslaDirectorLegalAffairs*MissCamillaAranaPolicyOfficerMrPhillipBinksAdviserMrAlistairHullTechnicalManager
MrsSusanGrayDirectorFinanceandAdministrationMrsKathrynHallPersonalAssistanttoSecretaryGeneralMrsCatherineHowlettAdministratorPublications
MrJohnMurrayDirectorMarineMrsNatalieShawDirectorEmploymentAffairsMrDavidTongueDirectorRegulatoryAffairsMrJamesLangleySeniorAdviserMissEmilyRowleyAdviserMrJohnStawpertSeniorAdviser
MrsShantelRyanPublicationsManagerMrsAnitaPowAdministratorShippingPolicyMissJulieRogersAdministratorMarineDepartment
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The‘CostaConcordia’Disaster
a‘stateoftheart’vesselmannedbyahighlyqualifiedcrewwhowereusingthelatestnavigationalequipment.
On13January2012,inthefullglareoftheworld’smedia,thecruiseship‘CostaConcordia’groundedandcapsizedoffthecoastofItalywithover4,000peopleonboard.Tragically,atleast30liveswerelost.Thisseriousmaritimecasualtyappearstohavebeenatextbookcaseofanaccidentthatshouldneverhavehappened,madeallthemorepoignantbythe100thanniversaryofthesinkingofthe‘Titanic’withwhichcomparisonshaveinevitablyiferroneouslybeenmade.Thatsaid,questionsarebeingaskedaboutwhatmighthaveoccurredhadasimilarincidenttakenplaceatamoreremotelocationawayfromsophisticatedsearchandrescueservices.
TheItaliancruiseshipstruckrocksin
EVERYONEINSHIPPINGrecognisestheneedtobepreparedfortheunexpected.Whatwasnotforeseenwasthatthedefiningeventof2012wouldbethetragiclossofthe‘CostaConcordia’andthatthesafetyrecordoftheindustrywouldbeputunderthespotlightinthemostdramaticwayimaginable.Thishighprofiledisastermayalsohaveimplicationsforothertypesofshipbeyondthecruisesector,anditwillalmostcertainlyhaveasignificantinfluenceontheimmediateregulatoryagendaatIMO.
Safetyoflifeatseamustalwaysremainthehighestpriorityandthewayinwhichtheindustryaddressesanyissuesraisedbythismajoraccidentmayreflectonitsreputationforyearstocome.Itwillbevitalfortheindustrytounderstandthesequenceofeventsthatledtothedisaster,whichinvolved
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theTyrrhenianSeajustofftheeasternshoreofIsoladelGiglio,withmediareportssuggestingthatthevesselcametooclosetotheislandinwhatarewellchartedwaters.Itseemstheimpactrippedanenormousgashontheportsideofthehull,floodingpartsoftheengineroomandcausinglossofpowertopropulsionandelectricalsystems.Withwaterfloodingin,theshipreachedtheislandseveralhourslater,whereitgroundedinshallowwaterwithmostofthestarboardsideunderwater.
WithICSsupport,theCruiseLinesInternationalAssociation(CLIA)andtheEuropeanCruiseCouncil(ECC)ledtheimmediatesector-specificpublicrelationsresponse.Moreimportantly,CLIAmembershavebeenconductingarootandbranchreviewoftheirsafetyandoperationalprocedures.However,ICSwillbecloselyinvolvedintheinevitable
regulatorydiscussionsatIMO,aswellasintheEuropeanUnionandtheUnitedStates.TheEuropeanCommissionhasalreadyannouncedthatitwilllaunchapublicconsultationandlegislativereviewduringthecourseof2012whiletheUSCongressisconductingitsownhearingsgiventhatalargeproportionofcruiseshippassengersareUSnationals.
ItishopedthattheItaliangovernmentwillpresenttheresultsofitspreliminaryinvestigationsforconsiderationbytheIMOMaritimeSafetyCommitteeassoonaspossible,althoughitstaskiscomplicatedbecausethedisasterissubjecttoacriminalinvestigation.Whileitisstillfartooearlytoknowwhattheoutcomeoftheaccidentinvestigationwillbe,questionsraisedbythemediasuggestthataswellasnavigationalissuesandemergencyprocedures,stabilityissuesmaycome
underfurtherscrutiny.Thedebateaboutthelargesizeofmoderncruiseships,andarrangementsconcerninginsuranceforliabilities,arealsolikelytobegivenrenewedattention.ProposalstoreviewtheproperapplicationoftheIMOInternationalSafetyManagement(ISMCode)arealsoanticipated.
Forthemomentatleastitseemsthatpoliticiansandregulatorsarecommendablyrefrainingfromknee-jerkresponsesuntilthecausesoftheaccidentarefullyunderstood.However,thisapproachmayyetchangeduringtheyearaheadasmorefactsaboutthisunfortunateincidentarereleasedandthecriminalproceedingsinItalyreceivefurthercloseattentionacrossthemedia.
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ITISIMPORTANTtorecallthatthecontinuingcrisisintheIndianOceanandattacksagainstshippingbySomalipirateshavealreadyledtoover60seafarerslosingtheirlivesandover4,000seafarersbeingtakenhostage.PiracyhasalsobeenestimatedtocosttheglobaleconomybillionsofdollarsayearandiscausinguntolddamagetotheeconomiesofAfricaandtheMiddleEast.Buttheprincipalconcernofshipoperatorsishumanitarian.Itissimplyunacceptablethatsomanyseafarershavebeenkilled,whilehundredsmorearestillbeingheldcaptiveinappallingconditions.Thousandsofseafarersstillhavetotraversethedangerareainseriousfearfortheirlives,andthestrainontheirfamiliesmustalsonotbeforgotten.
Notwithstandingthesuccessofcurrentmilitarydeployments,thereisstillapressingneedforthegovernmentsofthosenationswiththelargestmilitarynaviesintheregiontoincreaseresourcesavailabletotheextentthatisnecessarytohaveagamechangingimpact.Inco-operationwiththerestoftheindustry,includingthoseorganisationssupportingtheexcellent‘SaveOurSeafarers’campaign,ICSiscommittedtohelpingensurethattheproblemofpiracyretainssufficientpoliticalandpublicattention,sothatthecrisismightbeproperlyanddecisivelyaddressedduring2012.
SomepressreportsmayhavegiventheimpressionthatthelevelofpiracyoffSomaliaisdecreasing.Butasdatafromthemilitarymakesclear,piratecapabilityisactuallyhigherthanever.However,counter-piracyworkintermsofcompliancewiththeBestManagementPracticesdevelopedbytheindustryinco-operationwithnavies(anupdatedversion–BMP4–wasissuedinOctober2011)andsustainedmilitary
interventionwithamoreaggressivestancehasreducedthepirates’rateofsuccess.Thankfully,thenumberofcrewheldinSomaliaisalsoatalowerlevelthanhasbeenthecaseforsometime,withabout200seafarerscurrentlyincaptivity,althoughitmustbestressedthatthissituationisstilltotallyunacceptable.
InFebruary2012,thePrimeMinisteroftheUnitedKingdomhostedamajorintergovernmentalconferenceonSomalia.ICSwelcomedthecommitmentsmadetotrytorestoregovernmentandcivilsocietyinthisconflictriddencountry,theabsenceofafunctioningstatebeingoneoftheunderlyingcausesofviolentSomalipirateattacks.However,addressingtheseissueswilltakeyearsifnotdecadesandtheConferencedidnotappeartoresultinanyfirmpoliticalcommitment,ornewaction,toeliminateorsignificantlyreducethescourgeofSomalipiracyintheimmediatefuture.
ICSbelievesthatgovernmentsmusttasktheirmilitaryforcestotaketheattacktothepiratesandensurethatthemilitaryassetsrequiredtodothisaremaintainedintheatresothattheycancontinuetodefendmerchantshipsinthebestwaypossible.Encouragingly,inMarch2012,EUgovernmentssignalledthattheymaybemovinginthisdirection,andextendedthemandateofOperationAtalantauntil2014.HoweverlittlementionwasmadeattheFebruaryConferenceoftheobligationsofgovernmentsundertheUnitedNationsConventionontheLawoftheSeatoprotectmerchantshipsandtheircrewsfrompiracy,andthefearpersiststhatthecurrentlevelofpirateattacksissomethingwhichgovernmentsmightbewillingtocontinuetotolerate
becauseshipsareoutofsightandoutofmind.
Governmentabdicationofresponsibilityforshipsecuritytoprivatearmedguards,towhomshippingcompaniesarenowresortinginincreasingnumbers,isnotaviablelongtermsolutionforeliminatingpiracy.However,becauseoftheirgrowinguse,ICSisnowpressingIMO,andtheInternationalContactGroupworkingundertheauspicesoftheUN,togiveurgentconsiderationtotheregulationofarmedguardsandthecriteriaagainstwhichtheymightbevetted.TheGUARDCONcontractlaunchedbyBIMCOisaveryhelpfultool,butitdoesnotaddresseverylegalproblemtowhichshippingcompaniesandMastersmightpotentiallybeexposed.
AnotherkeyobjectiveofICSistoensurethateverycapturedpirateissenttotrial.Counter-piracyeffortshavebeengreatlydiscreditedbythelackofappropriatedomesticlegislationinmanynations,includinganyoffenceof‘intenttocommitpiracy’.ThishasledtoacontinuationoftheabsurdsituationwherebypirateswhoarecapturedbynaviesaresometimesreleasedbacktoSomalia.ICShasthereforewelcomedthefocusoftheFebruaryConferenceontheneedforapprehendedpiratestobearrested,takentoacourtoflawand,iffoundguilty,imprisoned,includingtheannouncementtoestablishanewRegionalAnti-PiracyProsecutionsIntelligenceCo-ordinationCentrebasedintheSeychelles.
ICShasalsowelcomedthedeterminationofgovernmentstobreakthefinancialchainthroughlegalactionagainstcriminalfinanciersinvestinginpiracywhereverintheworldthey
ThePiracyCrisisContinues
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areidentified.However,theshippingindustrywouldbedeeplyconcernedbyanysuggestionthatthepaymentofransoms,inordertosecurethereleaseofseafarersbeingheldhostage,shouldbeprohibitedorsomehowcriminalised.TheUKForeignOfficehasadvisedthatthisisnottheintentionbehindanewinternationaltaskforceonpiratefinancingthatisbeingestablishedin2012.However,thepossibilityofbanningransomshasreceivedconsiderablemediaattentionandsometimesunhelpfulcommentfromseniorpoliticianswhoshouldperhapsbemoremindfulofunintendedconsequences.
Intheeventthatseafarersaretakenhostage,theinabilityoftheinternationalcommunitytoeliminatepiracyortorescuehostagesmeansthatshipownershavenooptionbuttopayransoms.Thealternativewouldbeforshipownerstoabandon
theircrewstomonthsifnotyearsofappallingtreatment.Thisincludestortureandmurder,whichhasalreadybeentheresultwhenransomshavenotbeenpaid.Intheeventthatransompaymentswereprohibitedorcriminalised,manyseafarersandshippingcompanieswouldunderstandablyrefusetosailintheaffecteddangerarea,withsignificantimplicationsforthelargeproportionofworldtrade,includingabout40%oftheworld’soilshipments,whichistransportedviatheWesternIndianOcean.
Toreiterate,theprimaryconcernoftheindustryishumanitarian,andshipownershaveadutyofcaretotheircrewsandtheirfamilies.MentionmustthereforebemadeoftheimportantworkoftheMaritimePiracyHumanitarianResponseInitiative,towhichICShascontributed,thathascompiledgoodpracticeguidelines
forshippingcompaniesandmanningagenciestohelpsupportseafarersandtheirfamiliesaffectedbypirateattacks.
FindingasolutiontopiracyremainsaclearpriorityforICS,whichnowfindsitselfparticipatinginnumerousmeetingsatIMOandthevariousworkinggroupssetupbytheInternationalContactGrouponPiracyofftheCoastofSomalia.Whileallthesemeetings,inLondon,NewYorkandelsewhere,aretakingimportantdecisionswithrespecttodetailedfacetsoftheproblem,theyareperhapssymptomaticofthefactthatconsiderationofpiracyisbecominginstitutionalisedandthatgovernmentsmaystillbesidesteppingtherealissueofhowtotacklethepiratesmilitarily.Thetimehassurelycomeforaclearmessagefromtheinternationalcommunityofzerotoleranceofpiracyacrosstheglobe.
Year 2009 2010 2011
Pirate Attacks 117 127 151Disruptions 14 64 27Piratings 46 47 25
Source:EUNAVFOR
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INJULY2011,150ormoreIMOMemberStatesconcludedagroundbreakingagreementtoreducetheshippingindustry’sCO2emissions.Thisisthefirstsuchglobalagreementforanentireindustrialsector.AsaresultofamendmentstotheMARPOLConvention,newshipswillhavetobebuiltwithanEnergyEfficiencyDesignIndex(EEDI),whilefrom2013allships,includingexistingships,willhavetoutiliseaShipEnergyEfficiencyManagementPlan(SEEMP)inordertocontrolfuelconsumptionandreduceemissions.
AsaresultofthisIMOagreementontechnicalandoperationalmeasures,andthestepsthatshipoperatorsarealreadytakingtoreducefuelconsumption,ICSisconfidentthatshippingcandelivera20%reductioninemissionspertonne/kmby2020acrosstheentireglobalindustry.
ObjectiveobserversmightbeforgivenforthinkingthatthisIMOagreementisaveryimpressiveachievement,especiallyasshippingisalready,byfar,themostenergyefficientformofcommercialtransport.However,anumberofgovernmentsstillexpectmuchmore.InthecontextofthenewGreenClimateFundthatwasestablishedbythemostrecentUnitedNationsClimateChangeConference,somegovernmentshaveactuallyproposedthatshippingshouldpayasmuchasUS$40billionperyearfortheprivilegeoftransporting90%oftheworld’strade.
TheIMOagreementontechnicalandoperationalmeasuresenjoysthefullsupportoftheshippingindustry.ICShasrecommendedthatallnewshipscurrentlycoveredbytheregulationsaredeliveredwithanEEDI,eventhoughflexibility
Navigating thePoliticsofClimateChange
existstoapplyforflagstatewaivers.ReducingCO2emissionsthroughreducingfuelconsumptionisamatterofenlightenedselfinterestforshipoperators,andtheindustryisfullyengagedinthecontinuingdiscussionsatIMOaboutrefiningtheEEDIandextendingittoshiptypesforwhichEEDIformulaehavenotyetbeenfinalisedduetothemoreproblematicnatureofthecalculations.
Aboveall,theIMOagreementisstronglysupportedbyshipownersbecauseoftheoverridingneedforglobalrulesforaglobalindustry.Ifdifferentrulesweretoapplytoshipsatdifferentendsofavoyagetherewouldbechaos,inefficiencyandseriousmarketdistortion.Aregionalapproachtoreducingships’emissionswouldalsobefarlesseffectiveinactuallyreducingCO2.Climatechange,ofcourse,isaglobalchallenge.
Notwithstandingtheconsiderableeffortsbeingmadetoreduceshipemissionsthroughtechnicalandoperationalmeasures,theindustryisunderpressuretoaccepttheadditionalburdenofsocalledMarketBasedMeasures(MBMs).MarketBasedMeasurestoreduceCO2remainaverycontroversialissueamongshipowners.SomegovernmentsarguethatMBMswillsomehowincentiviseshipownerstoachievefurtherefficiencygains,andmightbridgethegaptheyperceivebetweenthesignificantefficiencyimprovementsthatshippingisalreadydeliveringandtheexpectationsthattotalmaritimetradewillcontinuetoexpandinresponsetothe(longterm)predictedgrowthoftheworldeconomy.
Butinthefaceofrisingfuelcosts,shipownersreasonablybelievethattheyalreadyhaveeveryincentiveto
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improvetheirfuelefficiency.Theintroductionoflowsulphurfuels,aspartofaseparateIMOagreement,isalsoexpectedtoincreasebunkercostsbyinexcessof50%.With2012lookinglikeoneofthemostfinanciallydifficultyearsforshipownersinlivingmemory,nowiscertainlynotthetimetointroduceanadditionalcostpressureintheformofanMBM.ManyintheindustryareconcernedthatsomegovernmentsaremoreinterestedinhowmuchmoneycanbesqueezedfromshippingthroughanMBM,ratherthananyfurtheremissionsreductionthatthismightactuallydeliver.ThechallengeforICS,astheindustry’sprincipalinternationaltradeassociation,isthatdespiteshipowners’justifiedsuspicionsaboutMBMs,itisnecessaryfortheindustrytoaddressthepoliticsofclimatechangeandsomedifficultrealities.
ThefirstoftheseisthattheUNFCCC,anditshighleveldiscussionsaboutreplacingtheKyotoProtocol,isinlargepartdrivingtheagenda.Inaddition,therearethesignificant,andsomewouldargueunrealistic,commitmentsthathavealreadybeenpledgedbynationssuchasEUMemberStates,toreducetheirtotalCO2emissionsdramatically.UnlessIMOcandemonstratethatitismakingrealprogresstowardsthedevelopmentofaninternationalMBMforshipping,theindustrymaybefacedwiththeunwelcomeprospectofregionalaction.
