Study of Strategy Adopted by Maersk Tanker- Onkar Singh Bhati

STUDY OF STRATEGY USES OF MAERSK TANKER

CONTENT:

SNO SUBJECT PAGE NO.

01 INTRODUTION 02

HISTORY 02

BUSINESS AREA’s OF MAERSK 03

TYPES OF TANKER 13

02 TANKER DEMAND & SUPPLY 21

STUDY OF MAERSK TANKER BUSINESS

03 RESEARCH METHOLOGY

SUSTAINABILITY STUDY OF MAERSK TANKER 26

04 TECHNICAL OPRATION MISSION

SUSTAINABILITY STRATEGY

SUSTAINABILITY COMPASS:

1. Health, Safety and Security,

2. Environment, Corporate Social Responsibility,

3. Quality.

Overview: Maersk Tankers Industry:-

Maersk Tankers owns and operates a large fleet of crude oil carriers, product tankers, and gas

carriers – all built and operated in accordance with the highest standards for quality and reliability.

Maersk acquired our first dedicated tanker in 1928, and we have been expanding and improving our fleet

to meet changing customer needs ever since. Today, the Maersk Tankers fleet is one of the largest, most

modern and most diversified independent fleets in the world. Driven by our innovative spirit and

commitment to first-class service, never stop striving to offer safer, more of more cost-effective transport

solutions for our customers around the world.

At Maersk Tankers, safety and environmental protection are always our top concern. To ensure safety, our

state-of-the-art tankers are all double hulled and comply with the latest industry standards and demands.

Maersk Tankers' fleet of product tankers is managed under three different brands: LR2 tankers through the

LR2 Pool with Torm, handy and medium range tankers through Handy tankers, 100% owned, and small

and intermediate tankers through Broström, the Swedish tanker company acquired in 2009.

Employees:

On shore: 401

Seafarers: 2,865

Offices: Maersk have 9 offices globally: –

Copenhagen, Gothenburg, Singapore, Paris, Tokyo, New York, Seoul, Paris,

London and Rio

CHAPTER: - 1

INTRODUCTION

A. P. Moller-Maersk, Group is based in Copenhagen, Denmark with subsidiaries and offices in

more than 130 countries worldwide and it is one of the world‟s largest shipping companies. Operate over

500 container, 56 supply, 32 tankers and 9 gas carriers and employ over 108,000 people worldwide. It

ranked 147 on the Fortune Global 500 list for 2010, down from 106 in 2009 & It is the largest container

ship operator and supply vessel operator in the world.

A.P. Moller - Maersk is a publicly traded corporation with some 68,000 shareholders. Our

controlling shareholder is the A.P. Moller and Chastine Mc-Kinney Moller Foundation, which was set up

by the company‟s founder in 1953. Maersk shares are traded on the Copenhagen Stock Exchange.

History: Founded in 1904

The company was founded in 1904, when Arnold Peter Moller partnered with his father in their

hometown of Svendborg, Denmark to tpurchase a second-hand steamship. A.P. Moller set a course of

carefully managed expansion that would eventually see the family business grow into a major player in

global shipping and energy. A.P. Moller's second child was Arnold Maersk McKinney Moller (born 13

July 1913). In 1939, Maersk Mc-Kinney Moller became a partner in the company. Following the death of

A.P. Moller in June 1965, he became CEO of the company and held this post until 1993, when he was

succeeded by Jess Soderberg. Beginning in 1965, Maersk Mc-Kinney Moller also served as company

chairman and did not relinquish this position until December 2003 (90 years old), when the chairmanship

was taken over by Michael Pram Rasmussen. Maersk Mc-Kinney Moller is still one of the "managing

owners" of the company and was chairman of Odense Steel Shipyard until 2 May 2006

Business Areas of Maersk:- A.P. Moller – Maersk's activities are organized into four main

business segments:

1) MAERSK LINE (including Safmarine Container Lines)

2) DAMCO

3) APM TERMINAL

4) CONTAINER INLAND SERVICE

5) MAERSK OIL

6) MAERSK TANKERS

7) MAERSK LNG

8) MAERSK FPSOs

9) MAERSK DRILLING

10) MAERSK SUPPLY CHAIN SERVICES

11) SVITZER

12) DANSK SUPER MARKET

1. MAERSK LINE: - The world‟s largest container shipping company and a customer-focused

leader in reliable, eco-efficient transport. As part of the A.P. Moller - Maersk Group, Maersk also

offer customers access to a global network of feeder vessels and onshore logistics services.

Reliable, eco-efficient shipping

Reliability is a top priority for Maersk Line. Maersk Line Frequently ranked by independent third

parties as the most reliable carrier among the world‟s 20

Largest shipping lines. In addition, Maersk Line also leaders in eco-efficiency, which is fast

becoming a major differentiator in the container shipping industry. Maersk Line considerably more

efficient than the industry average – and this enables our customers to reduce the CO2 footprint of

their logistics solutions and supply chains.

key figures: Maersk Line

Employees : 16,900

Number of offices : 325

Number of countries : 125

Number of vessels : 500

CEO : Eivind Kolding

2. DAMCO: - (Worldwide freight forwarding and supply chain management).

Damco is a global logistics company that empowers customers to access new markets,

sourcing options and business opportunities via supply chain management solutions, ocean, air

and landside transport services, and specialized logistics solutions. With offices in 90 countries,

Damco is a global player that keeps things moving for more than 10,000 businesses worldwide.

key figures: Damco

Employees : 10,500



Ocean freight total

volumes (TEUs) : 545,000

Air freight total export

volumes (tonnes) : 60,000

Supply chain management

total volumes (1000 cbm) : 45,000

Reefer logistics total

volumes (FFEs) : 70,000

CEO : Rolf Habben-Jansen

3. APM TERMINALS: - (Strength, stability and leadership in port operations).

APM Terminals is evolving to meet the growing need for state of- the-art terminal

services. APM Terminal helped develop the world‟s first container terminal in Port Elizabeth, New

Jersey in 1975, and we continue to lead today – serving some 60 lines from a widely recognized

position of strength and stability.

