February 2010 UACC NEWS 100 PER CENT UTILIZATION... In 2nd Half of 2009, the eight modern ships in our fleet managed to achieve zero off hire and full utilization, which was an important achievement and contribution during a challenging earnings environment. UACC aspires to be a world class shipping company of choice, linking the Middle East to the rest of the world. We are well on our way to creating the original business objective, which is to establish a flexible and highly efficient shipping company delivering value added services to clients and industry partners through cost effective and safe practices, as well as timely and accurate decision making. We strive to grow the Company in the coming years to meet our strategy and Business Plan, which calls for a fleet of between 20 and 30 MR (medium range) and LR1 (long range) tankers. D e s p i t e a n u n p r e c e d e n t e d financial crisis and world recession, we have financially managed to c o m e o u t o f 2 0 0 9 i n a very satisfactory way. The ships in our fleet managed to achieve more than 95% utilization/on hire days in 2009 even though a couple of our ships on an isolated basis experienced operational problems and extended drydocking during parts of the Year. However, the eight modern ships in our fleet in fact had 100% utilization during the 2 nd Half of 2009, which is an impressive number indeed! We therefore thank the dedicated staff on board, as well as our technical m a n a g e r s f o r t h e i m p o r t a n t contribution you have rendered to UACC. Also the UACC Oil Major Approval Target that we continuously m o n i t o r a n d f o c u s o n, w a s consistently above the target we have set. Well done to the command on board for optimizing an area which commercially is of utmost importance. Jens Groenning, Chief Executive Officer Year 2010 has started with cold weather in the Western Hemisphere and spot rates on the rise. This is indeed a good start to the Year, a year where we look forward to enjoying your continuous support and professionalism.
GALLERY COMPANY s ORGANIZATION Since our last quarterly report we have new colleagues joining team UACC. Senior Vice president- Finance Mr Ketil Ostern joined 1st November 2009. Senior Vice president Commercial Mr Mathieu Philippe will start 1 st March 2010.We are very happy to have them on board and are sure that company will benefit from the enormous experience and network they are bringing with them. We are presently 9 in our office namely:- 1. CEO - Mr Jens Gronning 2. SVP-Finance Mr Ketil Ostern 3. Finance Manager- Mr Nader Tehrani 4. SVP-Commercial Mr Mathieu Philippe 5. Operations Manager Capt Vikas Malhan 6. VP Technical Capt Johan Thuresson 7. Technical Manager Mr Bruce Irving 8. Admin Manager Ms Deepa Pushparaj 9. Chief Accountant Ms Marita T Conejero FINANCIALS Even though our consolidated result will only be available in the next News-letter, we are confident that we will manage to turn in a satisfactory result with due consideration to the tough environment we have been operating in 2009. PERIOD MARKET This graph illustrates how 1 year Time Charter rate per day has taken a downward trend on MR and LR1 segment in 2009. 1 Year Time Charter Rate for a Medium Range ( MR ) product tanker has increased a bit lately, and is currently around $12,500. A modern Panamax LR1 tanker is getting around $17,000 today. This marks an about 50% drop for MR respectively about 47% drop for LR1 from their peak in 2008. $30,000 $25,000 $20,000 $15,000 $10,000 MR47 LR1 $5,000 We are continously looking for good pictures for our web-site and company presentations, and your contribution in this respect is highly appreciated. Every day pictures on board, such as maintenance on deck or in the engine room, are often more interesting than the traditional hull pictures. $0 Jan Feb Mar Apr The freight market have improved a little recently May Jun Jul Aug Sep Oct Nov Dec Jan 2009 2010
News from the Shipping Industry 11 December 2009 - EU Low Sulphur Directive As Members will be aware a 0.1% sulphur fuel limit will apply in EU ports and anchorages from 01 January 2010. There have been significant concerns raised by the shipping industry in connection with the safety of using such fuels in boilers. There has been no official response to these concerns from the commission as yet. However, the International Chamber of Shipping have published guidance on the matter which is summarized below. Following lobbying by shipowner a s s o c i a t i o n s a n d e q u i p m e n t manufacturers, the Commission (DG Environment) has been reviewing the underlying technical issues and concerns. The indications are that it will be suggesting to Member States t h a t t h e y s h o u l d t a k e " d u e