TheotherimportantpoliticalrealityisthedecisionbythemostrecentUNClimateChangeConferenceinDurban,inDecember2011,toestablishtheGreenClimateFund.ThisaimstogenerateUS$100billionperyearby2020,inordertohelpmitigationandadaptationprojectsin
Regulationsenterintoforceforover90%ofworldfleet
ShipEnergyEfficiencyManagementPlan(SEEMP):mandatoryimplementationforallships
EEDIrequiresnewshipstomeetagreedefficiencytargets
Newshipsmustimproveefficiency10%
20%CO2reductionpertonne/km(industrygoal)
50%CO2reductionpertonne/km(industrygoal)
Newshipsmustimproveefficiencyupto20%
Newshipsmustimproveefficiency30%
IMOagreementontechnicalregulationswillreduceships’CO2MARPOLAnnexVI,Chapter4adoptedJuly2011
2013 2015 2020 2025 2030 2050
developingnations.Insimpleterms,thiscanperhapsbeseenasthepriceforpersuadingdevelopingnationstoagreetocontinuenegotiationsonanewUNclimatechangeaccord,scheduledforadoptionin2015.ThisnewUNagreementisintendedtoincludecarbonreductioncommitmentsbyemergingeconomies,notjustfromdevelopedorsocalled‘AnnexI’nationsasisthesituationatpresent.BetweennowandthenextUNClimateConference,inQatar,inDecember2012,theUNFCCCmemberswillbegintoconsiderhow,andfromwhom,thismoneyisgoingtoberaised.
AhighlevelworkinggroupsetupbytheUNSecretaryGeneralandchairedbythepremiersofNorwayandEthiopiahasappearedtosuggestthatsomeUS$16billionperyearcouldberaisedfrominternationalshipping.ButinamorerecentWorld
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TowardsanIMOMBMICSisleadingindustryrepresentationonthediscussionsatIMOtodevelopaMarketBasedMeasureforshipping,withIMOhavingaviewtoadoptionin2014.
In2011,ICSmemberstooktheimportantdecisiontodeclaretheindustry’spreferenceforanMBMdirectlylinkedtofuelconsumption,ratherthananemissionstradingscheme(ETS).IfgovernmentsdecidethatanMBMshouldbeadopted,ICSmembershaveagreedthatamechanismlinkedtofuelconsumptionistheonethatmostshippingcompaniescouldprobablylivewithinordertoensurealevelplayingfieldandtheavoidanceofseriousmarketdistortion,concludingitwouldbefarsimplertomanageandmoretransparentthananETS.
Inawelcomemove,theIMOSecretary-GeneralhasannouncedtheintentionofIMOtoconductafullimpactassessmentofthevariousMBMproposals,withdetailedtermsofreferencetobedevelopedin2012.
Bankreport,preparedfortheG20SummitinCannesinNovember2011,itwassuggestedthatshippingshouldcontributesomeUS$25billionperyear.Andthedemandsdonotstopthere.SomegovernmentshavepublicallysuggestedthatonlyaproportionofanymoneycollectedfromshippingshouldactuallygointotheGreenFund,andthatasignificantchunkshouldgostraightintothetreasuriesofthegovernmentscollectingit,implyingthatthechargeimposedonshippingcouldactuallybeevenmore,perhapsasmuchasUS$40billionperyear.ThepositionofICSisthatifgovernmentsdecidethatshippingshouldcontributetotheGreenFund,thenthepaymentsshouldbeproportionatetoshipping’scontributiontotheworld’stotalCO2emissions.TocontributethekindofsumswhichtheWorldBankhassuggestedwouldbetotallyinequitable
andalmostcertainlyviewedbymanyemergingeconomiesasataxontrade
–aformof‘greenprotectionism’.
However,theparamountgoalfortheshippingindustryistheavoidanceof‘doublecharging’throughcontributionstotheUNFCCCandviaanyMBMagreedatIMO.TherewouldthereforeseemtobeaneedforaclearlinkagebetweenanyIMOMBMandanyshippingcontributiontotheGreenFund.
TheotherpoliticalrealitythatshippinghastoaddressistheUNFCCCprincipleofCommonButDifferentiatedResponsibility(CBDR),wherebytheemissionreductioncommitmentsacceptedbydevelopingnationsarelessthanthoseofmatureeconomies.ThechallengehasbeenhowtoreconcilethiswiththeIMOprincipleofnomorefavourabletreatmentforshipsunderdifferentflags.On
12
ComparisonofCO2emissionsbetweendifferentmodesoftransportgramspertonne-kmSource:NTM,Sweden
600
500
400
300
200
100
0
Cargovessel2,000-8,000dwt
21
Air freight
747-400 1,200 km
flight
540
Cargo vessel over 8,000 dwt
15
Heavy truck with
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theonehand,theEuropeanUnionthreatensregionalactionifIMOfailstodeliveronCO2,whileontheother,developingnations-ledbyChina,IndiaandBrazil-remainopposedtosupportinganIMOagreementwhichtheyfearmightprejudicetheirpositionatthehighlevelUNFCCCnegotiations.
Intheevent,withtheindustry’sfullsupport,IMOhasalreadyproveditselftobeeminentlycapableofdeliveringaglobalsolutionforshippingwhichcanbereconciledwiththeCBDRprinciple.TheJuly2011agreement,whichadoptedbindingglobalregulationsfortechnicalandoperationalmeasurestoreduceships’emissions,willenterintoforceinJanuary2013andwillapplytoatleast90%oftheworld’stonnage.ToaddressCBDR,theagreementincludedregulationsontechnologytransferandtechnicalassistancefordevelopingnations(althoughthedetailsofhowthiswillworkarestill
beinghotlydebated)aswellasaflagstatewaiverwithrespecttotheEEDI(althoughtheindustryhasdecidednottomakeuseofthis).
SecuringsupportforanIMOMBMfromnationslikeChinaandIndiawillalsorequireaccounttobetakenofCBDR.However,reconcilingtheCBDRprinciplewithanIMOMBM,whichmustapplyequallytoshipsofallflagsinordertoavoidmarketdistortion,willnotbeaneasytask.ButifanyofthemoneycollectedbyanIMOMBMwaschannelledtotheGreenFund(perhapsviaanIMOcompensationfundintowhichmoneyraisedfromshippingwaspaid)thiscouldperhapsbeameansofmeetingtheCBDRprinciple.Developingnationswouldbereceivingmoremoneythantheywerecontributing,whilepreservingthelevelplayingfieldforshipping.However,thechallengeofpersuadingnationssuchasChinaandIndiato
agreetosuchanapproachshouldnotbeunderestimated.
ICSwillcontinuetosupportIMOasthebodywherediscussionsaboutashippingMBMandanycontributiontotheGreenFundshouldtakeplaceHowever,theindustrywillfirmlyresistanynotionthatitcanberegardedasacashcow,andwillcontinuetoemphasisethatthebestmeansofdeliveringmeaningfulCO2emissionreductionwillbethroughtechnicalandoperationmeasures,ratherthanamechanismwhoseprincipalpurposeissimplytoraisemoney.
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TheYearinReview
LowSulphurFuel
In2008,IMOadoptedradicalamendmentstoMARPOLAnnexVIgoverningatmosphericpollution,whichformostshipswillrequiretheuseofexpensive,distillategrade,lowsulphurfuel.Whiletheuseofexhaustgascleaningsystems(scrubbers)ispermittedasanalternative,itisstillunclearwhetherthesewillbetechnically,environmentally,oreconomicallyviableforuseonawidespreadbasis.
Theenormityofthischange,anditseconomicimpactonshippingshouldnotbeunderestimated.Fuelisbyfarthelargestoperationalcostforshipownersandhasalreadyincreasedinpricebyabout300%since2000.Thecurrent50%pricedifferentialbetweendistillateandresidualfueloilispredictedtoincreasefurtherifthenewdemandthatwillbecreatedbytheMARPOLrequirementsisnotmatchedbyincreasedsupply.Exhaustgasscrubbers,assumingtheywork,andthatquestionsareresolvedaboutthewastethatisproduced,havebeenpredictedtocostinexcessofUS$2millionperengineiffittedonboardlargerships.
PerhapsthemostcontroversialrequirementinMARPOLAnnexVIconcernstheneedforshipsoperatinginEmissionControlAreas(ECAs)toburnfuelwithnomorethan0.1%sulphurasfrom2015.Atpresent,theBaltic,theNorthSea,andtheentireWestandEastcoastsoftheUSandCanadahavebeendesignatedassulphurECAsbyIMO,attherequestofthegovernmentsconcerned.Thispresentsamajorchallengefortheoilrefiningindustrywhichwillhavetoexpandtheproductionofcompliantlowsulphurfueltomeetthenew
demand.ThisiscomplicatedbythefactthatitisnotyetfullyknownwhichadditionalareasmaybedesignatedasECAs.Forexample,theEuropeanParliamenthasproposedthatallEUwaterswithin200milesofthecoastshouldbedeclaredassulphurECAs.WhetherthiswillbeacceptedbyEUMemberStates,orinturnwillbesupportedbythescientificstudiesrequiredtogainIMOapproval,isstillanopenquestion.
WhentheMARPOLamendmentswereadopted,ICSwelcomedtheIMOagreementasanacceptablecompromise,althoughthiswasinthecontextoftheevenmoredraconianmeasuresproposedbymanygovernments,andthethreatbytheEUtoimposeanimmediateregionalsolutionifIMOwasunabletodeliveraglobalagreement.Howevertheimplementationofthenewrequirementswillbefarfromeasy,andICSiscloselymonitoringtheprogressthatisbeingmadetoensurethatthedemandfromshippingfordistillatefuelcanactuallybemet.IntheUnitedStates,itisstillveryunclearwhetherornotenoughfuelwillbeavailablefortheUSshippingindustry,letalonethehugeamountofinternationalshippingthattradesinandoutoftheworld’slargesteconomy.
RecentstudiessupportedbytheEuropeanCommunityShipowners’Associations(ECSA)havealsosuggestedthatthemodalshifttolandtransportthatwillprobablyresultfromtheapplicationofthe0.1%limitonsulphurinfuelcouldgreatlydamagelocalshortseashippingwhilebeingdetrimentaltothelocalenvironment.ThisisalsoabigconcernforGreatLakestradesaffectedbytheUS/Canada
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ECA.Theseconcernsarenowsharedbymanygovernments,butitremainstobeseenifanywillrequestthatIMOshouldnowrevisittherequirements.
WhilethereisaformalmechanismintheIMOagreementtocompleteareviewby2018ofprogressmadetowardsmeetingthedemandfor0.5%sulphurfuelthatismeanttobeusedoutsideofECAsby2020,ICShasbeenpressingIMOtostartworknowondevelopingamethodologythatcanconsiderallofthemajorchangesrequiredbythenewregime.Forpoliticalreasons,theUSandEUgovernmentshavesofarbeenreluctanttosupporttheICSproposal.Butthisissueoffuelavailabilityisbecomingincreasinglypressing,andICSwillagainmakeaformalwrittenproposaltotheIMOMarineEnvironmentProtectionCommitteeinOctober2012.
IMOagreementtoreduceatmosphericpollutionfromships
Year 2005 2010 2015
1.5%
1.0%
0.1%
SulphurcontentoffuelpermittedinEmissionControlAreas
BallastWaterManagement
TheIMOBallastWaterManagement(BWM)Conventionwasadoptedwithgreaturgencybygovernmentsin2004,inordertoaddressenvironmentalconcernsaboutdamagetolocalaquaticecosystemscausedbytheunwantedintroductionofforeignmicro-organisms,whichisapparentlyfacilitatedbyinternationalshipping.
TheadoptionoftheBWMConventionwasaclassiccaseofaspirationallegislation.Forreasonsthatarewellunderstood,includingtheeconomicdamagetotheUSeconomyfromtheunwantedinfluxofzebramussels,therewashugepoliticalpressureforIMOtoadopttheConventioneightyearsago.Buttheequipmentneededtocomplywiththenewrequirements,andthecomplextechnicalguidelinesneededtoensureproperimplementation,hadnotthenbeendeveloped,whichiswhyitisonlynowthatgovernmentsarealmostinapositiontoratify.
FollowinganincreaseinthenumberofratificationsithadbeenexpectedthattheConventionwouldenterintoforceduring2012.However,atanIMOmeetinginJanuary2012,somemajorchangeswereproposedtoimportantdraftguidelinesonballastwatersamplingandanalysisthatwillbeusedbyportstatecontrolinspectors,whichwouldbeverydamagingtoshipownersifadopted.ICSmadeastrongstatementattheendoftheIMOmeetingaboutthedirectionthathadbeentakenand,supportedbymanyflagstates,thesedraftguidelineswillnowbereconsidered.However,thisnowmeansthatthesesamplingguidelineswillnotbeagreeduntilatleast2013,whichinturnisexpectedtofurther
Timetablefornewlimitstosulphurcontentinships’fuelagreedbyIMO
2010-EmissionControlArea(ECA)limitreducedto1%(from1.5%)
2012-Globallimitreducedto3.5%(from4.5%)
2015-ECAlimitreducedto0.1%
2020-Globallimitto0.5%butareviewin2018,withauthoritytodelayimplementation,willdeterminewhetherthisisachievable.
2025-Globallimitto0.5%notwithstandingtheresultofthe2018review.
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Reductioninnumberofmajoroilspillsperyear(over700tonnes)Source:ITOPF
1972-1981 1982-1991 1992-2001 2002-2011
250
200
150
100
50
0223 94 64 31
delaytheadditionalratificationsneededtobringtheConventionintoforce.ThiscreatesotherproblemsforshipownersduetothefixeddatesbywhichexistingshipshavetoinstalltheveryexpensivenewtreatmentequipmentasrequiredbytheConvention’stimeline.
Therearestillgenuineconcernsabouttheavailabilityofsuitableequipment,therobustnessofthetypeapprovalprocess,thehugeexpenseofretrofittingexistingships,andthepresentlimitedpossibilitiesfortreatmentsystemsforlargervessels.Thatsaid,progressisnowbeingmadetoapprovevariousballastwatertreatmentsystemsasanalternativetoballastwaterexchangeatseaoncethisisnolongerpermitted.
Completionofthisworkislongoverduegiventhatnewshipsarealreadymeanttobeconstructedwiththeseexpensivenewtreatmentsystems.ICShascontributedsignificantlytothisworkandcontinuestoprovideaconsultanttotheGESAMP(JointGroupofExpertsontheScientificAspectsofMarineEnvironmentProtection)BallastWaterWorkingGroupthathasbeenconductingthedetailedassessmentofthenewequipment’senvironmentalacceptability.Meanwhile,ICScontinuestoencouragefullco-operationwithlocalballastwaterexchangerequirementswhereveritissafeforshipstodoso.
SolongastheBWMConventionhasnotenteredintoforce,thiswillcontinuetoencouragethedevelopmentoflocalrequirementsthatareatvariancetothoseagreedbyIMO(seeseparateitemonUnitedStatesDevelopments).Thepossibilityremainsofballastwaterchaos.
ChangestoMARPOL
InadditiontothehighprofilediscussionsaddressingCO2andotheratmosphericemissions,awiderangeofotherenvironmentalissuesremainonIMO’sagendarequiringdetailedinputfromICS.AlargeproportionofICSresourcesiscommittedtoparticipatingintheongoingworkofnumerousIMOCommitteesandworkinggroupswhichareconstantlyupdatingenvironmentalregulationsandtechnicalcodes.
Meanwhile,atthe‘high’politicallevel,ICSplanstosupportIMOinitsparticipationatthe‘Rio+20’UnitedNationsConferenceonSustainableDevelopmentinBrazilinJune2012.ThiswillprovideauniqueopportunitytohighlightthesuccessthattheindustryandIMOhavehadindeliveringcontinuousimprovementinshipping’senvironmentalperformancethroughthedevelopmentofa
comprehensiveregulatoryframeworkandthewidespreadglobalenforcementoftheInternationalConventionforthePreventionofPollutionfromShips(MARPOL).InJuly2011,IMOadoptedchangestoAnnexVoftheMARPOLConvention,concerninggarbage,thatwillenterintoforceinJanuary2013.TheseweresupportedbydetailedguidelinesadoptedbytheMarineEnvironmentProtectionCommitteeinMarch2012.Thereisnowanewrequirementspecifyingthatdischargeofallgarbageintotheseaisprohibited,exceptwhereexpresslyprovidedotherwise(thedischargesstillpermitted,incertaincircumstances,includefoodwastes,cargoresiduesandwaterusedforwashingdeckandexternalsurfacescontainingcleaningagentsoradditiveswhicharenotharmfultothemarineenvironment).FollowingtheparalleladoptionbyIMOofnewGuidelines
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onGarbageManagementPlansthatmustbecarriedonboardships,ICSwillbereviewingitsownmodelplanandbestpracticeguidelinesforshipowners.
Somewhatcontroversially,inJuly2011IMOalsoadoptedamendmentstoMARPOLAnnexIVconcerningthepreventionofpollutionbysewagefromships,whichincludethepossibilityofgovernmentsestablishing‘SpecialAreas’forthepreventionofsuchpollutionfrompassengerships,andwhichdesignatetheBalticSeaasthefirstsuchSpecialArea.TheimpactofpassengershipswithrespecttonitratepollutionoftheBalticiswidelyacknowledgedtobeinsignificantincomparisontomajorsourcesofpollutionsuchasagriculture.Theoperationalimplicationsofcomplianceandthedifficultiesoffindingsuitablereceptionfacilitiesareoutofallproportiontotheenvironmentalbenefit.Therealconcern,however,istheprecedentthismightcreatefortheintroductionofallsortsofotherMARPOL‘SpecialAreas’beingestablished,potentiallyapplyingtoallshiptypes.ICShasalreadyhadtocountersuggestionsthattheAnnexIVSpecialAreamightalsoapplytocargoshipswhichtypicallyhave20personsonboardasopposedto2,000.Thereisadangerthatsuchspecialpleadingbycoastalstatesmaygraduallyservetoerodetheconceptofatrulyglobalregulatoryframework.
