7

The International Association of Independent Tanker Owners

INTERTANKO - Global forum for chemical tanker owners

June 2003

1 INTERTANKO
For safe transport, cleaner seas and free competition
Chemical tankers increasing market share
In addition to representing 70% of the world’s independent oil tanker fleet, INTERTANKO also represents

over 576 chemical tankers. Chemical tankers account for close to 30% of the tankers registered in

INTERTANKO. This makes INTERTANKO the world’s largest association representing independent oil and

chemical tanker owners.

According to Drewry, the world tanker chemical fleet is estimated to have grown by 1.2% in 2002, not as

strongly as in previous years due to increased levels of recycling. The chemical tanker fleet has shown net

growth every year since 1994. During 2002, 78 chemical tankers of 1.6 million dwt were ordered, which was

significantly higher than in previous years. The total orderbook stands at 155 tankers of 3.3 million dwt

representing close to 14% of the fleet. 66% of these orders are expected to be delivered in 2003.

Traditionally there have been low levels of recycling of chemical tankers, but lately recycling has been

increasing due to the advancing age profile of the fleet. 17 chemical tankers of 0.35 million dwt were sold for
recycling during 2002.

Chemicals are involved in everything from agriculture to complex manufacturing - providing the world with

such things as pharmaceuticals, detergents, insecticides and fertilizers, synthetic fibres and rubbers, and
packaging materials. The increasing demand for these chemical products throughout the world has led to

the development of sophisticated ships capable of carrying a wide range of specialty cargoes in bulk, often

in smaller quantities or ‘parcels’. While some chemical tankers are specifically constructed to carry less

sophisticated chemicals, such as methanol, the term parcel tankers usually refers to the more complex

parcel/chemical tankers.

Chemical tankers primarily transport organic and inorganic chemicals as well as vegetable oils and fats. The

total global volume of chemicals is estimated at approximately 60 million metric tonnes per year. In addition,
the transportation of vegetable oils, alcohols, molasses and lubricating oils amounts to 40 - 45 million tonnes

per year.

Chemical tanker fleet by segment

Number of tankers.

276, 23%
5,000-9,999 dwt
477, 41%
10,000-19,999 dwt
113, 10% 20,000-29,999 dwt
30,000 dwt +

309, 26%
Source: INTERTANKO / LR/Fairplay

2 INTERTANKO
Chemical tankers are complex and technologically advanced
The transportation of chemicals is technically and logistically different from the transportation of oil and oil

products. Chemical tankers are more advanced in many ways. The cargoes may be hazardous and noxious

chemicals or such products as edible oils and fats. A common characteristic of these cargoes is that they

tend to be high value and require sophisticated handling for safety, health and loss prevention reasons. The

ships are complex and technologically advanced due to the degree of subdivision created by 50+ cargo

tanks. They are inherently more robust vessels compared to bulk tankers. This large number of cargo tanks,

sophisticated cargo operating systems and supply of deck services enable them to carry a broad range of

chemicals, in accordance with the requirements of the International Code for the Construction and

Equipment of Ships Carrying Dangerous Cargoes in Bulk (IBC/BCH Code), and in strict accordance with

anti-pollution regulations under MARPOL Annex II.

Every chemical cargo carried requires careful consideration during the planning process and loading. Some

are temperature sensitive some are semi-gases, some need to be inhibited, and some are sensitive to water.

Checks also need to be made regarding the chemical ship type, (for instance category I, lI or III), tank coating

compatibility, cross compatibility with other cargoes carried, environmental controls if required (inerting). In

addition, tank construction type for containment, venting requirements, gauging equipment, vapour detection,

compatible fire protection medium, heating requirements, inhibition requirements, density limitations of the

product in relation to the cargo tank, and pumping requirements are important considerations. Most of this

information is set out in the IBC or BCH Code. In addition, the vessels also need to take into account the

information contained in safety data sheets, applicable load-line zones encountered during the voyage,

changes in sea/harbour water densities, bunker quantities and disposition, the loading sequence of each

grade, final quantities/ullages, charterers’ options on cargo lift requirements, segregation requirements,

valve line-up and the line-up and sequence of concurrent ballast operations.

Chemical tanker fleet by hull type

100%
90%
80%
70% N/A
60% Single hull
50% Double side
40%
Double bottom
30%
20% Double hull
10%
0% Source:
INTERTANKO
5,000-9,999 10,000- 20,000- 30,000 dwt
LR/Fairplay
dwt 19,999 dwt 29,999 dwt +

ARINE & Chemical Graph

3 INTERTANKO
INTERTANKO Chemical Tanker Committees

Historically INTERTANKO has represented its members’ chemical tanker interests through an open forum

within INTERTANKO called the Chemical Tanker Owners’ Advisory Group (CTOAG).

Over the last few years the number of chemical tankers within INTERTANKO’s membership has been

steadily increasing. To ensure that INTERTANKO provides optimal support and representation for its

chemical tanker owners, it was decided to reconsider the current methods of work within INTERTANKO.

