INDEPENDENT

A N N U A L R E V I E W

1996

“Tobecredible,”

class must be

Frank J. Iarossi

T H E C H A L L E N G E

“The Case for the Regulator” ………………………………………………………… 2

William A. O’Neil

Secretary-General, International Maritime Organization

“Ship Ownership in a Highly Regulated Environment” …………………… 4

Richard du Moulin

Chairman, INTERTANKO

Chairman, Marine Transport Lines

Council Member, ABS

“Class — An Independent Arbiter of Standards”……………………………… 6

Frank J. Iarossi

Chairman, ABS

THE ISSUES

Bulk Carrier Safety …………………………………………………………………………9

Port State Control…………………………………………………………………………12

ISM Compliance ……………………………………………………………………………14

Deep Water Exploration ………………………………………………………………16

ISO 14000: Environmental Standards ……………………………………………18

Technical Innovation ……………………………………………………………………20

Enhanced Surveys …………………………………………………………………………22

Information Management ……………………………………………………………24

ACT IV IT IES

1996: The Year in Review ……………………………………………………………27

1997: Looking Ahead ……………………………………………………………………31

Classification Activity ……………………………………………………………………34

OFF ICERS

American Bureau of Shipping ………………………………………………………38

ABS Group of Companies………………………………………………………………40

Our MissionThe mission of the American Bureau of Shippingis to serve the public interest as well as the needs of our clients by promoting the security of life, property and the natural environment primarily through the developmentand verification of standards for the design,construction and operational maintenance of marine-related facilities.

Quality PolicyIt is the policy of the American Bureau ofShipping to provide quality services in support of our mission and to be responsive to the individual and collective needs of ourclients as well as those of the public at large.

All of our client commitments, supportingactions, and services delivered must be recognized as expressions of quality.

We pledge to monitor our performance as an on-going activity and to strive for continuous improvement.

C O N T E N T S

A BS is a unique, mission driven organization. It faces the daily challenge of satisfying

the multiple interests of the public, of industry and of its clients.

Within our traditional mission of “promoting the security of life, property and the natural environment” our obligation is to an even widerrange of interests including shipowners, ship-builders, underwriters, charterers and both Flag State and Port State administrations. Each of these relies onthe impartial application of our expertise. So, too, doesthe public and, perhaps most importantly, the seafarerswho entrust their lives to vessels classed by ABS.

During this past year, the diversified ABS Group ofCompanies also defined a unique vision. It’s mission is to assist its clients to “improve the safety, enhance the quality and minimize the environmental impact of their activities.”

These two missions define the ABS organization, one which is committed to the highest standards of safety, integrity, service and quality.

Frank J. IarossiChairman, ABS

1

W hen IMO met for the first time in 1959 its first concern was toexamine existing regulations deal-

ing with maritime safety and marine pollutionfrom ships and fill in any gaps. There were somany that the Organization was kept busy forthe next thirty years adopting new conventions,protocols and codes and amending the onesthat already existed.

It was a busy period which established IMO asa respected legislative body, but most delegateswho attend IMO meetings would agree that theage of control by regulation is almost over. Itwill occasionally be necessary to adopt a newconvention and it will always be important tokeep existing regulations under review and toupdate them when necessary. But the idea thatproblems can be solved simply by adopting aconvention is no longer credible.

What we have to do now is to make sure thatthe regulations that already exist are properlyimplemented. That sounds obvious enough, but our experience shows that it is also very difficult to do.

Ratifying an IMO convention imposes certainobligations. Parties to a convention in effectguarantee that all ships flying their flag meetthe standards laid down in the convention.Since nowadays the great majority of maritimenations have accepted all the most importantIMO treaties, that should mean that their ship-ping accident rates are more or less the same.But in practice we know that the rates in somefleets are a hundred times worse than in others.That can only be because of the way the con-ventions are implemented by the governments

concerned and by the shipowners who chooseto fly their flag.

Implementation involves setting up a properlegal system and a good administration. Itrequires surveyors and inspectors, proper train-ing and good procedures. All of this costsmoney and takes time and effort to develop. In some countries most of these are absent andit is the failure of Flag States to implementmeasures properly that has led to the rise ofPort State Control around the world with IMO’sstrong support.

In these circumstances there is little point inadding new laws to the ones that we know arenot being properly enforced. And in any case,the danger with relying solely on regulation is that legislative solutions often have little todo with the cause of the accident.

The EXXON VALDEZ spill was caused by a navigational mistake. The most celebrated outcome was the introduction of mandatorydouble hulls on tankers — which do nothing to improve navigation and might not even have prevented the Alaska spill in any case.

If the shipping community wants to avoid similar actions in the future it will have tomake sure that existing measures are properlyenforced. Although it is the government thatratifies the convention and agrees to implementits provisions, it is the shipowners and theindustry in general that have the greatest practical responsibility.

It is the shipowner who best knows the condi-tion of the ships and who selects the flag ofregistry, not the other way round. Can we hon-estly deny that some shipowners register theirships in certain countries because they knowtheir procedures relating to quality are lax?

The importance of implementation has beenrecognized by IMO for many years, but justrecently there has been a change of emphasis.The amendments to the InternationalConvention on Standards of Training,Certification and Watchkeeping for Seafarers

2

T H E C H A L L E N G E

“The age of control by regulation

is almost over — the idea that

problems can be solved simply

by adopting a convention is no

longer credible.”

William A. O’Neil

Secretary-General,International MaritimeOrganization

REGULATORthe CASE for the

ISM3

“Problems can no longer be solvedby regulations alone. What wehave to look for is a change of attitude within the industry as a whole. We have to insistthat standards are not onlymaintained but raised. We haveto ensure that countries andcompanies wishing to profit from shipping all have to play by the same rules.”

STCW

[STCW], 1978, which entered into force on 1 February this year, have given IMO the powerto audit governments’ abilities to implementthe treaty. They will have to be able to prove to the IMO Membership that they have theadministration, educational system and certification procedures required to put theamendments into effect. If they succeed they will be able to issue certificates to theirseafarers that the whole world will accept. If they fail they could face problems, becauseother governments could refuse to accept certificates issued on their behalf.

This is a powerful incentive to conform to in-ternational standards. And although it has beenintroduced by means of regulation, in effect itrepresents a new determination by IMO to makesure that regulations are enforced. Nobody —especially the shipowners who have complainedabout too many regulations in the past — canobject to that, can they?

s o l a sm a r p o l

No other sector of the shipping indus-try is faced by such a proliferation of constantly evolving regulatory

controls as is the tanker operator. No othersector carries such a negative perception inthe eyes of the general public. In large part ithas been that public opprobrium which has

turned the tanker sector into a lightning rodfor regulatory control. Owners of other vesseltypes, ranging from ferry operators to ourbulk sector brethren, are finding that similar,high profile incidents to those which havedriven the regulators’ response to the trans-portation of oil are increasingly affectingtheir own operations.

It was the tanker industry’s inability to regulateitself effectively in the 1980s that has brought usto this juncture. With hindsight, it was far froman unblemished record. Speculators and assetplayers became involved. The maintenance bud-gets of some fleets were cut, perhaps too far.

The entire industry became tarred by a brushwielded against a few. The generally negativeperception of the tanker industry, one which had formed thirty years ago with the TORREY

CANYON and which had been reinforced by regular incidents thereafter, was cemented inplace by the EXXON VALDEZ as the last decadedrew to a close.

Tankers had become the visible face of theshipping industry to the general public. Tothem tankers carry oil and it is this oil whichsoaks seabirds and blackens beaches. The factthat the tanker industry had been able toreduce the volume of oil reaching the sea, both operationally and accidentally combined,by 85 per cent over the previous 25 years,received scant public attention and made littleimpact with regulators.

The reality is that about 20 per cent of the costof a new tanker is now earmarked for safetyand environmental features, double the level of the commitment made by land-based manufacturing industries.

We have been inundated with a flurry of newregulations which have created fundamentalchanges in the manner in which ships are

built, maintained and operated. Some of theseregulations have been aimed squarely at thetanker industry. But many of them, spawned by an increasingly activist official oversight,have much wider application.

All shipowners are now wrestling with theimplications of the International SafetyManagement Code (ISM). All shipowners are now subject to vastly more stringent Port State scrutiny.

The International Maritime Organization (IMO)has led this regulatory revolution. It has foundwilling allies in the most prominent Port Statesand the most professional Flag States. Class hasrediscovered its core mission of interpretingthese new requirements through the impositionof reasonable safety standards, and is pursuingthat intent with renewed zeal.

4

T H E C H A L L E N G E

“The reality is that about 20 per cent of the cost of a new tanker is earmarked for safety and environmentalfeatures, double the level of the commitment made by land-based manufacturing industries.”

Richard du Moulin

Chairman, INTERTANKOChairman, MarineTransport LinesCouncil Member, ABS

REGULATEDship OWNERSHIP in a HIGHLY

environment

There are many owners who resent this intru-sion. Some of them are highly professional,responsible operators who have always accededto the highest standards. Their operations havebeen made more complex and costly as theyare forced to implement additional safety andquality layers upon those they already have inplace. Regrettably other owners are equallyresentful but for the opposite reasons. Theywould prefer to operate in a free and unfet-tered manner, marching to the beat of theirown safety drum which, too often, is little morethan a muffled tap.

Member owners of INTERTANKO have adopteda more pragmatic response to this changedenvironment. To deflect punitive regulationsand to aspire to the zero defect standard whichlegislators and the general public insist upon,the tanker industry must prove that, not only isthe regulatory regime by which it is governed arigorous and demanding one, but also that itbelieves in this regime, lives by it, and will nottolerate those who do not.

INTERTANKO has met this challenge by maintaining a broad based association withfirm criteria for membership. These criteria,which apply to all tankers controlled by eachmember, include classification with an IACSmember society, such as ABS, good standing in a P&I Club, adequate pollution coverage and completed ISM certification before the July 1998 implementation date. The fact that our association has expelled a large member for failing to comply with acceptedquality assurance and ship classification criteria is testament to our commitment tothese standards.

Easy as it may be to lament this trend towardsincreased regulation, I believe that the tankersector’s experience should be taken as a rolemodel for the manner in which the entireshipping industry conducts its business as weapproach a new millennium.

While much of the shipping industry continuesto stonewall in its acceptance of the ISMstandards, almost 80 per cent of INTERTANKO’smembers are within schedule for full compli-ance by July 1997, a full year ahead of thedeadline. We have stressed to the remainingfew that the process of compliance cannot be underestimated and that future member-ship rests upon their doing so.

The association firmly believes that the ISMCode marks an important step forward in thepursuit of the dual goals of safer ships andcleaner seas. The Code is a universal standardthat our industry can hold up to the public asevidence of its commitment.

Its authority stems from the major commit-ment which it demands from everyone in the transport chain, from crews and office staff to customers. Since the class societies are thepredominant group certifying ISM, it is criticalthat they are rigorous and consistent when certifying operators. Any slack will damage the entire shipping industry.

But we, as responsible owners, must participatein the future regulatory process. The sweep ofthe current regulatory changes is so broad thatit is serving to unite once disparate parts of theindustry. Trade organizations and businessgroups have banded together to speak with acommon voice to ensure that rulemakings arebased on solutions that are sound from a practical, safety and commercial point of view.

Industry also sees merit, now more than everbefore, in leading by example and promotingits own initiatives to preclude the need for further regulations that may be unnecessarilyonerous or unilateral in nature.

5

“The challenge is to utilize these

latest developments to optimum

effect to deter new, overly strict

or misguidedly well-intentioned

regulations. And we must, as an

industry, replace the negative

perception which shadows our

operations, with an awareness

of the reality which is that of

a safe, responsible, efficient

and professionally self-regulated

shipping industry.”

T here is no disputing that the shippingindustry is more tightly regulated nowthan at any time in its history. Yet there

is also little dispute that the operation of shipshas never been held to higher, or safer stan-dards, requirements which are reflected indeclining casualty statistics and reduced loss ofprecious life. Yet it is often the system of classi-fication which is castigated by shipowners forimposing new safety standards, rather than theregulators who frame those standards, or theless scrupulous owners who encourage such legislative initiatives.