ShipRecycling
ICSremainsfirmlycommittedtotheearlyentryintoforceoftheIMO(HongKong)ConventionontheSafeandEnvironmentallySoundRecyclingofShips,notleastthroughthepromotionoftheinter-industry
GuidelinesonTransitionalMeasuresforShipownersSellingShipsforRecycling,whosedevelopmentwasledbyICS.TheindustryGuidelinesarespecificallyintendedtohelpimprovesafetyandenvironmentalconditionsinrecyclingyardsinadvanceoftheentryintoforceofthenewConvention.
ICScontinuestoco-operateinanambitiousIMOprogrammetopromotethenewShipRecyclingConvention.InMarch2012,IMOadoptedfurtherguidelinesonimplementationforPartiessupportedbyguidelinesfortheauthorisationofshiprecyclingfacilities.ItisverymuchhopedthatthesewillnowbeappliedbythosegovernmentswithauthorityoverthevastmajorityoffacilitieswhicharelocatedinAsia.Theearlyidentificationofsoundrecyclingfacilitiesshouldgreatlyassisteffortsbyshipownerstomeettheirresponsibilitiesonavoluntary
basisinadvanceoftheHongKongConventionenteringintoforce.
ShipbuildingStandards
Themaintenanceofhighstandardsofshipconstructionisoftheutmostimportance.TheobjectiveofICSisthatshipbuildingstandardswillcontinuetobetakenforwardsothatwithanappropriatelevelofmaintenance,andadequatemarginsforcorrosion,futureshipswillbeconstructedsothattheywillcontinuetobe‘fitforpurpose’throughouttheirtypical25yearlifespan.
ICScontinuestoparticipateinacrossindustryinitiative,co-ordinatedbytheInternationalAssociationofClassificationSocieties(IACS)toprovideguidanceontheharmonisationandamendmentoftheCommonStructuralRules(CSRs)forbulkcarriersandtankers.Theintentionistoprovideaharmonisedsetofrules,forusebyallclasssocieties,oncommonaspectsofhullstructuredesign,supplementedbydedicatedsectionsonthespecificrequirementsforthesetwoshiptypes.IACShasbeenoverwhelmedbythehugenumberofcommentsreceivedfromshipowners,alargeproportionofwhichhaveleddirectlytoproposalsforrulechanges.Whilethecarefulattentionbeinggiventothisfeedbackfromindustryisverywelcome,itseemsthatthefinalisationofthenewrules,sothattheymaybesubmittedtogovernmentsatIMO(forusewiththeIMOGoal-basedStandardsinitiative)isnowlikelytobedelayeduntil2013.
CloselyrelatedtotheIACSCSRs,IMOcontinuestofinalisearrangementsfortheimplementationofthe2010amendmentstotheSOLAS
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Conventionconcerningthenew‘Goal-basedStandards’(GBS)fortheconstructionofbulkcarriersandoiltankersof150moroverinlength.IthasnowbeenresolvedthatclasssocietiesshouldpayfortheGBSverificationprocess,butquestionsremainastowhetherthereisanadequatenumberofsuitablyqualifiedauditors.
InChina,inOctober2011,theChairmanledanICSdelegationtothelatestroundof‘Tripartite’discussionsaboutshipbuildingstandardswithrepresentativeorganisationsofshipowners,classificationsocietiesandshipyards.Topicsconsideredincluded:measurestoreduceCO2emissionsincludingtheapplicationoftheEEDIandrequirementstoensuretheprovisionofadequateship’spower;thechallengespresentedbytheimplementationoftheIMOBallastWaterManagementandShipRecyclingConventions;andthereviewbeingundertakenbyIACSofitsCommonStructuralRules.ICSwillbeco-ordinatingthearrangementsforthenextTripartitemeetingtobeheldinKoreainNovember2012.
CargoSafety
Thetransportofgoodsbyshipmaysometimesinvolveahighdegreeofphysicalriskduetothedangerspresentedbytheharshconditionsthatoftenprevailatsea.Forthemostpartthesearerisksthatcanbesuccessfullyandsafelymanagedbyshipoperatorsandtheircrews.However,suchriskscanbeseriouslymultipliedwheninsufficientcareisgiventothesafeloadingofcargoes,afactorwhichissometimesbeyondshipowners’directcontrol.WhileIMOhasbeenverysuccessfulwithrespecttoensuringthatshipbuildingstandardsand
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safenavigationalproceduresarewidelyenforcedbygovernments,therigorousapplicationofIMOstandardsdoesnotalwaysextendsoeffectivelytothoseactionsthatoccurfarbeyondtheship/portinterface.
Thesefearshaverecentlybeenbroughthomeinamostdisturbingmanner.Thereisnowveryseriousconcern(andanger)throughouttheindustryabouttherecentlossofseveralshipscarryingnickelore/ironorefinesloadedinIndia,thePhilippinesandIndonesia,apparentlyduetocargoliquefactioncausingcargotoshiftdramatically.Somecargoes,itseems,arebeingdeliberatelymisdeclared.Especiallyupsettingwasthetragiclossof22seafarersonthe‘VinalinesQueens’afterloadinganickelorecargoinIndonesia,inDecember2011.ItmustbestressedthatsuchproblemsarenotconfinedtoAsia,withbulkcarrieroperatorsreportingthatthewatercontentofironorecargoesisbeingsimilarlymisdeclaredbyshippersinBrazil.
ICSacknowledgesthattheissuesarecomplex,buttherootoftheproblemwouldseemtobetherefusalofsomeshipperstoallowtheappointmentofindependentsurveyorstoconductcargotestinginaccordancewithIMOrequirements,plusthecommercialpressureplacedonMasterstoacceptpotentiallyunsafecargoesatwhatareoftenremotelocations.Thepreventionofsimilarincidentsisanutmostpriority.Inco-operationwithIMO,Intercargo(whichrepresentsbulkcarrieroperators)theInternationalGroupofP&IClubs,andthegovernmentsofthosenationswhereproblemsseemtoexist,ICSisendeavouringtohelpfindasolutionthatwillassistshipownersandMasterstoresistanypressuretoacceptunsafecargoes.
Meanwhile,containershippingcompaniescontinuetobeconcernedbytheincidenceofshippersprovidingincorrectcontainerweights,andtheneedtoensurethatmarineterminalsalwaysverifytheweightofloadedcontainersagainstthecargomanifest,priortoloadingonboardship.FollowingaproposaltotheIMOMaritimeSafetyCommitteemadebyICSandtheWorldShippingCouncil(WSC),IMOhasbeenconsideringhowitmightestablishanewinternationalregulatoryrequirementtoaddressthisproblem.
Theindustry’saimisthatallexportedcargocontainersshouldhavetheirweightsverified,andthatthisinformationshouldbeconfirmedbythemarineterminaluponreceipt,andbeforevesselloading,andmadeavailabletotheshipoperatorsoitcanbeusedforstowageplanning.Aswellasimprovingsafety,sucha
measurewouldhelptoaddresswidersecurityconcernsaboutthecontentofcontainers.Inawelcomemove,theInternationalAssociationofPortsandHarbors(IAPH)gaveitssupporttothisinitiativeattheendof2011.
Disappointingly,forreasonsnotentirelyclear,somegovernmentshavesofarbeenlukewarmabouttheindustryproposaltoamendtheSOLASConventionanditremainstobeseenhowtheconceptwillbetakenforwardduring2012.Butintheabsenceofarequirementthatcontainerweightsdeclaredbyshippersareverifiedbyterminalsitseemslikelythatasubstantialnumberofcontainerswillcontinuetobemisdeclaredandthatoverweightcontainerswillcontinuetoposeaseriousrisktosafeshipoperations,toships’crew,andtootherpersonnelinthetransportchain.
Totallosses1994-2011bynumberofvessels(over500GT)Source:IUMI
200
180
160
140
120
100
80
60
40
20
0‘94 ‘95 ‘96 ‘97 ’98 ‘99 ‘00 ‘01‘02 ‘03 ’04 ’05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11
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TankerSafety
In2012,IMOwillbeapproachingtheendofamajorreviewoftankersafetythatissettoresultinsomeimportantregulatorychanges.ThiswasinresponsetoamajorreportbyanInterIndustryWorkingGrouponFiresandExplosionsonBoardTankers,towhichICScontributedwiththeOilCompaniesInternationalMarineForum(OCIMF)andIntertanko,andwhichwaspresentedtoIMOin2007followingasequenceofsometimesfatalexplosionsontankers.
ICShasplayedanactivepartinthediscussionsatIMOontheextensionofthepracticeof‘inerting’cargotankatmospheres.AtameetingoftheIMOFireProtectionSubCommitteein2011,animportantdecisionwasmadewithrespecttotheproposednewmandatoryrequirementsfortheinertingofchemicaltankers.Thenewcarriagerequirementswillapplytonewshipsover8,000dwt.InconjunctionwiththeInternationalParcelTankersAssociation(IPTA),ICShadhighlightedtheenvironmentalimpactofoperatingIGequipment,andhadindicatedthatacarriagerequirementforsub5,000dwtchemicaltankerscouldbeproblematic.TheIMOdecisionisthereforecompatiblewiththeICSposition.SubjecttotheadoptionofthenewregulationsbytheMaritimeSafetyCommitteeinMay2012,thisdevelopmentwillbeaddressedinaneweditionoftheICSTankerSafetyGuide(Chemicals)whichICSintendstofinalisein2013.
ICSfullysupportstheproposalstoamendSOLAStoprovidefortheapplicationofinertgas(IG)tonewoilandchemicaltankersabove8,000dwt.Itshouldbenoted,however,thatIMOdecidedthatthepossibleextensionofnewmeasurestoexistingtankersoflessthan20,000dwtwouldonlybe
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consideredinthelightofexperiencegainedfollowingintroductionofIGonnewshipsof8,000to20,000dwt.However,aseriousexplosioninKoreainJanuary2012whichinvolvedasmallchemicaltankermightputrenewedpressureonIMOtoaccelerateitsconsiderationofIGforexistingships,asmightamajorfireonboardachemicaltankerthatoccurredintheGulfduringMarch2012(whichinvolvedtheadditionaldramaoflocalportsrefusingtoprovideaplaceofrefugeforthestrickenship,contrarytoIMOGuidelines).
ItisimportanttorecallthatadisturbingconclusionoftheoriginalindustryreportthatinformedtheIMOreviewwasthatotherwisecompetentandqualifiedseafarersarestillpronetobypassacceptedproceduresduringcargooperations,andthatthishadbeenafactorinanumberofsometimesfatalexplosionsontankers.Thesolutionsarecomplex,involvingmattersthatdonotalwaysreadilylendthemselvestoprescriptiveregulations,suchashowtofurtherinculcateagenuine‘safetyculture’amongstships’crews,whichtheneweditionoftheICSTankerSafetyGuideChemicalswillseektoaddress.
MalaccaandSingaporeStraits
Eachyeartherearemorethan70,000transitsbyshipsthroughtheStraitsofMalaccaandSingapore,whichisoneoftheworld’smoststrategicallyimportantinternationalwaterways,linkingtheFarEasttotheIndianOcean,theMiddleEastandEurope.WhilewishingtohelpensurenavigationalsafetyandenvironmentalprotectionoftheStraits,thelongstandingobjectiveofICShasbeentoencouragethemaintenanceoftheprinciplesoffreedomofnavigation
governinginternationalwaterwaysasenshrinedintheUnitedNationsConventionontheLawoftheSea(UNCLOS),sothatindividualshipsarenotchargedforsafetyservices.However,thishashadtobereconciledwiththechallengefacedbythelittoralstatesofIndonesia,MalaysiaandSingaporeinfinancingnavigationalsafety.ICShasconductedadetailedsurveyofincidentreportswhichitisanticipatedwillresultinthedevelopmentofproposalstoenhancethemanagementoftrafficintheStraits.InOctober2011,ICSpresentedthereport’sfindingstothemaritimeadministrationsofthelittoralstatesatameetinginKualaLumpur.
Onlyaverysmallproportionoftransitsresultinaccidentsornearmisses.However,theICSsurveyhasidentifiedheavyshippingtraffic,inappropriatespeedandthelossofsituationalawarenessassignificantfactorsthatneedtobeaddressed.TheICSreportpraisestheskillandprofessionalismofthosemanaging,operatingandnavigatingshipsintheMalaccaandSingaporeStraits.However,itisimperativethatsafetycontinuestobeprioritised.ICShasthereforealsosuggestedthatimprovementscouldbemadewithrespecttothelocationofpilotboardingareasandthetimingofpilotdepartures.ThereisalsoconcernabouttheunderstandinganduseofnavigationsystemssuchasECDIS,AISandradar,bothatseaandashore.Oftheincidentsexamined,whichinvolvedarangeofvesselsfromtugstotankers,68%resultedincollisions.Encouragingly,thelittoralstateshavewelcomedtheICSreportandarealreadytakingmeasurestofurther
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improvenavigationalservicesintheStraits.InconjunctionwithICS,itishopedthattheywillmakeajointsubmissiontoIMO,advisingonthecurrentstatusofthisimportantwork.
Meanwhile,althoughithastakensomewhatlongerthanexpected,thelittoralstatesareabouttostartconductingseatrialsintheStraitswithrespecttoaMarineElectronicHighway(MEH),althoughanumberofissuesneedtoberesolvedsuchaswhetheranAIScomponentwillbeincorporated.WhileitisICS’sintentiontorequestthatshipsactivelyparticipateinthesetrials,thiswillnotbepossibleuntildetailedplanningiscompleteandtheinfrastructureisfullyinplace.ICShasstressedtheimportanceofstandardisationandinteroperabilitybetweenshorebasedcomponentsofe-navigationinordertoavoidshippinghavingtocommunicatewithunharmonisede-navigationresourcesindifferentgeographicalregions.ThequestionoffreeaccessduringthetrialstotheseMEHdataservices,inaccordancewithUNCLOSprinciples,alsostillneedstoberesolved.
E-NavigationandECDIS
ICSwelcomesthegreatpotentialofe-navigationforimprovingnavigationalsafety.However,ICScontinuestoemphasisetheneedfora‘userfocused’approach,sothate-navigationisnotdrivensolelybyideasfromequipmentmanufacturersortheavailabilityofnewtechnology.ICSiscurrentlyengagedindetaileddiscussionsatIMO,andalsowithintheInternationalAssociationofMarineAidstoNavigationandLightHouseAuthorities(IALA),abouttheimplementationofIMO’se-navigationstrategy.Thisincludesuserneedsandservices,andthe
technicalspecificationsofvariousshipboarddevices.Inparticular,ICSisstillseekingtoensurethatnationalauthoritieswillnotregardVirtualAidstoNavigationasacheapermeansofprovidingstatutoryservices,andthattheycontinuetobeseenasacomplementratherthanareplacementforphysicalaidstonavigation.Apressingissueconcernsarrangementsfortheintroduction,inJuly2012,ofthenewmandatoryIMOrequirementsforECDIS(ElectronicChartDisplayandInformationSystems),whichICShaslongsupportedprovidedthattheindustry’sdefinitionof‘sufficientElectronicNavigationChart(ENC)availability’canbemetbeforethephased-incarriagerequirementbecomeseffective.ICShasbeencloselymonitoringprogressattheInternationalHydrographicOrganization(IHO)towardsmeetingtheENCcoveragenecessarytomakethemandatorycarriageofECDISviable.
Inparticular,ICShasbeenengagedwiththeIHOandotherinterestedorganisationsindiscussionsoverpotential‘operatinganomalies’thathavebeenidentifiedwithECDIS.AtesthasbeendevelopedbyIHOthatallcompanieshavebeenencouragedtouseinordertodetectsuchanomalies.DisturbinglyithasbecomeapparentthatnotallECDISsystemsmaybefullyeffective,withathirdofthosetestedreportedlyfailingtodisplaysignificantunderwaterfeaturesinthe‘standard’displaymode.AtleastonemanufacturerhasconfirmedtoIHOthatearlierversionsofitsECDISwillnotdisplaysometypesofwreckandunderwaterobstructionsinanydisplaymode,necessitatingthecontinueduseofpapercharts.
InviewofconcernsaboutfullENC
coverageandECDISoperatinganomalies,ICSisalsoquestioningproposalsbyAustralia(andothergovernments)toamendtheSOLASConventionwiththeeffectofprohibitingtheoperationofECDISintheRasterChartDisplaySystem(RCDS)mode.Therearealsoworriesabouttheambiguityofsuggestednewrulesonupdatingrelevanthardwareonboardthatcouldimplythatshipoperatorsmightconstantlyhavetoreplaceveryexpensiveequipment.
WiththecarriageofECDISabouttobecomemandatory,ICScontinuestohighlighttheimportanceoftrainingseafarersinitsuse.ICShasthereforecontributedtotheproductionofguidanceonissuesofcompetencyandtrainingwhichhasbeenco-ordinatedbytheNauticalInstitute.ICShasalsosubmitteditsowndetailedproposalsonECDIStrainingrequirementstotheIMOSubCommitteeonStandardsofTrainingandWatchkeepingwhichmeetsinMay2012.ThesesuggestbestpracticerecommendationsforthetimingofdeliveryofECDIStrainingforbothnewandexistingseafarers,takingaccountofpresentrequirementsforupgradingtrainingascontainedinthe2010amendmentstotheSTCWConvention.
