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Thursday, July 19, 2018

Shipbuilders, Class representatives and owners met in Shanghai

Some 60 executives representing leading shipbuilders, Class, and owners met in Shanghai at a seminar and workshop to analyse the challenges related to shipbuilding standards, contractual relationships and shipyard capacity.

The “Tripartite” seminar was organised by the Round Table of Maritime Associations – namely INTERTANKO, INTERCARGO, ICS and BIMCO. The agendas for the seminar and workshop were wide ranging  and this encouraged participants to approach these with an open mind. In this  atmosphere there was enthusiasm to enter into constructive dialogues among the participants. Mr. Fredrik Tsao, Chairman of INTERCARGO and IMC Pan Asia Alliance Group, was the conference Chairman and contributed to the success of the gathering.

The workshop on Contractual Relationships was chaired by Mr. Rolf Westfal-Larsen, Chairman ICS and Westfal-Larsen Management in Bergen. The purpose of analysing contractual relationships was to determine how to improve communications between builder, owner and Class during the building period. It was agreed that although it would be advantageous to have greater transparency of information in the building period, care had to be taken to avoid abuse of commercially sensitive information. The workshop included consideration of whether Class should have a contract with the owner and not the yard during the building period.

The workshop did not feel that developing a standard newbuilding contract was essential at this stage to enhance quality. There were extensive discussions on enhancing the standard shipyard guarantee of one year. The fundamental issue was not who should pay for the extended guarantee, but whether it would contribute to improving the quality of design. For the yard to be able to extend guarantees, they first had to look at their relationship with sub-contractors. During the discussion it was also said that it would be possible for owners to negotiate extended guarantees on an individual basis.

The workshop on Shipbuilding Standards was chaired by Mr. Li Kejun, China Classification Society. This workshop on shipbuilding standards attracted the greatest interest. Notwithstanding that ships today are built to high standards, there was a general consensus that improved design margins should be developed for newbuildings. Most shipping segments are extremely competitive and in this context it was emphasized that mandatory rather than optional enhancements of common and consistent design standards would be best for the industry. It would be difficult for individual societies to raise standards and it would therefore have to be done on an industry basis. If standards were raised on a general industry basis, a level playing field approach would help to ensure that none of the parties, builder, Class or owner, would be disadvantaged.

It was further recognised that an enhancement of standards had to be agreed among all three parties, the class taking the lead in setting standards and the owners and yards deciding specifications.

A wide range of concrete issues need to be considered in enhancing standards such as designed service life/longevity, increased scantlings, coating standards, maintenance and service friendliness, machinery and equipment efficiency, fitness for purpose, and perhaps most importantly, in general more robustness of the design. However, it was also emphasized that it was necessary not to make the process of raising standards too complicated. It was nevertheless significant that all parties agreed on the need for enhancements and it was decided that the three parties should continue the work to arrive at concrete results.

The workshop on Shipyard Capacity was chaired by Mr. Fredrik Tsao.

It was agreed that both the builders and owners often acted in the market on the basis of wrongly analysed market signals on basic issues such as shipyard capacity. Decisions based on short-term, misleading information caused needless unpredictability in the market. There is a great deal of information available in the market, but there is a need for an independent analysis and evaluation of available data on the costs of building ships and yard capacity seen in relation to the general shipping markets. It was therefore agreed to set up a group, including shipyard and owners’ representatives, to identify and analyse such data on a more regular basis. INTERTANKO’s research section will provide secretarial assistance to this group.

A Press Release on the seminar and workshop can be viewed here