Rarely have the regulations which have led tothese improvements been welcomed by allshipowners. Initially each has been seen aseither an infringement on time honored oper-ating methods or an additional cost burden ofsometimes arguable efficacy. Yet, in time, eachnew regulatory initiative has been absorbed bythe industry to become the new and acceptedstandard of operation. This is a tribute to theindustry’s ability to adapt to changing circum-stances, albeit reluctantly.

As an industry we are both blessed and cursedby a short memory. Adaptability is ourstrength. In so quickly adapting to each newset of standards, we tend to forget the forceswhich led to their formulation. It is this passivity which breeds still further regulation.At the present time the bulk carrier sector riskssuch a response as it wrestles with proposednew standards for the construction and maintenance of dry bulk vessels.

Even a short memory would arouse warningsignals to such an approach. Less than tenyears ago, with the reputation and credibilityof class sadly tattered, port state authoritiesincreased their oversight of shipowners’ opera-tions to ensure acceptable standards wereapplied, monitored and achieved by the indus-try. Class, quite simply, was not doing its job.At ABS, and within IACS, we have learned fromthat chastening experience. Safety, quality andprotection of the environment have been thewatchwords which have governed our subse-quent conduct.

We have recommitted to our obligation to theindustry to assist it in meeting those standardsthrough self-regulation. That obligation is to amuch wider range of interests than shipowners.The insurance industry, Flag States, Port Statesand charterers rely on the impartial applicationof our expertise, as do the public and theworld’s mariners. To be credible to each ofthese interests, class must be independent. It cannot be the servant of the shipowner.

Nor is it the unquestioning servant of the regulator. Perhaps no issue better exemplifiesthe unique role of class than does the unfold-ing debate over bulk carrier safety. To someowners class is currently viewed as a high-handed imposer of unreasonable standards. We take a different perspective.

Ships which, when they were designed andbuilt, we believed to be structurally sound onthe basis of the empirical knowledge and tech-nology available to classification societies atthe time, began to experience greater effectsfrom corrosion and fatigue than would havebeen expected from industry history. Someships were lost. Many seafarers tragically lost

6

T H E C H A L L E N G E

“Classification is the mechanismby which the international shipping industry has traditionallyregulated itself. If, in the future,the shipping industry is loath to regulate itself, there is no shortage of legislative and regulatory bodies eager to fillthat role. A strong, independentsystem of classification is theindustry’s best defense againstsuch an intrusion.”

CLASSan INDEPENDENT

arbiter of standards

Frank J. Iarossi

Chairman, ABS

7

their lives. The industry’s antennae quivered,none more so than the regulators at theInternational Maritime Organization (IMO) and the management at the handful of leadingclassification societies. Quite clearly somethingwas wrong. Quite clearly we, as an industry,needed to take appropriate steps to reduce the level of risk.

It is not up to class to determine the accept-able degree of risk associated with shipping. It is also not possible to mandate an error freeoperating environment. There will always be adegree of risk associated with navigating theuncertain waters of the world’s oceans. It is thetask of our industry and of society in generalto determine, so far as is possible, what level of risk that should be. It is the regulators whoaccept the burden of assessing that risk onbehalf of society. They must take into accountthe degree of technical expertise available at the time. It is the role of classification to provide that technical advice, to help the regulators frame a philosophical demand forsafety into practical, implementable standards.And it is that role which class has played within the bulk carrier debate.

The IMO will codify the new standards. They have sought technical guid-ance from the members of IACS as they grapple with that task. As a result of an exhaustivelydetailed combined research program conducted by an IACSadministered task force, class hasoffered that guidance to the IMO.And as a result of that research,the members of IACS have unani-mously concluded that enhancedstandards, not just for new bulkcarriers, but retroactively applied to existing vessels, are essential ifsafety of life and property at sea is to be effectively provided for.IACS members have elected toinclude these standards within our own technical rules since, once aware of the dangers, wecould not leave it to chance.

In taking this action class has re-asserted its absolute adherence toits basic mandate and mission ofthe protection of life and propertyat sea. In attempting to underminethese actions, certain organizationshave elected to risk seriously, perhaps critically, damaging theindependent credibility of the

primary self-regulating body within the indus-try. Should such an approach prove successful,it will mark a retreat to the dark days of theeighties when the shipping industry left itselfexposed to the intrusive and overly zealousinterference of well-intentioned but technicallynaïve legislators.

“All shipowners should share our

concern at the efforts of some

of their colleagues to force class,

and IACS, into retreat and disunity.

Classification is the mechanism by

which our industry should continue

to regulate itself. The alternatives

are unacceptable.”

I S O

IMOiacs

8

T H E I S S U E S

9

IMO’s intent that 1996 be “the year of thebulk carrier” was emphatically realized.The debate continues in such a manner

that 1997 and 1998 may create a trilogy ofconcern for this vessel type. Efforts by theleading classification societies, which com-prise the membership of the InternationalAssociation of Classification Societies (IACS),to ensure the continued safe operation ofbulk carriers as they age have been vilified by some organizations.

Editorial writers within the trade press havestressed the irony of the dilemma in whichclass now finds itself. A Lloyd’s List editorialsummarized the situation: “Long lambastedfor endangering safety by being too eagerto please their shipowner clients, the societies are now attacked by owners forpursuing this target too vigorously.”

All IACS members have a very clear under-standing of the concerns of the shipowners.But each, individually, also has an equallyclear understanding of its responsibility forensuring safety of life and property, vested inthem by their members and expected of themby the industry in its entirety.

The actions of IACS must be viewed withincontext. In the five year period 1989-94more than thirty bulk carriers were lost,taking with them more than seven hundred seafarers. Such an incidence of loss wasunacceptable. Regulators demanded action.Class, as the repository of technical exper-tise within the industry, responded. As theresearch into the problem by the IACS members expanded, new directives were

“Open warfare is closeto being declaredbetween IACS andthe bulker owners’representative group, Intercargo” Fairplay editorial

“At stake are not only the lives

of seafarers, but possibly

hundreds of millions of dollars

in modification costs.”

Lloyds List analysis

BULKcarrier

SAFETY

10

T H E I S S U E S

issued in an attempt to forestall furthercasualties. Each of those responses has hadimmediate and identifiably beneficial effect,none more so than the Enhanced SurveyProgram (ESP) for bulk carriers.

Since the implementation of that program in July 1993 there has been a significantimprovement in the casualty record of bulkcarriers. The program became the center-piece of the classification bodies’ immediateresponse. Unfortunately, some owners came to believe that ESP, by itself, would be sufficient.

Theirs was an operational reaction. Class isbeholden to different demands. Effective asthe ESP program has proven to be, it has notcurtailed the increasingly wide-ranging andcomplex research upon which IACS membershave embarked.

Some of this research has been conducted in tandem with industry organizations, par-ticularly BIMCO and Intercargo. The researchhas harnessed the very latest and mostsophisticated technology, including ABS’unique SafeHull structural analysis, jointlypooled by the IACS members. It is tech-nology which far outstrips that which wasavailable at the time that the rules which,almost two decades ago, governed the construction of the aging bulk carriers which are now most at risk.

And that research has indicated that structuralmodifications would improve the operational

safety of some of these ships when carryinghigh density cargoes. It is expected that forthcoming unified IACS’ requirements for new vessels will be accepted by the industry,despite the capital cost penalty attached totheir implementation. Opposition has been centered on the amendments to class require-ments for existing vessels.

Although designed and built to the acceptedclassification and international regulatorystandards in force at that time, proving theirsoundness over many years of sturdy service,these older workhorses of the world’s fleet areshowing greater degradation of their structurethan had been projected or catalogued. In theintact condition they continue to serve theirowners well. It is when water finds its wayinto the cargo holds, when these vessels areloaded with high density cargoes, that theyhave been placed in danger.

Critics have alleged that the new IACS require-ments are an admission that class has beenknowingly surveying and approving unsafe ships.Such allegations are repugnant to the moral andprofessional ethics upon which class is founded.

During 1997 the discussions will continuewithin IMO to decide on new statutoryrequirements for existing bulk carriers, as wellas future new construction. The results ofthese discussions will not affect the applica-tions of the IACS requirements which havebeen accepted by each of the IACS membersas a condition of class.

“The IMO sets the objectives. Our job is to set the technical standards. It would have been an abnegation of ourresponsibility if we had justwashed our hands of it and left it to the IMO. We had to come to a decision.” James Bell, Permanent Secretary, IACS

“We should look to the

primary barrier. If you

ensure the hull remains

watertight, is properly

painted and there is no

corrosion, then you don’t

have to worry about the

secondary barrier.”

Bruce Farthing Director, Intercargo

11

ABS is working hard to ensure there will be aslittle commercial disruption and the least costpenalty attached to making the necessarymodifications to bulk carriers in ABS class asis possible. An internal task force has beencreated to deal with the expected surge inrequests for engineering plan review. It is rec-ognized that each ship will have to be dealtwith on a case by case basis, the degree ofstructural modification being dependent uponthe initial design and subsequent level ofwastage and damage.

IACS members thus far have not felt it neces-sary to extend the new structural requirementsapplicable to Hold No.1 throughout the cargoblock. However, IMO’s forthcoming actionsand the future operational record may openthe matter to further consideration. It isunderstandable that owners should view thepossibility of such an extension with fore-boding. Any such decision could significantlyincrease the cost of modifying a vessel andmay send some ships to the scrap yard aheadof their expected retirement.

Class is cognizant of these fears. For themoment the only reassurance we can offer is that any decision will be pragmatic, takingdue account of operational realities. Butthose decisions must also be founded on thesame fundamental principles of safeguardinglife and property as have the decisions affectingbulk carrier safety to date. The independenceof class in reaching those decisions cannotand must not be compromised.

Over the years, the shipping industry has distin-guished itself by the manner in which it has

responded to urgent safety concerns. The opera-tional problems which are being encountered by older bulk carriers have posed the latest challenge. The industry has responded with a massive technical reevaluation of the designand operation of these vessels.

ABS has thrown its full technical resources into finding practical solutions to the uniqueproblems which the loading and carriage of high density bulk cargoes place on the world’sbulk carrier fleet. Our entire organization is committed to stemming the loss of ships andseafarers through the implementation of safe design, construction, maintenance and operational practices for these vessels.

“Owners can be assured thatnone of these recommendationsand new standards has beendeveloped in a theoretical vacuum. A great deal ofthought, research and discussionhas gone into the developmentof the new standards to ensurethat they are a sensible, real-world response.” Robert D. Somerville, President ABS

“Industry and IMOshould accept in toto the IACS proposals made to MSC 67 on bulk carrier safety.”Executive BoardLiberian Shipowners Council

12

T H E I S S U E S

R esponsibility for the application ofeffective safety standards should start,and finish, with the shipowner. That is

the theory. In practice the most professionalshipowners accept this responsibility and striveto enforce those standards. Despite the wellpublicized headlines of casualties and PortState detentions, the reality is that a greatmajority of owners can be found within thisresponsible category.

When the actions of the shipowner fall short, itis expected that the statutory standards imposedby the Flag State will ensure compliance. But, asIMO Secretary-General Bill O’Neil points out inhis introduction to this Review, the casualty

rates in some fleets “are a hundred times worsethan in others.” Clearly not all Flag States haveaccepted their responsibilities. Neither have allclass societies, although, once again, there is aclear predominance of those that have.

Inevitably there will be a residue of owners,Flag States and other bodies withresponsibilities for ensuring safety of life and property at sea whochoose to abrogate the duty of care imposed upon them. It is then that Port States should takeaction to ensure compliance. That Port State Control is now widely viewed as being the mosteffective, front line weapon in thefight against not just substandard

ships, but against any fall-off in standards by any ship, could be construed as an indica-tion that the proper hierarchical system ofresponsibility has been found lacking. On the other hand, the increase in Port State activity could also be construed as a prag-matic acceptance by the maritime industry that this method of enforcement has becomeone of the most effective means of monitor-ing standards.