TrainingStandards
Thecompetenceofseafarersisamostcriticalfactorinthesafeandefficientoperationofships,andhasadirectimpactonthesafetyoflifeatseaandtheprotectionofthemarineenvironment.TheIMOConventiononStandardsofTraining,CertificationandWatchkeepingforSeafarers(STCW)constitutesacomprehensivesetofregulationsintendedtomaintainthehigheststandardsofcompetenceglobally.Inparticular,the
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STCWConventionplacesimportantresponsibilitiesonmaritimeemployers.
InJanuary2012,widerangingamendmentstotheSTCWConventionenteredintoforce,havingbeenadoptedbyaDiplomaticConferenceinManilainJune2010.Withimmediateeffect,companiesarenowrequiredtocomplywiththenewSTCWminimumresthourprovisionsforseafarers(seepage27).Manyoftheothernewrequirementswillbephased-inbetweennowand2017.SomegovernmentsarenowexpectedtobeginapplyingthenewSTCWrequirementsonanationalbasis,suchasenhancedfiveyearlyrefreshertraining,orthenewmandatoryrequirementsfortheonboardtrainingofratingstobedocumented.ThisincludestrainingforthenewSTCWgradesofAbleSeafarerDeckandAbleSeafarerEngine,whichmanyflagstatesareexpectedto
requireexistingratingstoundergoinordertocomplywiththeirminimumsafemanningrequirements.
FromJanuary2013,allnewseafarerscommencingtrainingwillberequiredtodosoinaccordancewiththenewtrainingandcompetencestandardsinSTCW2010.However,until2017governmentsmaycontinuetorenewandrevalidateexistingcertificatesinaccordancewithcurrentSTCWprovisionswhichappliedimmediatelypriortoJanuary2012.
NumerousamendmentswereadoptedbyIMOtotakeaccountofrecenttechnicaldevelopmentsrequiringnewshipboardskills,suchastheuseofElectronicChartDisplayandInformationSystems(ECDIS)ortheneedtogivemoreemphasistoenvironmentalmanagement.Butthechangesalsocoversuchmattersasnewtrainingrequirementsforleadershipandteamwork,enhanced
refreshertrainingforqualifiedseafarers,aswellastheintroductionofdetailedstandardsofcompetenceforthenewgradeofAbleSeafarermentionedabove.Therearealsonewcompetencetablesandtrainingrequirementsforpersonnelonoilandchemicaltankersandgascarriers.
Althoughnotadirectresponsibilityofcompanies,theindustrywillwishtoensurethatasmanygovernmentsaspossiblecomplywiththerevisedrequirementstoreporttoIMOtheactionsthathavebeentakentoimplementthenewSTCWstandards.Thiswillbenecessary,byJuly2013,ifgovernmentswishtomaintainaplaceontheIMO‘whitelist’ofnationsthathavedemonstratedcontinuingadherencetoSTCWstandards,soastoavoidportstatecontroldifficultiesfortheirships,orflagstaterecognitionproblemsforseafarersworkingonforeignshipstowhomtheyhaveissuedSTCWcertificates.
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ICSanticipatesthattheremaybeaneedtoclarifytheinterpretationofhowsomeofthenewstandardsaretobeapplied,forexamplewithregardtohownewrefreshertrainingshouldbeimplemented,deliveredandassessedorwhenthenewsecuritytrainingrequirementsenterintoforce.Thereisalreadyevidencethatsomemaritimeadministrationsmaybeintendingtoapplythenewrequirementsoverzealously.
TheoverridingobjectiveofICSanditsmembernationalshipowners’associationsisthatthestandardsrequiredbytheSTCWConvention,asamendedin2010,areputintoeffectassoonaspossible,andthatthehigheststandardsofseafarercompetencewillcontinuetobemaintainedworldwide.In2011,ICSthereforepublishedaneweditionoftheISFGuidelinesontheIMOSTCWConventiontoadviseshippingcompaniesandshipboardpersonneloftheirfundamentalobligationsasrequiredbythe‘Manilaamendments’.Aswellasprovidingadviceoncompliance,theGuidelinesalsogivebackgroundinformationonthephilosophyunderlyingthecompetence-basedapproachtotrainingwhichtheSTCWConventionseekstopromote.
In2012,ICSaimstocompleteitsambitiousscheduleofrevisingitswidelyusedISFonboardtrainingrecordbookstotakeaccountoftheManilaamendments.UpdatedOnBoardTrainingRecordBooksfordeckandengineratings(includingthegradesofAbleSeafarerDeckandEngine)havealreadybeenpublished,andrevisedtrainingrecordbooksfordeckandengineofficertraineesshouldbepublishedinthefirsthalfof2012.ICS/ISFiscurrentlyindiscussion
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withmajorlaboursupplynationssuchasthePhilippinesabouttheuseandapprovaloftheupdatedbooks.
AsaresultoftheSTCWamendments,employersshouldnowgenerallyhavefargreaterconfidenceinthevalidityofseafarers’certificates,regardlessofthecountryofissue.Thisisnottosaythatquestionsaboutthequalityoftraininginmanytraininginstituteshavebeeneradicatedcompletely.However,thereisnowaclearersensethatallseafarersworkinginternationallyarepartofthesameglobalprofession,inwhichtheparamountimportanceofsafetyoflifeatseaandtheprotectionofthemarineenvironmentisfarmorewidelyrecognised.
WorkHourRegulations
Thepreventionoffatigueamongstships’crewsanditspotentialimpactonsafetyisamajorpriorityfortheindustryanditsregulators.InJanuary2012,asaresultoftheentryintoforceofChapterVIIIoftheIMOSTCWConvention,newandstricterregulationscameintoforcegoverningseafarers’hoursofrest.Theminimumrestthatmustbereceivedinany7dayperiodisnow77hoursratherthan70hoursandtheflexibilitypreviouslypermittedbythe‘2dayderogation’ruleundertheIMOruleshasnowbeenremovedsothatseafarersmustalwayshave10hoursrestinany24hourperiodwithnoexceptions(apartfromduringemergencies).Amostimportantrequirementisthatshippingcompaniesarenowrequiredtomaintain,onamandatorybasis,individualrecordsofseafarers’hoursofworkandrestthatmaybesubjecttoinspectionbyportstatecontrol.
TherationaleforthenewSTCWrequirements,whichwereadoptedin2010,wastoensurethattheIMOrequirementsarecompatiblewiththosecontainedintheILOMaritimeLabourConvention(MLC)onceitentersintoforce.ThetaskofIMOwascomplicatedbecausetheregimesadoptedbyIMOandILOweredevelopedfordifferentpurposes.STCWprescribesminimumresthoursfromthesafetyperspective,whiletheILOConventionalsotakesaccountofsocialissues,suchasthepointatwhichadditionalpaymentsforovertimeshouldnormallybemadeandtheextenttowhichworkhoursmaybesubjecttonegotiationbetweenemployersandunionsincollectivebargainingagreements-issuesoutsidetheremitofIMO.
ICSissatisfiedthatthechangestominimumresthoursagreedbyIMOarefullycompatiblewiththeILOrequirements,althoughinpracticetheyaresomewhatstricter.Inreality,giventhattheSTCWamendmentshavealreadyenteredintoforcetheyarelikelytobecomethedefaultregimeforportstatecontrolinspectors.AnimportantaspectofSTCW2010isthesocalled‘Manilaexception’clauseswhichcontinuetopermitoccasionaldeviationfromthenormalminimumresthoursprovidedcompensatoryrestisprovided.Whilelackingtheflexibilityoftheold‘2dayderogation’rule,thiswillallowsomeflexibilityduringperiodsofpeakworkload,particularlyimportantforshortseaoperators.However(withtheexceptionofemergencies)allseafarersarenowprohibitedfrombeingondutyformorethan14hourswithinany24hourperiod.
Manycompaniesarenowensuringthattheyaremaintainingaccurate
recordsofthehoursofworkandrestonboardshipbyusingtheISFWatchkeepersoftware,which,aswellasproducingindividualseafarer’srecordsintheformatrecommendedbyILOandIMO,allowscompaniesandcrewstoensurethattheycomplyfullywithboththeILOandIMOlimits.AnupgradedversionofISFWatchkeeperVersion3,whichallowsaccounttobetakenofthenewIMOSTCWresthourlimits,waslaunchedduring2011.
EmploymentRelations
Anunusualfeatureofinternationalshipping,whichobserversfromoutsidetheindustrysometimesfindsurprising,isthatthereisapowerfulandglobalseafarers’tradeunionintheformoftheInternationalTransportWorker’sFederation.TheITFhasadirectimpactonseafarers’employmentandworkingconditionsonaworldwidebasis.Whetheremployerslikeitornot,theITFisprobablyasrelevanttodayaswhenitwasfoundedover100yearsago,althoughtheemploymentconditionsenjoyedbyseafarersin2012areofcoursegreatlyimprovedandcompareextremelyfavourablytothosewhichtheywouldreceiveinsimilarjobsashore.
Atthe2011AnnualGeneralMeetingsofICSandISF,thedecisionwastakentofullyintegratethetwoassociations.However,theInternationalShippingFederationistheidentitywhichICSwillcontinuetousewhenaddressinglabourrelationsquestionsasa‘partisan’employer’sorganisation.AspartofamajorstrategicreviewwhichledtothedecisiontointegrateICSandISF,oneoftheimportantissuesidentifiedwastheneedtostrengthendialoguewithITFatbothstrategicandworkinglevels.The
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aimofmembernationalshipowners’associations,whichhavetheirownrelationshipswiththeirnationaltradeunionsthatareaffiliatedtoITF,istobeactivelyco-operativeonnon-contentiouspracticalmatters,buttostandfirmwhenrequired.
ISFhasalongstandinginstitutionalrolewithITFasitsofficial‘socialpartner’attheInternationalLabourOrganization(ILO),andhascommoncausewithITFnationalunionaffiliatesonmanyissuessuchaspiracyandtheunwarrantedcriminalisationofseafarers,aswellasmattersrelatingtotheregulationofsafetyandhighqualitytraining.Inthesphereofemploymentrelations,however,thecharacteristicrelationshipbetweenISFandITFhassometimesbeenmoreconfrontational,primarilyduetoITF’s‘FlagofConvenienceCampaign’againstopenregisters,anditsinsistencethatshipoperatorspayITFminimumwageratesinthefaceofthethreatofboycottactionbyitsdockworkeraffiliates.
Inrecentyears,however,lessemphasisperhapsthanhithertohasbeengiventothismoredifficultaspectofrelationswithITF.InpartthishasbeenduetothepositivefocusgivenbybothsidestothesuccessfuldevelopmentoftheILOMaritimeLabourConventionanditssubsequentimplementation.TherelationshipbetweenISFandITFhasalsoevolvedduetotheemergenceoftheInternationalMaritimeEmployers’Committee(IMEC),whichcomprisesindividualcompanies,andisnowanassociatememberofISF/ICS,andtheestablishmentoftheInternationalBargainingForumwhichconductsinternationalwagenegotiationswithITF.ISF’shistoricrefusaltonegotiatedirectlywithITFaboutseafarers’
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termsandconditions,whichisamatterforindividualcompaniesandtheirnationalassociations,isthereforelessofanissue.RelationswithITFhavealsoimprovedfollowingtheresumptionofdiscussionsattheILOJointMaritimeCommissionaboutarevisionoftheILOMinimumWageforAbleSeafarers(seepage30).InMay2012,inordertoexploremeansoffurtherimprovingco-operation,ISFheldahigh-levelmeetingbetweenseniorrepresentativesofnationalshipowners’associationsandITFunionaffiliatesinLondon,thefirstsuchmeetingoutsideoftheinstitutionalsettingoftheILOforover10years.ItishopedthatthiswillbefirstofseveralmeetingsatwhichISFandITFmemberswillbeabletoidentifyissuesonwhichtheycancollaboratemoreeffectively,whilemaintainingdialogueonthosemattersonwhichtheremaystillbefundamentaldifferencesofapproach.
MaritimeLabourStandards
Forthelargemajorityofseafarers,employmentconditionsatseaalreadymatch,orinmostcasescomfortablyexceed,thosethattheycouldobtaininshorebasedemploymentathome.However,themaintenanceofgoodemploymentconditionsiscrucialtotheindustry’sabilitytoattractandretainthecompetentandwellqualifiedseafarersonwhomitdepends.
Followingratificationbyagrowingnumberofflagstatesincludingthemajoropenregisters(26ofthe30nationsrequired,atthetimeofwriting)theILOMaritimeLabourConvention(MLC)isexpectedtoenterintoforcegloballyverysoon,probablyduring2013.Therequired
tonnagethresholdhasalreadybeenachievedandcompaniesthereforeneedtobereadytoensurefullimplementationandcompliancewiththeMLCstandards.
TheILOMLCaddressesawiderangeofmattersincluding,amongstothers,theobligationsofshippingcompanieswithrespecttoseafarers’contractualarrangements,theresponsibilitiesofmanningagencies,workinghours,healthandsafety,crewaccommodation,cateringstandards,andseafarers’welfare.Asanofficialsocialpartner,underthetripartiteILOprocess,ISFwasresponsiblefornegotiatingthetextoftheConventiononbehalfofmaritimeemployers,withgovernmentsandseafarers’tradeunions.ISFthereforehasaveryspecialinterestinwantingtoassisttheConvention’ssmoothimplementation.
AnimportantaspectoftheConvention’senforcementwillbetheissuancebyflagadministrationsofMaritimeLabourCertificates,usuallyfollowinginspectionbyaRecognizedOrganizationsuchasaclassificationsociety,appointedbytheflagstate.ThereisalsoaseparaterequirementforshipstomaintainaDeclarationofMaritimeLabourCompliance.Importantly,compliancewiththeMLCwillbesubjecttoportstatecontrolaswellastoinspectionbyflagadministrations.
InDecember2011,inGeneva,ISFco-ordinatedshipownerrepresentationatamajortripartitemeetingofgovernments,employersandunionswhichagreedtermsofreferenceforaSpecialTripartiteCommitteethatwilloverseeproposalsforamendmentstotheILOMLConceitentersintoforce.TheChairman
oftheISFLabourAffairsCommittee,ArthurBowring(HongKong)servedastheemployers’spokesman,supportedby25delegatesfromnationalshipowners’associations.
ThevastmajorityofcompaniesshouldnothaveanydifficultycomplyingwiththesubstanceoftheConvention,sincethisislargelyderivedfromexistingILOmaritimestandardsandacceptedgoodemploymentpractice.However,theenforcementmechanismisnew,anditwillbeimportanttoavoidteethingproblemsassomeofthemoredetailedrequirementsareappliedandinterpreted.
Duringthecourseof2012,ISFexpectstopublishanupdatededitionofitsGuidetotheMLC.ThefirsteditionwasproducedshortlyaftertheMLCwasadoptedin2006,andsoughttointroduceshipoperatorstotheirobligationsunderthenewregime.Intheinterveningperiod,muchworkhasbeendonebyseveralILOtripartiteworkinggroups,comprisinggovernments,unionsandnationalshipowners’associationstoensurethatallconcernedunderstandtheirresponsibilities.ThissecondeditionhasthereforebeenupdatedtotakeaccountoftheserecentclarificationsfromILO.AdditionalguidancehasalsobeenaddedinordertohelpmaritimeemployersapplytheILOstandardsinapracticalmanner.ItishopedthatthesecondeditionoftheISFGuidewillproveusefulinassistingshippingcompaniesinpreparingfortheimplementationoftheMLCbygovernments,whetherintheircapacityasflagstates,portstatesorlaboursupplynations.ISF’sintentionistopromoteandhelp
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deliverthegloballevelplayingfieldofdecentmaritimelabourstandardsthatboththeshippingindustryandseafarersrequire.
ILOMinimumWage
Abouttwothirdsoftheworld’s1.5millionmerchantseafarerscomefromdevelopingcountries.Whilewageratesarecommonlyaffectedbyaseafarer’scountryofresidence,theshippingindustrygenerallyprovideshighlevelsofremunerationtoallthoseemployedatsea.Indeed,theshippingindustryisprobablyuniqueinthatithasamechanismforrecommendingminimumacceptableinternationalwagerates.
TheMinimumWageforAbleSeafarersisagreedbytheInternationalLabourOrganization(ILO)JointMaritimeCommission(JMC)whichcomprisesrepresentativesofnationalshipowner’sassociationsandseafarers’unions.ISF(theidentityusedbyICSwhenactingasanemployers’organisation)istheco-ordinatoroftheEmployers’GroupattheJMCwhiletheInternationalTransportWorkers’Federation(ITF)co-ordinatesseafarers’representation.UnlikeotherILOinstitutions,theJMCisbipartiteanddoesnotinvolvegovernments.InJanuary2012,theILOMinimumWageforAbleSeafarersincreasedtoUS$555amonthfromthepreviousfigureofUS$545whichhadcomeintoeffectin2009inlinewithanearlierscheduleofagreedincreases.ThislatestincreasefollowedanagreementbytheJMCwhichmetinGenevaattheendofApril2011.Inreality,theJMChasagreedafouryeardealwherebytheILOminimumwagewillincreasetoUS$568for
2013andUS$585for2014,withnofurtherrevisionexpectedtotakeeffectuntilatleast2015.Thiswillhopefullyprovideemployerswiththestabilitytheyneedduringthedifficulteconomiccircumstancesanticipatedintheyearsahead.