consideration of the safety risks that 0.1% in bunker fuel use might entail and to exercise flexibility in relation to ships that can demonstrate their p l a n s f o r c o m p l i a n c e u n t i l September 2010". Unfortunately there is no guarantee that individual port States within the EU will not apply the law strictly. As such Members should check with their local agents as to the situation in the EU countries to which they trade. Even where port States are prepared to grant dispensation this will be based upon documentary evidence that the ship is aware of the directive and that owners/ operators are taking appropriate steps to become compliant. S u c h e v i d e n c e m a y i n c l u d e information received from boiler manufacturers, or conversion contractors on the equipment required, its availability and a timescale to complete the work. Class society letters are also likely to be helpful. To avoid problems with port State authorities Members should take action immediately. Life Buoy:- The Norwegian Marine Directorate has issued advice in respect of two models of lifebuoy that have been found to sink when used. Obviously this trait is highly undesirable for a lifebuoy. The problems appear to stem from holes located under the retro-reflective tape that are designed to allow some water ingress but that should stop the complete flooding of the lifebuoy. The models involved are: - EVAL, Lifebuoy Code 542 - VELERIA - SAN GIORGIO - ITALY - Altura Lifebuoy 2.5kg The manufacturers of the Altura L i f e b u o y 2. 5 k g h a v e i s s u e d guidance for inspection of potentially defective lifebuoys. Members with EVAL lifebuoys o n b o a r d s h o u l d c o n t a c t t h e manufacturers for further advice on inspection of their lifebuoys. Enclosed Space Entry Statistics:- I M O h a v e r e c e n t l y p r o d u c e d statistics that show that since the I M O r e s o l u t i o n A. 8 6 4 ( 2 0 ), 'Recommendations for entering enclosed spaces aboard ships' was adopted, there have been 101 reported enclosed space incidents causing 93 deaths and 96 injuries. The document from the subcommittee on dangerous goods, s o l i d c a r g o e s a n d c o n t a i n e r s highlights the following areas of concern: - lack of knowledge, training and understanding of the dangers of entering enclosed spaces; - Personal Protective Equipment (PPE) or rescue equipment not being used, not available, of inappropriate type, i m p r o p e r l y u s e d, o r i n disrepair; - i n a d e q u a t e o r n o n - e x i s t e n t signage; - i n a d e q u a t e o r n o n - e x i s t e n t identification of enclosed spaces on board; - i n a d e q u a c i e s i n S a f e t y Management Systems; and, - poor management commitment and oversight. The document goes on to state that t r a i n i n g w a s c o n s i d e r e d a s inadequate and that both safe entry into, and safe rescue from, enclosed space drills were not being carried out. The document then provides brief comments on the circumstances of each reported accident which provides a useful overview of the problems experienced with enclosed space entry. Anchoring:- A number of recent incidents have highlighted the need for vessels, and their Masters, to exercise particular care when selecting and approaching an anchorage. There have been numerous 'minor' collision incidents in crowded anchorages, and several more high profile groundings and collisions. Another problem that has arisen in the Malacca and Singapore Straits is that of vessels anchoring within traffic separation scheme boundaries and within the precautionary areas. Anchoring in such areas is in contravention of Rule 10 (g) of the COLREGS. Indeed, such is the extent of this problem that the littoral states in this area have decided to take action against vessels anchoring in such areas. Vessels anchoring within these areas, or between the landward limits of the TSS and the approaches t o t h e p o r t s, w i l l b e c l o s e l y m o n i t o r e d b y t h e m a r i t i m e authorities of these States. The relevant authority will then take appropriate action, which may include reporting the vessel to its flag State. There have been several reported cases of collision incidents involving vessels, as well as reports on submarine cable damage caused by vessels anchoring at non-designated anchorages in the area. If submarine cable damage occurs the relevant authority will promptly share information with the cable owners or other relevant parties to facilitate legal proceedings for compensation from the vessel owners. Members are reminded of the i m p o r t a n c e o f c h o o s i n g a n appropriate anchorage, approaching the anchorage with care and of maintaining an effective anchor watch at all times.