The spread of the Port State Control regimenthrough new Memorandums of Understandingin the Pacific, the Americas, the Caribbean andproposed Memorandums for the Mediterraneanand Africa provides ample evidence of the efficacy of the approach. That around 1,000ships are detained in European ports each year,and that 23 Flag States, all members of IMO,have been placed on the European MOU blacklist, is distressing testimony to the needfor such an enforcement system.

Roberto Salvarani, Head of Maritime Safety atthe European Commission has made the expan-sion of Port State Control within Europeanwaters a primary focus of activity for the comingyear. On the other side of the world, Australianauthorities are equally committed to stringentPort State Control monitoring. And the US CoastGuard continues to rigorously enforce these

standards on ships calling at US ports. With therequirements of the ISM Code taking effect in1998, Port State authorities are expected to further strengthen their enforcement activities.Shipowners who have run from areas of strin-gent enforcement, are finding it increasinglydifficult to hide from a Port State inspector.

Each of the Port State MOUs has identifiedclass as a central element within the mix ofcontributory factors to a vessel’s safety stan-dard. For example the US Coast Guard appliesautomatic penalty points within its targetedinspection matrix dependent upon the classsociety with which a vessel is registered. It is a matter of pride that ABS is one of only foursocieties which receives zero penalty pointsbased on its past performance.

“Next year (1997) I am devoting

50 per cent of my department’s

time to getting really effective

application of Port State Control

in Europe.”

Roberto Salvarani, Head of Maritime Safety,European Transport Commission

CONTROLPORT state

In Europe, Mr. Salvarani is currently workingwith IACS to determine a set of objective crite-ria which should be applied to classificationsociety responsibilities and performance. The new criteria are intended to more closelyidentify serious deficiencies which can be considered to have stemmed from lax classi-fication society oversight of areas for which it had responsibility. The information is expect-ed to be used to more closely target vessels for inspection in a manner similar to that used by the US Coast Guard. IACS is closelycooperating with the European Commission in this endeavor.

ABS has a very simple policy with respect toPort State Control. It is one of total support forthe system and total intolerance for any classrelated detention of an ABS vessel. Every PortState detention of an ABS vessel is subject to anexhaustive in-house, survey department review.When these reviews were first introduced theyindicated that there were areas in which ABSpolicy directives to and support of the field survey staff could be further enhanced.

Chief among these has been the initiation of anew Lead Surveyor Program within ABS. This isintended to provide field surveyors with a clear-er level of support from experienced colleagueswhen determining appropriate action ininstances where an unusual degree of subjectivejudgment, or a complex interpretation of theregulations, is required during an inspection.

To reduce the chance of a safety equipmentrelated shortcoming escaping a surveyor’snotice, ABS has also established a policy whichrequires two surveyors to attend every SLE survey carried out on a bulk carrier 15 years of age and older. A further safety check hasbeen established with the new internal policythat SOLAS and Load Line Reports on all ves-sels 10 years of age and over are to be reviewedand countersigned by an ABS Principal Surveyoror Surveyor-in-Charge.

In addition, ABS has sought to strengthen itsworking relationships with the various PortState and Flag State administrations to jointlytackle this question. An added feature of thenew ABS SafeNet program, which is currentlybeing released to owners, is a directory listingof the principal contacts at both the major PortState and Flag State administrations to giveowners an immediate avenue through which to discuss any incidents that may arise.

That the most recent Port State statistics avail-able show a noticeable decline in the alreadysmall number of incidents involving ABS classedvessels, indicates that these improvements havehad an immediate and positive impact.

There is now a threat of direct financial sanctionsbeing imposed on owners of vessels detained byPort State authorities. These would be in additionto the already significant financial implications ofthe detention itself. They will provide addedincentive for owners to ensure their vessels aremaintained to the highest standards.

But safety should never be a question ofmoney. It should be an ethical and professionalacceptance that safety and quality are integralresponsibilities attached to the owning andoperating of ships. The lives of the seafarerswho serve aboard those ships depend uponsuch a commitment by the shipowner. The safe delivery of the cargo can only be assured if the ship itself is sound and maintained inaccordance with all industry standards.

From the boardroom to the boiler-room, ABS has made a total commitment to thesestandards. If every shipowner, Flag State andclassification society fully accepted and en-forced these responsibilities in the same manner,Port State inspectors would be out of a job.

13

“ABS will continue to give its complete support to the Port State authorities in theirefforts to enhance safety compliance. We encourage all shipowners and every Flag State Administration to support the application ofthe highest professional andsafety standards aboard everyship. ABS will do its part.”Robert D. Somerville, President, ABS

j u l y 1

For those organizations approved by themajor Flag States to audit and issue certifi-cation of compliance with the International

Ship Management Code (ISM), 1996 proved to bea frustrating year of wait and then wait somemore. As the year drew to a close, more than 90per cent of all shipowners required to complywith the provisions of the Code, which will forma part of the Safety of Life at Sea (SOLAS) con-vention from its effective date of 1 July 1998,had yet to begin the auditing process.

Despite repeated urgings from regulatory bodies, from the most responsible Flag Stateadministrators and from prominent industryorganizations such as INTERTANKO, the vastmajority of owners appeared reluctant to acceptthat these new requirements will be a part oftheir future operations.

For most Flag States, and for the more prescientowners who have already sought ISM certifica-tion, the major classification societies are thepreferred auditing bodies. Without exception,these organizations have geared up to meet theenormous demands which the auditing processwill place upon them. Yet, for the moment,these new resources remain underutilized.

According to statistics compiled by theInternational Association of Classification

Societies (IACS), by year end only 5 per cent ofthose owners affected by the Phase One dead-line of the Code had been certified. Only 1,000,or just 6 per cent of the nearly 19,000 shipswhich must comply with the provisions of theCode by July 1998, had met the new standards.

Without exception, these compliant owners arethose that have already evidenced a total commitment to quality management and to thehighest possible operating standards. It is ironicthat, if all owners operated to comparable, self-imposed standards, it is unlikely that the regulatory bodies would have perceived a needfor the imposition of mandated standards. TheISM Code has been formulated to ensure that allowners adopt a quality management approach to their operations, ashore and afloat. Yet it is the owners most specifically targeted by the Codewho have yet to respond to its requirements.

Cause for mounting concern on the part of reg-ulators and the IACS members is that experiencegained from assisting the pathfinding ownersthrough the process of compliance, has shownthat a minimum twelve months is required frominception to certification. In many instances thisperiod has stretched out to almost eighteenmonths. Only in the rare instances of auditing a company which is already ISO 9000 certifiedand totally familiar with quality managementrequirements has there been any significantreduction in this period.

The sound of the

ticking clock

reverberates ever louder.

Although ABS has mounted more than thirtyseminars in as many cities over the last twoyears, explaining to shipowners, operators and managers exactly what is required by the Code, the reticence of so many owners tobegin the compliance process suggests thatthere is still widespread misunderstanding ofthe implications. The Code is intended to setacceptable standards of safety for shipownersand shipmanagers. Where it differs from pastsafety standards is that it applies not merely to the operation of the ships but also to the

14

T H E I S S U E S

COMPLIANCEISM

“Shipowners must realize that it is not a question of whethertheir ship will be detained in a US port if it is not in compliance with the ISMrequirements. The ship will not be permitted to enter any US port if it is not fullydocumented.”Adm. James Card, United States Coast Guard

15

owner or manager’s shoreside operations and office.

As any organization which has adopted theprinciples of Quality Management, as ABS hasdone, can attest, it is no easy task. It involves arigorous analysis of what the company does andhow it does it. Indeed, it is this process whichoriginated our own corporate statement that“Safety is what we do. Quality is how we do it.”

An essential element of a quality managementsystem is that the organization itself sets its owncriteria. As a consequence, it has been widelyreported that the Safety Management Manual,which the ISM Code requires an owner to placeaboard each of its vessels, may be as slim as fivepages or as voluminous as 500 pages. Yet it isfallacious for an owner to think that the audit-ing and certification process can be reduced to a quickly produced five page booklet and lip-service adherence to vaguely worded principles.

Although the actual auditing and certificationfees are low, shipowners are right in their assess-ment of significant overall costs associated withmeeting the ISM standards. There is the cost ofan experienced consultant, such as ABS MarineServices, to guide an owner or manager throughthe process. And there are costs associated withsystemic changes within the organization.

There is also the less quantifiable cost of the timewhich must be devoted to the process by thesenior management of the organization. Yet thereis also mounting evidence that these costs will bequickly offset by significant operational savings,ranging from more competitive insurance rates toa reduced incidence of injuries and cargo damage.

Yet the cost-benefit arguments should not ultimately impinge on an owner’s accession tothe code. It is a mandated requirement. It hasbeen made clear by the principal regulatorybodies that there will be no waivers granted on the implementation date of 1 July 1998.There will be no extension of this deadline.

The US Coast Guard, for example, is quite firmon this point. From the date of implementationa vessel which is not in full compliance withthe ISM code will not be permitted to enter aUS port. The Port State Control authority hasmade it clear that full compliance means thevessel must carry proper certification, issued bya recognized auditing body. Temporary certifi-cates issued by a commercially complaisant flagstate on the understanding that the owner hasbegun, but not yet completed, the auditing andcertification process will not be acceptable.

It is a sobering thought to set this policy state-ment alongside the IACS statistics. Withscarcely sufficient time still remaining for acompany to complete the steps required forcompliance, more than 90 per cent of theworld’s merchant fleet faces exclusion from the ports of the world’s largest trading nation.

ABS stands ready to help these owners meetthe challenge and the deadline. We havetrained a worldwide team of experienced ISMauditors. Many of these experts are also quali-fied to conduct ISO 9000 audits and ABS,alone among the major classification societies,has reached an agreement with the principalISO regulatory bodies for joint auditing andissuance of both ISO and ISM standards andcertification. This approach offers owners considerable savings, both monetary and interms of organizational disruption.

Our experienced staff from ABS Marine Servicescan provide all the necessary guidance to shep-herd a company through the organizationaladjustments necessary for the issuance of theISM’s Document of Compliance (DOC). Drawingfrom experienced former seagoing personnel,ABS has put together an expert team to reviewand amend on-board safety and operationalpractices to bring each vessel in a fleet intocompliance for the issuance of the requiredSafety Management Certificate (SMC).

And ABS has recognized that some owners haveunintentionally delayed embarking on the ISMaccreditation process because they have notfully understood the requirements, the timingnor the risks of non-compliance.

To assist these owners, ABS has elected tofreeze its ISM fee structure at 1996 levels untilmid-1997. But the recalcitrance of so manyowners promises a last minute bulge of activitywhich will place unreasonable burdens on allrecognized auditors. It is these owners who willfind fees rising rapidly in response to demand.

“This should not be an exercise

in brinkmanship. The deadline

is looming. It is not going to be

waived or extended.”

Tim Leitzell, President, ABS Marine Services

16

T H E I S S U E S

Man’s relentless need for petroleumbased energy and products is push-ing oil and gas exploration into

new, technologically demanding areas. Withinthe offshore sector 1996 saw the industry’sfocus return to the Gulf of Mexico, its birth-place fifty years ago. It is there that technologyhas fueled a revolution, ending a decade ofdepression and changing the lives of millionsalong its shores. The discovery of new reservesin deep waters of the outer continental shelfhas sparked development of new productionmethods and revitalized the offshore industry.

In 1994, seismic mapping techniques uncoveredthe 100-million barrel Mahogany oil-field,proving the salt layer believed to be the “bottom” of the Gulf was in fact not a bottombut merely another layer of potential. Thatsame year, a near-gusher at the Auger platformin 2,860 feet of water sparked interest inexploring the Gulf’s greater depths. By 1996,exploration activity had blossomed. Multi-billion-dollar commitments for deep-waterdevelopment projects from industry leaders,including Shell, Amoco, Texaco and Exxon, dispelled the last of the lingering shadowswhich grew during the US offshore industry’sdecade of depression.

It has taken ten years for technology to meetthese new deep water demands. The growingprecision of seismic techniques in locating oilreserves, and improved engineering technology

for extracting the oil, have led the industry intoonce-forbidding depths. The new fields havevindicated the researchers who had longbelieved in the Gulf’s promise of deep-waterriches, despite industry skepticism.