ISFbelievesthatthenewILO
ILOheadquartersinGeneva
wagefiguresarerealisticgiventhecontinuinguncertaintycreatedbytheglobaleconomiccrisis.ISFhadpreviouslyexplainedtoITFthatemployerssimplycouldnotagreetoanyimmediatefurtherincreases.However,whilemanyunionsrecognisedtheneedtohelpsafeguardemploymentforseafarers,some
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unionswereclearlydisappointedbythisresponse.TheJMCthereforeagreedtoadoptascheduleofincreasesthatwillapplyuntil2015.
ISFremainsstronglycommittedtotheprincipleoftheILOMinimumWagerecommendationwhichisnowreferencedinthenewILOMaritimeLabourConvention,althoughithasinfactexistedforover50years.Whileitisonlyrecommendatory,andisnotdirectlyrelevanttootherseafarergrades,ithasastrongmoralauthorityandisparticularlyimportantforemployersindevelopingcountries.TheILOMinimumWagealsoinfluencesmanycollectivebargainingagreements,includingthoseenforcedbyITF,andissometimesreferredtoinlegalrulings.
TheILOMinimumWageissubstantiallyhigherthanthatpaidforcomparativeworkashoreindevelopingcountries.Moreover,theactualminimumwageissignificantlyhigher,typicallyperhaps50%more,onceovertimehours(fixedataminimumofoneandaquartertimesbasicpay)andothermandatoryILOrequirements,suchaspaymentsforleaveentitlements,aretakenintoaccount.Itisalsoonlyaminimum.Mostratingsfromdevelopingcountriesreceivesignificantlymore,whileofficersreceivesubstantiallymore,withdifferentialsbetweenofficersfromOECDanddevelopingcountriescontinuingtonarrow.
AsianDevelopments
Toacertainextent,somepartsoftheshippingindustryhavebeenshieldedfromtheeffectsoftheglobaleconomicslowdownbycontinuinggrowthinAsia,drivenespeciallybyChina’sinexorableexpansionanditsseeminglyinsatiabledemandforrawmaterials.However,inearly2012,Chinaannounceditsintentiontosubtlyrebalanceitseconomy,withlessemphasisonmassivefurtherinfrastructuregrowthandaredirectionofresourcesintoincreasedpersonalconsumption.WhileChinaisstillexpectedtocontinuetogrowatanimpressiverate,thisshiftinpolicycouldeventuallyhaveimplicationsforthefutureexpansionofChina’sdemandforshippingservices.Inthelongerterm,moreover,ithasalsobeensuggestedthataswagedifferentialsbetweenChineseworkersandthoseinotheremergingeconomiesreduce,theremayarelocationofmanufacturingtowardsLatinAmericaand,inparticular,toMexicowithitscloseproximitytotheUnitedStates.Moreimmediately,however,withmostoftheEurozonenowinrecessionthecurrentconcernisthatthisislikelytohaveadirectimpactonmaritimetradeastheimportofChineseproductsisreduced.
Ontheregulatoryfront,AsiannationsgenerallyhaveatrackrecordofbeinglessinclinedtowardstheadoptionofunilateralshippingregulationsatvariancewithinternationalstandardsagreedbyIMO.However,oneissuethatICShasbeenfollowingcloselyhasbeentheChinaPollutionRegulations.TheRegulationscameintoeffectin2010andintroducednewoperationalandliabilityrequirementsforshipowners.Implementationoftherequirement
tocontractwithlocalShipPollutionResponseOrganisations(SPRO)inordertoenterChineseportscommencedfrom1January2012andwasenforcedinallportsfromMarch.InNovember2011,attheinvitationoftheInternationalGroupofP&IClubs,ICSandrepresentativesoftheChinaandHongKongShipowners’AssociationsmetwiththeChineseMaritimeSafetyAgencyinBeijing.Shipowners’concernsabouttheabilitytocomplywiththerequirementtopre-contractwithanapprovedSPRObytheinitial1January2012implementationdatewereconveyed,alongwithconcernsabouttheveryhighSPROretainerfeesthathadbeenquoted.Theinitialimplementationprocesshasbeenproblematicbutitishopedthatitwillbesmoothergoingforward.
ItisgenerallyacceptedthatthecentreofgravityoftheshippingindustryismovingtowardsAsia.ApositivedevelopmentisthatAsianmaritimeadministrationshavebecomeincreasinglyconfidentandarticulatewhenpresentingtheirviewsatforasuchasIMO,notleastonissuessuchastheregulationofCO2.Inparticular,ICShasfoundcommongroundwithChinawithrespecttoitsemphasisonefficiencyimprovements,asopposedtosettingabsolutetargetsforemissionreductionsasfavouredbytheEU.IndiahasalsomadeanimportantcontributiontothedebatebywarningofthedangersofCO2regulationbeingappliedasaformofgreenprotectionism.Inawelcomemove,inDecember2011,IndiaratifiedAnnexVItotheMARPOLConventiongoverningatmosphericemissions,whichalsoincludesthetechnicalandoperationalmeasuresforCO2reductionagreedbyIMOinJuly2011.
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Asreportedelsewhere,ICShaswelcomedthepragmaticapproachofAsianauthoritiestowardsthedevelopmentofmaritimecompetitionregulation.Thisincludestheadoption,inJune2011,ofguidelinesconcerningnon-ratefixingagreementssuchasconsortia,bytheAsiaPacificEconomicCo-operationforum(APEC)whichisbecomingincreasinglyactiveonmaritimeissues.
ICScontinuestoenhanceitsgoodrelationswiththeAsianShipowners’Forum(ASF)whosemembershipcomprisesnationalshipowners’associations,manyofwhichalsobelongtoICS.Asasignofthisincreasingco-operation,ASFhasparticipatedinrecentmeetingswiththeConsultativeShippingGroup(CSG)ofmaritimeadministrationsorganisedbyICS,whiletheASFSecretaryGeneralnowattendsICSBoardmeetings.InMay2012,inAustralia,theASFAnnualMeetingwillforthefirsttimebeheldback-to-backwiththatofICS.
EUDevelopments
During2012,thesituationinEuropeisexpectedtobedominatedbythe
continuingcrisiswithrespecttothelongtermviabilityoftheEuro.ThishasbeenbroughtaboutbythedivergingeconomiccircumstanceswithinindividualEUMemberStates,notleastwithrespecttoincreasingunsustainablelevelsofsovereigndebt.EUleaders,innumerouscrisissummits,havesoughttorespondbyprovidingsupporttofailingeconomiessuchasGreece,aswellaspumpinghugeamountsofmoneyintotheEurozonebankingsectorasawhole.However,thejuryisstilloutonwhetherthe
singlecurrencywillweatherthestormandholdtogetherinthelongerterm.WhilethecurrentrecessionintheEurozonewillalmostcertainlyhaveanegativeimpactonglobalshippingmarkets,iftheEurozonecrisisworsenstheeffectontheworldeconomycouldbeveryseriousindeed.Moreimmediately,however,theEuropeandebtcrisisalsomeansthatamajorsourceofshipfinancinghasvirtuallydriedup,withmostofthemajorshippingbanksbeinglocatedinEurope.
DespitethepoliticalandeconomicturmoilinEurope,theEUinstitutionsremaincommittedtotakingforwardtheiragendawithrespecttomaritimeregulation.Inco-operationwiththeEuropeanCommunityShipowners’Associations(ECSA),ICSseekstoensurethatproposalsinEuroperemaincompatiblewiththeglobalmaritimeregulatoryframeworkwhichtheshippingindustryrequires.
NotwithstandingIMO’sachievementinadoptingapackageofinternationalregulationstoreduceshipping’sCO2emissions,theEuropeanCommissionisproceedingwiththedevelopmentofregionalmeasuresforshippingintheeventthatIMOisunabletoreachagreementonMarketBasedMeasures.Whilethisdecisionisdisappointing,thetimescalefortheimplementationofsuchmeasuresisbelievedtobefiveyears,andtheCommissionisunderstoodtoremainseriousinitspreferenceforaglobalsolutiontobeagreedatIMO.Nevertheless,inconsultationwithECSA,ICShassubmittedcommentstoaformalconsultationbyDGClimateAction,disputingtherationaleforaregionalregimeandreiteratingoppositiontotheinclusionofshippingintotheEUEmissionsTradingScheme(ETS).Inpublic,theEuropeanCommissionis
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stillopenmindedaboutapplyingtheETStoshipping.Buttheapplication,inJanuary2012,ofaregionalETStointernationalaviation,hasnotbeenapleasantexperiencefortheCommissionwhichhashadtofacevigorousoppositionfromtheUnitedStatesandChina,amongstothers,whohaveindicatedtheymaytakeretaliatorymeasuressuchascancellingordersforEuropeanaircraft.ItremainstobeseenwhethertheEUwillbackdownwithrespecttoaviation,butifitshoulddosoitisdifficulttoseehowanETScouldthenjustifiablybeappliedtoshipping,whichunlikeaviationalreadyhasaninternationalagreementinplacethatwilldramaticallyreduceemissions.
AsdiscussedelsewhereinthisAnnualReview,otherimportantEUfilesinclude:thedraftDirectiveontheimplementationoftheIMOregulationsonsulphuremissions,whichmayincludetheextensionofEmissionControlAreas;itsresponsetothe‘CostaConcordia’cruiseshipdisaster,andtheimplementationoftheEUPassengerLiabilityDirective;andtheongoinginvestigationbytheCompetitionDirectorateoftheInternationalGroupofP&IClubs.ThecontinuingcommitmentoftheEUtocounter-piracyoperationsintheGulfofAdenisalsomostimportantandisgreatlyappreciatedbytheinternationalshippingindustry.
AnothermostimportantissueisthecurrentreviewoftheEUStateAidGuidelinesfortheMaritimeSectorwhichwilldecidewhethertopermitthecontinuationoftonnagetaxregimesinEurope.ThereviewisimportantbecauseEUtonnagetaxschemeshaveprovidedamodelforsimilarregimesthatarenowappliedbygovernmentsthroughoutthe
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world,andarevitalforshippinginorderforittooperateinwhatarevolatileandhighlycyclicalglobalmarkets.However,thereviewiscomplicatedbecauseitisbeingoverseenbytheCompetitionDirectorateratherthanDGMOVEashaspreviouslybeenthecase,theformerperhapsnotbeingsofamiliarwiththeuniquecircumstancesthatapplytoshipping.AttherequestofECSA,ICSisthereforesubmittingcommentstotheCommissioninfavourofthemaintenanceofthestatusquo.
USDevelopments
UnlikeEurope,theUSeconomyisshowingsignsthatitisbeginning
torecover,althoughwhetherthiswillbesustainedfarbeyondthePresidentialelectioninNovember2012isunknown,asistheextenttowhichthiswillfeedintoincreasingdemandforshipping.AninterestingdevelopmentisthattheUnitedStatesisgraduallyreducingitsdependencyonforeignenergysuppliesasitdramaticallyincreasesitsexploitationofshalegas.InNovember2011,theAdministrationalsoannounceditsproposedfive-yearplanforoffshoreoildrillingwhichcalledfortheopeningofnewareasintheGulfofMexicoandAlaska.Anotherinteresting‘knownunknown’istheimpactthattheexpansionofthePanamaCanal(whichisduetobecompletedin2014)willhaveonUSshippingtrades,especiallycontainers.Inviewoftherun-uptothePresidentialelections,legislativeactivitywithinCongressisexpectedtobelimited,althoughUSFederalregulatoryagenciesstillhaveafullagenda,whileindividualUSStates
continuetoseektoimplementrulesatvariancetobothFederalandinternationalrequirements.Indeed,onecharacteristicoftheObamaAdministrationthathasbeenasourceoffrustrationforshippinghasbeentheapparentreluctanceofthecurrentUSAdministrationtodefendFederalregulationsfrominfractionsbyUSStates.ApositivedevelopmentinApril2012wasthepublicationbytheUSCoastGuardofitsfinalrulemakingonballastwatertreatment,whichadoptsa‘killstandard’formarinemicro-organismswhichmatchesthatadoptedintheIMOBallastWaterManagementConvention.However,seriousquestionsremainastowhethertheUSstandardsfortypeapprovalofequipment(inlinewithitsEnvironmentalTechnologyVerificationProgram),ortheballastwatersamplingstandardsthatwillbeusedtoinspectshipstradingtotheUS,willbeconsistentwiththoseexpectedtoadoptedbyIMOin2013.ThedoorisalsostillopenfortheCoastGuardtointroducemorestringenttreatmentstandardsifitisestablishedthatthetechnologyhasbecomeavailableinthefuture,whichwillbeofconcerntothoseshipownersinvestingmoneyintoexpensivetreatmentequipmentnow.Moreover,theproblemremainsofsomeindividualUSStatesstillconsideringtheimplementationoftreatmentstandards100timesmorestringentthanwhathasbeenagreedatIMOandforwhichtheequipmentrequiredsimplydoesnotexist.
ICSisalsoengagedintheongoingsagaofCalifornia’sunilateralairpollutionrules,whichincontraventiontoUNCLOSapplytoshipswithin24milesoftheUSCoastevenifnotcallingataCalifornian
port,andarestillsubjecttolegalchallengebythePacificMaritimeAssociation.However,followingUSratificationoftheIMOMARPOLrequirementsonsulphuremissionsfromships,itishopedthatthetemptationforindividualUSStatestodeveloptheirownenvironmentalruleswilldiminish.
AparticularexampleofunwelcomeregulationadoptedbyanindividualUSStateisthatadoptedbyMassachusetts.ThisstipulatesthatvisitingtankersthatdonotelecttocomplywithcertainadditionalrequirementswillbesubjecttofinancialliabilitiesinexcessofthosesetoutinFederallawintheeventofapollutionincident.TheissueforICShasbeenoneofprinciple,duetotheencouragementthatthiscoercivelawmightgivetootherUSStatestotaketheirownunilateralactions,whichwillresultinconflictingregulations.Inco-operationwithotherindustryassociations,ICShasthereforebeeninvolvedwithalegalchallenge.TheintentionoftheactionwastomaketheUSCoastGuarddefenditsownregulations.Disappointingly,however,theCoastGuardhassofarshownlittleinterestindoingthisforwhatareprincipallyassumedtobepoliticalreasons.
TradeSanctions
Oneofthemajorpoliticaldramasbeingenactedin2012istheactionbeingtakenbytheinternationalcommunityinresponsetoIran’snuclearprogramme.Inaworstcasescenario,tensionintheMiddleEastcouldleadtoclosureoftheStraitsofHormuzthroughwhichsomuchoftheworld’soilpasses,withdramaticeffectsonoilpricesandtherecoveryoftheworldeconomy.However,theimmediatepreoccupationforICS
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hasbeenthechallengepresentedbysanctionslegislation.
Inco-operationwiththeInternationalGroupofP&IClubs,ECSAandtheChamberofShippingofAmerica,ICShassoughttoprovideinformationvianationalassociationsabouttheimpactonshippingcompaniesofsanctionsagainstIranannouncedbytheEuropeanUnionandtheUnitedStates.Itremainstobeseenwhetherotherimportanttradingnationswillintroducesimilarsanctions.
Thereisundoubtedlyaneedforgovernmentstoprovidegreaterclarityanduniformitywithrespecttotheapplicationofsanctions,whetherinthecontextofIranorothernations,suchasSyria,towhichtheymightbedirected.Thesituationisnothelpedbythefactthatgovernmentsnodoubtwanttheirsanctionslegislationtobeasambivalentandflexibleinitsinterpretationaspossible,inordertofurthertheirforeignpolicyobjectives.ThesanctionssofarenactedagainstIranhaveanimpactfarbeyondEUorUSoperators,evenforshipsflaggedinandtradingtocountriesoutsidetheEUandUS.Thisisbecausemostmarineinsurance(andreinsurance)isbasedinLondon;whileUSlegislationwillpreventtankeroperatorsthatcallinIranfromtradingtotheUS.
AlthoughmanyquestionsraisedbyshipownershavebeenaddressedbyextensiveadviceproducedbytheInternationalGroupofP&IClubs,thereisstillsomeuncertaintyastotheprecisescopeofthesanctions,particularlywithregardtotheirimpactoncompulsoryinsurancecoverasrequiredbytheCivilLiability(CLC)andBunkersConventionsforoilpollution.
ThenewEUsanctionsannouncedinJanuary2012extendtothecarriageofpetrochemicalproductsandcrudeoil,andwillfullyapplytoanyexistingcontractsfromMayandJulyrespectively.TheseactuallybuilduponprevioussanctionsrelatingtoanyitemsthatmightassistIran’snuclearprogrammeintermsoftheterritoryandtheentitiestowhichtheyapply.Inshort,thesanctionsapplytoshipownersincorporatedordomiciledinEUnations,toshipsregisteredinorflyingtheflagofanEUMemberState,andtoallvessels,regardlessofplaceofregistration,whichtradetoEUports.
However,theEUsanctionsalsoapplytoinsurerswithintheEU,prohibitingthemfromissuingormaintaininginsurancewithregardtoanysanctionableactivityortrade.TheythereforeapplytoP&IClubs(andtheirreinsurers)aswellastohullinsurers(andtheirreinsurers),whichareincorporated,domiciledorregulatedwithinanEUMemberState.MostP&IClubs,andalargeproportionofhullinsurers,arelocatedinEurope,whilemostreinsuranceisprovidedinLondonorintheUnitedStates,whereitwillalsobeaffectedbytheUSsanctions.
