Len Gelosa: Pres.

& ECDIS Revolution: Ballast Water Treatment:

CEO, Drew Marine Goodbye Paper Charts The Time Is Now
THE MARITIME EXECUTIVE

January/February 2011
M I C K Y A R I S O N / C A R N I VA L C O R P O R AT I O N
VOLUME 15, EDITION 1, JANUARY/FEBRUARY 2011

Chairman & CEO, Carnival Corp.

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 Volume 15, Edition 1 C o nt e n ts

JANUARY/FEBRUARY 2011
3

THE MARITIME EXECUTIVE

8 | Executive Achievement 40

28
Len Gelosa Emerald Isle: The Prospects
President & CEO, Drew Marine Really Are Greener
by nichole williamson by barry parker

Case Study:
12 | Washington Insider 44
President Obama and the New Advances in Lifesaving Carnival Corporation
Congress Confront Budget and Equipment The world's biggest cruise line keeps
Regulatory Realities by Marex staff getting bigger and better.
by Larry Kiern By Robert C. Spicer
50

34
16 | MarEx OP-ED The ECDIS Revolution
Israeli Natural Gas: by art garcia

A Game Changer Executive

by Michael J. Economides
20 | Upgrades & Downgrades
Reading the Tea Leaves:
What to Expect in 2011
by Jack O’Connell
24
Why America Needs the Jones Act
By H. Clayton Cook, Jr.
56 Interview:
BWTS: It Doesn’t Have to Be
a Four-Letter Word Micky Arison
by tony munoz From "Fun Ships" to the Miami
Heat, Carnival's dynamic leader
62 knows what it takes to succeed
Environmental Directory in a big way.
By Robert C. Spicer

5:32 PM MarEx_42.indd 3 1/26/11 11:37 AM

 Half Page Vert 10/26/10 8:50 AM Page 1

publisher / Editor-in-Chief
Tony Munoz :: tonymunoz@maritime-executive.com
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MarEx_42.indd 4 1/27/11 9:51 AM

MarEx_42.indd 5 1/26/11 11:37 AM
 editorial

Cruising Into the New Year

MarEx is honored to have Micky Arison, Chairman & CEO of Carnival Corporation,
on this edition’s cover. Carnival, the world’s biggest cruise company and a neighbor to the south
in Miami, posted $14.5 billion in revenue in 2010 and net income of $2 billion. Its astounding
growth and success are due to the company’s ability to define and cater to its clientele with a
wide range of product offerings. Carnival carries over half the world’s cruise passengers, which
naturally puts it in a class by itself. With the harsh winter pounding the Northern Hemisphere,
the Carnival story will be a welcome antidote to the cold and snow – and maybe even encour-
age you to get away. And for those of you in the Southern Hemisphere, it’s not too soon to start
planning your winter escape. Either way, Carnival and the rest of the cruise industry are waiting
JANUARY/FEBRUARY 2011

to serve you.
This edition of MarEx is, as usual, filled to the brim with “Intellectual Capital.” In 2011, the
Tony Munoz IMO and USCG will finalize regulations on ballast water treatment systems for commercial ves-
Editor-in-Chief sels. Meanwhile, the states of Wisconsin, California and New York intend on raising the ante by
implementing their own ballast water legislation with requirements 100 to 1,000 times stricter than
the IMO’s. If your company is feeling the heat, then you need to read “BWTS: It Doesn’t Have to
Be a Four-Letter Word.” Additionally, Electronic Chart Display & Information Systems (ECDIS)
will become the order of the day in 2012. Returning contributor Art Garcia reviews the “ECDIS
Revolution” as paper charts are soon to become a thing of the past. It’s time to go digital.
6
In Washington, the political center of gravity has shifted and “Washington Insider” columnist
Larry Kiern offers valuable insight on what the maritime industry can expect from the Administra-
tion and new Congress, which is very little. Columnist Michael Economides shifts our attention
to the Middle East, where Israel’s energy situation has changed dramatically with the discovery of
massive amounts of offshore natural gas. The “Professor of Oil” has penned another provocative
and timely article for MarEx readers, which you won’t want to miss. Jack O’Connell has authored
another excellent financial review of the marketplace in his “Reading the Tea Leaves,” his annual
THE MARITIME EXECUTIVE