APM Terminals is well represented in established ports in North America, Western Europe and

Japan. We enjoy a strong position in the Mediterranean and China, and APM Terminals playing a

critical role in port and terminal development in key emerging markets such as Africa and South

America.

key figures: APM Terminals

Employees : 18,000



Annual TEU : 32,000,000

CEO : Kim Fejfer

4. CONTAINER INLAND SERVICE: - (Global container management, transport and

maintenance). Closely integrated with APM Terminals, Container Inland Services is a group of

over 80 local companies that specialize in container availability. As well as offering cargo support

services and buying, selling and modifying containers, Container Inland Services manage move

and maintain containers and other shipyard equipment for many of the world‟s top carriers,

transport companies and a wide range of other customers worldwide.

key figures: Container Inland Services

Employees : 6,000


CEO : Nigel Pusey

5. MAERSK OIL: - (An independent oil and gas company with global operations).

Turning marginal and challenging fields into a commercial success has been the

cornerstone of Maersk Oil‟s business since the company was founded in 1962. Maersk Oil

developed ground breaking technologies while working with tight chalk reservoirs in the Danish

North Sea and enabled Denmark to become an oil and gas producing country. Later, we deployed

these technologies around the globe to become a truly global player in the upstream business.

Today, Maersk Oil operate some 700,000 barrels of oil equivalent per day, with production in

Denmark, the UK, Qatar, Algeria, and Kazakhstan, and exploration activities in Angola, Brazil,

Norway, Oman and the U.S. Gulf of Mexico.

key figures: Maersk Oil

Employees : 3,500

Number of platforms/FPSOs : 80/3

Barrels a day : 700,000

CEO : Jakob Thomasen

6. MAERSK TANKERS: - (A leading independent tanker company with a modern, diversified

fleet). Maersk Tankers owns and operates a large, modern fleet of crude oil, product, and gas

tankers – all built and operated in accordance with the highest standards for quality and reliability.

Tankers are an important part of the energy industry‟s infrastructure, transporting oil from one end

of the world to the other. Maersk Tanker have been transporting oil since 1928, and today Maersk

Tanker offer our customers one of the most diversified independent fleets in the world.

Four distinct brands:

In addition to our crude and gas tankers trading under the Maersk Tankers brand, Maersk

Tanker offer product tanker services under three brands.

The LR2 Pool operates double hull coated Aframaxes, primarily carrying naptha and gasoil from

the Arabian Gulf to East Asia. Handytankers is one of the world‟s largest pool managers of vessels

between 25,000 and 51,000 dwt. And Broström, which we acquired in 2009, is a leading tanker

company specializing in vessels below 25,000 dwt.

key figures: Maersk Tanker

Employees : 2,400



Number of vessels : 230 (incl. T/C-in, Bareboat

and newbuildings)

CEO : Soren Skou

7. MAERSK LNG: - (Safe, innovative global transport of liquid natural gas).

With reserves normally located far away from consumer markets, transport is critical part

of the entire liquid natural gas (LNG) business. Maersk LNG meets the world‟s LNG transport

needs by combining a modern, ultra-efficient fleet with the high safety standards required by our

industry.

In-house innovation:

Maersk‟s in-house technological department, Maersk Maritime Technology, oversees our

new buildings from design to delivery. We work closely with our customers to ensure that our

vessels will meet their expectations, and we constantly seek new solutions for improving

operational performance and efficiency. For example, we developed a new gas cooler technology

for our DFDE vessels that has helped to significantly reduce the natural boil-off of the cargo carry.

This reduces the amount of cargo lost during sea passage, while enabling vessels to travel at more

flexible speeds.

key figures: Maersk LNG

Employees : 290



CEO : Stig Hoffmeyer

8. MAERSK FPSOs: - (Mobile production, storage and offloading capabilities for the oil and gas

industry). Maersk FPSOs develops, constructs and operates technologically advanced, purpose-

built FPSOs, or “floating production, storage and offloading” vessels contracted by offshore oil

and gas companies.