WithspecificregardtothirdpartyliabilityinsuranceprovidedbytheInternationalGroupofP&IClubs(IG),theEUsanctionswillalsoaffectvesselsthatwouldotherwisefalloutsidethejurisdictionofEUMemberStates,evenifsuchvesselshavetheirP&Iinsurancewithanon-EUregisteredP&IClub.ThisisbecausesuchaClub(ifanIGmember)willbeunabletoobtainaccesstoreinsurancefromtheEUbasedClubsviatheIGPoolingAgreement.Anon-EUClubwillalsobeunabletoaccessmarket
reinsurancecoverfromotherEUbasedreinsurers.
AllInternationalGroupClubshaveincludedintheirrules,inoneformoranother,eitherexpresssanctionstocoverterminationorexclusionprovisionsforimprudentorimpropertrading.Theeffectoftheserulesistowithdraworexcludecoverinrelationtosanctionsoffendingvoyages.Inotherwords,ifashippingcompanyundertakessuchavoyageitsliabilitieswillnotbeinsuredbytheInternationalGroup.
ThisrestrictionwillthereforealsohaveanimpactonanycompulsoryinsurancecertificationrequiredbyIMOConventions(whilepaymentforliabilitiesthataresubjecttocompulsoryinsurancemayalsobecaughtbytheprohibitionsinthesanctions).Asaconsequence,shipownersinbreachofsanctionsmayalsobeviolatingflagstatelaw,eveniftheflagstateisnotconnectedwiththeEU.Aswellasmonetaryfines,penaltiesmayincludedetentionofthevesselandsuspensionofthevessel’scertificateofregistry.
InApril2012,itwasstilluncertainwhattheexactscopeofthesanctionswouldbe.However,theconcernremainsthatthoseresponsiblefordevelopingsanctionspolicymayhavelittleunderstandingofthewiderconsequencesforshippingandtrade,manyofwhichmaybeunintended.
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LLMCIncreases
InApril2012,theIMOLegalCommitteeagreedsignificantincreasestothelimitsofliabilityundertheLimitationofLiabilityforMaritimeClaimsConvention1996(LLMC).UndertheIMO‘tacitamendment’procedure,the51%increaseswillcomeintoeffectin2015.Inadditiontogeneralmaritimeclaims,theLLMClimitsalsoapplytoclaimsunderIMOConventionsgoverningliabilitiesforbunkerspills(otherthanclaimscoveredbytheCivilLiabilityConvention)andwreckremovaloncetheNairobiConventionentersintoforce.
TheincreasesweremadeattheinitialrequestofAustraliainresponsetothe‘PacificAdventurer’bunkeroilspillinQueenslandin2009wheretheclean-upcostswerethoughttohaveexceededtheapplicablelimitationamount.Australiahadsupportfrom20co-sponsoringnations,whichmeantthatthefactthelimitswouldbeincreasedwasprobablyneverindoubt.Intheeventtherealdebatewasaboutthequantumoftheincreases.Australiahadmadeitclearfromtheoutsetthatitwasseekingthemaximumamountpossibleviathetacitamendmentprocedure,namely6%peryearcalculatedonacompoundbasisfrom1996.However,Japanwasfirmlyoftheviewthattheincreasesshouldnotbehigherthantherateofinflationduringtherelevantperiod(some2.7%peryearcompounded).
ThroughoutthedebateatIMOoverthepasttwoyears,ICSobservedthattheindustrywasopentoadiscussionofincreases,butthatthesehadtobebasedonthecriteriaspecifiedinthe‘tacitamendment’procedure,namely
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theclaimshistory,inflation,andtheeffectonthecostofinsurance.
SomenationscontinuedtoexpressdoubtastowhetheranyincreaseswerejustifiedinviewofthestatisticscompiledbytheInternationalGroupofP&IClubs.Theseshowedthatonlyasmallnumberofclaimshadnotbeencompensatedfullyunderthepresentlimits.TherewasalsoarobustdiscussionabouthowinflationshouldbecalculatedwithmanystatessupportingtheJapaneseposition.Itwasacknowledgedthatitwasnotpossibletoquantifytheeffectofincreasedlimitsoninsurancepremiumsbecausethatwoulddependonfutureclaims.Butifamajorincidentnowoccursthatissubjecttothehigherlimits,thenthisislikelytobereflectedinincreasedpremiumssoonafterwards.ICSbelievesthatthefinalincreasesagreedbyIMOareareasonablecalculation.Itremainstobeseenwhateconomicimpactthenewlimitswillhaveontheindustryaftertheycomeintoeffectin2015.However,itistobehopedthattheincreaseswillensurethattheprincipleoflimitationofliabilitywillbemaintained,whichisvitalifshipownersaretocontinuetohaveaccesstoaffordableinsurance.ItisalsohopedthatthenewlimitswillnotdeterlessdevelopednationsfromsubscribingtotheLLMC.
PassengerShipLiability
Questionsrelatingtopassengerliabilityinsurancearelikelytoreceiveadditionalattentionasaresultofthe‘CostaConcordia’cruiseshiptragedy.However,theimmediatefocusofICSistheimplicationsoftheentryintoforceofthe2002ProtocoltotheIMOAthensConvention(whichisexpected
soonfollowingratificationbyEUMemberStates)notleasttheneedforcertificationofinsurancecoverforterrorismandwarrisks.
Inco-operationwithECSA,andtheInternationalGroupofP&IClubs(IG),ICSisalsoseekingtoaddressthesimilarproblemsthatmayariseasaresultoftheenforcementoftheEUPassengerLiabilityRegulation(PLR)withwhichshipoperatorsmustcomplyfrom31December2012,andwhichbroadlymirrorstheIMOAthensProtocolrequirements.
Theissuesarecomplex,butthethornyissueofterrorismcoverhashamperedimplementationoftheIMOProtocolsinceIMOMembersStatesfirstrejectedindustryargumentsthatterrorismisanattackonsocietyatlargeandthatthecostsshouldthereforebebornebygovernments.InsteadIMOdecidedthattheprovisionofsuchcovershouldbelefttothemarket.
ThepotentialliabilitiestowhichtheClubsmightbeexposedundertheAthensProtocolarehuge,perhapsinexcessofUS$5billionpershipinaworstcasescenario.TheP&IClubscommunicatedtheirdifficultiesinprovidingcoverforterrorism(whichcouldhaveimplicationsfortheinsurancetheyprovidetonon-passengershipping)andacompromisewasarrivedatbytheIMOLegalCommitteein2006,wherebycoverforterrorismcouldbelimitedtoUS$500million.However,thisIMOcompromisewasunderpinnedbyaschemeproposedbytheinsurancebrokerMarshLtd.WhileMarshhasadviseditsschemewillbeupandrunningintimefortheapplicationoftheEUPLRattheendof2012,questionsaboutthescheme’sviability
continue,anditisstillunclearwhattherateswillbeandwhetherlargershipswillbecovered.
AlthoughtheIGP&IClubshavenowdecidedtoissuecertificatesofinsuranceforthenon-warrisksarisingundertheEUPLRandtheIMOAthensProtocol,theyhaveyettodecideontheprovisionofIGClubcoverforthewar/terrorismrisks.
InOctober2011,ICSmetwithEUgovernmentstoobtaintheirviewsonthestructureoftheinsurancevehicleproposedbyMarshLtd,andfromthelimitedresponsesreceiveditwouldseemthatgovernmentswillacceptit,notwithstandingthepracticaldifficultiesthatmightariseforclaimantsintheaftermathofacasualty,suchastheneedtodealwithamultiplicityofinsurersfortheirindividualindemnities.Thegovernments’approachappearstobeguidedbyageneralunderstandingthatsuchcovermightnotbeavailableelsewhereandthatthisisthebestthatcanbeobtainedfromthecommercialmarket.Butitisuncertainwhethertheyarefullyaufaitwithallofthepotentialcomplexitiesinvolved
Giventhecomplicationofhavingtohaveseparateterrorismcover,theindustryistryingtopersuadegovernmentstodevelopacommonpositionwithregardstoportstateacceptanceofinsurancecertificates.ICSandECSAarealsoencouraginggovernmentstoensurethatwhenratifyingtheAthensProtocoltheymaketheimportantreservation,asagreedandrecommendedbyIMO,withrespecttoshipowners’liabilityforwarandterrorismrisks.However,somedetaileddiscussionswillbeneededbetweennowandtheendoftheyear.
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EnvironmentalSalvageAwards
Inco-operationwiththeInternationalGroupofP&IClubs,ICScontinuestoleadshipownerrepresentationonsalvageissues,particularlyinrelationtothesmoothoperationoftheLloyd’sOpenFormandSCOPIC(specialcompensation)regime.
ICSismaintainingitsfirmoppositiontoproposalsfromtheInternationalSalvageUnion(ISU)foranewseparateawardfor‘environmentalsalvage’whensalvorshavecarriedoutoperationsinrespectofashiporcargowhichhaspresentedathreatofdamagetotheenvironment.ICSisdeeplyscepticalabouttheproposal,believingthatsalvageservicesarealreadygenerouslyrewardedunderthepresentsystem.
AworkinggroupestablishedbytheLloyd’sSalvageGroup,inwhichICSparticipates,hasreachedastalematefollowingtheISU’sinabilitytodemonstratethatitsproposalwouldimprovesalvageresponse,ordelivercostsavingstothosepayingforsalvageservices.However,theISUhassucceededinpersuadingtheComitéMaritimeInternational(CMI),theinternationalassociationofmaritimelawyers,togiveconsiderationtoitsproposalsforarevisionoftheIMOConventiononSalvageandalsotoamendtheLloyd’sOpenForm(LOF).
Despitethelackofindustryconsensus,aCMIworkinggrouphasalreadystartedworkonpossibleamendmentstotheLOF.ICSregardsthisdevelopmentwithparticulardismaysinceitappearstoinvolvethediscussionofproposalstoamendwhatineffectisaprivatecontractwithouttheinvolvement
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ofatleastoneoftheparties,whilstbypassingthelongstandingforumalreadyestablishedtocarryoutsuchworkwhichistheLloyd’sSalvageGroup.InMarch2012,ICSandtheInternationalGroupofP&IClubswroteformallytoCMI,settingoutshipowners’concernsinthestrongestpossibleterms.
TheISU’sproposalswithrespecttoenvironmentalawardswillbediscussedfurtherattheCMIConference,inBeijing,inOctober2012atwhichICSwillberepresented.GiventhatCMIdoesnotplantoinvitedetailedpresentationstobemadeontheseissuesbyalloftheinterestedparties,itisoftheutmostimportancethatthereportoftheCMIworkinggroupisasbalancedaspossibleandreflectsthedivisionwithintheindustry.TheCMIshouldalsobearinmindthatamendmentstoIMOConventionshavetobeproposedbygovernments,andthattheIMOLegalCommitteeisunlikelytoentertainproposalsthatfailtodemonstrateanycompellingneed.
ICSdoesnotbelievethattheproposalsconcerningenvironmentalsalvageenjoythesupportofmostnationalmaritimelawassociations,andinMarch2012ICSpublishedadetailedpositionpaperreiteratingtheargumentsastowhytheyshouldnotbesupported.
RotterdamRules
ICScontinuestopromotetheratificationoftheRotterdamRulesoncargoliabilitywhichwereformallyadoptedin2009bytheUnitedNationsCommissiononInternationalTradeLaw(UNCITRAL).TheRotterdamRulesareintendedtoreplaceoutdatedcargoliability
regimessuchastheHamburgandHague/VisbyRules,takingaccountofmodernmulti-modaltransportand‘doortodoor’deliverypractices.
ICSrecognisesthatthenewrulesmaynotbeperfect,andinsomerespectsareoverlycomplex.However,maintenanceofthestatusquoisnotarealisticoption.IftheRotterdamRulesdonottakeholdthentheUnitedStatesandtheEUwillalmostcertainlypursuetheirownregionalregimesandtheopportunityforglobaluniformitywillbelostforanothergeneration.FollowingathoroughanddetailedanalysisoftheRotterdamRules,ICSmembershavethereforeconcludedthatthenewregimemustbestronglypromotedbytheshippingindustryinordertoavoidtheriskofaproliferationofregionalcargoliabilityregulations.
Encouragingly,theUnitedStatesappearstobecommittedtotheearlyratificationoftheConvention.WiththefullsupportofUScarriersandshippers,theStateDepartmenthaspreparedafiletobeputbeforeCongresswhichisexpectedtotakethisforwardafterthe2012PresidentialElection.Thiswillalmostcertainlygivecriticalmomentumtotheprocessofratificationworldwide,withChinaandotherAsiannationslikelytowishtoaligntheirregimeswiththeUS.Meanwhile,althoughsomepartsoftheEuropeanCommission,whomayhavebeeninfluencedbytheEuropeanShippers’Council(ESC),havebeenambivalentabouttheUNCITRALConvention,forthemomentatleasttheEUhasputasideplansforaregionalcargoliabilityregime,andmanyEUStatesareproceedingtowardsratification.Moreover,thedoubtsabouttheRotterdamRulesdisplayedbytheESC
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arenotsharedbytheGlobalShippers’ForumwhichembracesUSandAsianshippers.Whilethosewhoweredeeplyinvolvedinthenegotiations,suchasICS,areclearabouttheneedtoencouragegovernmentstoratifyandimplementtheRotterdamRules,therestillappeartobereservationsinsomequarters,includinginAsia,aboutthebenefitsofthenewregime.AnongoingpriorityforICS,inco-operationwithlocalnationalassociationsandbodiessuchastheAsianShipowners’Forum,istoexplaintotheseinterestswhytheRotterdamRulesshouldbesupported.
CompetitionIssues
Compliancewithcompetitionlawismostimportantgiventhateven‘technical’violationsbyshippingcompaniescanresultinpenaltiesamountingtotensofmillionsofdollars.InMay2011,mostofthemajorinternationalcontainerlineswerepresentedwithasharpreminderofthiswhentheEuropeanCommissionlaunchedadawnraidonnumerouscompanyoffices.Apparentlythiswastoestablishthatitsmajorshake-upofcompetitionrulesin2008isbeingfullycompliedwith.ItisunderstoodthattheEuropeanCommissionwasnotrespondingtoanyparticularcomplaint;noristherereasontobelievethattherehasbeenanynon-compliance.(However,inMarch2012,theEuropeanCommissionalsodemonstrateditspowerbyfining14internationallogisticscompanies,includingUPSandKuehne&Nagel,€169millionforcollusionwithrespecttosecuritysurcharges.)
Theabovenotwithstanding,in
thosepartsoftheworldwheretheyarestillpermitted,ICSpolicyistodefendthecontinuedexistenceoflinerconferencesandothersimilarexemptionstocompetitionlawsuchasdiscussionagreements.TheEUCompetitionDirectorate,however,continuestoargueforcefullythatitsforeigntradingpartnersshouldfollowitsunilateralexampleofmakingshippingcompanies’participationinsuchmechanismsillegal.
ICShasthereforewelcomedthepublication,inFebruary2012,bytheUnitedStatesFederalMaritimeCommission(FMC)ofitsdetailedstudyoftheimpactoftheEUprohibitiononUStrades.ManyoftheFMC’sconclusionsappeartosupporttheICSpositioninfavourofthemaintenanceofthestatusquowithrespecttocurrentantitrustimmunitythatappliesinnon-EUtrades.Basedonitsexaminationoftheperiod2006-2010,theFMChasconcludedthattherepealoftheEUBlockExemptionhasapparentlynotresultedwithanyrelativedeclineinEUfreightratescomparedwithFarEast/UStrades.Inotherwords,shippersinEUtradeshavenotbeenadvantagedasaresultoftheEUdecisioncomparedtoshippersinFarEast/UStradeswheretheEUprohibitiondoesnotapply.TherealsoappearstohavebeenanincreaseinratevolatilityinEUtrades,comparedtoFarEast/UStrades,andtheFMCsuggeststhattheactivitiesofdiscussionagreementsthatarestillpermittedinnon-EUtradesmayhavehada‘dampeningeffect’onratevolatility.
ABillintroducedtotheUSCongressin2010proposedremovalofmuch
oftheantitrustimmunitywhichisstillenjoyedbytheinternationallinerindustryinUStrades.Fortunately,thisBillisnowdeadandlittlefurtheractionisanticipateduntilafterthePresidentialelectionsinNovember2012.TheFMChasreachednofirmconclusionsastowhetheranychangesarewarrantedwithrespecttocurrentUScompetitionregulationssuchastheOceanShippingReformAct.However,theFMCstudydoesseemtoprovideevidenceinsupportofmaintainingthestatusquoshouldtherebefurthercallsfortheUStofollowtheexampleofEurope.
Meanwhile,inAsia,followingonfromthedecisionbySingaporethatitsblockexemptionfromcompetitionrulesforlinershippingagreementswillbeextendeduntil2016,ICShaswelcomedthesimilardecisionbyJapan,inJune2011,tomaintainitsAntitrustImmunitySystemuntilatleast2015.JapanhasalsoconcludedthattheEUrepealofantitrustimmunityhasledtoincreasedvolatilityoffreightratesinEuropeanlinertrades,aswellasariseinsurchargesleviedbyindividualcarriers.Inaddition,theJapanesegovernmentwasconcernedthatthedrasticrationalisationoflinerservicesbyindividualcarrierswhichhasensuedsincethedownturn,andwhichhasresultedwithareductionofavailableservices,waspartiallyaresultofthelines’reducedabilitytoco-operate.ICShaswelcomedtheagreementbytheAsiaPacificEconomicCo-operationforum(APEC),inJune2011,onguidelinesonmaritimecompetitionrules,specificallyforco-operationagreementswhichdonotinvolveratesetting,suchasconsortia.Althoughafarlooserformofco-operationthanconferences,
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consortiahaveprovidedstabilitytomarkets,helpingguaranteethemaintenanceofscheduledservicestomoreremotedestinationsandpermittingefficienciessuchasslotsharingoncontainerships.Inparticular,consistentwithargumentspresentedbyICS(andtheWorldShippingCouncil)atanearlierAPECconsultationmeetinginTokyo,ICShaswelcomedtherecommendationthatfilingrequirementsshouldbelefttothediscretionofindividualgovernments,sincethesearecommonlyrequestedbythosegovernmentswhichcontinuetoallowamoreflexibleapproachwithregardtoco-operationbetweenshippingcompanies.
