COMMENT Will SMM be the turning point, or will it be business as usual? The bi-ennual fun of rushing headlong through exhibition halls knocking countless people out of the way to make an appointment is nearly upon us. This, as if it would need any introduction, will shortly be SMM week. "Bigger, better, more visitors, more stands, more halls" - appear on every press release. And indeed, ever since your Editor first attended the show, which was longer then he cares to remember, it has indeed become bigger and better. Fed by the gigantic world orderbook, the equipment suppliers have never had it so good. In fact, the only worry seems to be how to manufacture and deliver that piece of equipment on time and within budget. 'Where will it all end?' the cynics ask. Will the economic situation cause a slowdown in vessel ordering? But, with most yards hanging the 'full up' sign outside until 2011-2012, the suppliers are still sitting pretty. Many have also signed lucrative after sales deals. One manufacturer told TANKER<strong>Operator</strong> a couple of years ago, that after sales and service etc accounted for more than 50% of the company's turnover. With all the various rules and recommendations from the many regulators on the horizon, the equipment industry will doubtless continue to reap the rewards of retrofitting and installing new equipment on newbuildings - ballast water treatment plants being the prime example just now. Like the Greeks highlighted in our June issue, the Germans have been major investors in new tonnage, but mainly in box ships. However, the various KG funds have now opened up to other types of vessels, including tankers. All is not rosy, however, as in what could turn out to be the shape of things to come, the German banks have almost ceased lending to KG fund investors, leaving the shipping companies who rely on KG type 02 Product tankers in demand It would seem the consolidation bug has struck the product tanker industry yet again. Following relatively closely on TORM/OSG's buyout of OMI, Moller-Maersk has shaken the industry with an agreed bid for Broström. Interestingly, the offer was formally made through a company called Maersk Product <strong>Tanker</strong>s AB, a wholly owned subsidiary of AP Møller - Mærsk. "The scale of the combined operation will enable us to offer a superior worldwide service through a large, modern and homogeneous fleet. We need scale to ensure our organisation is cost effective and for customers to have easy access to chartering offices globally. "Combining Maersk <strong>Tanker</strong>s and Broström's scale with skilled and dedicated employees will further enhance our competitive position and create the world's leading product tanker company", Søren Skou, Maersk <strong>Tanker</strong>s' ceo said when announcing the deal. Until this announcement, the No 1 position in product tankers was held by TORM, following the OMI buyout, but with more than 130 vessels both owned and long term chartered, the new combined operation will claim that title. Maersk also said that the demand for energy transportation was funding bereft of investment for their projects. Without the proper finance for these projects, the shipyards will slowly run out of orders, which in turn will have a knock-on effect on the equipment suppliers. However, this is the 'worst case' scenario. We do not appear to have reached such a low point thus far, although the money men (and women) are warning of 'doom and gloom' next year. There are many problems facing the shipping industry, most notably operating costs. Most of them if not all will be discussed at SMM and solutions found, but havn't we been talking about similar problems for many years to varying degrees? I admit to being old enough to remember slow steaming in the 1970s and 1980s when the price of fuel rocketed, resulting in the Norwegian Fjords being awash with VLCCs and ULCCs. It was difficult to get finance in those days, due to low earnings, leading to negative equity. At the time, some even blamed to banks for the shipping crisis for being too free with their money and not undertaking proper credit checks. We can't accuse them of that in today's credit crunch aftermath. Two problems stand out above all- the perceived lack of experienced seafarers and the environment. In Germany, positive steps are being taken to recruit and train not only seafarers, but also office staff in the maritime field. Environmental issues are also being addressed, mainly by those seeking to reduce emissions and the polluting of the oceans, although like many things, opinions vary not necessarily for the right reasons. Will we be in time to address these issues for the better of the shipping industry and even more important- for mankind? Time alone will tell. The atmosphere at this year's SMM could be rather strange as on the one hand there is still a state of euphoria over the shipping industry's recent strength and on the other apprehension over what the next year or so will bring. expected to continue to grow, which together with the IMO's phase out of single hull tankers by 2010, underlined the positive business environment for the tanker market. It was in this light that AP Møller - Maersk had previously stated its intention to invest in Maersk <strong>Tanker</strong>s as one of the growth areas within the group. Of course, the regulation authorities will have a look at the deal before it is allowed to go through, but this will probably be a formality. Once it is rubber stamped, Maersk said it would evaluate how the various partnerships and agreements could be integrated into the business structure. One partnership was with Hamburg-based Offen Tankschiffreederei, which was to put eight Hyundai Mipo type 37,000 dwt product tankers into Broström's fleet, adding to the eight already operated by the Gothenburg-based concern. Both companies are in favour of operating in pooling arrangements and this move will no doubt considerably strengthen Maersk <strong>Tanker</strong>s' Handytankers pool. Other pool partners also operate the now standard Hyundai Mipo 37,000 dwt type tankers, most notably another Copenhagen-based operation, Norient Product Pool, managed jointly by Interorient and Norden. � TANKER<strong>Operator</strong> � August/September 2008 TO
First Class tankers: a new perspective TAKING TANKERS SERIOUSLY Germanischer Lloyd Aktiengesellschaft Vorsetzen 35 · 20459 Hamburg, Germany Phone +49 40 36149-0 · Fax +49 40 36149-200 headoffice@gl-group.com · www.gl-group.com Stand No. 150, Hall B4 See you at SMM 2008 <strong>Tanker</strong>s are like a work of art – the more quality they offer, the more valuable they are. Welcome to GL, your First Class partner in improving the operational safety and profitability of your tankers!