preview of the year ahead. His review of the winners and losers in 2010 reveals interesting bits of
information about the players in the maritime markets. Royal Caribbean, SEACOR Holdings and
Carnival Corporation were great stocks to hold in 2010, but what can we expect in 2011? Well,
you’ll just have to read his article to find out, so enjoy.
Hang on, we’re not done yet! MarEx has a few more intellectual morsels for your consumption.
H. Clayton Cook, Jr., well-known Washington D.C. attorney, has written a gem on why the Jones
Act is important to America. During the Deepwater Horizon incident, and seemingly for eons
before, the Jones Act has been held up to scrutiny and criticism for causing all kinds of economic
harm and being a hindrance to international commerce. Well, no matter what side of the subject
you’re on, Mr. Cook is considered one of the top thinkers on the matter. Assistant Editor Nichole
Williamson caught up with Len Gelosa, President and CEO of Drew Marine, for our “Execu-
tive Achievement” feature. The 100-year-old company transitioned in 2010 from Fortune 500
ownership to an extremely successful year under the private equity ownership of J.F. Lehman &
Company. Drew Marine is a top player in global water and fuel treatment systems and continues to
grow under the watchful eye of its new CEO. Long-time contributor Barry Parker points out that,
while it might surprise some maritime executives (but certainly not MarEx readers), Ireland is fast
becoming one of the world’s preferred sites for maritime businesses. The Irish Maritime Develop-
ment Office (IMDO) was established in 1999 with a mandate to attract maritime companies to
Ireland. Thus far players like Maersk, OOCL, MSC and CMA-CGM have set up shop there. Forget
the fields of barley! Ireland is becoming a major force in the maritime industry under the leadership
of Glenn Murphy, IMDO’s Director.
Like us on Finally, when it comes to safety at sea, MarEx took an insider's look at some of the latest ad-
Facebook! vances in safety equipment. There’s a lot of great photos and information here on some of the top
companies in the business. If your company has ships and boats, we think this article is a must, so
Join our group enjoy. The best to all of you in 2011, and we at MarEx promise to send you another year of mari-
on LinkedIN! time journalistic excellence. Mar Ex

Tony Munoz can be contacted at tonymunoz@maritime-executive.com with comments, input and

Find us on
Twitter! questions on this editorial or any other piece in this magazine. The Maritime Executive welcomes
your participation in our editorial content.

MarEx_42.indd 6 1/27/11 1:05 PM

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JANUARY/FEBRUARY 2011
Gelosa
8
Len
THE MARITIME EXECUTIVE
The distance from Boonton to Whippany, New
Jersey is only about six miles. In fact, the drive takes ten min-
utes at most. But its significance was big for century-old Drew
Marine last September when it celebrated its first year under
J.F. Lehman’s private equity ownership by christening its new
Whippany headquarters. The new facilities, complete with offices
and laboratories, were a shining symbol of the company’s new
standalone status.
The celebration marked the culmination of a year in which the
company transitioned successfully from Fortune 500 ownership to
having its own dedicated infrastructure and management systems,
while at the same time building sales and maintaining customer
loyalty. “Despite a global recession which severely impacted the
maritime industry, Drew Marine achieved strong results in its
first year of independent ownership,” noted President and CEO
Len Gelosa. “Our brand, our people, our service and our prod-
uct quality enabled us to deliver the superior performance our
customers have come to expect in the 65 countries and 900 ports
where we do business.”
The Back Story
It was in 1907 that J.F. Drew founded Drew Chemical. The company
started out in the vegetable oil business but soon added a water treat-
ment line, focusing on the major problems of the day, which were in
boilers. It wasn’t long before the company began to notice the need
for the same solutions onboard ships. Marine engineers were hired,
and the newfound niche grew rapidly. By 1928 a separate marine
MarEx_42.indd 8
By Nichole Williamson
President & CEO,
Drew Marine
division was launched, focused exclusively on the maritime industry.
Drew Marine and Drew Industrial, the two parts that comprised
Drew Chemical, grew side by side over the years and were eventually
acquired by Ashland Chemical in 1981.
Interestingly enough, Len Gelosa had left Ashland the year
before it acquired Drew. He returned 11 years later as head of
marketing for Drew Industrial. Two years later he was running
that division, and in 2004 he was put in charge of Ashland Water
Technologies, which included Drew Marine.
Looking back over the company’s history, Gelosa observed,
“We have consistently adapted to our customers’ needs with new
products and evolving technologies. For instance, when the Arab
oil embargo struck in the 1970s and sent bunker prices soar-
ing, we launched a full fuel treatment product line to enable our
customers to manage their fuel requirements as efficiently and
cost-effectively as possible.” Welding and refrigeration products
were added in the 1980s. When customers started having prob-
lems with ballast tank coatings, Drew acquired a company that
specialized in coatings. More recently, it added onboard testing
devices, fuel homogenizers, and fire safety and rescue products.
Gelosa notes, “We have evolved by focusing on the acute prob-
lems the industry is facing and focusing on operating efficiencies,
the longevity of the vessel, and the equipment onboard.”
Enter J. F. Lehman
At the end of 2006 Gelosa retired from Ashland, having done all
he could to develop the water treatment business and seeking
1/26/11 11:37 AM

Maritime solutions provider
Drew Marine is thriving under
new ownership and the steady
hand of CEO Len Gelosa.
new challenges. He had no desire to take a top job with another
big corporation but wanted to stay in the swing of things, and so
he started a management consulting business to keep in touch
with his clients. He also found time to do some of the things he’d
always wanted to do, like coach an American Legion baseball
team for boys aged 16 to 19. The long-time Yankees and football
Giants fan also found himself attending more games than usual
during this period and cheering his home teams on. It wasn’t
EXECUTIVE ACHIEVEMENT
the two technologies that I’ve always remained very interested in.”
The pairing of Gelosa with Drew Marine was a natural from the
very beginning, since water and fuel treatment are Drew’s two
biggest businesses.
After some time on the technology side of things, the would-
be engineer discovered a flair for business and moved on to
marketing and sales, and then general management positions
with several Fortune 500 companies, including Allied Signal and
U.S. Filter. Gelosa says his sales and marketing experience made
him “very customer focused and very appreciative of the fact that,
in order for us to be successful, we had to supply value to our
customers to help them be successful.”