The deep-water revolution is now in full swing,helping the US oil and gas industry recover someof the 400,000-plus jobs it lost between 1984and 1994. Once called “The Dead Sea,” the Gulf of Mexico is now called “The New Alaska.”Shell alone predicts that the projects in which it is involved have the potential to produce a combined 400,000 barrels of oil and 1.3 billioncubic feet of natural gas per day. This optimismon the part of just one producer, when com-pared to current levels of Gulf oil output, reveals the cause of the deep-water renaissance.At present, the Gulf of Mexico region delivers a total of 1.2 million barrels of oil and 13.7 billion cubic feet of natural gas per day.

Such potential is spreading ripples throughoutthe region. The Gulf Coast is alive again withthe hum of reborn industries and the din ofworking shipyards. New projects for reachingthe presumed reserves of 10 billion barrels ofoil in the deeper Gulf waters have set armies of engineers, technicians and craftsmen towork. With general rig utilization at nearly

100 per cent, 1970s-built semi-submersibleshave been called out of retirement and sent to yards for extreme modification to work inever-greater depths. Gulf shipyards are over-flowing with the resulting conversion work.

This shipyard work has been spread around theUS Gulf and to Mexico, where the TNG ship-yard in Veracruz, jointly owned by US andMexican interests, is being readied to catch thespillover. Virtually every Gulf Coast yard capableof fabrication has benefited from the renewedactivity, often subcontracting for sections whichare moved to the main contracting yards forfinal assembly.

As a key supporter of the offshore industry, ABS has been participating fully in this rebirth.In 1997, when the offshore industry celebratesits 50th anniversary, ABS will have notched up

“We haven’t seen such optimism,nor such creativity, in the USGulf since the 1970s. Ideas such as the drilling spar and the mini-TLP signal that theentrepreneurs and innovators are returning.”Bud Roth, President, ABS Americas

EXPLORATIONDEEP water

17

more than 40 years of partnership with this re-energized sector. From the earliest involve-ment of class societies in the certification of odd-looking barges, working in 20 feet deep Louisiana marshes, to recent plan approvalfor operations in water depths up to 10,000 feet, the offshore industry and ABS have worked closely on research and the exchange of technology.

The ABS Record reflects this long history. More than 80 per cent of the world’s fleet of jack-up drilling rigs, and over 50 per cent of both the drillship and the semi-submersibledrilling rig fleets are to ABS class. As 1996 drew to a close, ABS also confirmed its dominance within the floating production(FPSO) sector when four FPSOs for Brazilianproducer Petrobras brought the ABS fleet ofthese specialized vessels to more than 40.

It is the willingness of the ABS OffshoreEngineering Department (OED) to take aninteractive role in these technically sophisti-cated projects which has given ABS such amajor presence in the offshore industry. ABSproject managers are often called upon foradvice in the earliest phases of a project. Such early involvement often leads to signifi-cant cost savings for the client. And ABS is able to guide these innovative operators as they seek to meet new standards for ground-breaking projects such as spar buoys andtension leg platforms (TLPs).

New technologies for extracting oil — such asthe spar buoy and the mini-TLPs — exemplifythe technical creativity and daring now beingemployed in the Oil Patch. Seismic technology,pioneered in the Gulf, is discovering reserves

in fields ranging from Scotland to West Africa,from Brazil to the South China Sea. Althoughmost of these are not deep waters, their development is being facilitated by constructionand processing techniques recently applied onthe US outer continental shelf.

Another technological leap is being developedby a Conoco/Reading & Bates partnership —construction of the first of a new generation of 120,000 dwt, dynamically positioned drill-ship, designed to ABS class for exploration in depths of up to 10,000 feet. The ABS experience with dynamic positioning of largevessels goes back over 20 years, to the classifi-cation of the top-secret GLOMAR EXPLORERfor the US government.

With super-drillships, the challenge is not somuch newness of technology as size. For theABS engineers, one of the challenges is to identify these new thresholds and develop the technology necessary for the industry tomove safely past them.

Deep-water development will continue to stretchthe capabilities of the tension-leg platform.Whether modified TLPs, new designs of sparbuoys, super-drillships or some as-yet unknownconcept will produce oil in depths beyond10,000 feet remains to be seen. Every indicationfrom 1996 is that it will and that ABS will con-tinue to be at the forefront of that technology.

“It is really exciting that

we, as a class society,

can play a part in

ensuring that technical

innovations are safe —

without being so rigid

as to stifle innovation.”

Malcolm Sharples Vice President Offshore, ABS

“The fundamental contributionof ABS and class is safety. I believe the offshore industry as a whole recognizes this.These are smart, tough peoplein this industry and they wouldn’t pay for somethingthat’s not benefiting them.”Peter Noble, Vice President Engineering, ABS

18

T H E I S S U E S

It is not easy being an environmentalist.Even in environmentally sensitive countries,the environmentalist lobby is often per-

ceived as being part of a radical fringe, moreconcerned with saving arcane species ofwildlife than preserving jobs or creatingwealth. Worse, in the majority of countries,environmental issues have scarcely rated a second thought by the governments or thepeople. The earth continues to be polluted in alarming ways, despite the significantprogress which has been made towards instituting environmentally sensitive policies in the US and its major industrialized partners.

In September of 1996 the first, coordinated,internationally accepted step was taken towardsencouraging a cleaner, healthier, more sus-tainable world-wide environment for futuregenerations. ISO 14000 EnvironmentalManagement Systems standards were formallyfinalized at that time and have already begunto be implemented around the world. Yet whatis expected to be a landmark in the globalchallenge to protect the environment passedalmost unnoticed. Few, even in industries likelyto be affected by these new standards, are evenaware of their existence.

But, in the same manner that the ISO 9000standards surged from obscurity to become thedominant determiner of quality operations overthe last five years, ISO 14000 standards areexpected to become equally widespread overthe next decade. There are, however, notable

differences in the method of application ofthese two international standards. And there is a very distinct difference between ISO 14000standards and the environmental regulationsenforced by government agencies such as theEnvironmental Protection Agency (EPA) in theUS and its counterparts elsewhere.

The new international standard takes a differ-ent approach to enforced regulation of anorganization’s activities. It challenges eachorganization to take stock of itself, set its ownobjectives and commit itself to a process ofcontinual improvement. Where the philosophyof ISO 14000 differs from the pattern which hasbecome familiar to industry through the imple-mentation of ISO 9000 standards, is that itdemands the consideration and involvement of a much wider participatory group.

ISO 9000 essentially ensures compliance withthe quality specifications of a customer throughthe demonstration of an adherence to qualitymanagement. ISO 14000 doesn’t have such aspecific focus. Instead it challenges an organi-zation to assess its operations from anenvironmental impact standpoint, taking intoaccount such factors as the impact of thesourcing of its raw materials, its productiveprocesses and the use and ultimate disposal ofits products within the market. It requires anorganization to think past a customer to itsshareholders, staff, insurers and even those citizens who may live near its plant.

Moreover, the standards require a completecommitment to these environmental principlesby the employees of an organization. Staffmust be trained and shown to be competent in environmental procedures. They must becompetent in handling the environmental consequences of their work. The new standardsdemand an infusion of environmental aware-ness, a change in corporate culture and anacceptance of the environmental consequencesof every aspect of the organization’s activities.

As with other ISO Management Systems stan-dards, the ISO 14000 requirements have beenkept intentionally generic so that they are

“We are united by a commonpremise: that human activitiesare needlessly causing grave andperhaps irreparable damage tothe global environment.Thedamages are clear to all of us.”US Vice President Al Gore

STANDARDSISO14000 environmental

19

equally applicable to all kinds of organiza-tions. They are not to be considered as onlyapplying to heavy process and manufacturingindustries, but have equal relevance within theservice sector, a white collar company or agovernment department.

The ABS Group of Companies, and particularlyABS Quality Evaluations, geared up for thesenew standards so that immediate professionalhelp could be provided to those organizationswhich elected to respond quickly to them. The client list has already grown to includecompanies across the United States, Asia andin South America.

Within weeks of the new standards beingissued, ABS QE had received accreditation asan ISO 14000 Registrar. Although it wouldappear to have been a natural outgrowth ofthe ABS Group’s long experience with auditingISO 9000 standards for clients around theworld, ISO 14000 imposed new challenges forthe company. The very specific demands ofthe standards require auditors who are notonly experienced with Management Systemsbut who also have wide-ranging expertise inenvironmental issues.

ABS already has some auditors on staff able tomeet these demanding new criteria. Audits willbe approached on a team basis, marrying thespecialized talents of an experienced auditorand an environmental expert to provide clientswith the most effective service.

Difficult to impose, demanding to comply withand far reaching in their impact, these newstandards have garnered considerable supportfrom governments. Their formulation stemmedfrom the groundbreaking United NationsConference on Environmental Development,held in Rio de Janeiro in June of 1992. The standards were developed in less than half the normal time taken for new ISO instruments, a fact which underscores theimportance which many governments place on them, and of the official support which has underpinned their development.

Governments in several countries have be-come concerned that the environment needsgreater protection, yet they have recognizedthat they have little formal environmentalregulation in place. ISO 14000 is viewed as a quick solution, one which encourages aculture of compliance rather than the threatof retaliation.

As both governments and industry come torealize the enormous importance of these newstandards, there will be a growing demand for experienced, independent environmental auditors. It is the mission of the ABS Group to assist its clients to enhance the safety oftheir operations, the quality of their servicesand the environmental impact of their activities. Every step of the necessary training,implementation, verification and certificationwhich will be required by a company willing toembrace these new international environmental standards, will be offered by ABS as it strivesto fulfill that mission.

“Within five years, ISO 14000

activity will surpass ISO 9000.

This is the most far reaching,

most important enhancement to the

quality of our life, the safety of

our children and the protection of

the environment in which we live.”

Chris Wiernicki, President, ABS Group.

20

T H E I S S U E S

M arket forces continue to drive technology developments within the shipping industry. Technology

is seen by the most progressive shipowners as a very effective weapon in the competitive war.As owners strive to maintain a slimmed downadministrative infrastructure, classification societies are seen as offering an increasinglyimportant source of technical expertise, advice and support.

Working closely with shipyards, naval architects,consultants and an owner’s technical

management, ABS is able to con-tribute its vast reservoir ofpractical and technical experienceto the process of designing, con-structing, operating andmaintaining vessels and othermarine systems. As owners anddesigners increasingly seek bettersolutions to traditional design prob-

lems, ABS is able to draw on itsknowledge and experience to provide

innovative yet realistic application of theformal Rules.

Larger ships can return economies of scale, as tanker and bulk carrier owners have proved.

In 1996 it was containership owners which capitalized on the same guiding principle asthey moved up to and past the 6,000 TEUmark. These larger vessels highlighted theimportance of a sophisticated understanding ofthe structural strength of the hull girder, andthe impact of large hatch openings, from a firstprinciples engineering standpoint. Past experi-ence, coupled with the traditional prescriptiveRules which stem from such experience, cannotprovide the same detailed degree of confidenceas refined first principles engineering. Of thevarious computer-based Rule applicationsissued by classification societies, ABS SafeHullTM

is solidly based on these first principles. As aresult, a preponderance of orders placed in1996 for large containerships were for vesselsdesigned to the SafeHull notation.

Faster ships offer improved utilization and competitive advantage. Once again container-ship operators have been in the forefront,exploiting improved engine technology. Andferry operators continued to embrace high speedtechnology throughout 1996, taking delivery ofa wide range of size and types of high speedcraft. ABS responded to this latter demand bydeveloping an updated, significantly expandedand improved version of its well establishedRules for High Speed Craft. Larger vessels, builtfrom a wider ranger of materials including composites, are now covered by the Rules.

Technology not only facilitates larger, fasterand more efficient vessels, it is also the key tosafer vessels. 1996 was the year in which thedebate over the structural integrity of agingbulk carriers became more intense. The debatespurred continuing detailed research of theproblem by an IACS members’ group of experts.That research provided clear validation of thefirst principles approach to Rule making asembodied in SafeHull.