Accordingly, the CTOAG reviewed its terms of reference. As a result the CTOAG was elevated from an open

forum to the full status of a committee within INTERTANKO. This new committee is called the Chemical

Tanker Committee (CTC) and meets twice a year rotating between Europe and the Far East.

To ensure that the Americas are fully represented, INTERTANKO inaugurated the Chemical Tanker

Sub-Committee – Americas (CTSCA) in April 2003. This Sub-committee of the CTC aims to support the

work of the CTC whilst handling specific regional issues that arise from both North and South America.

Both the CTC and CTSCA provide a forum for INTERTANKO to promote the activities and priorities

nationally, regionally and internationally, and report to the INTERTANKO Council.

The appointment of Captain Howard Snaith as Marine and Chemical Director and the recent appointment of

Margaret Doyle as Chemical Manager have strengthened our presence in this area.

How does INTERTANKO represent members’ interests?

INTERTANKO through its Chemical Tanker Committee (CTC) and Chemical Tanker Subcommittee –

Americas (CTSCA) monitors the regulatory issues affecting this sector. The aim is to further the interests of

independent chemical tanker owners and ensure that chemical tanker owner' interests are best reflected in

the chemical industry’s day-to-day trading activities and market developments.

INTERTANKO also has NGO status at IMO and participates in all the IMO meetings, including Bulk Liquid

Gases Subcommittee (BLG), Marine Environmental Pollution Committee (MEPC), Evaluation of Safety

Pollution Hazards Working Group (ESPH), the Marine Safety Committee (MSC), and associated

sub-committees. INTERTANKO logged 3,500 man-hours representing its members at IMO during 2002.

INTERTANKO is also represented in Washington and Europe, and maintains close contacts with the US

Coast Guard Chemical Tanker Advisory Committee. In addition we have a close working relationship with

FOSFA (The Federation of Oil Seeds and Fats Association).

4 INTERTANKO
How does INTERTANKO support that function?
Through an effective team of experts in the relevant fields ranging from marine biologists, master mariners,

maritime lawyers, naval architects, brokers, statisticians, political scientists, and charterparty experts and

administrative support. These are supplemented by a team of political consultants in Brussels and

legislative representation in Washington DC. INTERTANKO has two principal offices in Oslo and London as

well as regional offices in Singapore and Washington DC.

What are the main chemical issues?

INTERTANKO is active on a number of fronts and the principal issues are summarised in the following

pages.

MARPOL Annex II Revisions

This is currently the main issue under consideration, which relates to the re-categorisation of the existing

pollution categories within MARPOL Annex II. Currently there exist 5 categories A, B, C, D and an Appendix

III. (Appendix III lists products to which the IBC Code does not apply). However, due to the re-evaluation

process of the existing MARPOL Annex II products by GESAMP/GHS, existing products will be

re-categorised into a new 5-category system also called A, B, C, D and Appendix III, based upon their

re-evaluation. It is easy to see that confusion could arise between the old 5-category system and the new

5-category system.

INTERTANKO believes that a new 3-category system will be a lot simpler for industry, and also a lot simpler

to implement by Port State Control. It is therefore prudent to reduce the number of categories from 5 to 3. It is

proposed that such a new 3-category system would be called X, Y, Z. Importantly, under this new system

there would be no Appendix III. INTERTANKO strongly believes that all MARPOL Annex II products should

be regulated with regard to tank washing procedures and slop disposal. The chemical tanker industry,

strongly supported and represented by INTERTANKO (who is lobbying flag states, PSC and the vegetable

oil producing nations on the issue), supports this concept for a new 3-tier pollution categorisation system, as

this will assist in protecting the environment. Such regulations would include stricter controls regarding

vegetable oil tank washings. Some would consider it therefore surprising that the chemical tanker industry is

experiencing a degree of opposition to this concept from some flag states. INTERTANKO strongly supports

the view that all products within MARPOL Annex II should be regulated and controlled in order to better

protect the marine environment.

New stripping limitations for new buildings

INTERTANKO has also carried out a stripping capability survey of its member’s chemical tankers. Based

5 INTERTANKO
upon this study INTERTANKO made recommendations to IMO that under the current revisions of MARPOL

Annex II, stripping requirements should be reduced by 50% for new chemical tankers from 150 litres to 75

litres. INTERTANKO continues to promote this proposal at IMO as an important environmental measure.

Chemical tanker vetting

Both oil and chemical tankers alike are subject to vetting inspections. The oil companies operate through the

OCIMF SIRE system, and the chemical tankers through the Chemical Distribution Institute (CDI).

INTERTANKO actively supports the use of both these recognised industry inspection systems in order to

reduce the number of multiple inspections.

Chemical Distribution Institute (CDI)

INTERTANKO is fortunate that its technical expertise meets strict criteria by CDI, such that INTERTANKO is

represented at the CDI Technical Committee, CDI Executive Board Meetings, CDI Inspection Accreditation

Committee, and the CDI Quality Audit Committee.