long, however, before J. F. Lehman came calling.
Ashland was in a period of reorganization and gearing up for a
big acquisition. Drew Marine didn’t fit its changing strategy and
so it was looking to sell it. J.F.Lehman, an investor in mid-market
companies in maritime, aerospace and defense, whose namesake
Chairman is the former Secretary of the Navy, was interested and
enlisted the help of an expert on the subject, Len Gelosa. Follow-
ing the completion of the deal in September 2009, Lehman asked
Gelosa to serve as CEO, and he accepted.
The Making of a Leader, and a Company
Gelosa is a New York City native with Bachelor’s and Master’s
degrees in chemical engineering from CCNY. “Very early on I
learned about water and fuel treatments,” he says, “and those are
JANUARY/FEBRUARY 2011
This regard for the customer’s needs is embedded in Drew’s
culture with a particular focus on changing government regulations.
The Clean Water Act, for example, gave Drew the opportunity to
guide its clients through the compliance process using its patented
products and services, including DREW WATCH™, a software
application that monitors shipboard water treatment systems and
makes recommendations on corrective actions as needed. Similarly,
the company’s diesel performance and emission monitoring systems
identify problems and enable customers to take corrective action to
9
ensure air quality standards are being met.
The introduction of low-sulfur fuel and its mandated use in
Emission Control Areas around the globe opened up another
whole area of opportunity for the company, and Drew was the
first to offer its customers a full range of low-sulfur fuel services.

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 EXECUTIVE ACHIEVEMENT
“Low-sulfur fuel brings with it a whole new set of challenges for
the operator,” notes Gelosa, “so we provide sampling, analyti-
cal, consultative and treatment services along each step of the
way to make sure the customer is burning the fuel as efficiently
as possible. And while we don’t supply the fuel, we do just about
everything else to help the customer avoid potential problems.”
“Best Outcomes Business”
Gelosa says the company is in “the best outcomes business.”
The outcomes may include oily water discharge compliance,
protecting a vessel’s boiler or engine, monitoring heat exchanges
and clean exhaust spaces, or ensuring crew safety. The array of
JANUARY/FEBRUARY 2011
applications, products, training and monitoring systems makes
Drew Marine a full-service provider. The company has an unerr-
ing ability to diagnose the problem, identify the solution, and then
provide the proper products, service and training to ensure that
the problem is resolved. In a world that is becoming increasingly
green, Drew Marine finds itself in the sweet spot. Gelosa says it is
the combination of products and services that creates a solution
that’s very specific to each customer. The focus on quality and
results is something that hasn’t changed much since the business
10
was founded more than one hundred years ago.
When asked what the most satisfying part of his job is, Gelosa
says, “Working with high-level professionals who are really
excited about the opportunity of Drew Marine. It translates into
providing value to our customers.” He sees his role as assembling
THE MARITIME EXECUTIVE
MarEx_42.indd 10
the very best team possible, setting the direction of the company
and then letting people do their jobs. The enthusiasm and profes-
sionalism of the 350 people who make up Drew Marine reflect
the type of service a customer can expect from this organiza-
tion. The respect and appreciation Gelosa has for his people are
mutual. If the CEO defines a corporation’s culture, then Drew’s
culture is one of respect and great passion – for employees, cus-
tomers, and the company’s future.
“We have consistently adapted with evolving technologies to
changing regulatory requirements,”Gelosa says. The company
has gone from supplying not just materials but whole solutions.
The ability to continually adapt will be the key to Drew’s future
success as well. Gelosa says the company’s new ownership has
given him the freedom to realize its full potential – something he
was unable to do at Ashland, where the competition for capital
among the various divisions and other big-company strictures
limited his ability to get things done.
The future for Drew Marine indeed appears bright. Len
Gelosa calls himself an engineer at heart who applies many of the
“principles and mindsets of an engineer to the running of a busi-
ness.” He adds, “I believe that all aspects of a corporation, from
finance to manufacturing, are really a series of processes and very
much driven by numbers. I take that approach, and it seems to
work well.” We would have to agree. Mar Ex
Nichole Williamson is Assistant Editor of The Maritime Executive.
1/26/11 11:37 AM
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 washington insider
Written by Larry Kiern,
Winston & Strawn LLP