Matching performance with needs and conditions:

Maersk production units ensure the safe and profitable exploitation of offshore oil and gas

fields, and meet the highest standards in some of the world‟s most strictly regulated and harshest

offshore areas. Two of our vessels, the Maersk Curlew and the North Sea Producer, are purpose-

built for the North Sea and have been producing since 1997 with capacities of up to 76,000 barrels

of oil and 110 million standard cubic feet of gas per day. The Maersk Ngujima-Yin was designed

and constructed for use in Australian fields and has a production capacity of 120,000 barrels of oil

and 100 million standard cubic feet of gas per day. Maersk FPSOs also operates the Maersk

Inspirer production unit. With its very efficient process system it can produce up to 75,000 barrels

of oil per day sitting on top of one of the world‟s largest jack-up drilling rigs.

key figures: Maersk FPOSs

Employees : 823




CEO : Stig Hoffmeyer

9. MAERSK DRILLING: - (Innovative technology and expertise in offshore drilling). With Maersk

fleet of jack-up rigs, deep water semi-submersibles and cantilevered drilling barges Maersk

Drilling is always ready to take on a tough new challenge. Maersk Drilling currently drilling in the

North Sea, the Middle East, Brunei, Egypt, the Gulf of Mexico, Australia, the Caspian Sea and

Venezuela – applying efficient, high-performance equipment to break new ground in the global

energy business.

key figures: Maersk Drilling

Employees : 3,150




CEO : Claus V. Hemmingsen

10. MAERSK SUPPLY CHAIN SERVICES: - (An integral part of the offshore industry).

Offshore oil or gas operations are more complex than just the rig or platform itself. Maersk Supply

Service is an integral part of these operations and supports the oil and gas industry around the

world with a large fleet of modern, advanced supply vessels.

A diverse fleet of support vessels:

At Maersk Supply Service have the technology and know-how to meet almost any need our

customers have. Our diverse and highly specialized fleet of modern vessels includes platform

supply, powerful anchor handling, tug supply, craned and light subsea support vessels. Since 2008

Maersk introduced a total of 18 new ships to our fleet, and all our vessels are operated by our own

officers and crews.

Broad expertise

Maersk capabilities cover all areas of offshore supply services, from towing, installation work,

anchor handling and pipeline ploughing to supply services, iceberg management, subsea

construction work, offshore firefighting and pollution control. Maersk can tow, move and install

virtually any kind of rig or offshore installation and have particular expertise in deep water

operations.

Employees : 2,025

Number of offices : 13 including Port Captains


Number of vessels : More than 60

CEO : Carsten Plougmann Andersen

11. SVITZER: - (Providing safety and support at sea for more than 175 years).

With a fleet of about 525 vessels and operations in some 40 countries around the world, we are the

global market leader in marine towage and emergency response.

Towage

We provide harbor, terminal and ocean towage services, as well as pilotage, firefighting, pollution

response and escort assistance – always taking the greatest care to protect lives, the environment

and our customers‟ assets. To make sure Maersk prepared to meet any towage need, our crews

train in advanced tug simulators that replicate real-life port situations. Simulator training also

prepares Maersk crews to navigate around terminals even before they are built – so Maersk ready

to deliver safe operations from Day 1.

key figures: Svitzer

Employees : 4,500



CEO : Jesper T. Lok

12. DANSK SUPER MARKET: - (Parent company of six retail chains with operations in Denmark

and several European countries). Dansk Super market is a group of six retail chains, five

operating primarily in Denmark, and one represented with some 1,100 outlets in Denmark,

Germany, Poland and Sweden. The company was founded in 1906 as Ferdinand Selling, a drapery

shop in Aarhus, Denmark. Maersk acquired a 50 per cent stake in the growing retailer in 1964, and

has owned a majority stake in the company since 2007. Today, our Fotex super markets and Bilka

hypermarkets are market-leading players in Denmark, making Dansk Supermarked

the country‟s most profitable retailer by far.

key figures: Dansk Super Market

Employees : 40,000

Number of shops : 1,100


CEO : Erling Jensen

CHAPTER: - 2

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

Research is an art of scientific investigation. The advanced Learner‟s Dictionary of current English

lays down the meaning of research as “A careful investigation or inquiry specially through search for new

facts in any branch of knowledge”. Research is an academic activity and as such the term should be used

in a technical sense. According to Cliffor Woody Research comprises defining and redefining problems,

Formulating hypothesis of suggested solutions; collecting, organizing and evaluating data, making

deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether

they fit the formulating hypothesis.

A. RESEARCH OBJECTIVES

To understand the overall process of MaerskTanker Industry.

To understand the Types of Tankers and Maersk Tanker Business.

To analyze the sustainability strategy of Maersk Tanker.

To understand the Technical Operations of Maersk Tanker.

To understand the sustainability compass of Maersk Tanker- Health safety and security,

Environment, Corporate Social Responsibility and quality.

B. RESEARCH DESIGN

“A research design is the arrangement for the collection and analysis of data in a manner that aims to

combine relevance to the research purpose with economy in procedure”.In fact, the research design is the

conceptual structure within which research is conducted; it constitutes the blue print for the collection,

measurement and analysis of data.

A. Type of research

Type of research is exploratory. The objective of the exploratory research is the development of

hypothesis rather than their testing.

C. SOURCE AND TYPE OF DATA

Sources of data can be classified into two types. They are

Primary data

Secondary data

a. Primary data

The primary data are those, which are collected afresh and for the first time, and thus happen to be

original in character. In this research primary data is not collected becouse the research topic is extreamly

wide and the time and area give is not sufficient for the research.

B. Secondary data

Secondary data means data that are readily available i.e., they refer to the data, which have already been

collected and analyzed by someone else. In this research secondary data is mainly collected through

Reports prepared by research scholars

Public records and statistics

Reports and publications journals

Books, Magazines and newspapers

Internet

D. RESEARCH TOOL

The reaseach tools means the way or the technique or the equipments which all are used in the

research of the perticular subject like questionnaire, interview, etc.