During 1996 ABS completed a major improve-ment of the groundbreaking SafeHull System,further differentiating the first principles basedRules from the other, more traditional alter-natives. Pilot testing of the new system waslargely complete by the end of the year, ready-ing the new Windows and workstation based

“There is unlimited potential for

continued technical improvement and

refinement in the manner in which ships

and marine structures are designed

and built. Increased knowledge, more

sophisticated use of computers and

on-going research will lead to stronger,

safer and more efficient ships, and

marine structures in the future.”

Dr. Don Liu, Senior Vice President, ABS

INNOVATIONtechnical

21

versions for an early 1997 release. The mostsignificant differences for SafeHull users will bethe new user friendly Windows environment,and the addition of containerships to the exist-ing applications for tankers and bulk carriers.

On closer inspection, however, the user findssignificant improvements in the technologyunderlying the program, particularly improvedfinite element modeling and analysis capabili-ties, and simpler and easier interfaces withcommonly used CAD systems. Also included areall the latest draft IACS requirements for bulkcarriers which permit cross checking of a designagainst these criteria and will permit easyadjustment to the new IMO standards oncethese are confirmed.

Although SafeHull is a cornerstone to thefuture of ABS Rule making, it is just one ofmany major technology advances which arebeing taken in response to industry needs.Throughout 1996, ABS participated in jointstudies and launched its own studies into awide range of topics including non-linear,time-domain hydrodynamic methods for load-ings and motions, non-linear ultimate strengthmethods for ship structures, improved rules forthe design of refrigerated vessels and refrigerat-ed cargo containment systems, and industryleading research in wave-induced large ampli-tude motions and loads (LAMP).

This latter effort will develop what is expectedto be the foremost, most advanced availableship motion program, able to accurately predictextreme wave loads on the ship structure. More

than four years have already been devoted toresearching this essential new area of technicalknowledge in partnership with the US Navy.Development work is on-going and the program is undergoing extensive validation and testing on both super computer and ABSin-house computer systems.

Concurrently, the ABS Research & Developmentdivision is developing a methodology and procedures which will allow these advancedmethods to be applied to modern ship designs,particularly the new generation of very large,fine form, higher speed ships, complementingboth Dynamic Load Approach (DLA) andSafeHull analysis capabilities.

It is through projects such as the LAMPresearch that ABS continues to progress theboundaries of marine technology knowledge.The beneficiary is the marine industry itself.From enhanced technology for the innovativeand demanding offshore sector, to new, reliability based “Safety Case Approach” assessments of machinery components, maintenance and operational issues, ABS continues a century long tradition of definingthe leading edge of technical innovation, developments which will enhance the safety of marine structures and systems and assist in protecting the marine environment.

“There is a need for the peoplewithin Research & Developmentto have more than tunnelvision. They must have broadpractical experience so thatthey can interpret developmentswhich are affecting the industryand be able to identify newareas which offer value-addedenhancements to design and safety.”John Conlon, Director R&D, ABS

“Experience is clearlyvalidating SafeHullTM

shows how to redistribute steelwithin the structureto produce a stronger and morerobust ship.”Dr. Jack SpencerVice President Technology, ABS

R esponding to escalating demands forhigher standards, owners of older bulkand tanker tonnage are faced with

increasingly stringent inspection procedures.Some of these, such as the highly successfulEnhanced Survey Program (ESP) for bulk carriers,are now mandatory. Others, such as the volun-tary but rigorous Condition Assessment Service

(CAS) are being requested by some tanker andlarge bulk carrier owners seeking to place theirvessels with the most discriminating charterers.

A number of improvements have been made tothe ESP requirements for older bulk carriers inthe three years since its introduction. During1996 IACS members agreed to increase thescope and frequency of close-up surveys of sidestructure, hatch covers and bulkheads. Effective1 January 1997, IACS requires an annual close-up inspection of the hatch covers and coamingson all bulk carriers. It is expected that IMO willalign its own requirements with those of IACSas soon as it is possible.

For vessels between 10-15 years of age, exten-sive annual close-up inspection of the forwardcargo hold, with intense scrutiny of the lowerone-third of at least 25 per cent of the shell

frames, including the lower end attachmentsand adjacent shell plating, is now required byIACS. If any significant degradation is found,all frames in the hold are to be checked. Andan annual overall inspection of all the cargoholds on these vessels is to be carried out.

For bulk carriers over 15 years of age, the vesselswhich have proved to be at greatest risk, thissame degree of intense scrutiny of not just theforward hold but of at least one other hold, mostcommonly No. 2 hold, will also be required.

For the often hard-pressed ABS field surveyors,these revisions have meant significant changesto their workloads and work practices. Wheninspecting an older bulk carrier with significantcorrosion, a survey which may have taken a few hours may now often last a day or more. If extensive gauging is required, the attendanceof the vessel may stretch much longer.

The requirement for close-up inspections of a much larger proportion of the interior of ahold is also placing greater physical demandson the surveyor. He may now spend severalhours swaying from the telescoped arm of acherry picker or clambering around elaboratestaging. In the past, the extent of a surveyor’sclose-up inspection depended upon the judgment and experience of the surveyor.

The new rules over-ride much of this subjectiveinterpretation. They have imposed specific re-quirements for close-up inspections to ensuresufficient hard, factual information is gatheredfor the surveyor to make a reasonable assess-ment of the hull structure.

The manner in which gaugings are taken andrecorded has proven to be of particular concernto the conduct of an effective ESP. When theESP requirements first came into effect, thecommon interpretation of the classificationsocieties was that, if a certified gauging com-pany performed the service, the class surveyorneed not be in attendance.

Unlike some other organizations which continueto accept this approach, ABS quickly determinedthat it is essential for the class surveyor to be in attendance throughout the gauging process

22

T H E I S S U E S

SURVEYSenhanced

“Existing bulk carrierscould have con-tinued without anystrengthening —

provided they had gone through an enhanced surveyprogram and carried out anynecessary repairs that the close-up survey revealed.”John HadjipaterasChairman, Greek Shipping Co-operation Committee

23

if valid and reliable data is to be collected. It is only with the guidance of an experiencedclass surveyor that the full range of gaugingsrequired for a class inspection can be collected.

It is the level of surveyor experience which ABShas found to be the crucial element in ensur-ing survey integrity. An experienced surveyorneed not witness the taking of every gaugedreading but ABS now requires the gauging firmto provide the surveyor with interim reportswhile the readings are being taken. In thatway, the surveyor can specify additional read-ings in areas of substantial corrosion and isalso on hand to immediately notify the ownerof the general condition and recommendremedial action.

There is ample evidence that the EnhancedSurvey Program for older bulk carriers has hadimmediate beneficial results. The incidence ofloss of older bulk carriers has declined signifi-cantly since the program was introduced in1993. But more still needs to be done. Theoriginal requirements had set a 1998 targetdate for all of the approximately 4,000 bulkcarriers which fall under its scope to completeESP. The timetable was linked to normal periodic survey requirements.

Given the risks attached to trading these vessels with high density cargoes, and the clearevidence of the efficacy of the ESP approach,IACS accelerated the deadlines during 1996.The revised requirements impose an end-1997target for all pre-1987 built bulk carriers, whichhave not yet undergone an enhanced survey, to undergo the cargo hold portion of the program. ABS took an even more aggressiveapproach to these new requirements. Ratherthan wait until the IACS proposed 1 January1997 implementation date, ABS adopted these tougher standards as conditions of class effective 1 September 1996.

Close-up inspections and extensive gaugingsare also central elements in the ConditionAssessment Service (CAS) which has beenrequested from ABS Marine Services by ownersof older tankers, bulk carriers and, increasingly,FPSOs. The voluntary program is separate fromrequired classification procedures. It offers acomprehensive assessment of the actual struc-tural condition of the subject ship, resulting ina final rating on a 1-5 high-low rating scale.

Owners are choosing to undergo the CAS for avariety of reasons ranging from pre-approval forcharter to sale and purchase valuation. For eachvessel it provides a clear assessment of future

repair and maintenance needs. For these owners, the unique ABS SafeHull system offersthe most precise structural evaluation andfuture prediction tool available. A particularstrength of SafeHull for these vessels is its ability to assess the future impacts of thestructure’s sensitivity to corrosion.

It is this predictive capability of a SafeHullbased CAS which has caught the attention ofoperators of FPSOs, particularly those consider-ing a major conversion of an existing 1970’sbuilt VLCC. Once in service these vessels will be on station for extended periods, with tenyear assignments considered commonplace.Downtime, or time off-station for these vesselsis operationally and commercially catastrophic. A complete SafeHull CAS can provide the high-est level of assurance that service interruptionsdue to structural failure can be avoided.

A CAS vessel need not be to ABS class toundergo such a SafeHull evaluation. The essen-tial element for an accurate evaluation is theextensive gaugings of the hull which are part of the CAS program. With these available, theSafeHull evaluation can be readily applied.

Whether it is the close-up scrutiny of an ESP or the exhaustive analysis of a CAS, surveyrequirements are beginning to tighten. Althoughthe job of the surveyor has become moredemanding as a consequence, the basic require-ment remains the same. Corrosion is the enemy.A ship’s hull and structure will always deterio-rate. The independent and impartial expertise of the class surveyor is the industry’s safeguardthat deterioration does not lead to disaster.

“Older ships are more difficult

for the surveyor. There is more

corrosion. The surveyor must be

more vigilant. The gaugings must

be more extensive. The real test

of a surveyor’s skill is the ability

to conduct a proper survey on a

twenty-year old bulk carrier.”

Gus Bourneuf, Chief Surveyor ABS

P lug into the Internet and find an answer.Subscribe to a database and receive a mountain of confirming statistics.

Search the intraoffice network to find the posting from your colleague. Open one of the rackfull of trade publications and glean the latest gossip. Information. It is everywhere.

It bears the modern manager up one minuteand threatens to bear him away the next.

It has changed the conduct of business. It has transformed theshipping business.

There is an enormous amount of tech-nical and regulatory information which

directly impacts the day to day operations of a shipowner. It is being issued by an alphabetsoup of organizations from the IMO to the USCoast Guard. It is layered atop the traditionalmarket intelligence which an owner requires to survive and prosper. Computers are seen bysome as the bane of this information overload.For others, they are the solution.

ABS not only subscribes to this latter view buthas been working to produce an easily appliedsystem which will alleviate some of the infor-

mation burden for shipowners. 1996 markedthe pilot release of SafeNet, an innovativeinformation management system for shipown-ers, operators and managers. 1997 will see itswidespread release to our clients.

The result will be better informed surveyors,able to better identify critical areas on which tofocus inspections, armed with more knowledgethan has ever been the case before. And it willresult in better informed owners and managers,with direct access to the most comprehensivedatabase of information relating to the surveystatus and physical condition of their vessels.An added benefit is access to a host of ancillaryinformation, from shipyard contact numbers toPort State Control checklists, needed to operateefficiently in the current market.

Shipowners are being given the opportunity to ease the transition from traditional practicesto this groundbreaking system through a twophase implementation of SafeNet. Phase I,which has been successfully piloted and isbeing readied for widespread release, offersowners electronic access to the ABS SurveyStatus database relating to the vessels in thatowner’s fleet. This value added service is beingprovided free of charge by ABS.

Included in this Phase I module are severaldatabases which owners have indicated wouldbe useful to their operations. These include a complete listing of ABS Type Approved equipment; a worldwide listing and descriptionof all shipbuilding and repair facilities with thenecessary contact information; an extensive listing of all the major Port State and Flag Stateadministrative contacts to assist owners requir-ing information relating to statutory and PortState requirements affecting the operation oftheir vessels; and a worldwide database of ABSsurvey offices to assist the owner in summoningprofessional assistance at any time in any port.

This Phase I release is equally important to ABS.Every one of those field survey offices will alsobe connected through the SafeNet program tothe ABS central Survey Status database. Futureinformation available to an attending surveyor

24

T H E I S S U E S

“We are truly now in the information

age. The use of information technol-

ogy is not only a great opportunity

but a necessity if an owner is to

successfully compete and meet the

regulatory and commercial

challenges posed by charterers,

Port and Flag States, and IMO

agreements such as ISM and STCW.”