WashingtonInsider
President Obama and the New Congress
Confront Budget and Regulatory Realities
The historic Republican victory discretionary spending by approximately almost another $1 trillion. As the President’s
in the U.S. House of Representatives, $100 billion during what remains of bipartisan deficit commission report and
combined with major gains by Republicans the current fiscal year. The President other similar proposals establish, for the na-
JANUARY/FEBRUARY 2011

in the U.S. Senate in the congressional
midterm elections, shifted rightward the
political center of gravity in Washington.
Republican congressional leaders, buoyed
by their victories, declared they were sent
to the nation’s capital to, among other
things, cut federal spending and rollback
“job-killing” federal regulations. Despite
this “shellacking,” however, President
12
Obama was quickly lifted by lame duck
session legislative successes and a grow-
ing sense of the need for national civil-
ity following the tragic Tucson, Arizona
shootings. The President professes to have
taken a different message from the election
results, observing that his priority is to spur
THE MARITIME EXECUTIVE
has shown a willingness to trim some
programs as well, having offered proposals
to cut $20 billion in his previous budget
and already agreed to a wage freeze for
federal civilian workers saving $2 billion
over two fiscal years. But the Administra-
tion’s position is that immediate deep
domestic spending cuts are fundamentally
imprudent because they threaten job
growth and economic recovery, which it
contends must precede the major policy
changes necessary to solve the nation’s
long-term debt problem. The Administra-
tion’s immediate priorities favor increased
investment in the nation’s infrastructure,
education, and research programs.
tion to come to grips with its long-term debt
it must address the structural deficit, i.e.,
the material chronic disjuncture between
revenue and expenditures that threatens our
nation’s fiscal integrity.
Brinksmanship is threatened sur-
rounding congressional action to raise
the national debt ceiling. But the grand
political compromise necessary to achieve
long-term debt reform appears illusive.
Notwithstanding the likelihood of heated
rhetoric, the nation is more likely to
muddle through with modest reductions
in some discretionary spending programs
until the result of the 2012 election con-
clusively resolves the prospects for greater

job growth through political compromise.
A Collision of Political
and Policy Goals
Despite newfound calls for civility in
political discourse, the professed goals
of the President and the new Republican
leadership collide. Simply put, immediate
cuts to federal spending, including cuts to
regulatory programs, will likely slow job
growth in the short term, not spur it. Thus
the political stage is set for conflict in the
opening act of this political drama, with
only modest compromise likely to result.
Republican congressional leaders
launched proposals to trim domestic
History teaches that during periods of
professed fiscal austerity the usual course
is for each political party to propose cuts
to programs the other favors. Notwith-
standing ambitious proposals and with tax
increases off the table, the likely outcome
this year is modest compromise to trim
some discretionary federal spending while
preserving both parties’ principal priorities. can be expected to be trimmed because
When we step back and consider that the
current annual federal budget deficit tops
$1.3 trillion, the immediate budget-cutting
proposals by both parties appear meager,
especially following both parties’ agree-
ment in December to cut taxes and extend
unemployment insuranceTTS_MaritimeExec_86x51
to the tune of
political power by the Republican Party,
which hopes to gain control of the U.S.
Senate and the White House.
Key Struggles Ahead Affect
the Maritime Industry
While maritime programs do not repre-
sent a material portion of the deficit, they
the new Republican leadership will be
searching diligently for any program to
cut that does not harm directly national
or homeland security or its core constitu-
encies. Maritime programs are also not
top-ranked by the Obama Administration.
Programs27/4/09
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 washington insider
stituencies present tempting targets.
Predictably, Republican House leaders
have seized upon proposals of the Presi-
dent’s bipartisan fiscal commission that
affect constituencies they do not represent.
For example, the new Chairman of the
Joint Economic Committee, Representative
Kevin Brady (R-TX), focuses on federal
employee unions. He proposes cutting fed-
eral civilian employment by 200,000 jobs
over the next decade while freezing federal
pay for three years. He also proposes cuts
JANUARY/FEBRUARY 2011
in funding for the White House and certain
surface transportation and education pro-
grams. But the conservative CATO Institute
quickly criticized his proposal, which “only
nibbles around the edges” while leaving
business and farming subsidies, Medicare
and Medicaid untouched. The net effect on
the maritime industry of such cuts will be
to make it even more difficult to get needed
14
federal approvals, assistance, cooperation
and funding. When the bureaucracy faces
cuts, its timeworn response is that it simply
lacks the resources.
Another top target for the new Repub-
THE MARITIME EXECUTIVE
USA Office (Main Office)
5824 Twelfth Avenue
Brooklyn, New York 11219
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Tel: (800) 828-9581
Fax: (718) 972-2355
MarEx_42.indd 14
lican leadership are “job-killing” federal
regulatory programs. Of particular impor-
tance to the maritime industry, the Envi-
ronmental Protection Agency (EPA) and
the Bureau of Ocean Energy Management
Regulation and Enforcement (BOEMRE)
are prime candidates. House Republican
leaders prominently highlighted a challenge
to EPA’s greenhouse gas regulations, but
proposed cuts are likely for EPA generally,
thereby stalling enforcement of the Clean
Water Act and Clean Air Act as applied to
vessels. Likewise, a core Republican con-
stituency, the domestic petroleum industry,
fiercely opposes the Administration’s new
regulatory requirements on offshore drill-
ing. BOEMRE will therefore face increased
scrutiny from a skeptical Republican House
and also face proposed spending cuts.
For its part, the Administration will
likely propose cuts to the U.S. Coast
Guard just as it did last year. Despite
the service’s stellar performance during
the Deepwater Horizon incident, it has
not proven a priority. In particular, the
Administration’s budget may seek savings
UK Office
Unit 54 Greatbridge Road,
Romsey, Hampshire
SO51 0HR, United Kingdom
Tel: +44 (0)1794 830090
Fax: +44 (0)1794 523048
from the Coast Guard’s ship, aircraft and
communications modernization pro-
grams because of the large appropriations
involved and the primarily Republican
shipbuilding and defense-contracting
constituencies sponsoring it. A media
report surfaced during the Administra-
tion’s internal budgetary process that the
Office of Management and Budget might
cut the service’s Offshore Patrol Cutter
acquisition projected to save $400 million
over its lifetime. Additionally, the proposal
advanced by the Democratic-led Congress
last year to increase funding for more
Coast Guard marine safety inspectors lost
its leading advocate, former Representa-
tive Jim Oberstar (D-MN), whose reelec-
tion bid failed. Therefore, this initiative
presents a likely candidate for cutting by
the new Republican House.
New Maritime Challenges
Warrant Increased Funding
Amid calls for budget cuts, the President’s
National Oil Spill Commission report on
the Deepwater Horizon incident published
Greece Office
Esperidon 1-3
Glyfada 16674
Athens, Greece
Tel: +30 (0)2104 174455
Fax: +30 (0)2104 174477
1/26/11 11:37 AM

