Single-hull: It is a type o f ship construction where there is no intermediate compartment between the cargo carrying space and the sea As a result these ships are more prone to polluting the sea as a consequence o f

Flag FOC

Ship GRT 50,000 tons approximately

Ship DWT 95,000 tons approximately

Size in relation to worldwide fleet Top 17% o f worldwide fleet

Built Early 1990

Type o f cargo carried Various types o f crude oil

Current trading area Persian Gulf, Asia and Australia

Number o f seafarers Around 21

Nationalities o f seafarers From East Europe and Far East

Table 26: Key information o f Ship-A l.

The OHS records from the PSC data suggest that the ship was regularly inspected by the PSC inspectors and performed better than the average in the wider group of companies. Between 2000 and 2005, the number of deficiencies per inspection was 0.63 in the case of Ship-Al while the corresponding ratio at the group level was 1.15. Also, none of these deficiencies were of the seriousness resulting in the ship’s detention45 (see table below). Thus, it indicates that the ship may be considered as one of the safer ships in the wider group of companies.

Group o f Companies PSC deficiency per inspection ratio

Ship-Al

PSC deficiency per inspection ratio

2000-2005 _1.15 0.63

Table 27: Position o f Ship-Al in the overall PSC records o f Company-A, 2000-2005.

4.2.7 Ship-A2

I conducted the second research voyage on another ship (Ship-A2) belonging to Company- A. It was also built in early 1990s and was of similar size as Ship-Al. It was registered with one of the FOC and classed with a reputable Classification Society, but unlike Ship- Al, this ship had a double-hull construction which did not impose any such trading restriction on it. For the last two years Ship-A2 was time-chartered46 by a multinational company involved in crude oil transportation in the North American region. Some of the important features of the ship are presented in the table below.

45 These data were obtained from the publicly available website ‘www.equasis.org’.

46 Time chartered: Hired by chartering companies on a daily rate and the contract usually lasts at least one year

Flag FOC

Ship GRT 55,000 approximately

Ship DWT 90,000 approximately

Size in relation to worldwide fleet Top 17% o f worldwide fleet

Built in year Early 1990

Type o f cargo carried Various types o f crude oil

Trading area North America

Number o f seafarers Around 22

Nationality o f seafarers From East Europe and Far East

Table 28: Key information o f Ship-A2.

Finally, the data on PSC inspections and company records show that Ship-A2 held an above average record in the fleet. Except in the year 2004, for the period between 2000 and 2006 the PSC inspectors did not point out any deficiency nor did they ever detain the ship. Thus, it suggests that the safety standard of Ship-A2 was also better than the fleet’s average. Company-A PSC deficiency per inspection ratio Ship-A2 PSC deficiency per inspection ratio Company-A PSC detention per inspection ratio expressed in % Ship-A2 PSC detention per inspection ratio expressed in % 2000 _1.67 0.00 _{6.67% 0.00%} 2002 _0.28 0.00 _{0.00% 0.00%} 2004 _{1.17 3.33 0.00% 0.00%} 2006 _1.45 0.00 _0.00% 0.00%

Table 29: Position o f Ship-A2 in the overall PSC records o f Company-A, 2000-2006.

With this overview of Company-A and its two ships the discussion now moves to highlight the important features of Company-B and the Ships-Bl and B2.

4.3 Case Study: Company-B

Introduction

Company-B was a technical ship management unit of a ship-owning company which only owned tankers. It was located in Europe and employed a group of managers and technical experts to operate the ship management unit of the business. The company also had a separate tanker chartering unit which looked into the commercial activities of the tankers. The ship management unit of the company is specifically identified as Company-B (see figure below).

Other Activities The Company Tanker Chartering Ship Management (Company-B)

Figure 21: Company-B within the com pany’s wider business setup.

Although Company-A, which offered third-party ship management services to different ship-owners, and Company-B, which managed the company’s own ships, had significantly different approaches to the business o f ship operation their functions were very similar.

4.3.1 Company Function

Company-B managed between 8 and 15 tankers which predominantly operated in Europe. For the purpose o f calculating the balance sheet, Company-B was considered a separate entity within the wider company. It acted as a service provider as it did not bring in any revenue to the business. The costs incurred by this unit in operating the ships were considered as ‘expenses’ to the ship-owning business. The main costs included:

1. The tax, repair, survey and maintenance cost o f the tankers

2. The wages and training expenses o f the seafarers and their travel costs 3. The wages and training expenses o f the managers

4. The cost o f maintaining the office premises

The tankers of Company-B carried clean petroleum products47 and operated in various ports in Europe. The size o f the tankers ranged from 3000 to 9000 tons GRT. About half of the fleet was registered with TMN and the other with FOC. All ships in the fleet carried company’s logo on their funnels and their names followed a particular pattern. All the ships

47 Clean Petroleum Product (CPP) is a range o f oil products obtained after refining and distilling crude oil. CPP starts from Gasoil and get finer. It is used by finer machineries such as cars (gasoline) and aircrafts (Jet A -l)

in the fleet were between five and fifteen years old. The key features of the ships managed by Company-B are shown in the table below.

Location Europe

Type o f company Company’s own management

Total number o f tankers Between 8 and 15

Size o f ships Between 2000 and 10,000 GRT

Ship trading area Mainly European waters

Flag States Both TMN such as UK and FOC, such as Liberia

Total number o f office employees Around 40

Total number o f seafarers Sailing around 180 and on leave another around 120 Table 30: Kay features o f Company-B.

Company-B was a Public Limited Company (PLC). It had a number of shareholders which included even international fund management groups. The company’s share index over the period between 2001 and 2005 indicated a significant rise. Its data also showed that during this period its turnover and revenue grew by around 20% although during the same period its asset dropped by around 10%. However, the company’s annual report highlighted that the decrease in the ship-owning asset was due to the company’s current fleet renewal programme.

In 2005, the fleet carried out over one thousand voyages by calling over 2000 ports in Europe and transported over four million tons of oil-product. The company document also indicated that a substantial percentage of its business was chartered by the Oil Majors, such as BP, Shell and Exxon. It showed that Company-B had nearly two-thirds of its business through Contract of Affreightment (CoA)48 with the Oil Majors.

The implementation of the SMS and the chartering procedure were common to the entire fleet. Although this section focuses on presenting the important features of the Company-B, for the purpose of appreciating its functions better, some of the main functions of its chartering counterpart are shown first. The chartering unit of the company was responsible for maximising the employment opportunities of the ships. The interview of the managers revealed that one of the major aims of the chartering unit was to secure Co A with the Oil

48 Contract o f Affreightment (CoA) was between the shipper (Oil Major) and the ship-owner (Company-B)