Vetting Status Commercial and vetting aspect of the vessels go hand in hand. It can not be over emphasized that Oil M a j o r A p p r o v a l s a r e v i t a l l y important in order to maintain the vessel as Tradable in this tight market condition. Its of utmost importance that vessel is in state of readiness at all times to put up a good show during inspection. We have noticed that at times vetting inspectors are unreasonable in giving the observations to the v e s s e l i n t h a t c a s e i n d u e consultation with your Technical/ vetting department Masters should not hesitate to challenge the same. We as owners look at these vetting inspection result (observation list) as mirror image of how the vessel is being maintained and managed. UACC s oil major approval target ( OMAT-4 ) that we are requesting our managers to adhere to, is presently maintaining an average of 5.9 oil major approvals per ship compared to last month of 6.1. Reason for downward trend is the year end/festive season and non availability of vetting inspectors, as well as trading pattern of the vessels. Although the downward trend presently doesn t effect the trading ability of the vessels we are very hopeful of upward trend in first two months of 2010. This illustrates vetting status on board our fleet from August to Dec 2009. Refresher from School Days The Protection and Indemnity Clubs, formed by ship owners to secure cover for risks which are outside the normal marine policy are generally known as P & I Clubs. Huge financial burden or risk is involved in the shipping business; in connection with the cost of the ship, value of cargo, voyage commitments, crew etc. The sea is a potential danger zone where loss of life and property cannot be predicted. Therefore, I n s u r a n c e a n d r e - i n s u r a n c e Companies or hull underwriters restrict their liability to the extend they are safe in providing cover. To solve the problems, groups of shipowners formed themselves into mutual associations and agreed to share each other s claims. Thus ship-owners provide themselves a security platform to mitigate any sudden financial setback in the course of their business on the high seas. A P & I Club functions as a c o m b i n a t i o n o f a n i n s u ra n c e company, a law firm and a loss adjuster. Precisely it protects and indemnifies the member. The ship owner and the Club works together to handle every aspect of a casualty; from finding experts and contractors to manage the casualty, face legal proceedings and settlement of liability claims. Clubs cover a wide range of liabilities including personal injury to crew, repatriation of seamen and passengers on board, cargo loss and damage, oil pollution, collision related damages, wreck r e m o v a l a n d d o c k / j e t t y / p i e r damage. Clubs also provide services to its members on claims, legal issues and loss prevention, and often play a leading role in the management of casualties. These clubs that took shape in the middle of the nineteenth century have now developed into thirteen underwriting member clubs of the I n t e r n a t i o n a l G r o u p o f P & I Clubs ( the group ). Between them, they provide liability cover for approximately 90% of the world s ocean-going tonnage. Each Group club is an independent, non-profit m a k i n g m u t u a l i n s u r a n c e association, providing cover for its ship-owner and charterer members against third party liabilities relating to the use and operation of ships. Each club is controlled by its members through a board of directors or committee elected from the membership. One of the main roles of the Group is coordinating the operation and regulation of the club s claim-sharing agreement (the Pooling Agreement). All qualifying claims in excess of $7 millio are shared between clubs in accordance with the terms of the Pooling Agreement by which the clubs reinsure each other for claims in excess of $7 million. Much of the Group's work involves defining and refining the scope of cover for pool claims and the rules and guidelines under which claims are shared. This c l a i m - s h a r i n g a g r e e m e n t i s underpinned by a very extensive market reinsurance programme which the Group clubs arrange. The Group also provides a forum for Group clubs to develop common policy and promote ship-owners interests in relation to liability and insurance issues. The Group provides an effective voice for the members of the individual clubs to speak collectively on important industry issues, for example on international conventions, treaties and legislation affecting ship-owners liabilities and related insurance matters. Again, it provides a useful forum for sharing information on general issues such as oil pollution and personal injury as well as current issues such as maritime security, places of refuge for ships in distress, carriage of particular cargoes etc.
The Club s ability to deal with casualty of any magnitude is directly proportional to the ability of the members to pay up. The money which a member draws, to set off the damages caused, has to be replaced sooner or later. The more the members receive from the P & I Club, the more he must pay back, to ensure the organization remain solvent. Calls are made from time to time by the Clubs to its members to replenish their funds. When and if severe losses occur repeatedly, the c a l l s m a d e b y t h e c l u b s simultaneously increases. These days, the Admiralty courts are slapping fines in millions for environmental damage caused due to oil spillage. Besides that, the expenses for damage assessment, restoration and clean-up operations are also very high. Under such c i r c u m s t a n c e s a n d w h e n t h e Insurance Companies withdraw to their own hood, P & I Clubs can provide succor to its members. UACC IN THE MEDIA
UNITED ARAB CHEMICAL CARRIERS LTD UASC Building, 8th Floor, Al Garhoud Road, Deira P.O. Box 125445 Dubai United Arab Emirates Tel : + 971 4 2948231 Fax : + 971 4 2948311 Email : info@uacc.ae Web-site : www.uacc.ae