Proposed spending cuts threaten
vitally needed maritime programs.
on January 11, 2011 calls for increased
spending on federal programs to improve
safety, environmental protection, and oil spill
response. The Commission concluded that
without such spending it will be impossible
to restore public confidence in the ability
of the industry to drill safely. The report
provoked fierce opposition by the domestic
offshore drilling industry, which decried this
conclusion as unwarranted. This funda-
mental debate will feature prominently in
upcoming congressional hearings.
Meanwhile, the Administration is
proceeding very cautiously with the
knowledge that it will be held accountable
by the electorate for any additional major
oil spill associated with deepwater drilling.
The Administration has already reversed
its March 2010 decision to expand and
expedite offshore drilling in U.S. coastal
waters, specifically citing a shortage of
resources and expertise to provide proper
regulatory oversight and approvals. BO-
EMRE’s new rules enhancing drilling and
workplace safety and spill response pre-
paredness are being enforced irrespective
of debate. Thus, in this critically important
area of the nation’s economy, proposals to
cut BOEMRE funding as part of a larger
critique on “job-killing” regulations would
likely only further delay offshore drilling
projects, thereby frustrating potential job
growth rather than aiding it.
Likewise, proposals to cut Coast Guard
funding appear painfully shortsighted.
First, the Oil Spill Commission expressly
recommended increased funding for the
Coast Guard to bolster its capacity to
respond to oil spills from deepwater drilling
both in the Gulf of Mexico and Alaska.
Second, with respect to Alaska, the
record shows that the Coast Guard lacks
adequate infrastructure, equipment and
personnel to meet the pressing national
priority to protect American interests in
the newly opened waters of the Arctic Sea.
Coast Guard Rear Admiral Chris Colvin,
Commander of Coast Guard forces in
Alaska, recently stated that “with 20 per-
cent of the yet-to-be discovered oil, gas,
and minerals remaining in the world in the
Arctic, the U.S. can’t risk losing it. Bottom
line is we are not accomplishing what
[Presidents Bush and Obama] directed us
to accomplish.” Coast Guard requests for
additional funding, including a desperately
needed new icebreaker, remain unmet.
Third, the urgent need to replace the
MarEx_42.indd 15
washington insider
Coast Guard’s aging fleet of ships and Outlook
aircraft and upgrade sensors and commu- Considering the conflicting conclusions
nications warrants funding, not cuts. The the President and the Republican congres-
service’s ability to respond to national cri- sional leadership profess to have drawn
ses has been seriously compromised by a from the midterm elections, the practical
chronic failure to invest in its critical assets. political and policy realities of achieving
Reports from the service are replete with those aims simultaneously will likely lead
aging ship and aircraft casualties. More- to modest compromise this year over con-
over, in these circumstances the service’s flicting budget priorities, leaving less fund-
heightened tempo of operations demanded ing for maritime priorities along with other
by disasters like Deepwater Horizon, less politically powerful constituencies.
Hurricane Katrina and Haiti’s earthquake Mar Ex
JANUARY/FEBRUARY 2011
presents serious risks to the safety of Coast
Guard crews. These crews deserve the na- Larry Kiern is a partner
tion’s support, not its neglect. at Winston & Strawn
Fourth, congressional hearings dur- LLP, an international law
ing the 111th Congress exposed serious firm of 900 lawyers. His
deficiencies in the Coast Guard’s marine practice concentrates on
safety program. Then-Coast Guard Com- maritime issues, includ-
mandant Thad Allen acknowledged the ing legislative, regulatory,
need for reform, proposed changes and and litigation matters.
15
requested additional funding. Bipartisan Before joining Winston & Strawn, he was a
support coalesced and additional funding Captain and law specialist in the U.S. Coast
was appropriated in FY2009. An additional Guard who served as the Legislative Coun-
increase this fiscal year following the Deep- sel and Deputy Chief of the Coast Guard’s
water Horizon incident, however, was not Congressional Affairs Office.
provided because of
the political impasse
THE MARITIME EXECUTIVE
over the omnibus
spending bill. The
recent release of the Based on a valuable
service’s own highly
critical report on the
tragic sinking of the
BRAND
Alaska Ranger again
highlighted a serious
lack of marine safety
resources. Conse-
quently, increased
funding to improve
marine safety, includ-
ing providing new
marine inspectors,
warrants approval by
Congress. Without
proper funding, the With unique heritages from both shipping and maritime
marine safety reform services, Wilhelmsen Ships Equipment and Wilhelmsen
measures enacted Marine Engineering are joining forces.
into law in the Coast
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tion Act of 2010, the new company – Wilhelmsen Technical Solutions.
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will represent further
unfunded burdens on
a service that merits
more funding, not
less.
1/26/11 11:38 AM
 oped Economides
JANUARY/FEBRUARY 2011

