Classification societies busy as ever but owners now look to new services

SLOWDOWN is not really a word classification societies understand right now – because 2009 continues to be as busy as ever, as the sector copes with the huge numbers of newbuildings ordered in more heady times.
Class societies are expanding their global networks and still talking about recruitment and additional training, partly as they work hard to meet the demands of massive orderbooks but also because shipowners are demanding some very different types of services – to support scrapping, lay-up and cost-efficiency drives, to name a few.
“We still have this huge orderbook and we have adjusted in respect of numbers of staff and trained up a lot of additional surveyors to deal with this,” Torsten Schramm, chief operating officer at Germanischer Lloyd said.
“We have seen a few cancellations in the course of the early months of 2009 but these have not been significant. We have many ships due for delivery in 2009, so our work continues. However, we will begin to see some effect [of the slowdown] in 2010. In the course of this year, we have seen hardly any newbuilding contracts signed.
“Having said that, with 80m gt in service and a lot of ships under construction, we can compensate a little bit if from next year we have less newbuilding activity. We will have more fleet-in-service activity and it is also a good time for developing new services such as our lay-up consultancy and fuel-efficiency campaign.
“We have even decided to build up a new business segment within GL which has a working title of ‘new services/maritime solutions’”.
DNV’s orderbook stands at 1,300 vessels totalling 58m gt, even after about 90 cancellations – “not a huge number” compared to the total size of the orderbook, head of maritime Tor Svensen said.
However, he said there had been “almost zero contracts” since September.
“We have recorded about 30 newbuilding contracts in the world in 2009 so far – and we have six of these,” he said.
“This includes specialist vessels – I don’t think we will see much in the other sectors, although I think both offshore and tankers will come back faster than bulk or containerships.
“There is still an underlying demand for fleet renewal but I think the market has to get itself into balance before that takes place.”
Meanwhile, in the industry in general there is a lot of focus now on product development, Mr Svensen said.
“In some ways, the best innovations do not happen at the top of the peak market – they happen when you have to innovate a little bit more, and that is more in the down cycle.”
Procedures
Oh Gyun-kong, president and chief executive of the Korean Register and chairman of the International Association of Classification Societies (IACS), hinted in March that class-hopping might become more prevalent as owners cut costs – but this has so far not apparently been an issue.
“I mentioned a single isolated case to highlight the possibility that in difficult economic times there may be cases [of class-hopping],” Mr Oh said.
“However, there have been no reports from IACS members where transfer of class is conducted within set IACS procedures.”
He said: “Obviously, the difficulties caused by the global financial crisis and the credit squeeze have affected class and we’ve seen vessels being laid up and shipbuilding orders cancelled. IACS and its members realise that this is a crisis affecting everyone in the shipping, shipbuilding and classification industry and we are committed to doing whatever we can to cooperate with our stakeholders and help them cope with and overcome this economic downturn.”
Deadline
However, he warned: “In doing so, class and IACS cannot and will not accept any compromise on safety or risk to the marine environment. In some quarters there might be a move to cut costs but class will resist this if it results in a reduction in quality or safety.”
Environmental issues are more important than they have ever been, Mr Oh said.
“With the current downturn in freight rates, an oversupply of tonnage and a looming deadline for the phase-out of certain single-hull vessels, it is inevitable that we will see an increase in scrapping. There are a number of excellent facilities available where vessels can be disposed of with minimum impact on both the environment and safety, and class, along with other industry sectors, should do all they can to encourage this.”
He added: “During my chairmanship of IACS and beyond, class will continually conduct research to make a significant contribution to the work of the industry regulators on the reduction of air pollution – SOx, NOx and other greenhouse gases.”