Classification societies are driving changes through the industry. Mike Reed of DNV explains how technical innovation and collaboration are making the oceans a safer place.
Classification Societies appear at first glance a paradox, many grounded in nearly two centuries of tradition, yet still remaining the most pioneering forces in protecting the global maritime business. Det Norske Veritas (DNV), is a founding member of the International Association of Classification Societies (IACS), and regarded among the elite of its members. Mike Reed, DNV business development manager - offshore UAE, explains the new developments in the world of classification and reveals his predictions for the coming years.
“2006 has been characterised by massive growth for classification societies, it was a very busy year. That’s indicative of the health of the maritime business generally, almost anyone you speak to in the field will no doubt agree,” says Reed. One of the most interesting developments in the realm of classification societies to emerge from 2006 was the implementation of the common structural rules (CSRs) which are a new standard that applies to all double hull oil tankers equal to or above 150 meters in length, and all bulk carriers, single or double side, equal to or above 90 metres in length.
The CSR is an initiative of the IACS. “This project was inspired by dialogue with shipyards and the ship owners as something that would help them in their business. Most of the builder’s expense comes in the form of steel purchases. The equipment for rigs and ships is bought and furnished by the owner. The shipyards are responsible for the steel purchase or manufacture, so the CSRs give these yards a common set of criteria to go to for the material requirements. Economics drove the formation of the CSRs as much as any design aspects,” says Reed.
The Rules have been a significant break with history. Traditional prescriptive Rules were based on empirical experience. They tended to favour the side of caution and no explicit consistent safety goals for the Rules were stated. Irrespective of this, they worked well for many years. With the emergence of advanced structural and hydrodynamics computational methods, designers became able to improve designs significantly over the years, while more precisely meeting the Rule requirements. In this way designers have been able to optimise ship designs with respect to construction and operation.
In the environment of increased expectations to safety at sea, shipowners, charterers, authorities and underwriters questioned whether the class societies allowed for too much optimisation of ship designs. In particular they questioned whether the class societies were mutually consistent in approval of new ship designs, considering the competitive environment between the class societies.
The development of the CSRs drew on the collective experience of the societies engaged in the respective tanker and bulk carrier project teams, and developed with all IACS member societies. The new Rules are not directly based on the convention of any one society, and are reflective of the combined knowledge of all the members that have contributed to their development.
“From the shipping side, the most innovative thing DNV have been involved in at the moment is the Conditional Assessment Program (CAP) and hull integrity management systems,” says Reed. CAP is an independent and thorough verification based on the actual condition of a vessel on board, instead of simply on age, derived from detailed inspection and function/performance testing, thickness measurements and strength calculations.
“CAP has been created out of a wish from the serious ship owners to document the quality of their vessels beyond the scope of classification. DNV was the first classification society to offer a Condition Assessment Service, and took the initiative to develop a harmonised rating scale for the leading societies. The programme is designed for tankers older than 20 years and bulk carriers older than 15 years, but may well be used for other types of tonnage and at any age,” says Reed.
Further to the structural surveys traditionally undertaken by the societies, the industry-wide boom has created a new growth area for DNV. “Increasingly we are being asked to help owners identify suitable yards for the building of new ships and rigs, and for advice on suitable rigs to purchase and upgrade. This is because the market is growing fast, and a lot of the traditional yards that have been favoured in the past by customers, are actually full - working to capacity and booked for up to two years ahead,” explains Reed.
“There are a lot of new yards being pre-selected to build some of these vessels and installations, and because it’s the first time they’ve undertaken such a project owners are obviously wary and come to us to assess these yards in terms of capability and suitability,” says Reed.
“As slots for new builds dry up there is an increasing tendency to upgrade old rigs, one’s that are stacked (in storage), bring them out of semi-retirement, bring the technology up to modern standards and often make them bigger too. Owners will come to us in a consultative capacity for our judgement on the suitability of a yard to carry out that work too,” he adds.
Getting the right people and retaining them is proving a daunting task in many of the areas of the maritime industry, no less so for the major classification societies. “There’s a huge amount of competition for skilled people. If you think about what we do and our function, we rely 100% on the quality of our staff. Of course, the firm has a vast amount of stores of knowledge, and the technology to support that, but the task ultimately requires people on the ground to undertake that work,” says Reed.
“There is a finite number of engineers qualified to do what we require of them, and a limited amount of work each one can carry out. For us to expand, ultimately we need more people with a high level of competence in their field. New recruits require training up to our standards. Invariably these are capable individuals but they still need skills and the knowledge of the way we operate,” he adds.
“There is a severe competition for staff across the industry, and especially now in the oil and gas business. DNV spends a lot of money on our competence systems, on inhouse management and technical training, and we have to, not just to keep pace with current technology but because our customers look to us as leaders in our field and that’s an image we strive to retain,” explains Reed.
The increase in demand for offshore installations is also driving up business in the classification sector. The oil price has had an impact, as more difficult areas to exploit become viable to drill, the bigger rigs inevitably move there. “But in the Middle East, it’s fair to say that there has been an exploration deficit. Because the reserves here are large there hasn’t been the motivation to carry out the surveys. That’s changing now, and the big driver in this respect is the gas market. This isn’t subject to OPEC quotas and is marketed freely. Huge reservoirs found in Qatar have driven exploration elsewhere in the region,” says Reed.
Differentiation between IACS members is hard to see at first glance. In terms of the Rules there is not a lot to choose between classification societies, and that’s to be expected, every established firm leans on the side of caution for very good reason. “Each society does have specialist areas of expertise, what DNV prides itself on is its long association with advanced risk assessment techniques, which other societies may not be so involved in,” explains Reed.
“We differentiate ourselves by approaching critical areas of rigs or vessels, and focussing our attention on these aspects as opposed to a more generic blanket approach that other societies may find suits their customers needs. Our work in that sense is specialised on sophisticated risk assessment and risk management techniques,” he says.
In terms of future projections, Reed is confident that the industry boom will continue for the foreseeable future. “There is enough orders around now, and there are enough potential orders waiting to be placed or awarded to yards that suggests the current climate will continue at least to 2010 and probably beyond.
The biggest challenge for the future is going to be coping with the demands of the market, and at the same time maintaining the standards and quality that DNV have built up over a long period of time,” he adds.
Beyond the scope of economics, Reed is keen to point out a new challenge the whole maritime industry must grapple with. “Climate change is something that’s starting to creep into things. The severity and frequency of storms, for example will need to be analysed more,” he says. A practical example would be the storms in the Gulf of Mexico. These storms have been happening forever, but not with the same force or as often. “This means class societies are having to adapt the technical requirements for ships and rigs operating in these areas. Strength and structural considerations for vessels are developed on the assessment that a storm of a certain severity will take place, for example, once every 100 years. If these events occur more often then this has to be taken into consideration at the design phase to accommodate for the structural stresses involved,” adds Reed.
Programmes such as CAP and the development of the CSRs prove the classification industry is adapting to the challenges the future holds. The sea freight business is demanding newbuildings across the entire spectrum, from container carriers through to specialist LNG vessels, and the desire for ever more secure and environmentally sound shipping is paramount to every operators needs. Despite nearly two centuries of tradition, the societies remain dynamic, and are taking every measure to assure they continue to be at the vanguard of promoting safe and sound shipping into the future.