16
THE MARITIME EXECUTIVE

Energy has always been at the center of the

Arab-Israeli conflict, creating alliances and influencing the poli-
cies of allies and adversaries alike. Israel, most of all, has had a
very complex relationship with its neighbors, mainly Egypt, which
has been a supplier of energy to Israel since the Camp David Ac-
cords in 1978.
In the past few years and with a stunning announcement by
Noble Energy in late December, Israel’s energy situation has
MARINE BUSINESS EXCHANGE changed dramatically. With Noble’s blockbuster Leviathan gas
Mergers, Acquisitions, Divestitures & Auctions discovery and 2009’s Tamar discovery, Israel now enters the
energy big leagues. Leviathan and Tamar are perhaps the larg-
www.marinebusinessexchange.com est purposeful gas discoveries in the world in each of the last
two years, and Israel is likely to play a highly enhanced regional
Are you ready to sell your business or are you ready to expand and geopolitical role as a result. Moreover, given the fact that
your business through a merger or acquisition? We presently the country has emerged as a global leader in many high-tech
have investors and buyers that are seriously interested in all industries with a resultant expansion of energy usage, Israel may
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Cell 504-650-5000 Without question the future of Israeli energy is tied to natural
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dent oil company – relatively small but quite capable in deepwa-

MarEx_42.indd 16 1/26/11 11:38 AM

 oped Economides

Israeli Natural Gas:

A Game Changer By Michael J. Economides

neighbors, Noa South, Nir, Or and Or South. These fields were

discovered between 1999 and 2000. With the exception of Nir,
the other fields are deepwater prospects between 2,300 and 2,550
feet. They hold an additional 1 Tcf of potential recoverable gas
volumes, of which 70 percent is from the Noa fields. Because of
its size, there are plans to tie Noa back to the Mari-B platform.

JANUARY/FEBRUARY 2011
The Big Ones: Tamar and Leviathan
The first really big discovery came in early 2009, when Noble
announced the discovery of a 5 Tcf field in a northwestern
offshore block called Tamar. An appraisal well quickly followed
the exploratory well and resulted in an increased estimate of the
field’s potential gas in place to 8.4 Tcf, which was independently
confirmed by Dallas-based Netherland, Sewell & Associates, Inc.
Tamar is located at a total depth of 16,000 feet under 5,500 feet
17
of water, 90 kilometers off Israel’s northwestern coast. Noble’s
development strategy for the find is still in progress. Currently,
Israel’s gas demand is about 350 MMcf/d. If production from
Tamar reaches 1 Bcf/d, which it easily could, it would be nearly
triple the amount needed for domestic consumption. Transporta-

THE MARITIME EXECUTIVE

We came up with something

NEW
ter, began gas production from the Mari-B field. This marked
the beginning of Israel’s shift towards natural gas and away from
coal and even further away from fuel oils. The Noble partnership
consists of Noble Energy and three Israeli firms – Delek Drilling,
Avner Oil Exploration, and Delek Investments.

Beginnings: Mari-B and

Associated Gas Fields
Mari-B was first discovered by the Noble partnership in 2000 in
796 feet (243 meters) of water and a total depth of 6,830 feet Our new broader range of comprehensive
(2,082 meters). Mari is part of a group of fields in the southern solutions gives added value to our customers:
offshore waters of Israel in the Pliocene stratigraphic-structural
play, part of the Pleshet Basin. Current gas-in-place estimates Environmental solutions Safety solutions
range from 1.2 to 1.3 trillion cubic feet (Tcf). In 2004 the field HVAC-R solutions Power solutions
began producing from a production platform with 600 MMcf/d Combined with our global services covering the entire
of capacity. The gas is sold to the Israel Electric Corporation life cycle, we are now one solid company.
and brought to Tel Aviv for power generation and to Ashdod for
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power and refining. Average daily production in 2010 was 330
MMcf/d from six wells. Noble has stated that the field can pro-
duce up to its rated capacity of 600 MMcf/d.
There are other fields close by that can be tied back to the
platform through a subsea network. These include Noa and its