E. DATA ANALYSIS

Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with the goal of

highlighting useful information, suggesting conclusions, and supporting decision making. Data

analysis has multiple facets and approaches, encompassing diverse techniques under a variety of

names, in different business, science, and social science domains.

All the data given in the report is mainly exploratory data so all the data analysis is done by

exploratory method of data analysis.

F. LIMITATIONS OF THE STUDY

There were certain limitations to the research that the researcher has forced:-

Lack of sufficient data

Companies do not ready to share their information

The Time was the major constraint for the researcher in collecting the data.

The topic of the study is really wide so that individual could not able to get appropriate data.

TYPES OF TANKER

While no standardized system for the classification of oil tankers exists; the fleet is typically

divided into four major categories based on carrying capacity. These categories are ULCCs and VLCCs,

Suezmax, Aframax, and Panamax and Handysize tankers. To benefit from economies of scale charterers

typically charter the largest possible vessel that can be accommodated in a particular voyages arrival and

discharge ports. The four main categories of vessels are:

ULCCs (Ultra Large Crude Carrier) and VLCCs (Very Large Crude Carrier)

These are the largest vessels in the world tanker fleet. They carry cargos of 200,000 dwt or greater and

typically transport oil in long-haul trades mainly from the Arabian Gulf to Western Europe and the United

States via the Cape of Good Hope and Asia. General Maritime currently owns and operates 2 VLCCs. The

large carrying capacity of ULCCs and VLCCs make them attractive to traders, however, this large size

limits their access into some of the worlds ports.

Suezmax:-

Suezmax are midsized tankers with displacement between 120,000 and 200,000 dwt. Suezmax tankers

offer the relative economies of scale that can be achieved with VLCCs; however, their slightly smaller

size offers increased versatility and access to a majority of the world‟s ports. Suezmax tankers primarily

operate in the Atlantic Basin delivering cargoes from West Africa, the North Sea, and the former FSU.

General Maritime currently owns and operates a fleet of 11 Suezmax vessels.

Aframax:-

Aframax vessels are mid-size tankers with displacement between 80,000 and 120,000 metric tons.

Aframax vessels typically engage in medium to short haul oil trades in nearly all operating regions and

can carry cargos of 80,000 to 120,000 dwt. Widely considered to be the work horses of the fleet, their size

makes them ideally suited to operate in areas of lower crude production or where draft and size restrictions

prevent the use of larger vessels. General Maritime currently owns and operates a fleet of 12 Aframax

tankers.

Panamax and Handysize:-

These tankers are primarily used for both the transportation of crude oil and petroleum products. Panamax

tankers have displacement between 50,000 and 80,000 dwt and trade in short haul. Handysize tankers

have displacement between 50,000 and 10,000 dwt. They primarily carry finished petroleum products as

their smaller size makes them less economic for the transport of crude. General Maritime currently owns a

fleet of 2 Panamax and 4 Handysize vessels.

CHAPTER :- 3

REVIEW OF LITERATURE: TANKER DEMAND AND SUPPLY

Tanker demand is expressed in "ton-miles" which are measured as the product of (a) the amount of

oil transported in tankers, multiplied by (b) the distance over which this oil is transported. Tonnage of oil

shipped is primarily a function of global oil consumption, which is driven by economic activity as well as

the long-term impact of oil prices on the location and related volume of oil production. In addition the

tonnage of oil shipped is also influenced by factors such as pipelines, political events and risk, as well as

weather.

The distance over which oil is transported is the more variable element of the ton-mile demand equation.

It is determined by seaborne trading and distribution patterns, which are principally influenced by the

locations of production and the optimal economic distribution of the production to destinations for

refining and consumption. Seaborne trading patterns are also periodically influenced by geo-political

events that divert tankers from normal trading patterns, as well as by inter-regional oil trading activity

created by oil supply and demand imbalances.

FACTORS DRIVING GROWTH

Growth in the seaborne crude transportation industry is principally driven by three factors: Global

oil consumption, import dependency, and voyage lengths.

Growing Oil Consumption:- Global oil consumption has witnessed substantial increases in the past

several decades. The traditional core of the world‟s major oil consumers, the United States, Japan,

and Western Europe, is expanding with new economic powers, most notably China and India, playing

an increasingly important role in global consumption. In the period prior to 2008-2009, U.S. oil

consumption increased an aggregate 5%. In this same period global oil consumption increased 11.9%.

Growing Import Dependency:- Demand for crude oil has grown faster than domestic supply in

major consuming regions such as the United States, Japan, Western Europe, and South-East Asia. As

a result these regions have been forced to rely more and more upon foreign crude exports to fuel

economic expansion. Oil consumption in the world two largest emerging economies, China and India,

has grown 70% and 40% respectively since 2000. This trend of increasing import dependency will

continue far into the foreseeable future further contributing to growth within the tanker industry.

Growing Voyage Lengths:- The World‟s largest and fastest expanding exporters are currently

located in the Middle East, Caspian Sea, Black Sea, and Africa. On the other hand production in areas

in closer proximity to major consuming regions such as the North Sea, and Gulf of Mexico, have

currently already reached or are nearing output decline. Production in the Norway, the UK, and

Mexico has decreased by 27.9%, 38.3%, and 10.7% respectively. This global shift in the source of

production contributes to increasing import dependency, but also serves to increase the ton-mile ratio

for tanker owners.