Admiral William J. KimeChairman and Chief Executive Officer, Interocean Ugland Management Corp.

INFORMATION management

25

will be more complete, more current and morefocused than ever before, offering significantinternal operating efficiencies for the organi-zation and improved service to our clients.

Although this first phase will bring new efficiencies to ship management and ship surveying, it is the second phase, scheduled for a pilot release in the second half of 1997,which will elevate the shipmanagement capabilities of SafeNet to a new dimension. This phase will link the survey status of a vesselto an owner’s planned maintenance system. It will allow the life cycle storage of com-plete condition assessment information, including gaugings, 3-D vessel schematics and digitized photographs.

Owners will have access to the precise conditionof a vessel and will be able to accurately pre-dict future structural condition. Because of theintegration of the various databases within theSafeNet program, including a key casualtydatabase, owners will also be able to conducttrend analysis to give early warning of potentialtrouble spots to permit more cost effectiveplanning of repairs.

Using the results of structural evaluation, anowner will be able to work with ABS to developa survey strategy based on such factors as cor-rosion, stress, coating breakdown and fatigue.For new vessels, SafeNet will provide a completelifecycle record, from building dock to scrapyard.

While attention is being directed at implement-ing the ambitious first two phases of SafeNet,such is the dynamic structure of the programthat ABS is already planning future technicalenhancements to provide owners with moreuseful, and useable information. On that futurehorizon, ABS foresees the capability of provid-ing an owner with the tools necessary to notonly assess the structural condition of the ves-sel but to predict critical areas for inspection,identify hull sections requiring replacementsteelwork, determine the quantity of materialsrequired, prepare the repair specifications anduse pricing information supplied by selectedcontractors to develop quotes, all from a com-puter in the owner’s office.

Other applications currently under considerationinclude risk assessment analysis, and imagingand multimedia technology to offer ownersreal-time viewing of hull and machinery sur-veys. Rather than swamp an owner with anunmanageable overload of information, ABSenvisages SafeNet as the means by which anowner will have access to essential operationalinformation in a single, easy to use location.The information it provides will offer the ownera clear commercial advantage in an increasinglycomplex and competitive market.

“The concept of SafeNetTM isso profound that its richpotential is bound only bythe extent of our vision.SafeNet will take the worldsof shipmanagement andship surveying into the nextcentury. They will never bethe same.”Frank J. Iarossi, Chairman, ABS

“SafeNetTM has only

recently been installed

in Tidewater’s office but

it has already become

an indispensable part of

operations. We have

faster access to more

and better information

than before.”

John Laborde Director, past Chairman, President & CEO, Tidewater Inc.

A C T I V I T I E S

26

27

A s the year began, ABS announced a new service to expedite these periodic surveys through a program

allowing ABS certified chief engineers to inspect and obtain credit for machinery that has been opened and repaired in the course of normal operations.

Also in January the ABS affiliate, ABS QualityEvaluations, certified Jurong Shipyard Limited in Singapore to the ISO 9001. At that timetwelve shipyards were among the more than1000 facilities in various industries that ABS QEhad certified in accordance with this qualitymanagement standard. In the ABS tradition of positioning its services in advance of clientneeds, ABS QE began preparing certification services for the next ISO standard of developinginterest, ISO 14000, which addresses environ-mental management.

1996theYEAR in review

Periodic surveys of ships in service is one ofthe more routine activities of the classifica-tion society. But no other is more importantto an owner struggling to keep a vessel well maintained, operating safely with aminimum of in-service interruptions.

The quality management approach

to the safety of ships, as embodied

in ISO 9000 and the International

Safety Management Code (ISM),

was an area in which ABS devoted

increased energy throughout the year.

Robert D. Somerville

President, ABS

Chris Wiernicki

President, ABS Group

garbage, and by harmful substances carried inpackaged forms.

In May the EVER ULTRA was delivered to ABSclass. This 69,000 gt, 5,300 TEU containership(and its four sisters), under construction atMitsubishi Heavy Industries for EvergreenInternational, became the largest containershipin ABS class. (Later in the year Evergreen ordereda further six vessel series of containerships toABS class at the same yard.) Class activity withlarge containerships continued as a particu-larly strong suit for ABS. Throughout the year

it classed 29 such vessels(19 of which are 50,000gt and over), deliveredto owners includingOOCL, Hyundai, APL,

NOL and Sea-Land Services, as well as Evergreen,while also receiving contracts to class an addi-tional 47 containerships.

ABS created a stir at the Posidonia InternationalExhibition in June with announcements by ABSChairman Frank Iarossi of the launching ofSafeNet and advancements in SafeHull. The former is a life cycle shipmanagement and infor-mation network designed to assist shipownersand operators with the increasingly complex taskof managing their vessels more safely and effi-ciently. Following a successful pilot programin the US, SafeNet is scheduled for release toABS owners in thefirst half of 1997.

SafeHull, the uniquelyinnovative, dynamic based method for thedesign and analysis of ship structures, under-went a series of majorimprovements in 1996.At the gathering inGreece, Mr. Iarossireported on refine-ments that will make

28

A C T I V I T I E S

implementation and certification process.Proving to be an overwhelming success, the seminars attracted capacity attendance in all locations.

Throughout the year, shipowners and operatorsturned to the ABS organization in increasingnumbers for certification to these two importantstandards. Early leaders were Mobil Shipping Co.Ltd. in London and Universe Tankships(Delaware) Inc. in NewYork which received ISMand ISO 9002 certifica-tion in February. In thesame month AntaresNaviera SA andTransportes MaritimosPetroleos of BuenosAires, received their ISMcertifications, under-scoring the worldwidereach of the ABS orga-nization.

In March ABS accepted the ATLANTIC PROSPERITY, the largest ship to be classed byABS during 1996. This VLCC and its sister vesselare 164,400 gt (311,700 dwt) and were built byHitachi Zosen for a subsidiary of OSK Lines forcharter to Exxon. Six VLCCs in all were classedby ABS during the year and a count of a further29 newly delivered smaller tankers was indicativeof the organization’s continued high level ofinvolvement within the tanker sector. That highlevel will continue as contracts were received toclass 28 more tankers during 1996, giving ABS a majority share of all VLCC contracts placed by year end.

Under the terms of a 1995 Memorandum ofUnderstanding with the US Coast Guard — aspart of the Alternative Compliance Program —

ABS Marine Services pioneered the joint ISO 9000/ISM auditing and certification program for the industry and theseminars explained this linkage, the fundamen-tals of the quality management programs, and took the attendees through the entire

Initiated in February, a round of seminars wereheld in 10 major international cities over the following months.

ABS had been appointed as the designated authority for the issuanceof International Oil Pollution PreventionCertificates. The program proved a success and in April of 1996 it was announced that thisauthority would be extended to apply to vesselsused for the carriage of noxious substances inbulk. Authority was also granted to ABS toinspect and verify requirements associated withthose sections of MARPOL which deal with theprevention of pollution by ship generated

29

this powerful tool even more flexible and userfriendly. These include features such as WindowsPC and workstation office environments, inaddition to the extension of its application fromtankers and bulk carriers to containerships.Following extensive pre-release testing, theseenhancements will be available to the industry in early 1997.

A noteworthy vessel classed by ABS in July isLARAMIE, the last of a 16 vessel series of 26,400 dwt fleet oilers built for the US Navy by Avondale Shipyards. The series was developedand constructed over a twelve year period withthe final three, including the LARAMIE, beingmodified to an environmentally sensitive doublehull configuration. During August the affiliateABS Marine Services added asset and leveragedlease appraisals to its growing array of industryservices. These are intended to assist the finan-cial and insurance sectors.

At the same time, it was reported that amongthe classification requests for newbuildings ABShad received, was a contract for two 155,000 gt(317,000 dwt) bulk carriers. To be built atDaewoo for Krupp interests they will be thelargest bulk carriers in ABS class. Bulk carrierswere a source of significant class activity for ABSthroughout the year as 27 were classed, eight ofwhich were Capesize ranging from 151,000 to163,000 dwt, while class contracts were receivedfor an additional 24 newbuildings.

A major achievement was recorded by the ABSIndustrial Verification subsidiary in Septemberwhen it received approval by Japan’s Ministry ofLabor (MOL) as a foreign inspection body forimported boilers and pressure vessels. ABS IV isone of the very few organizations to have beengranted such recognition.

Unequivocal evidence of the success of SafeHullin its application to both new and existing shipscame in September. At that time ABS passedthe 100 vessel mark for new ships (totalingmore than 10,000,000 dwt) delivered,designed to be built, or building using the ABS SafeHull system. Since the firstSafeHull vessel was classed in the spring of 1994 (a 128,000 dwt shuttle tanker for ConocoNorway), other owners to have applied SafeHulltechnology to their newbuildings include such

industry leaders as Ceres Hellenic, MISC, Mobiland Evergreen.

At the same time this newbuilding milestone was reached, an additional 93 vessels, all existingtonnage built to the Rules of both ABS andother class societies, had undergone or werecontracted to undergo a SafeHull structuralassessment, most as part of the extensiveCondition Assessment Service (CAS) offered by ABS Marine Services.

Indicative of this effort, in October ABS openeda SafeHull training center at the Marine Designand Research Institute of China in Shanghai.Equipped with a battery of powerful computers,the center can train engineers from the majorshipyards from China and elsewhere in thePacific region where most of the SafeHull vesselsare building.

Also in October Marinette Shipyard delivered theABS classed, 206 foot, buoy tender JUNIPER.This marked the first time the US Coast Guardhas adopted the standard commercial practice of building and maintaining a vessel to classifi-

Providing training and assistancein the effective use of SafeHull tothe world’s leading shipyards wasa major activity of ABS during1996. Dedicated teams were activethroughout the year. They notonly provided initial support butalso helped find solutions to hardware and software issues topermit seamless integration of theSafeHull programs into shipyards’existing workstation computerbased systems.

the needs of offshore operators. Also included isan expanded suite of advanced computer pro-grams and technical support services, principalamong which is the extended application ofSafeHull to FPSOs. An ABS Guide for Buildingand Classing Floating Production, Storage andOffloading Systems had been published earlierin the year.

Of further service to the offshore industry wasthe approval by the ABS Technical Committee inNovember of a revised edition of the ABS Rulesfor Building and Classing Vessel Under 90Meters. Responding to the trend toward larger,more powerful offshore support vessels, theRules include an entirely new section devoted tothis type of craft. Developed in close cooperationwith the industry, these Rules set new standardsfor unrestricted worldwide service and includethe innovative ‘SOLAS ready’ designation forcabotage trading vessels.

Also in November, ABS Marine Services formed a new partnership with Oiltest Inc. and DrewMarine Inc. which expanded its long-standingABS Oiltesting Service. The service will benefitfrom the inclusion of Drew within the partner-ship. The company offers market leadingtechnical expertise in the field of fuel additivesand a worldwide sales and service network.

By December there was growing concern on thepart of ABS senior management to IACS statis-tics on the implementation of the ISM Code.These figures indicated that only 5 per cent ofthe estimated 18,700 vessels required to complywith the Code by 1 July 1998 had been certifiedby IACS members. In an attempt to encourage

shipowners to begin this important certificationprocess, estimated to take at least twelvemonths, ABS announced that it would defer aplanned auditing fee increase until 1 July 1997.At that time a significant increase will beimposed to be followed by further penaltyincreases from the first of the New Year.

At the same time, ABS also announced that significant internal cost savings and operationalefficiencies would allow it to maintain its 1996fee structure for classification services through-out the coming year. This represents the thirdconsecutive year that ABS has been able to offerits clients a stable fee structure as a result ofmanagement efficiency efforts.

As an organization serving the internationalmarine industry, ABS has been particularly con-cerned with the provision of educationalopportunities within the fields of naval architec-ture and marine and offshore engineering. Thesedisciplines provide the training ground for theindustry’s future leaders. To encourage studentsto pursue careers in these areas, a scholarshipprogram was established by ABS in December.The program encompasses six annual scholar-ships to be awarded at technical universities inGreece, Japan, Korea, Italy China and the UK, as well as three in the US at Webb Institute,MIT, and the University of Michigan.