MarEx_42.indd 17 1/26/11 11:38 AM

 oped Economides

CYPRUS
tion of the excess gas for foreign consumption becomes LEBANON
the next issue, which will be addressed shortly.
But the best was yet to come. In late December Noble
MEDITERRANEAN
Energy and partners announced that the Leviathan field, Leviathan Field
SEA SYRIA
off the northern coast of Israel, contained at least 16 Tcf
of recoverable gas, which would make it one of the larg-
est offshore natural gas discoveries ever. Such a giant Tamar Field
field, which may be followed by other discoveries, would
certainly make Israel a prime candidate for natural ISRAEL
gas exports. The United States Geological Survey has
estimated that the Eastern Mediterranean may hold as
much as 200 Tcf of ultimately recoverable gas.
JANUARY/FEBRUARY 2011

The Economic Implications
Israel is a country that has had a tumultuous history,
and its energy demand has always been in the immediate
foreground. Since the nation’s establishment in 1948,
it has fought six wars against its neighbors. With each war and,
more recently, with each act of terrorism, one would expect Israel
to descend into a darkness ever more difficult to transcend. Yet
Israel has continued to expand its economy and make technologi-
18
cal advances that revolutionized high-tech industries, agricultural
products, and the defense establishment. Through lasting peace
agreements with Egypt (1979) and Jordan (1994), as well as a
commitment to peace with the Palestinians, Israel has ushered in a
prosperous future.
THE MARITIME EXECUTIVE
JORDAN
EGYPT
In addition, there is little question that Israel is the most stable
democracy in the region and the only Mideast country that does
not limit free speech. It has an independent judicial system with a
strong rule of law, one that does not shy away from convicting a
former president, as it did in December. There is also a thriv-
ing market economy and, with the country’s growth in the past
decade, the government has reduced its role to allow for increased
market competition. The main industries include high-tech
equipment, pharmaceuticals, software, telecommunications, metal