CONSOLIDATION

The seaborne crude oil transportation business is highly fragmented and is generally comprised of

two types of operators: independent ship owners and captive fleets of privately and state owned oil

companies.

o Within the industry, independent owners account for approximately 80.4% of the tanker capacity,

and the top ten owners account for 27% of the world tanker fleet. The continued concern among

oil companies to secure safe modern tonnage by dealing with large trusted owners has facilitated

consolidation within the industry. The drive towards consolidation has provided larger owners with

leverage to better control operating costs by taking advantage of economies of scale. Through

consolidation of the mid-size tanker market, General Maritime has created a sector specific focus.

FOCOUS ON SAFTY

Environmental protection has been a major focus of the tanker industry over the past years.

Regulations such as OPA 90 have caused tanker owners to take extra care in the maintenance of their

vessels and plan ahead to the time their vessels will no longer be allowed to trade.

o Oil pollution incidents have led to legislation forcing charterers to exercise caution in hiring only

the most modern and well-maintained vessel to trade to trade within U.S water.

o With oil majors seeking exclusively modern double hull vessels, the demand for single hull vessels

has decreased, increasing demolition rates for single hull vessels and demand for the double hulled

fleet. With a modern fleet of double hull VLCC, Suezmax, Aframax, Panamax,

and Handysize vessels, General Maritime is well positioned to take advantage of the phase out of

single hulled vessels.

STUDY OF MAERSK TANKER BUSINESS

Oil is the world‟s major energy resource and is normally produced far from where it‟s refined and

consumed. Because of this, tankers and pipelines are critical infrastructure in the energy value chain.

Generally speaking, tankers are used for trade between regions, while pipelines are used within a given

region.

A very simplified version of the energy value chain is illustrated below. It has three main steps:

exploration/production, refining and consumption. Tanker shipping connects these three steps.

There are two types of oil tankers: Crude carriers for unrefined products and product carriers for refined

products.

Crude tankers are mainly used for the deep sea transport of crude oil from production sites to refineries.

They range in size from 55,000 DWT* up to around 450,000 DWT. The main trading routes are from the

production areas in the Arabian Gulf and West Africa to Asia, Europe and the USA

Product tankers are used to transport refined oil products (gasoline, diesel, kerosene, jet or fuel oil) to the

market. They range in size from 5,000 DWT to around 80,000 DWT. One traditional trading route for

product tankers is between North America and Europe, where gasoline is carried to the US and diesel fuel

is transport back to Europe.

*DWT = deadweight, which is the maximum weight of cargo, bunkers and stores that a vessel can carry.

PLAYERS AND ROLES:

Tankers are often compared to taxis, as tankers take on new assignments with new

customers whenever they are available – unlike container ships, which are more like buses travelling

on a fixed schedule. The nature of the tanker business is characterized by a trading mindset involving

3 parties: the charterer, the ship owner and the broker.

I. The charterer of the vessel has cargo that needs to be shipped as safely, quickly and affordably as

possible.

II. The ship owner owns and operates the vessel and wants to maximize freight but with reliable and

solvent customers and at best possible contract terms.

III. The broker bridges the gap between the charterer and the ship owner by using market knowledge to

guide both parties

INDUSTRY DYNAMICS

Energy transport is driven by global economic growth and dislocation of consumption and

production. This is reflected in cyclical freight rates that vary in accordance with vessel supply and

demand.

Factors That Affect The Transport Business:-

FACTORS DRIVING DEMAND FACTORS DRIVING SUPPLY

MACRO ECONOMICS AND

POLTICAL FACTOR

- ECONOMIC GROTH, - INDUSTRIAL

PRODUCTION, - TRADE PATTERN, -

ENERGY & ENV. POLICES,

- TRADE POLICIES, - WAR & CONFLICTS.

ENERGY MARKET

- OIL, - COAL, - NATURAL GASS,

- NUCLEAR POWER,

- HIDROELECTRIC POWER

OIL MARKET

- REFINERY UTILISATION, - REFINERY LOCATION

- REGIONAL IMBALANCE, - STOCK LEVEL,

- SPOT & FORWARD PRICES

- INDUSTRY STRUCTURE

NEW SHIPBUILDING

- SHIPYARD CAPACITY, - LABOUR COST, - PRICES

OFINPUT GASS, - VESSEL PRICES, - INTERNET RATES

- ACCESS TO CAPITAL

TRANSPORT CAPACITY

- SIZE OF GLOBAL FLEET, - NEW BUILDING RATES, - SCRAPING RATES, - AGE OF STRUCTURE,

- ENVIORMENTAL & SFFTY ISSUE

SHIPOWNER & LOGISTIC

OPRATION

- SERVICE OFFER, - CONTRACT FORM,

- GEOGRAPHIC CONSENTRATION, - OWNERSHIP

THE TANKER SHIPPING MARKET

CHAPTER: - 4

SUSTAINABILITY STUDY OF MAERSK TANKER:

In an ever challenging economic environment the rules of doing business have permanently

changed. Looking ahead we must focus on keeping a competitive edge through maximizing the

performance of our existing assets. This will be obtained through getting better rates, increased utilization,

and outperforming our competitors on cost and efficiency. These new market conditions also call for new

ideas to improve work processes, reduce bureaucracy and retain valuable employees.