AnumberofotherAsianjurisdictionsarealsoreviewingtheapplicationofantitrustlawtoshippingaspartoftheirdevelopmentofgeneralcompetitionlaw.ThelatestcountrytodothisisNewZealand.InSeptember2011,ICSsubmittedcommentstotheNewZealandProductivityCommissionandurgedtheNewZealandgovernmenttoconsiderthemaintenanceofpracticespermittedintherestoftheAsia-Pacific.
InJanuary2012,NewZealandreleasedadraftreportofitsenquiryintointernationalfreighttransportserviceswhichrecommendsthatitsexemptionforratemakingorcapacitylimitingagreementsberepealed,butthattheexemptionfornon-ratemakingactivitiesshouldberetained,conditionalonfilingtheagreementswiththeMinistryofTransport.
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ECInvestigationofIGofP&IClubs
ICSfirmlybelievesthatthecurrentsystemofmutualthirdpartyliabilityinsuranceprovidedbytheInternationalGroupofP&IClubs(IG)continuestoservethebestinterestsofshipoperatorsandtheircustomersextremelywell,alongsideservingtheinterestsofclaimantsandthegeneralpublic.Inparticular,themutualinsurancearrangementsprovidedbytheClubsenabletheprovisionoftheveryhighlevelsofinsurancerequiredunderinternationalliabilityconventions,underwhichcompensationtoclaimantsisgenerallypaidregardlessoffaultandwithoutlegalwrangles.
ICSisthereforecloselyfollowingtheEuropeanCommission’sinvestigationsoftheactivitiesofthe
IG,theCommissionhavingopenedformalproceedingsin2010.TheCommissionhadstatedthatitwassimplyconductinganinvestigation,andthatthisdidnotimplythattherewasanyproofofinfringement.TheCommissionhadalsoadvisedthatithadopenedtheinvestigationonitsowninitiativeandthatithadnotreceivedanyformalcomplaints.
ItwasoriginallyunderstoodthattheCommissionwishedtoexaminewhethercertainprovisionsoftheIGAgreementandPoolingAgreement,notablytheGroup’sclaimssharingandreinsurancearrangements,mightsomehowlessencompetitionbetweentheClubsorrestricttheaccessofcommercialinsurersorothermutualP&Iinsurerstotherelevantmarkets.InbilateraldiscussionswiththeCommission,ICSandECSAhave
thereforeemphasisedthatthemutualinsurancearrangementsprovidedbytheP&IClubsareefficientandcosteffective.Fortheirpart,theCommissionofficialswhoweretheninvolvedhadstressedthattheywerenotintentondestroyingthesystembutwereinterestedinthequotationprocedure,releasecalls,andtheavailabilityofcommercialP&IinsuranceoutsidetheInternationalGroupsystem.
In2011theCommissionsentoutquestionnairestoindividualshippingcompaniesseekingfurtherinformationontheapplicationoftheIGAgreement,andalsorequesteddetaileddocumentationandinformationfromtheIGClubs.However,developmentshavebeenmuchslowerthanexpected,apparentlyduetotheappointmentofanewteamofcasehandlers.
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FlagStatePerformance
Inaglobalisedindustrysuchasshipping,thereisnothinginherentlywrongwitharegulatorysysteminwhichtheflagwhichashipchoosestoflyisdifferenttothecountryofbeneficialownership.Inparticular,ICSbelievesthatgeneraliseddistinctionsbetweentheperformanceofopenregistersandsocalledtraditionalmaritimeflagsareneitherhelpfulnorrelevant.Pejorativetermssuchas‘flagsofconvenience’havemoretodowithindustrialrelationsissuesofthe1980sthanthesituationwhichpertainsto2012.FlagstatessuchasBahamas,Liberia,HongKongandSingaporeareamongsttheverybestperformersintermsoftheirimplementationofIMOandILOrequirementsandportstatecontrolinspectionrecords,whiletheownershipprofileofmanyOECDshipregistersnowincludeslargenumbersofforeignownedshippingcompanies.
Nevertheless,ICSbelievesthatabalancehastobestruckbetweenthecommercialadvantagesofshipownersselectingaparticularflagandtheneedtodiscouragetheuseofanyshipregisterthatdoesnotmeetitsinternationalobligations.Whileitisshippingcompaniesthathaveprimaryresponsibilityforthesafeoperationoftheirshipsitistheflagstatethatmustenforcetherules.
ICShasthereforebeenastrongsupporteroftheIMOMemberStateAuditSchemeandhaswelcomedthedecisionbyIMOfortheauditstobecomemandatoryin2014,oncethefirstroundofvoluntaryauditsiscomplete.InMarch2012,IMOfinalisedadraftofitsIMOInstrumentImplementationCode,whichwillunderpinthemandatoryschemesubjecttoadoptionbythe2013IMOAssembly.However,intheinterestsoftransparency,ICSbelievesthattheresultsoftheIMOauditsshouldbepublished,andthat,asaminimum,informationshouldbemadeavailablebyIMOastowhethermaritimeadministrationshaveactuallyputthemselvesforwardforinspection.Inthemeantime,ICShaswelcomedthedecisionofsomeofthemajorregionalportstatecontrolauthoritiestorequestinformationastowhetherauditshavebeenconductedaspartoftheircriteriafortargetinginspections.AsacomplementtotheIMOScheme,andasaservicetotheindustry,ICScontinuestoproduceitsannualShippingIndustryFlagStatePerformanceTablewhichcollatesvariousdataavailableinthepublicdomainandwhichcanbedownloadedfromtheICSwebsite.However,underthesupervisionofICS’smembernationalshipowners’associations,thepresentationofthe
Tablefor2011hasbeenmodifiedslightlyinordertoaddressfeedbackfromgovernments,includingcommentsattheIMOFlagStateImplementationCommitteewhichquestionedsomeofthecriteriausedbyICSandwhetherthedatamightbepresentedinamorepositivemanner.
However,thepurposeofthenewTableisthesame:toencourageshipownerstoexaminewhetheraflagstatehassubstancebeforeusingitandtoencouragethemtopressuretheirflagadministrationtoeffectanyimprovementthatmightbenecessary.ICSmakesnoapologyforcontinuingtosubjectflagstatestoscrutiny,inthesamewaythatshipsandcompanyproceduresarerightlysubjectedtoinspectionbygovernments.Theoverridinginterestinpromotinghighperformingflagsisthattheyarelesslikelytotoleratesub-standardoperatorswhowouldotherwiseenjoyanunfaircommercialadvantageoverthevastmajorityoffullycompliantshippingcompanies.
ShippingPolicyandFreeTrade
Forthepastfouryearstheshippingindustryhasbeenconfrontedwithunprecedentedeconomicturmoil.Muchoftheindustryisstillstrugglingwiththeseriousconsequencesofatrulymassivecontractionineconomicactivity,withglobaltradeestimatedtohavedeclinedbynearly10%in2009.Whiletradepickedupalittle,especiallyinAsia,thelatestWorldTradeOrganizationprojectionsfor2012arenotverypositiveandoverallglobaltradeisprobablynotmuchimprovedonthelevelsthatexistedbefore2008.Thepracticeofsoundshippingpolicybygovernmentsisthereforeasimportantasever.
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ShippingpolicyinvolveslongtermengagementbyICSanditsmembernationalassociationsinthelargelyunseendiplomaticactivitynecessarytohelpensurethemaintenanceoftheopenmarketswhichtheshippingindustryneedstooperatecompetitivelyandefficiently.Shippingalsorequiresaregulatory‘levelplayingfield’and,inviewofthegreatmarketvolatilitybeingexperiencedduringthecurrenteconomicdownturn,thecontinuationofthecertaintyprovidedbythetonnagetaxregimesthatnowapplytoshippingcompaniesinmostcountries.InJune2011,ICSmadetheseimportantpoints(aswellashighlightingtheissueofSomalipiracy)asoneoftheleadingindustryparticipantsatamajorConferenceoftheworld’stransportministersinLeipzig,organisedbytheOECDInternationalTransportForum,whichhascontinuedtofocusontheimplicationsfortransportasitemergesfromtheeconomicdownturn.ICSwillagainberepresentingtheindustryatthenextOECDtransportministers’conferenceinMay2012.
Moreroutinely,ICScontinuestoplacegreatimportanceonrelationswiththeConsultativeShippingGroup(CSG)ofgovernments,whichistheguardianofmaritimefreetradeprinciples.InJune2011,inco-operationwithECSAandtheRoyalBelgianShipowners’Association,ICSheldaseminarontradepolicyforCSGgovernmentsattheirmeetinginBrussels.InconjunctionwithASFandtheSingaporeShippingAssociation,asimilareventwasorganisedinApril2012attheCSGmeetingheldinSingaporewhich,interalia,discussedthepossibletradeimplicationsof
marketbasedmeasuresforCO2emissions.
ICShascontinuedtogiveinput,vianationalassociations,onissuesrangingfromproblemsofmarketaccesstogovernmentinterferenceinlocalmarkets.TheCSGisalsoausefulconduitforthediscussionofsensitivediplomaticissues,suchasthetreatmentofpiracy.
InadditiontothebroaderroleoftheCSGasaforumfordiscussionofshippingpolicyandtradeissues,itstillmaintainsitsoriginalfunctionasprovidingameansfortheworld’smajorshippingnationstocommunicatewiththeUnitedStatesgovernment,whichhistoricallyhasoftenbeenslightlydetachedfromthemainstreamoftheinternationalshippingcommunity.ICSwillparticipateatthenextCSGdialoguemeetingwiththeUnitedStates,inWashingtonDC,inJune2012.AmajorconcernofICSnationalshipowners’associationshasbeentodiscouragegovernmentsfromrespondingtothecurrenteconomiccrisiswithprotectionistmeasures,whichwillonlydamageworldtradefurther.Moreparticularhasbeentheneedforgovernmentstoavoidmeasuresthatrestrictfairandopenaccesstoshippingmarkets.Acaseinpoint,whichreceivedcloseattentionin2011,wastheapparentattemptsbytheChineseauthoritiestorestrictaccesstoChineseterminalsfortheultralargebulkcarriersoperatedbytheBrazilianironoreproducerVale,althoughthisissuenowseemstohavebeensettledsatisfactorily.Likewise,whilstICShasnoopinionabouttheunderlyingissuessurroundingthefutureoftheFalklandIslands(Malvinas),any
restrictionsbyArgentinaonshipsthathavecalledattheislandswillbeofgreatconcernbecauseofthenegativeprecedentthatcouldbesetwithrespecttothemaintenanceofmaritimefreetradeprincipleselsewhere.
Althoughoflittleimmediatecomforttothoseindividualcompaniesthatmaystillbestrugglingtosurvive,oneconsolationisthatgovernmentssofarappeartohavemadeadeterminedefforttoavoidtheexcessiveuseofprotectionistmeasures,(althoughinearly2012somebackwardlookingmoveswereproposedwithintheEUwithrespecttogovernmentprocurement).Buttherecoveryoftheworldeconomyisstillfarfromcertain,anditwillremainimportantforICS,andlike-mindedgovernments,toremainvigilant.Inparticular,ICSremainscommittedtotheinclusionofshippinginanynewagreementonservicesthatmaybeagreedbytheWorldTradeOrganization(WTO),inordertocodifytheliberaltradingpracticeswhichalreadyapplytomostshippingmarkets.However,progresstowardsanewWTOdealontraderemainsslow,largelyduetosignificantdifferencesbetweengovernmentsonissuessuchasagriculture.
ShipbuildingPolicy
Shipping,ofcourse,istheservantofworldtradeandjustasitbenefitedfromtheboomyearsofthemid2000sitsfortunesarenowalsoinextricablylinkedtotherecentfallinthedemandforitsservices.Butmanyoftheproblemsconfrontingshippinghaveundoubtedlybeenexacerbatedbyshipownersplacingordersforfartoomanyships,withfartoofewcargoestocarry.With
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vastamountsofnewtonnagebeingdeliveredduring2012,inmanytradesthereisnowamajorglutofships.
Currentmarketswouldappeartobedemonstratingjusthowseriouslydamagingtheoversupplyofshipshasbeentoshipowners’revenues,withmanynowstrugglingtomeettheiroperatingcosts.However,theproblemsofindividualownersaside,thebiggestdangerperhapsistheovercapacitythatexistsintheshipyards,withanalmostobsessivecommitmenttomarketsharebeingdisplayedbythethreemajorshipbuildingnations:China,KoreaandJapan,where90%ofworldtonnageisbuilt.Evenifshipyardsgobankrupt,itislikelythattheirgovernmentswillstepinsothattheycancontinuetoproduceshipswhichfewpeoplewant,otherthanspeculatorswhomaybefoolishlytemptedbyknockdownprices.However,amarketmightbefoundforotherwiseunwantedChineseshipsbytheChinesefleetitself,withChinahavingawidelyrecognisedgoalofseekingtocarryamuchlargerproportionofitscargoes–perhaps50%-onboarditsownvessels.
ItisthereforeasourceofdisappointmentthattheOECDhasconfirmeditsdecisiontoterminatenegotiationsonanewagreementtoeliminatesubsidiesandmarketdistortingmechanismsintheshipbuildingindustry.ThiswasprimarilyduetodifferencesbetweentheEuropeanCommissionandAsiangovernmentsaboutthetreatmentofpricingofnewshipsinanynewagreement,thelatterwishinginsteadtoconcentrateontheeliminationofsubsidies-apositionsupportedbyICS.However,theOECDWorkingPartyonShipbuildingwillcontinue
tomeet,inordertoexplorefurtherwhatconstitutesmarketdistortionandthemeansofachievinggreatertransparencyongovernmentsupportmeasures.ICSwillattendameetingthatOECDisorganisinginParisinJune2012,withthegoalofencouragingtheresumptionofthetalksassoonaspossible,eveniflittleimmediatemovementisanticipated.Inviewoftheserioussupply/demandimbalancethatcurrentlyprevailsitisclearthatspeculativeorderingofshipsthathavenoeconomicpurposeshouldbediscouraged.Whatevermightseemrationalfromanindividualcompany’sperspectivemightnotbegoodwhenseeninthecontextoftheindustryasawholeandtheindividualcompaniesitcomprises.
However,onethingonwhichICSisclearisthatitwillresistanysuggestionthatallshipsaboveacertainageshouldautomaticallybescrapped.ICSwillcontinuetoresisttheconceptofamaximumageforshipswhich,aswellasdamagingthecommercialinterestsoflargenumbersofcompanies,wouldremoveincentivestomaintainoldershipsandwouldhavenegativeimplicationsforsafetyandenvironmentalprotection.
CanalIssues
ThePanamaandSuezCanalsreducethelengthofmanyseavoyagesbythousandsofmiles,buttheprivilegeofusingthemisexpensive.Individualtransitsbylargevesselscancosthundredsofthousandsofdollars.WhilebothCanalsarededicatedtoprovidingexcellentservicetheyarealsoverymuchcommittedtoprofitmaximisation.
ThecurrentAdministratorofthe
PanamaCanal,MrAlbertoAlemánZubieta,whohasbeenpivotalinoverseeingthecurrentCanalexpansionandstrengtheningliaisonwithindustryhasannouncedthathewillstepdownfromhispostlaterthisyear.ICSlooksforwardtoworkingwithhissuccessor,MrJorgeQuijano,whowilltakeoverinSeptember2012.
InJanuary2012,ICShostedameetingofinternationalindustryrepresentativeswithadelegationfromthePanamaCanalAuthority(ACP)todiscussthefutureofoperationsafter2014,whenthetrulyimpressiveCanalexpansionprojectisscheduledforcompletion.TherewasapositiveexchangeabouttheACP’spreliminarythoughtsonhowCanaltollsmightchange.Ingeneral,theACPindicatedthatitwouldliketointroducemoresegmentationinitstollsinordertobetterrespondtomarketfluctuationsthataffectthecompetitivenessoftheCanalasaroute.Theindustryhadunderstoodthattheseideaswereatanearlystageandwouldbesubjecttomuchfurtherdiscussion.ICSwasthereforesurprisedwhen,attheendofApril20I2,theACPannouncedmajortollincreases,formanylarger(non-container)ships,of15%overthenexttwoyears,commencinginJuly,withevenlargerincreasesformanysmallervessels.Inaddition,theACPhasannouncedgeneralincreasesintariffsforsecurityandoilspillresponseservices,bothofwhicharemandatoryforshipspassingthroughtheCanal.Theindustryisexpectedtoopposethesedevelopmentsverystrongly.Meanwhile,ICShasopposedthe3%tollincreasesannouncedbytheSuezCanalAuthority(SCA)inDecember2011,atatimewhentheindustryisstillstrugglingtomanagetheeffects
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oftheglobalfinancialcrisis.SuezCanaltollshaveremainedfrozenforthepastthreeyearsinrecognitionofdifficultshippingmarkets.ICSthereforeco-ordinatedanindustryresponsetotheSCA,explainingthattheeconomicsituationhasnotimprovedandrequestingthattheincreasesbeadjustedordeferred.Disappointingly,however,theincreaseswentaheadunchangedinMarch2012.