Shortly before the close of the year the affili-ated ABS Group of Companies reorganizedits structure to improve market opportunitiesand internal efficiencies. Effective 1 January1997 ABS Quality Evaluations will continue itsoperations only in the Americas. The certificationservices it formerly provided in Europe and the Pacific regions will be undertaken by a newsubsidiary, ABS Services, which will also providethe industrial verification services worldwide formerly offered by ABS Industrial Verification, a subsidiary which has been phased out.

The new organization’s emphasis on product lineselling through a single geographic office in eachcountry is expected to offer ABS clients betterservice, driven by market demand, and signifi-cant operational efficiencies for the ABS Group.

ABS Marine Services will continue to operateworldwide, closely aligning its marketing withthat of ABS to offer shipowners a complete suiteof marine safety related services.

The year ended on a high note, one whichaugured well for ABS classification activity in1997 and the years ahead. During the month ofDecember ABS received contracts to class 70 newvessels of over 1,000,000 gt (1,700,000 dwt).

30

A C T I V I T I E S

cation society standards. This vessel will be fol-lowed by four sister ships and a second series of14 similar but smaller craft.

November brought the announcement of a series of new ABS initia-tives to reinforce its dominant position withinthe offshore industry. These included a newmarketing structure and internal expert strategygroups to ensure that engineering and technicalservices provided by ABS are uniquely tailored to

nies, training institutes and government bodies.ABS Marine Services has developed a series ofprograms to assist owners and educationalinstitutes meet the immediate and ongoingstandards of these new requirements.

The first quarter of the year will also see therelease of several new products which will offersubstantial assistance to owners of craft fromsmall catamaran ferries to the most moderncontainerships.

Publication of the ABS Guide for Building andClassing High Speed Vessels offers designers,builders and operators of these specialized craft the latest technological guidance for steel,aluminum alloys and fiber-reinforced plasticconstruction. ABS has been a traditional leaderin classing these vessels, whether to catamaran,hydrofoil, SWATH, aircushion, wave piercing or monohull designs. Responding to the rapidchanges in this sector, ABS has revised its existing Guide, released in 1990. The newrequirements reinforce the ABS position at theforefront of this technology.

For owners and builders of tankers, bulk carriers and containerships, the major devel-opment at ABS in 1997 is the release of awidely revised and significantly updated version of the unique ABS SafeHull structuraldesign and analysis program. The muchanticipated release had been deferred as ABSresponded to industry requests for a range of

operating systems to ensure maximum ease ofuse. As a result, the new ABS SafeHull systemwill be equally effective under all threeWindows environments — Win 3.1, Win 95 andWindows NT, as well as all workstations mostcommonly used in the world’s major shipbuild-ing yards.

In addition to improved ease of use, and widerand more sophisticated technical capabilitiesthan the previous MS-DOS based version, thenew ABS SafeHull program has been expandedto include containerships of greater than 130min length. Although several containerships forprominent operators have already been con-tracted to SafeHull criteria, design review hashad to be carried out by ABS staff. The new

is a year in which ABSwill be putting newtechnologies to work

in support of the wide range of essential safetyand quality services it offers, particularly thoseassociated with classing and operating shipsand offshore structures. And a reorganizationhas positioned the ABS Group, comprising thesubsidiary companies ABS Services, ABS Marine

Services and ABS QE, for robust expansion ofits activities in support of safety, quality andenvironmental services for shore based industries.

Updated regulations will also keep the ABSteam active as it assists shipmanagers adjust tonew requirements ranging from the latest ver-sion of the STCW (the International Conventionof the Standards of Training, Certification andWatchkeeping for Seafarers) to garbage man-agement and the all-important preparations forthe implementation of the International ShipManagement Code (ISM).

Time is short. Adherence to therequirements of the ISM Codetakes at least twelve months for most companies. ABS has theexpertise to assist owners meetthe requirements of the Code.The ABS team stands ready to respond. It is expected that1997 will be the year of compli-ance as the industry movesfirmly towards more responsibleand safer operational practices.

1997

31

LOOKINGAHEAD

STCW took effect February 1,1997. It covers all ship types and appliesenhanced requirements for crew training andcompetency, and the documentation of compa-

32

A C T I V I T I E S

version of the program will devolve that capa-bility to any SafeHull user, whether in theshipyard or the owner’s design office. Fulltraining support will continue to be providedthroughout the year by a dedicated ABS team.

Subsequent to an extensive and deliberatepilot testing program, the first phase of ABSSafeNet will be released to owners of ABS-classed vessels throughout 1997. The nucleusof this phase is access to the survey statusdatabase relating to those vessels. But it alsoincludes an array of additional useful informa-tion such as a listing of ABS Type ApprovedEquipment, listing and description of repairfacilities worldwide, a listing of all Port Stateand Flag State contacts, and a worldwide direc-tory of ABS survey offices.

Mid-1997 is the target date for the pilot releaseof the ambitious Phase Two SafeNet. This will link survey status to the owner’s plannedmaintenance system covering both hull andmachinery. And it will allow the creation of avessel specific life cycle database comprised

of complete condition assessment information,including gaugings, 3-D vessel schematics, and digitized photographs.

A resurgence in the offshore industry hasfocused attention on a new generation of float-ing units for both drilling and production. Inresponse, ABS has been updating its full rangeof existing technical software which is applicableto this pace-setting technological sector. Thenew package of programs will be available forapplication to offshore projects by mid-year,although plan specific applications will be possible even earlier. Evaluations of advancedpurpose column stabilized drilling units, tensionleg platforms, drill ships and floating productionsystems will be covered by the new suite of soft-ware. Application of ABS SafeHull technology toFPSOs will also be available on a project basisfrom ABS technical experts.

Mid-year will bring the release of additional technological advances in the shape of newguidelines for specialized refrigeration systemsand equipment, and for machinery fitted aboardall vessels. Both initiatives are expected tobecome the new industry standards upon release.

A resurgence in the offshore industry has

focused attention on a new generation

of floating units for both drilling and

production. In response, ABS has been

updating its full range of existing

technical software which is applicable to

this pace-setting technological sector.

33

On 1 July, Annex V of MARPOL will require a garbage management plan to be aboard allnew ships equal to or greater than 400 gt carrying 15 or more persons. ABS MarineServices has developed the necessary guidelinesfor owners seeking to comply with theserequirements and will be able to offer expert assistance.

This responsive approach to owners’ demandsfor guidance in meeting new regulatory burdens will be applied to the new SOLAS provision for Cargo Securing Manuals. All newand existing ships, equal to or greater than 500 gt, carrying other than solid or liquidcargo in bulk, will be required to carry andstow cargo in accordance with a CargoSecuring Manual (CSM), approved by the FlagState, effective 31 December 1997. ABS isoffering owners a detailed guide in electronicformat to smooth the development of thesenew manuals and ensure proper compliance.

Bulk carriers will remain a central focus ofindustry attention throughout 1997. Therewill be further discussion of the structural stan-dards for new and existing bulk carriers usedfor the carriage of high density cargoes at theMay meetings of the IMO Maritime SafetyCommittee. Preparatory to this ABS will bemeeting with owners to explain the new IACSrequirements that have already been imposedand to inform owners of the additional complex research which is being undertaken by the Association’s members.

Enhanced Survey Requirements imposed byIACS took effect for bulk carriers of 10 years ofage and older from 1 January 1997, althoughABS had already imposed these new require-ments during 1996. ESP was also required byIACS for all new and existing chemical carriers,effective 1 January 1997.

Regulations affecting tanker operators in 1997include the July 1 IACS requirement for intactstability for all new and existing tankers. Andthe US Coast Guard has mandated that by 29 July all existing single hull tankers of anysize entering U.S. waters must have specificmaneuvering data posted in the wheelhouse.

Throughout the year an ongoingfocus for the ABS organizationwill be the implementation of the ISM Code provisions. Thematter has passed from thehands of IMO to the individualFlag States which are chargedwith its enforcement and to theowners who must comply with its terms prior to the July1998implementation date.

The phaseout of single hull tankers will contin-ue throughout the year under the provisions ofboth MARPOL and OPA-90 The former man-dates that, during the year, applicable singlehull tankers built during 1967 are to be withdrawn from trading and that tankers builtbetween 1967 and 1972 are to be prohibitedfrom transporting oil in bulk unless they comply fully with the terms of MARPOL 13(G).Within the US, OPA 90 applies to tankers andtank barges and the 1997 phaseout will requireolder vessels to be withdrawn from serviceaccording to the size-age configurations contained in the law.

Passenger and RO/RO passenger ships willalso be subject to further regulation during1997. Effective 1 July new requirements relat-ing to ventilation duct strength, operationalfeatures, watertight doors, and stability require-ments will apply to either one or both shiptypes. Enhanced IACS requirements for sideand stern doors comes into effect for allapplicable vessels on the same date.

34

A C T I V I T I E S

Strong results continue in major ship categories with containership figures showingthe most significant increases.

A BS classification activity during 1996continued to be robust. When viewedin perspective with the strong showing

of results over the prior two years, it is evidentthat there is a renewed vigorous demand forABS classification services fueled by significanttechnological advancements and quality initia-tives. Moreover, the results for 1996 were wellbalanced having been spread over the threemajor vessel types — tankers, bulk carriers andcontainerships

SafeHull technology has clearly come into itsown having been quickly recognized by themarine industry as providing superior design andoperational benefits. It has generated significantclass activity since the first SafeHull vessel wasclassed in mid-1994. By the close of 1996, 25 SafeHull tankers and bulk carriers had beenclassed while another 86 tankers, bulk carriersand containerships were contracted to be builtor building to ABS class.

It is also interesting to note that whereas 1995was a particularly outstanding year for ABS interms of bulk carrier class activity, 1996 was anespecially distinctive one for its class activitywith containerships.

VESSELS CLASSED

During 1996 ABS classed 742 new and existingvessels totaling 6,662,300 gross tons. This sur-passes the 1995 figures by some 2 per cent innumbers and a hefty 36 per cent in tonnage. Infact, this exceeds totals for vessels classed in agiven year going back well over two decades. Ofthe vessels classed in 1996, 523 of 5,106,200gross tons were newbuildings. This compareswith the 1995 figures of 452 vessels of3,611,000 gross tons registering an impressivejump of 16 per cent in numbers and 41 per centin tonnage. The other 219 vessels classed in1996, are existing vessels including 140 of1,331,500 gross tons that had previously beenclassed by other societies or were unclassed and79 vessels, the prior ABS class of which hadbeen dropped, were re-instated.

VESSELS REMOVED

Removed from ABS class during 1996 were 975propelled and non-propelled vessels. Of these483 were dropped for noncompliance with the

ACTIVITYclassification

Total Tonnage in Class

60

70

80

90

100

90 91 92 93 94 95 96

94.1

mGT

Order Book

0

1

2

3

4

5

6

7

8

88 89 90 91 92 93 94 95 96

mGT

7.0

35

ABS Rules — 54 of this number being oceango-ing vessels, the others being nonpropelled andsmaller types — 66 were scrapped, and theremaining 426 were withdrawn for a variety of other reasons.

CLASSED FLEET

At the conclusion of the year the ABS fleetamounted to 11,584 ships and offshore struc-tures of all types totaling 94,071,700 gross tons.This marks a slight decrease in numbers andslight increase in tonnage, compared to end ofthe year 1995. This ABS classed fleet represents100 different flags of registry.

NEW CONTRACTS RECEIVED

During the year formal contracts were receivedto class 474 new ships and offshore units of4,528,000 gross tons. While the tonnage figureremained almost the same as for contractsreceived during 1995 the number of vessels was9 per cent less.