With the financial results for 2010 in hand and the outlook for 2011 not living up to the past, it‟s

important to recognize what will keep Maersk Tankers ahead of competitors. The highest safety and

quality standards are pivotal to operating successfully and the sustainable development of Maersk Tanker

business unit recognizes that we must be committed to developing environmentally sound solutions to the

challenge on environment and climate change. Not only do these offer a competitive edge to Maersk

Tanker business, but equally important are the benefits they bring to Maersk Tanker employees, the

environment and the communities operate in.

Sustainability is the new way of doing Maersk Tanker business and delivering Maersk Tanker

services. It sums up quite well the approach necessary to ensure o Maersk Tanker competitive edge in

maintaining Maersk Tanker strong customer base, attracting new customers and more importantly

ensuring all employees feel engaged and active in Maersk Tanker business. In all areas of operations it

needs to strive for continuous, socially responsible improvement in Maersk Tanker performance.

1. TECHNICAL OPERATIONS MISSION:

Maersk Tankers Technical Operations consists of a Marine Standards division - providing

support on matters related to Sustainability, and a Technical Operations Division focusing on daily

technical operations issues of the fleet.

Maersk Tankers deliver best in class technical management by meeting or exceeding customer and

industry requirements. Maersk Tankers fleet will be operated cost-effectively with focus on

reducing it environmental footprint and ensuring the health and safety of our employees.

Maersk Tanker Management Fulfill Our Mission By:

• Focusing on Sustainable Business

• Continuously improving our Health, Safety and Security performance

• Providing high Quality technical services

• Showing Cost leadership compared to peers within the industry

• Organizational development

2. SUSTAINABILITY STRATEGY:

Q. What do I think about when developing the Sustainability Strategy?

Values and principles

• Which issues are materials to Maersk Tanker business? - Environment, safety, CSR,

employment and labor

• Maersk need to priorities areas where most at risk and have the best business opportunities to

support Maersk Tanker Business Strategies?

• What are Maersk Tanker customers‟ priorities? - Safety, environment, cost

Stakeholder engagement

• Who are our most important stakeholders?

- Employees, customers

- Class.

• How do we ensure that we understand their priorities and concerns? And that they understand

ours?

- Employee engagement surveys, vetting management systems, tenders.

Accountability and transparency

• Which metrics will measure performance of our strategy priorities?

- Accident stats, environmental damage, audits, vetting‟s, retention rates, sustainability compass.

What is Maersk strategy is a long term one in line with the BU strategy.

The integration of Broström Tankers has provided an opportunity to relay onto those

vessels all the good projects and operations that Maersk Tankers has been running for years, such

as implementation of the Maersk Ship Performance System.

For an overview it‟s been decided that the following five areas will be prioritized during the

coming years. These areas when addressed, will give us the competitive edge required by showing

true sustainable leadership.

A. Management Commitment:

• Clear communication of environmental/ CSR commitment from Top Management to all

employees

• Top Management externally communicate environmental/CSR targets

B. Supplier Management:

• Collaborate with „strategic partners‟

• Minimum sustainable requirements to suppliers

• Ensure we have an influence on New Build Management

C. Integrate sustainability as a part of our business:

• Set and achieve high safety standards.

• Establish local integrated environmental organization

• Total business impacts taken into account in the decision making process

• Set high but achievable targets such as 15% relative CO2 reduction by 2015

D. Partnerships with customers, academia & clean-tech companies:

• Be in the forefront with new technologies. Strong collaboration with innovation departments.

E. Internal and external communication:

• Continuously enhance our communication on good sustainable performance.

Benefits from proposed strategy:

1. Cost savings and cost avoidance

• Proposed investments will save fuel, lower climate impacts and avoid compliance costs.

2. Competitive edge

• Moving cargo more cost effective and more sustainability friendly.

3. Positioning

• Recognized as a sustainable leader in the tanker business.

• Assist governing bodies on developing future regulations.

4. Creates business opportunities

• Ensure our strategy and operations support the Business Strategy and continuously work in

accord with the commercial departments to leverage opportunities.

5. Engaged employees

• Sustainable development will attract and retain skilled employees. Our employees have many

ideas and solutions and we need to ensure that we have the right people in the right positions to

influence New-build Design and Management.

3. SUSTAINABILITY COMPASS:

I am introducing a new and aligned performance measurement system for Maersk Tankers. This

will include 'balanced scorecards' to measure the overall performance by Maersk Tanker Vessels,

Fleet Groups and Marine Standards.

To help increase focus in Key areas for a sustainable business, the compass is being introduced to

visualize the Marine Standards Performance.

This sustainability Compass represent the following four main areas of our Sustainability strategy –

4. Health, Safety and Security,

5. Environment, Corporate Social Responsibility,

6. Quality.

It acts as a Balanced Scorecard which consists of some of the KPIs listed below and will show our

progress towards our targets. It is also a useful tool for recognizing areas that require increased focus

or a strategic change during the year.

As most of the Key Performance Indicator included has a risk element, the compass also gives us an

overview of Maersk Tanker risk from a sustainability point of view where a high performance

indicates a low risk.

