Last week at BIMCO’s Annual Conference in Dubai, delegates heard from the shipowners affected by upcoming regulatory requirements, such as ballast water management and how emission reduction regulations may affect the type of fuel a ship may use – and the technical experts working on delivering ways for shipping to adapt and comply.
The first part of the session focused on ballast water management, hearing first the latest developments and case studies from Wärtsilä, Alfa Laval and ClassNK, who have been responsible for the development of systems for ballast water management on a range of vessels globally – also a very acute insight from Ince & Co on crucial contractual issues that owners should be aware of.
The technical speakers highlighted that the critical decisions for shipowners in this area were not just which type of system they should choose, but when to invest and implement the system. It’s clear that during the last ten years since the adoption of the Ballast Water Management Convention by IMO, development of the management systems has been rapid – and that flexibility was a byword – flexibility both in terms of the capacity that can be provided and in terms of the space the system can fit into, which is crucial for retrofits. The choice of system depends on the type of ship, its operation and the route of its voyages – and that expert advice on this area was readily available from leading companies.
However, the question of US Coast Guard (USCG) type-approval remained a clear reason for shipowners to wait a little longer before investing. No ballast water management system has yet been type-approved by the USCG – they have only approved products to the level of an alternate management system (AMS) system. As one speaker pointed out, any AMS installed now might have to be removed if it does not obtain final USCG type-approval when the Convention comes into force. Speakers seemed to expect that most owners will therefore wait to benefit from further development and invest in a fully approved system.
The example of the past case of the Elli and the Frixos (The “Elli” and The “Frixos”) [2008] EWCA Civ 584: 23 May 2008) shared with delegates illustrated this problem very clearly. A time charter stated that the ships were to be in every way fit to carry crude and/or dirty petroleum products – and to be in every way fit for service when the vessels were delivered. These stipulations were met, but the charter was still running with 18 months left when MARPOL was amended, leaving the ships no longer in compliance for carrying that type of cargo and not eligible for an extension.
The charterers then found it difficult to obtain contracts and were forced to do less lucrative work and in time withheld from the owners part of the hire that would have been calculated based on the profits from their intended type of contracts.
The owners then claimed that part of the hire, arguing that the charterers were contractually obliged to “restore” the vessels, taking any steps necessary to carry dirty crude under the new regulations. The charterers won the case, claiming that the change in regulation meant that a major refit was required to carry dirty crude – and therefore it was not a case of “restoring” the vessel to that condition. Despite an appeal from the owners, the High Court held that the vessel should be physically and legally fit when returned to charter, leaving the owner liable. Significantly, no judgement has yet overruled this and so the session concluded with a warning that shipowners should not assume that if a ship has been delivered under time charter, they will not need to invest to move it into future compliance.
The second part of the session focused on the viability of future fuels, with a wealth of information from MAN Diesel & Turbo, Clean Marine Technology, ABS, RINA, DNV-GL and again from Wärtsilä and Alfa Laval on the pros and cons of LNG, ship electrification, HFO, MGO and biofuels – ranging from available supply, cost, potential future regulation and financing for future fuels.
However, a theme soon emerged from experts and shipowners alike that as yet in this field, uncertainty is the only certainty. The closing shipowner panel discussion, chaired by Julian Bray showed clearly that there is still a perpetuation of the “wait and see” mentality – with only a minority committed to a future with LNG – and also a unanimous view that measures such as slow steaming – and a change in on-board culture – could reduce consumption save an increasing amount of energy.
Source: BIMCO
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