FollowingthedramaticpoliticaleventsinEgyptin2011,andthecollapseofothermajorsourcesofforeignincomesuchastourism,theSCAisnodoubtunderpressuretomaintainitsrevenue.TotheSCA’scredit,theCanalhascontinuedtofunctionsmoothly.However,ICShassincerepeateditsrequestforfullandproperconsultationbetweentheindustryandtheSCA,particularlywhenevertolladjustmentsarebeingcontemplated.
IndustryRepresentationandCo-operation
Astheprincipalinternationalassociationfortheshippingindustry,theprimaryfocusofICSrepresentationistheInternationalMaritimeOrganization(IMO).ICSparticipatesactivelyinvirtuallyeveryIMOCommitteeandSub-Committeeaswellasnumerousspecialistworkingandcorrespondencegroups.ICSisthereforeacknowledgedbygovernmentsasrepresentingtheconsideredviewsofallinternationalshipoperators.
Whilstefficientglobalshippingdependsonasystemofuniformglobalrules,shipoperatorsstillliveinaworldofnationstates.Theimportanceofnationalshipowner’s
associationsthereforeremainsasessentialasever.ThestrengthofICS’sadvocacyatIMO(andthevariousotherforathatimpactonshipping)isverymuchdependentontheICSmemberassociationswhichpresentagreedICSpositionstotheirmaritimeadministrationsinadvanceofintergovernmentalmeetings.ICSmemberassociationscollectivelydeveloptheindustry’sglobalpositionsthroughacomprehensivestructureofspecialistcommittees(seepage56).
UsingitsseparateISFidentityasanemployers’organisation,ICSisalsoanofficialsocialpartnerattheGeneva-basedInternationalLabourOrganization(ILO)andactsasSecretarytotheEmployers’GrouponallILOmaritimeissues.
InadditiontointeractingwithindividualgovernmentsduringmeetingsatIMOinLondonandILOinGeneva,ICScontinuesregularattendanceatmoregeneralpolicymeetingsheldbytheUnitedNationsinNewYork,theWorldTradeOrganization(WTO),theOrganizationforEconomicCo-operationandDevelopment(OECD),theConsultativeShippingGroup(CSG)ofmaritimeadministrations,theUnitedNationsConferenceonTradeandDevelopment(UNCTAD),theWorldCustomsOrganization(WCO),and,insofarastheyarerelevanttoseafarers,bodiessuchastheWorldHealthOrganization(WHO).GiventheimportanceofdiscussionsaboutCO2emissionsreduction,ICShasalsotakenupconsultativestatuswiththeUnitedNationsFrameworkConventiononClimateChange(UNFCCC)andrepresentedtheindustryatthelastUNClimateChangeConference(COP17)inDurbaninDecember2011.
ICSenjoysgoodrelationswithmanyotherintergovernmentalbodiesthatimpactonshippingincludingtheInternationalAssociationofMarineAidstoNavigationandLightHouseAuthorities(IALA),theInternationalHydrographicOrganization(IHO)andtheWorldMeteorologicalOrganization(WMO).ICSalsohasconsultativestatuswiththeInternationalMobileSatelliteOrganization(IMSO),whichisthebodythatoverseespublicsafetyandsecuritycommunicationservicesincludingtheGlobalMaritimeDistressandSafetySystem(GMDSS).Inaddition,ICSattendsmeetingsofboththeParisandTokyoMOUsonPortStateControl.
Asanemployers’organisation,andanofficial‘socialpartner’attheILO,theoppositenumberofISFistheInternationalTransportWorkers’Federation(ITF).Asreportedelsewhere,inApril2012nationalshipownerassociationsandITFunionaffiliatesheldameetingtoexchangeviewsonmattersofcommoninterest,thefirstsuchmeetingoutsidetheconfinesoftheILOforadecade.Itisintendedthatthispositivedialoguewillcontinue.Inaddition,ISFcontinuestobeamemberoftheInternationalCommitteeonSeafarers’Welfare(ICSW)whichembracessecularandreligiousseafarers’welfareorganisations.
Inviewoftheimportanceofensuringglobalregulationforaglobalindustry,ICScontinuestoworkcloselywiththeEuropeanCommunityShipowners’Associations(ECSA)incommunicatingonissueswithEuropethatarerelevantfromaninternationalperspective,andparticipatesinconsultationsorganisedbytheEUinstitutions.IntheUnitedStates,ICS
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changesnecessitatedbytheSTCW2010amendments.
AnticipatingtheentryintoforceoftheILOMaritimeLabourConvention,aneweditionoftheISFGuidelinestotheILOMLCisexpectedtobepublishedinthefirsthalfof2012,inordertotakeaccountofthevariousclarificationsagreedbyILOsincetheMLCwasadoptedin2006.Incorporatingnewadviceoncomplianceandtheadoptionofbestemploymentpractices,itishopedthatthispublicationwillcometoberegardedasasisterpublicationtothedefinitiveICS/ISFGuidelinesontheApplicationoftheInternationalSafetyManagement(ISM)Code.
WorkisnowwelladvancedonaneweditionoftheICSTankerSafetyGuide(Chemicals).Thisisamajorundertakingbutpublicationisanticipatedin2013.Lookingforwards,aworkgrouphasalsobeenestablishedtobeginareviewofthecurrenteditionoftheICSTankerSafetyGuide(Gas).WorkisalsounderwayonaneweditionoftheICSBridgeProceduresGuidetotakeaccountofdevelopmentsine-navigation.
Meanwhile,inco-operationwiththeOilCompaniesInternationalMarineForum(OCIMF)andtheSocietyofInternationalGasTankerandTerminalOperators(SIGTTO)workhasprogressedonanewconsolidatededitionoftheShiptoShipTransferGuidethatwillcoverpetroleum,chemicalandgasoperations.Publicationisexpectedduring2012.
workswiththevariousUSagenciesthatimpactonshippinginliaisonwiththeChamberofShippingofAmerica,whichbyagreementofficiallyrepresentsICSinUSdiscussions.Additionally,ICSenjoysgoodrelationswiththeAsianShipowners’Forum,whosemembersarealsonationalshipowners’associations.ICSisalsonowdevelopingarelationshipwiththeAsiaPacificEconomicCo-operationforum(APEC)whichisbecomingincreasinglyengagedwithmaritimetransportmatters.
ICSworkscloselywithadiverserangeofotherindustryorganisationsthatareengagedgenerallyontransportissues,includingtheInternationalChamberofCommerce(ICC),theInternationalOrganizationforStandardization(ISO),theBusinessandIndustryAdvisoryCommitteetotheOECD(BIAC),theInternationalOrganizationofEmployers(IOE)andtheWorldOceanCouncil(WOC).
Lastbutnotleast,ICSenjoysgoodrelationswithvariousspecialistindustrybodiessuchastheInternationalAssociationofClassificationSocieties(IACS),theInternationalGroupofP&IClubs(IG),theInternationalUnionofMarineInsurance(IUMI),theInternationalAssociationofPortandHarbors(IAPH),theInternationalMaritimePilots’Association(IMPA),theNauticalInstitute(NI),andtheGlobalShippers’Forum(GSF).This,ofcourse,isinadditiontocloseco-operationwithotherspecialistinternationalshippingassociationsincludingBIMCO,theCruiseLinesInternationalAssociation(CLIA),Intercargo,Interferry,Intermanager,Intertanko,theOilCompaniesInternationalMarineForum(OCIMF),theInternationalMarineContractorsAssociation
(IMCA),theInternationalMaritimeEmployers’Committee(IMEC),theInternationalSupportVesselOwners’Association(ISOA),theInternationalParcelTankersAssociation(IPTA),theSocietyofInternationalGasTankerandTerminalOperators(SIGTTO)andtheWorldShippingCouncil(WSC).
Publications
AlargeproportionofICSresourcesisdevotedtotheproductionofpublicationsforthebenefitoftheindustry.IssuedunderthebannerofMarisecPublications,ICSpublishesover30titleswhichprovideguidanceonregulatorydevelopmentsandindustrybestpractices,especiallywithregardtosafety,environmentalprotectionandemploymentstandards.
UnderthebadgeofISF,ICScurrentlyhasanambitiousprogrammetoupdatevariouspublicationstoreflecttheentryintoforce,inJanuary2012,ofthe2010amendmentstotheIMOConventiononStandardsofTraining,CertificationandWatchkeepingforSeafarers(STCW).In2011,thisincludedpublicationoffullyupdatedGuidelinestotheSTCWConvention,followedbyrevisedonboardtrainingbooksfordeckandengineratings,whichtakeaccountofthenewSTCWgradesofAbleSeafarerDeckandEngine.Updatedonboardtrainingrecordbooksfordeckandengineofficercadets,thatwilladdressthenewSTCWcompetencestandards,areduetobepublishedinthefirsthalfof2012.Inco-operationwithitspartnerITEnergy,ISFhasalsolaunchedaneweditionofitspopularISFWatchkeepercomputersoftware,whichallowsseafarers’workandresthourrecordstobemaintainedinaccordancewithIMOandILOregulatoryrequirements,including
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Available from Marisec Publications
www.marisec.orgInternational Chamber of Shipping
In
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OrganisationalMatters
ThecurrentICSmembershipcomprisesnationalshipowners’associationsfrom36countries,representingallsectorsandtradesandover80%oftheworldmerchantfleet(seeinsidebackpage).InJanuary2012,theInternationalMaritimeEmployers’Committee(IMEC),whichengagesincollectivebargainingnegotiationswithseafarers’unions,joinedICSasanAssociateMember.
PeterHinchliffecontinuestoserveasICSSecretaryGeneral.SincehisappointmentinSeptember2010hehasalreadyoverseensomesignificantorganisationalchanges.The2011AnnualGeneralMeetingtooktheimportantdecisiontofullyintegratetheICSorganisationwiththatoftheInternationalShippingFederation(ISF).ForallintentsandpurposesICSandISFarenowthesameorganisationandthearticlesandrulesofICShavebeenamendedaccordingly.However,ICSwillcontinuetousetheseparateidentityofISFwhenrepresentingtheindustryasanemployers’organisation,forexampleatmeetingsoftheInternationalLabourOrganizationorwhendealingwithlabouraffairsquestions.
SinceJune2011,theCommitteesofICSandISFhavebeencombinedintoasinglestructure,asshownoverleaf,reportingtoasingleICSBoardofDirectors,membershipofwhichhasbeenexpandedandtowhichallFullMembersthatsubscribetobothtradeassociationandemploymentaffairsservicesarenowentitledtoberepresented.ThiswillhelptoensurethatthepositionsadoptedbyICS
trulyreflecttheconsideredviewsoftheentireglobalshippingindustry.
TheSecretariatandstaffofICSisprovidedbyMaritimeInternationalSecretariatServicesLimited(Marisec),whichiswhollyownedbyICS.MarisecalsocontinuestoprovideservicestotheInternationalSupportVesselOwners’Association(ISOA).
InOctober2011,ICSrelocatedtobrightnewofficesatStMaryAxeintheCityofLondon.InDecember,thenewofficeandmeetingfacilitieswereofficiallyopenedbytheICSChairmaninthepresenceofrepresentativesfromthevariousinternationalmaritimeorganisationswithwhomICSworksmostclosely.
The2011AnnualGeneralMeetingofICS(andthefinalAnnualGeneralMeetingofISF)washostedbytheGermanShipowners’AssociationinHamburginMay.Underthenewarticlesofassociation,thefourICSViceChairmenelectedfor2011/2012wereCaptainDirkFry(Cyprus),MrFrankLeonhardt(Germany),MrTrygveSeglem(Norway)andMrGerardoBorremeo(Philippines).AnexpandedBoardofDirectors,whichmeetsthreetimesayear,wasalsoelectedbytheICSAGM,asshownontheoppositepage.MrSpyrosMPolemis(Greece)continuedtoserveasChairmanfollowinghisre-electionin2010.
MrPolemishasservedasICSChairmanforthelastsixyearsandhasannouncedthathedoesnotintendtoseekre-electionfor2012/13.AsuccessorwillbeelectedattheICSAnnualGeneralMeetinginMay2012,whichwillbehostedbytheAustralianShipownersAssociationinPortDouglas,Queensland.
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ICSSecretaryGeneral,
PeterHinchliffe
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RepresentingtheGlobalShipping
Industry
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ICSBoardofDirectors2011-2012
ICSSecretariat
ICSChairman,SpyrosMPolemisopensthenewofficesatStMaryAxe
Australia MrNoelHart Bahamas MrChrisOliver Belgium MrPeterVierstraet Canada MrGerryCarter Cyprus CaptainDirkFry Denmark MrCarstenMortensen Finland MrJanHanses France Mr.ChristianGarin Germany MrFrankLeonhardt Greece MrAnastasiosPapagiannopoulos HongKong Mr.RobertHo Ireland MrJohnDolan Italy MrStefanoMessina Japan MrHiroshiHattori Liberia MrMarkMartecchini Mexico MrLuisOcejo Netherlands MrsKarinOrsel Norway MrTrygveSeglem Philippines MrGerardoBorromeo Singapore MrEsbenPoulsson Sweden MrLarsHöglund Turkey MrTamerKiranUnitedKingdom MrMichaelParker UnitedStates MrCharlesParks
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ICSOrganisationalStructure
MarineCommittee
Chairman:CaptainTrevorSmith
Singapore
FullMembersAssociateMembers
BoardofDirectors
OffshorePanel
Chairman:MrDavidBlencowe
Denmark
DangerousGoodsPanel
Chairman:MrJohnLeach
UnitedKingdom
EnvironmentSub-Committee
Chairman:MsTeresaLloyd
Australia
CanalsSub-Committee
Chairman:MrKoichiInoue
Japan
PassengerShipPanel
Chairman:MrTomStrang
UnitedKingdom
ContainerPanel
Chairman:MrMikeDownesUnitedKingdom
GasCarriersPanel
Chairman:Tobeconfirmed
BulkCarrierPanel
Chairman:MrDimitriosFafalios
Greece
ChemicalCarriersPanel
Chairman:MrJosephLudwiczak
Liberia
OilTankerPanel
Chairman:MrRogerRestaino
Liberia
Manning&TrainingCommittee
Chairman:MrTjitsoWestra
Netherlands
InsuranceCommittee
Chairman:MrMatheosLos
Greece
Construction&Equipment
Sub-CommitteeChairman:
MrMauriziod’AmicoItaly
ShippingPolicyCommittee
Chairman:MrJohnCLyras
Greece
MaritimeLawCommittee
Chairman:MrViggoBondi
Norway
LabourAffairsCommittee
Chairman:MrArthurBowring
HongKong
Radio&NauticalSub-Committee
Chairman:CaptainPaulJones
Singapore
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Members of the International Chamber of Shipping
FULL MEMBERS
AUSTRALIA Australian Shipowners Association BAHAMAS Bahamas Shipowners’ Association BELGIUM Royal Belgian Shipowners’ Association BRAZIL Syndarma•• BULGARIA Bulgarian Shipowners’ Association• CANADA Canadian Shipowners’ Association CHILE Chilean Shipowners’ Association CHINA China Ocean Shipping (Group) Co•• CROATIA Mare Nostrum, Croatian Shipowners’ Association• CYPRUS Cyprus Shipping Chamber DENMARK Danish Shipowners’ Association FINLAND Finnish Shipowners’ Association FRANCE Armateurs de France GERMANY German Shipowners’ Association GREECE Union of Greek Shipowners Hellenic Chamber of Shipping• HONG KONG Hong Kong Shipowners’ Association INDIA Indian National Shipowners’ Association IRELAND Irish Chamber of Shipping ISLE OF MAN Isle of Man Shipping Association•• ITALY Confederazione Italiana Armatori (Confitarma) JAPAN Japanese Shipowners’ Association KOREA Korea Shipowners’ Association KUWAIT Kuwait Oil Tanker Co. LIBERIA Liberian Shipowners’ Council MEXICO Grupo TMM S.A. NETHERLANDS Royal Association of Netherlands Shipowners NORWAY Norwegian Shipowners’ Association PHILIPPINES Filipino Shipowners’ Association SINGAPORE Singapore Shipping Association SPAIN Asociación de Navieros Espanoles SWEDEN Swedish Shipowners’ Association• Swedish Shipowners’ Employer Association•• SWITZERLAND Swiss Shipowners’ Association• TURKEY Turkish Chamber of Shipping UNITED KINGDOM UK Chamber of Shipping UNITED STATES Chamber of Shipping of America
ASSOCIATE MEMBERS
Abu Dhabi National Tanker Co. (Adnatco)• BW Fleet Management Pte. Ltd• Chamber of Shipping of British Columbia• Cruise Lines International Association (CLIA) European Dredging Association (EuDA) Interferry• International Maritime Employers. Committee (IMEC) Sail Training International Shipping Australia Ltd• World Shipping Council• • Trade Association Only •• Employers Organisation Only
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Representing the Global Shipping Industry
International Chamber of Shipping
38 St Mary AxeLondon EC3A 8BH
Tel +44 20 7090 1460Fax +44 20 70901484
www.ics-shipping.org