Past performance and future targets – Quality

KPIs – Key

Performance

Indicators

Performance

2008

Targets

2009

Performance

2009

Targets

2010

LTI– Lost Time

Incidents

16 0 9 0

LTIF – Lost Time

Incidents frequency

1.38 0.6 1.06 0.6

TRCF – Total

Recordable Case

Frequency

3.53 2.50 3.19 3

Incidents (excluding

spills)

41 0 32 0

Near Misses report

per vessel

26.7 24 28.4 36

Oil Spill

(Overboard)

3 0 2 0

Oil Spill (Contained) 4 0 9 0

APMM Valid

Average

observations from

SIRE inspections

5.0 5 4.2 4.5

High Risk

Observation from

0.3 0.3 0.3 0.3

SIRE

PSC– Port State

Control – Detentions

0 0 1 0

PSC Port State

Control – Def. per

inspection

0.4 0.5 0.6 0.3

Sea Staff Attrition

rate

11.1% 9% 9.20% 8%

MLC– Maritime

Labor Convention*

New KPI New KPI New KPI 4.5

Health, Safety and Security:- Key success causing actions 2008/2009.

Several achievements in regard to Health, Safety and Security performance were made in

2008/2009:

One key success factor since the release of the last HSE Action Plan (07/08) has been the dramatic

all round improvement in reporting and the responses to reports.

One area that has befitted is Near Miss reporting with an impressive increase of nearly 70% since

year end 2007. This equates to an increase in hazard spotting and safety awareness, which in turn

leads to all round improved organizational safety culture.

Equally instrumental to a successful safety philosophy is timely and valuable responses to

submitted reports. During 2008, Maersk Tankers designated responsible parties to review,

investigate and impart constructive responses to submitted reports; this in turn reduced the large

number of open, unclaimed and waiting reports within the Safety Reporting System.

As part of the last HSE Action Plan, vessels were encouraged to formulate their own safety

initiatives. This has been successful in fostering a proactive onboard approach to safety concepts

and ideas.

Focus on knowledge sharing has been a key issue during this time scale. Maersk Tankers have

both partaken in industry knowledge sharing events such as the Informal Tanker Operators Safety

Forum (ITOSF). The valuable information gleaned from this forum has often been cascaded down

to our vessels in the form of Controlled Fleet Information Notices (C-FINS) and Fleet Circulars.

Health, Safety and Security Strategy for Future

To adopt a Proactive Approach to our Safety Performance by encouraging the continuous search

for innovative ideas, areas of improvement and ensuring that all appropriate information within

Maersk reporting structure is utilized. This will be achieved by good cooperation between both our

personnel working ashore and those working on board our vessels.

The number of pirate attacks this year has already overtaken the number of attacks recorded in

2008, according to the latest figure from the International Maritime Bureau (IMB). The reason: An

unprecedented increase in piracy activity off the Somali Coast.

At Maersk Tankers we are monitoring the situation off the coast of Somalia very closely and we

are in constant contact with the relevant authorities on how best to deal with the situation. Maersk

Tankers has policies and procedures in place for sailing in the area, which are updated based on

available civilian and military intelligence as well as best practices recommended by the relevant

authorities, maritime and other organizations

Part of the procedures for sailing in the area includes training, drills and reviewing security plans

onboard before entering into the area as well as instructions for transiting and dealing with an

attack.

Health, Safety and Security Plan for Future:

TITLE OBJECTIVES TARGETS ACTIONS

1

Health Campaign

Analyse and then

improve the impact that

life on board a vessel

has on seafarers health.

Investigate the standards

of the - Working

environment -

Recreational

environment - Food

Provide a report on the

analysis performed with

guidance for

improvement.

2

Mooring Campaign

Accident Analysis has

identified Mooring

Operations as an area

for improvement.

Give sea farers an

improved knowledge

into the safety aspects

relating to Mooring

Operations, therefore

reducing the accidents.

AMooring Campaign

DVDwill be distributed

to the fleet.

3

Ship Safety Officer

Course

Fleet feedback has

requested further

information regarding

the roles of Ship Safety

Officer.

Provide all Officers and

Cadets with a training

tool that will detail the

task involved in the role

of Safety Officer and

give them guidance in

how to carry out the

role.

An interactive CD-Rom

will be distributed to the

fleet.

4

Behavioural Safety

Adopt the concept of

Behavioural Safety.

Improve safety

performance and reduce

the number of accidents

that occur.

In addition to the current

hardware and software

tools in place to maintain

safety performance,

Behaviour will be

analysed and used to

improve safety

performance.

5

Safety Performance

Maintain a high level of

Safety Performance

KPI‟s.

- Achieve a LTIF of 0.6

- Achieve a TRCF of 3.0

- ear Miss Reports

3/vessel/month

- nified Safety

Performance

Knowledge sharing will

be performed throughout

the organisation so that

all Maersk Tanker and

Broström vessels meet

our performance targets.

6

Rest Hour Violations

Reduce the number of

Rest Hour Violations

experienced by the fleet.

Achieve a continually

improving number of

violations per month

over 2010.

Use the rest hour analysis

and feedback from the

fleet to minimise the

number of rest hour

violations experienced.

8

Security Training

Ensure that abs and

officers receive onboard

CBT(Computer Based

Training).

All on board have “on

board security training

certificate”.

An interactive CD-rom


vessel (if the SSO (Ship

Security Officer) does

not have one already).

9

Security Training

Ensure that all personnel

onboard the vessels

going through high risk

areas have been trained

in Surviving piracy and

All crew passing

Owners identified High

risk areas have the

relative CBT certificate.

An interactive CD-rom


vessel transiting the

areas.

armed robbery Course

(SPAR).

10

Security Drill

Quarterly security drill

(tabletop) involving the

CSO(Company Security

Officer) from each

office.