ORDERBOOK

As of the completion of 1996 the ABS order-book of new ships and offshore structuresshowed 574 vessels of 7,027,100 gross tonscontracted to be built or building to class.Orderbook figures for year-end 1995 showed831 vessels of 7,579,000 gross tons. This appar-ent falloff in the ABS orderbook results from anadministrative procedure of deleting contractsfor a number of smaller vessels as it became evi-dent the projects were not going to materialize.However, the orderbook remains at a level thatassures ABS classification activity will remainvibrant into the next century.

TANKERS

During 1996 ABS classed 29 tankers totaling1,800,000 gross tons. While this was a decreaseof 12 tankers from the year before, it was anincrease of almost 32 per cent in tonnage indi-cating stepped up activity with larger size VLCCand AFRAMAX tankers. Contracts were receivedto class 28 new tankers of 1,220,000 gross tonsduring 1996 besting 1995’s corresponding fig-ures by 75 per cent and 15 per cent respectively.At the close of 1996 there were 47 tankers of1,825,900 gross tons building or contracted tobe built to ABS class (which is 12 per cent morein numbers but 18 per cent less in tonnage thanthe close of 1995) with a further 831 tankers ofsome 36,922,000 gross tons already in the fleetof ABS classed vessels.

ABS % of the World Deliveries

0

5

10

15

20

90 91 92 93 94 95 96

18.2%

Self Propelled Vessels > 100 GT

%

Based on GT

Contracts Received

0

1

2

3

4

5

88 89 90 91 92 93 94 95 96

mGT

4.5

Total Incoming GT

0

1

2

3

4

5

6

7

8

88 89 90 91 92 93 94 95

Existing

New

96

mGT

6.7

36

A C T I V I T I E S

BULK CARRIERS

In 1996, 27 bulk carriers of 1,235,100 gross tonswere classed for an increase of 3 in number and38 per cent in tonnage over the previous year.Contracts slowed somewhat from 1995 whichwas a superlative year in receiving new ordersfor bulk carriers. During 1996 ABS received con-tracts for 24 bulk carriers of 1,213,000 grosstons down from 1995 by 44 per cent in num-bers and 34 per cent in tonnage. Nevertheless,the orderbook at the end of the year remainedclose to that of 1995 with 63 bulk carriers of2,500,500 gross tons building or contracted to be built to ABS class. The classed fleet of ABS bulk carriers numbered 855 of some21,892,000 gross tons.

As of 31 December 1996 As of December 1996 During 1996Vessels in Class Vessels on Order New Vessels Classed

Type No. Gross Tons No. Gross Tons No. Gross Tons

Barge 4,875 8,219,600 122 287,600 287 487,600

Bulk Carrier 855 21,892,300 63 2,500,500 27 1,235,100

Combination [Dry/Liquid] Carrier 27 1,103,900 - - - -

Container Carrier 312 9,498,600 58 1,770,700 29 1,385,000

Dredge 48 116,600 2 2,000 4 2,000

Ferry/Passenger Cargo 106 450,300 5 600 4 38,400

Fishing Vessel 49 36,700 6 2,300 - -

General Cargo Vessel [Dry Cargo] 596 5,254,800 4 41,900 11 115,300

Launch/Crew Boat 188 19,200 10 2,000 13 600

Liquefied Gas Carrier 68 2,446,200 3 111,700 - -

Mobile Offshore Drilling Unit 551 3,589,200 4 21,300 1 2,700

Offshore Platform* 91 - 2 - 2 -

Passenger Cruise Vessel 87 688,700 1 39,000 4 3,100

Single Point Mooring 23 - 1 100 1 -

Supply/Tug & Supply Boat 910 492,300 10 7,000 1 1,600

Survey/Research Vessel 108 188,900 24 16,500 2 7,400

Tanker 831 36,922,100 47 1,825,900 29 1,800,000

Tugboat 1,067 289,600 65 21,500 47 14,100

Underwater Vehicle 74 400 5 100 - -

Vehicle/Barge Carrier 97 2,302,600 6 272,600 - -

Yacht 298 55,400 44 12,300 40 7,000

Other 320 504,300 92 91,600 21 7,300

Total 11,584 94,071,700 574 7,027,100 523 5,106,200

*Includes offshore installations and pipelines where gross tonnage does not apply.

ABS Activity During 1996

ABS Class Vessels

Tanker40%

BulkCarrier24%

ContainerShip10%

GeneralCargo5%

OffshoreRelated5%

Other16%

Based on GT

CONTAINERSHIPS

It was a most extraordinary year for ABS with containerships as significant increases were registered in its class activities over 1995.During 1996 ABS classed 29 containerships of 1,385,000 gross tons for an increase of 81 per cent in numbers and more than doublethe tonnage. Contracts also were received at abrisk rate throughout the year and by its closeABS had received requests to class 47 container-ships of 1,580,000 gross tons for an increaseover the year earlier of 81 per cent in numbersand well more than double in tonnage. At theyear’s end the ABS orderbook for containershipsrose to 58 of 1,770,700 gross tons marking anincrease of 38 per cent in numbers and 24 percent in tonnage over year end 1995. The ABSclassed fleet of containerships at the close of theyear reached 312 of some 9,499,000 gross tons.

37

VLCC’s on Order

Other43%

31 December 1996

ABS57%

Based on DWT

Drill Ships

Other41%

Existing Market Share

ABS59%

Based on DWT

Semi-Submersibles

Other49%

Existing Market Share

ABS51%

Tension Leg Platforms

Other50%

Existing Market Share

ABS50%

Jack-UpsOther12%

Existing Market Share

ABS88%

FPSO’s

Other49%

Existing Market Share

ABS51%

Frank J. IarossiChairman

Robert D. SomervillePresident

Donald LiuSenior Vice President

Walter J. CzernyVice PresidentDivision President-ABS Pacific

Antonio C. Lino CostaVice PresidentDivision President-ABS Europe

Vincent F. RothVice PresidentDivision President-ABS Americas

Robert J. BauerleVice PresidentTreasurer and Chief Financial Officer

Donald M. BirneyVice President

Gary A. LatinVice President

William J. O’BrienVice PresidentGeneral Council, Secretary

John S. SpencerVice President

Stewart H. WadeVice President

Thomas P. HincheyAssistant Treasurer

Martha C. AdamsAssistant Secretary

38

O F F I C E R S

Officers, Council & Board

ABSCorporate Officers

Board of DirectorsLars CarlssonConcordia Maritime AB

Peter G. GoulandrisCapeside Steamship CompanyLimited

John A. HickeyAmerican Hull Insurance Syndicate

Frank J. IarossiAmerican Bureau of Shipping

Paul IoannidisSpringfield Shipping Co., Panama, S.A.

Gerhard E. KurzMobil Shipping & Transportation Co.

John P. LabordeTidewater, Inc.

Dr. John J. McMullenJohn J. McMullen Associates

T. Peter PappasPappas Enterprises

Robert D. SomervilleAmerican Bureau of Shipping

C.C. TungOrient Overseas International Ltd.

Douglas C. WolcottWolcott Associates

Ariffin AliasMalaysia International Shipping Corp.

W. J. Amoss, Jr.Marine Logistics, Inc.

Kurt AndersenA.P. Moller/Odense Steel Shipyard

John A. AngelicousisAgelef Shipping Co. (London) Ltd.

William T. Bennett, Jr.Friede & Goldman, Inc.

Lars CarlssonConcordia Maritime AB

John M. Carras

Kendall G. ChenEnergy Transportation Corp.

John P. ClanceySea-Land Service, Inc.

Peter R. CresswellAlgoma Central Corporation

Richard D. DeSimoneThe Atlantic Mutual Companies

Dott. Ing. Saverio di MaccoFincantieri C.N.I. S.p.A.

Richard du MoulinMarine Transport Lines, Inc.

John D. FafaliosFafalios Ltd.

Peter G. GoulandrisCapeside Steamship Company Limited

Peter John GoulandrisOrion & Global Chartering Co., Inc.

John G. Goumas J. G. Goumas (Shipping) Company, S.A.

William O. GrayGray Maritime Company

Dott. Aldo GrimaldiGrimaldi S.p.A. di Navigazione

Gregory B. HadjieleftheriadisEletson Corporation

VAdm. Albert J. HerbergerUnited States Department ofTransportation

Ran HettenaMaritime Overseas Corporation

John A. HickeyAmerican Hull Insurance Syndicate

John HuffOceaneering International Inc.

J. Erik HvideHvide Marine Inc.

Y. W. HyunHyundai Merchant Marine Co., Ltd.

Masaharu IkutaMitsui O.S.K. Lines

Paul IoannidisSpringfield Shipping Co. Panama S.A.

Adm. J. William KimeUSCG (Ret.)Interocean Ugland Management Corp.

R. F. KlausnerExxon Company International

Adm. Robert KramekUnited States Coast Guard

A.B. Kurz Keystone Shipping Co.

Gerhard E. KurzMobil Shipping & Transportation Co.

John P. LabordeTidewater, Inc.

Michael C. LemosC.M. Lemos & Co. Ltd.

George P. LivanosCeres Hellenic Shipping Enterprises Ltd.

George S. LivanosStar Maritime S.A.

VAdm. Louis C. LoUnited Ship Design andDevelopment Center

Loh Wing SiewKeppel Corporation Ltd.

Malcolm W. MacLeodMoran Towing Corporation

Dr. John J. McMullenJohn J. McMullen Associates, Inc.

Thomas R. MooreChevron Shipping Co.

C. Bradley Mulholland Matson Navigation Co.

William C. O’Malley Tidewater, Inc.

C.R. PalmerRowan Companies, Inc.

Basil PapachristidisPapachristidis Ship Management Services Ltd.

T. Peter PappasPappas Enterprises, Inc.

Ambassador Manoel Pio CorreaIndustrias-Verolme Ishibras

Spyros M. PolemisSeacrest Shipping Co. Ltd.

Thomas J. PrendergastCenter Marine Management

Richard J. Quegan

Edwin J. Roland, Jr.Bona Shipping (USA), Inc.

Robert E. RoseDiamond M. Drilling Company

Dott. Alcide Ezio RosinaFinmare, S.p.A.

Basil Scarvelis

Cesare SorioS. J. Marine Inc.

Capt. Panagiotis N. TsakosTsakos Shipping & Trading S.A.

Frank W. K. Tsao IMC Development & Management Ltd.

C.C. TungOrient Overseas (Holdings) Ltd.

Capt. Antonio ValdesConoco Shipping Company

Douglas C. WolcottWolcott Associates

39

The Council

Frank J. IarossiChairman

Christopher J. WiernickiPresident

Joel Brad FillmoreVice President

Robert J. BauerleVice President

Gary A. LatinVice President

Timothy R. LeitzellVice President

Bernard M. PerinneVice President

John KrousouloudisVice President

Fred ZorbasVice President

Joseph E. VorbachVice PresidentGeneral Counsel, Secretary

40

O F F I C E R S

ABS Group of Companies, Inc.

Dr. Victor L. ArnoldUniversity of Texas

Robert J. BauerleABS Group of Companies, Inc.

Edward J. CampbellJ.I. Case Co. (Retired)

Frank J. IarossiChairman

Christopher J. WiernickiABS Group of Companies, Inc.

Dan F. SmithLyondell Petrochemical Company

Corporate Officers

Board of Directors

Group of Companies, Inc.

Our MissionThe mission of ABS Group and its operatingcompanies is to assist its clients to improve the safety of their operations, to enhance thequality of their services, and to minimize theenvironmental impact of their activities.

The ABS Group Companies pursue this missionby offering integrated services related to aware-ness, evaluation, training, implementation,verification and certification.

Quality Policy It is the policy of the ABS Group Companies to provide quality services in support of our mission and to be responsive to the individualand collective needs of our clients as well asthose of the public at large. All of our clientcommitments, supporting actions and servicesdelivered must be recognized as expressions of quality. We pledge to monitor our perfor-mance as an on-going activity and to strive for continuous improvement.

This Annual Report was produced by ABS Marketing Development & Communications, New York212.839.5000

© American Bureau of Shipping 1997DE

SIG

N B

Y M

UR

RA

Y M

ULT

IME

DIA

ABS Group

TWO WORLD TRADE CENTER, 106TH FLOOR, NEW YORK, NEW YORK 10048