Howard
Use of CDI reports by Port State Control
INTERTANKO supports the CDI concept as a positive step towards reducing the number of commercial

vetting inspections and promotes recognition of the CDI scheme by PSC authorities to assist in reducing

inspections and better targeting sub-standard vessels.

High Interest Vessel Boarding

Following 11 September 2001, the US Coast Guard was tasked with ensuring the safety and security of the

US Marine Transportation System. Immediately after the attacks INTERTANKO staff worked closely with the

US Coast Guard and Captain of the Port representatives in the development of a risk assessment system to

efficiently control movement of ‘high interest’ traffic in the ports and waterways. The focus on high risk

vessels such as tankers carrying gas, oil and chemicals resulted in the US Coast Guard High Interest

Vessels Boarding Program currently in use. The High Interest Vessels Boarding Program and the current

matrix being used was developed using industry information provided by INTERTANKO

US Coast Guard Chemical Transportation Advisory Committee (CTAC)

INTERTANKO continues to participate in the CTAC meetings at present dealing with:

• Correlation between the ISPS and all three NVICs (port facility and vessel)

• Discussion of the training needs relative to the US PREP programme

• Development of a training competency matrix for CSO and SSO

• A discussion of communication and security publications

• A discussion of scenarios involving ‘worst case’ and hazardous cargoes

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Chemical tankers trading routes

The major chemical trade routes end in Asia, India, the Middle East and South America from the US and

Europe. There is a considerable bilateral trade between the US and Europe. Seagoing transport from the

Arabian Gulf to destinations both in the east and in the west is increasing as new production capacity is being

developed in this area. The industry has also seen a large production increase in the Far East with a

considerable share of this volume going to overseas markets.

Chemical Trade Patterns - Deep Sea

(Courtesy of Odfjell Tankers)

According to the Drewry, chemical tanker supply is set for rapid growth in 2003 with 109 ships of 1.9 million

dwt expecting to be delivered. As the clean products market is strong at the moment this has led to increased

earnings in the chemical markets. The change in the rates for the chemical

tankers has not been of the same magnitude as for the CPP market. Drewry considers that this is related to

the so-called "swing" ships (chemical/oil tankers) not having a significant impact on the freight market.

Demand for chemical tanker tonnage should continue to grow this year as the positive indicators from the

recovering chemicals industry help boost trade.

Organic chemical seaborne trade rose 6.5% in 2002. This increase was underpinned by a 19% increase in

Chinese organic imports. Drewry estimates the Chinese organic imports for 2002 at 9.9 million tons, with

China replacing the US as the leading importer for the first time. Strengthening exports for the US (+20% -

7 INTERTANKO
emerging from a prolonged downturn) as well as Japan (+12%) also contributed to the expansion and helped

offset decreased imports for the US (-11%) and Japan (-5%).

Revised forecasts for the inorganic seaborne movements point to a 2% increase in 2002. Again China is

estimated to be the leading importer with almost 2 million tons imported, replacing the US. Contributing to the

increase in seaborne trade were exports from the US (+20%) and Japan (+12%). Both countries saw

decreased imports with the US (-26%) and Japan (-6%).

Chemical seaborne trade

Source: Drewry
60
Organics
50 Inorganics
Veg/Animal Oil & Fats
40
Million tonnes

30

20

10

0
82

84

86

88

90

92

94

96

98

00

02
19

19

19

19

19

19

19

19

19

20

20

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INTERTANKO in summary

INTERTANKO has been the voice of independent tanker owners since 1970, ensuring that the oil, products

and chemicals keep the world economy turning is shipped safely, responsibly and competitively.

Membership is open to independent tanker owners and operators of oil and chemical tankers, i.e. non-oil

companies and non-state controlled tanker owners, who fulfil the Association's membership

criteria. Independent owners operate some 80% of the world's tanker fleet and the vast majority are

INTERTANKO members. As of June 2003, the organisation has 242 members, whose combined fleet

comprises more than 2,160 tankers totalling 160 million dwt, which is 70% of the world's independent tanker

fleet above 10,000 dwt. INTERTANKO's associate membership stands at 273 companies with an interest in

shipping of oil and chemicals.

INTERTANKO is a forum where the industry meets, policies are discussed and statements are created. It is

a valuable source of first-hand information, opinions and guidance. INTERTANKO has a vision of a

professional, efficient and respected industry, that is dedicated to achieving safe transport, cleaner seas and

free competition.

Marine and Chemical Department INTERTANKO contacts:

London Office
Captain Howard Snaith – Marine and Chemical Director

Tel: +44 20 7623 9685 howard.snaith@intertanko.com

Washington Office
Margaret Doyle – Chemical Manager

Tel: +1 508 460-6143 : margaret.doyle@intertanko.com

London Office
Adele Garnett – Assistant

Tel: +44 20 7623 4311 adele.garnett@intertanko.com

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and non-state controlled tanker owners, who

fulfil the Association's membership

criteria. Independent owners operate some

80% of the world's tanker fleet and the vast

majority are INTERTANKO members. As of

May 2003, the organisation has 242 members,

whose combined fleet comprises more than

2,160 tankers totalling 160 million

10 INTERTANKO