Drill for all office

locations involving

vessels.

Vessel provide Security

training check list to their

SSO.

Environment:

The general trend of our performance is that Maersk improved the scale of our environmental

impact from 2007 to 2008. The main contributing factors to the improvement in our performance are a

range of focused efforts to limit for instance fuel consumption. The trend in emissions of SOx, NOx,

and PM from ships under the Maersk Tankers control is stable, even though the numbers reported have

grown due to improvements in the amount and quality of data.

Key Success Causing Actions: Several achievements in regard to environmental performance were

made in 2008/2009:

ISO14001 training has been distributed to all vessels and very positively met. More than 900

officers, cadets and shore staff have completed the training.

The US environmental compliance programed successfully completed with great satisfaction from

the US requirements.

A sludge/garbage reporting system for all tanker vessels was launched in order to ensure

environmentally responsible waste landing facilities in ports. More than 70 ports have been

environmentally rated.

Green Passport has become part of the new specification on all tanker vessels except LNG carriers.

Internal audits/ surveys have been initiated, e.g. Maersk Global Fleet Support, Gallagher Marine

Systems and Selected new building shipyards.

Key office personnel have been trained in oil spill response in order to improve shore-based

preparedness in case of a major incident.

First group wide APMM HSSE report was published externally.

Green award granted to Maersk.

Reduced the total Specific Cylinder Lube Oil consumption by 5 % in 2 months.

Reduced CPH and Paris Broström Vessels Cylinder Lube Oil consumption by 12 % in 2 months.

Base Load reductions of 25 % = 0,8 MTHFO = 2,56 MTCO2 pr day achieved on test vessels by

optimizing procedures.

CLT propeller Fitted on Roy Maersk. Expected emission reduction of 5-7 %.

VTG Turbo Charger installed on Maersk. Expected emission reduction of 3 %.

uel Oil Sliding valves retrofitted on 12 Vessels. NOX emission reduction of 30 %

Electrical Steam generators fitted on 7 Vessels, approximately 30 more to come. Expect 35 %

reduction of emission during Port stay.

Future Targets – Environmental Strategy.

To ensure a continuous improvement of Maersk Tanker environmental performance, objectives

and targets are established and revised on an annual basis.

The environmental objectives and targets involve everyone in the MTTO, and those on board the

vessels. Employees must work together to achieve Maersk common goal, which is to reduce

consumption of resources, emissions and pollution and aid in its aim for Eco-Efficiency. In

addition to the environmental objectives and targets below, all vessels have established vessel-

specific objectives and targets for improvements.

Maersk long term strategy will focus on the following goals. They will work hard to become a true

environmental leader through the integration of sustainability as a part of our business. Focus areas

are:

• Air Emission Reduction Targets

• Waste Management

• Sustainable use of Resources

• Chemical Management

• ISO14001 for combined fleet

• Increased Environmental Management and Awareness (shore and seafarers).

Q. What defines Eco-Efficiency?

Maersk Tankers aspires to go beyond compliance in order to gain competitive advantage through

a systematic approach to identify potentials for more efficient use of resources, lower emissions

and optimize cost and also a proactive mitigation of environmental risk

Maersk Tankers will place itself to anticipate regulatory changes as well as customers' and

competitors' moves.

Corporate Social Responsibility:

The Global Compact is an international initiative launched by the UN for the purpose of promoting

corporate citizenship. The UN wants to involve private companies in tackling some of the major social

and environmental challenges that arise from increasing globalization. The Global Compact provides

an opportunity for companies all over the world to actively participate in tackling these challenges.

The core of the Global Compact is ten principles that are based on internationally agreed conventions

and treaties on human rights, labour standards, environmental protection and anti-corruption. The

Global Compact aims at making the ten principles an integral part of business strategy and operation.

The ten principles of the Global Compact

Under the Global Compact, companies are asked to embrace support and enact, within their sphere of

influence, a set of core values in the areas of human rights, labour standards, the environment and anti-

corruption. The principles are listed here.

The Ten Principles of Maersk Tanker:

Human Rights

1 Businesses should support and respect the protection of

internationally proclaimed human rights; and

2 Make sure that they are not complicit in human rights abuses.

Labour Standards

3

Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining.

4 The elimination of all forms of forced and compulsory labour;

5 the effective abolition of child labour; and

6

The elimination of discrimination in respect of employment

and occupation.

Environment

7

Businesses should support a precautionary approach to

environmental challenges;

8

Undertake initiatives to promote greater environmental

responsibility; and

9

Encourage the development and diffusion of environmentally

friendly technologies.

Anti-Corruption

10 Businesses should work against corruption in all its forms,

including extortion and bribery.

BIBLIOGRAPHY

A) Books

C.R.Kothari, Research Methodology,2nd

Revised edition 2004

B) Magazines, Journals and Newspapers

The Hindu Business Line

Economic Times

Times Shipping Journal

C) Online Sources

http://www.generalmaritimecorp.com/

http://www.maersktankers.com

http://www.shipping.nic.in/

D) Reports

ICRA Rating Feature Sep 2011(Shipping And Ports)

ICRA Rating Feature Aug 2010(Shipping And Ports)

ICRA Research Analysis 2006(Shipping And Ports)

http://www.generalmaritimecorp.com/

http://www.shipping.nic.in/

Documents

Study of Strategy Adopted by Maersk Tanker- Onkar Singh Bhati