MarEx_42.indd 18 1/26/11 11:38 AM


products, and military technology and equipment. Israel has the
fifth highest GDP per capita in the Middle East, trailing only four
oil-rich nations. Countries like Saudi Arabia, Iran, and Egypt fall
well behind on the basis of this metric. The prospect of becoming
a natural gas exporter has huge implications, not only in terms
of reducing Israel’s energy imports and dependence on potential
adversaries, but also in sheer economic benefit. Moreover, few
countries are more capable of actually pulling it off and, at the
same time, gaining considerable benefit from using natural gas in
the transportation sector.
The Geopolitical Implications
In geopolitical terms, Israel’s success in the energy arena is a game
changer. The least worrisome eventuality would be a conflict with
its northern neighbor, Lebanon, which is already claiming that
the Leviathan prospect extends into its waters and is planning an
exploration program off its coast. Further west, Noble already
holds the only lease in Cypriot waters, which could prove a winner
in exploring the outer reaches of the Levantine Basin. Israel and
Cyprus are cooperating to define the borders of the continental
shelf under the rules of the UN Convention on the Law of the Sea,
under which a country has the right to explore and exploit natural
resources within a distance of 200 nautical miles from its shores.
The closest distance between Israel and Cyprus is 140 nautical
miles and, according to international law, the boundary in such a
case is set at the midpoint between the two countries.
MarEx_42.indd 19
oped Economides
Natural gas may bring Israel and Cyprus (and, by extension,
Greece) into a natural alliance, and not just for the economic
benefits. In a classic example of the old adage, “The enemy of my
enemy is my friend,” the recent breech between Israel and Turkey
brings the Greeks closer to Israel. A natural gas pipeline from the
Israeli fields to Cyprus would be an obvious gesture of rapproche-
ment. Such a pipeline would immediately benefit Cyprus, which is
now in the process of making a decision to import highly expensive
LNG, and could also become the vehicle for LNG liquefaction
facilities and then LNG exports from Cyprus to natural gas-starved
Europe, now suffocating under Russian natural gas imports. An
alternative and substantial source of natural gas to Europe could
JANUARY/FEBRUARY 2011
provide what the ill-fated Nabucco pipeline is unlikely to ever
deliver. Two LNG facilities on Cyprus, each with a capacity of 7
million metric tons, would amount to roughly 23 percent of Rus-
sian exports to Western Europe, which were 3.3 Tcf in 2009.
Israeli natural gas, like almost everything else in that part of
the world, has many more dimensions than
the obvious. It’s a game changer in more ways
than one. Mar Ex
19
Dr. Michael J. Economides is a Professor at
the Cullen College of Engineering, University
of Houston, and Editor-in-Chief of the Energy
Tribune. Benjamin Shlyabopersky also
contributed to this article.
THE MARITIME EXECUTIVE
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Our solutions, equipment and services, combined with
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www.wilhelmsen.com/technicalsolutions
1/26/11 11:38 AM
 20
Upgrades
Downgrades
It’s always fun to look back
at the year just ended and pick out the
winners and losers. Sometimes you even
learn something along the way. Who was
it who said, “Those who do not remember
the past are condemned to repeat it”? The
Harvard philosopher George Santayana
comes to mind, but I’m sure savvy MarEx
readers know the answer. In any event,
taking a moment now and then to review
the recent past – and especially the year
just ended – can be a valuable exercise
and often lead to useful conclusions about
what to expect in the year ahead. Which
is why we reserve the first column of the
year to do just that.
It was, for the record, another good
year for investors. Not as good as 2009,
when gains averaged 28 percent, but we’ll
take it anytime. Looking at broad market
measures, the Dow was up 11 percent
in 2010, the S&P 500 13 percent, and
the Nasdaq 17 percent. Global markets
did even better, with first prize going to
Argentina, up 52 percent on the year, fol-
lowed closely by Indonesia at 46 percent
and Chile at 38 percent.
It was, in fact, hard not to make money.
Everywhere you looked there were flashing
green lights. Commodities, in particular,
did well, as China’s appetite for everything
that comes out of the ground knew no
bounds. We all know about gold prices,
which finished above $1,400 an ounce, but
how about silver? The bridesmaid metal
gained a whopping 84 percent and closed
the year above $30. Copper, aluminum,
iron ore and coal all rose, with the red
metal leading the way. Down on the farm,
crops reached multiyear highs with the
price of corn up 52 percent, wheat 47
MarEx_42.indd 20
Reading the
Tea Leaves:
What to
Expect in
2011
By Jack O’Connell
percent and soybeans 34 Capital Link Maritime Index (Jan. 1, 2010 – December 31, 2010)
percent. Of course the
drought in Russia had
something to do with that,
but it’s also becoming clear
that the global economy
is on the mend and global
demand is growing.
Missing the Boat
Alas, shipping stocks
missed the boat again last
year, although the readers
of this column no doubt managed to beat
the averages. Despite some notable excep-
tions, shipping was among the market’s
worst-performing sectors. As measured by
the Capital Link Maritime Index, which
tracks the 41 publicly listed U.S. maritime
stocks, these stocks rose just seven percent
in 2010, marking the third consecutive
year they have underperformed. The lone
exchange traded fund devoted to shipping,
the Guggenheim Shipping ETF (SEA),
formerly (and better) known as the Clay-
more/Delta Global Shipping ETF, eked
out a two percent gain on the year. Look-
ing at individual segments of the market
(as measured by the various Capital Link
indices), tanker stocks were up a meager
four percent on average; container stocks
fell one percent, and drybulks fell eight
percent. Not an encouraging – or reward-
ing – performance, by any measure.
There were a number of reasons for
this underperformance. Most obvious was
the huge supply of new ships that came
on the market – a record number, in fact
– increasing the already intense competi-
tion for cargoes and exerting downward
pressure on rates. Another was the finan-
cial difficulties experienced by companies
that had overextended themselves in the
boom years by ordering too many new
ships and then found themselves un-
able to pay for them. It didn’t help any
that the value of these newbuildings had
in the meantime plunged from the time
they were originally ordered to the time
they were finally delivered. This squeezed
corporate balance sheets and led to many
a liquidity crisis as companies struggled
to meet loan deadlines.
Winners and Losers
There were some bright spots, however,
and the cruise industry was one of them.
Carnival Corporation (NYSE: CCL) – fea-
tured on the cover of this edition of MarEx
– saw its stock price gain 46 percent in
2010 on top of a 30 percent increase in
2009. It also started paying a dividend
again, a sure sign of improving health.
Royal Caribbean Cruise Lines (NYSE:
RCL), Carnival’s main competitor, did
even better, registering an 86 percent gain
on top of last year’s 84 percent rise. RCL’s
results were boosted by the launch of the
world’s two largest cruise ships, the Oasis
of the Seas in late 2009 and the Allure
1/26/11 11:38 AM
 Will shipping stocks finally break
out of their three-year slump?
winners
Royal Caribbean Cruises (RCL) + 86%
Knightsbridge Tankers (VLCCF) + 68%
Ship Finance (SFL) + 58%
Seacor Holdings (CKH) + 53%
Carnival Corporation (CCL) + 46%
Teekay (TK) + 43%
losers
Aegean Marine (ANW) - 62%
Genmar (GMR) - 54%
Genco (GNK) - 36%
Overseas Shipholding (OSG) - 19%
Diana (DSX) - 17%
Navios Maritime (NM) - 13%

JANUARY/FEBRUARY 2011
Sources: Capital Link, Wall Street Journal Sources: Capital Link, Wall Street Journal

of the Seas in 2010. If you were smart
enough to hold both of these stocks, you
should probably be writing this column.
Another big winner in 2010 was Sea-
cor Holdings (NYSE: CKH) of Fort Lau-
derdale, FL, which rewarded shareholders
with a 53 percent gain including a special
cash dividend of $15 per share paid in
December. Seacor operates a diversi-
fied portfolio of businesses but is mainly
an offshore supply vessel company. Its
Environmental Services Division scored
big with the cleanup of the Macondo well
blowout.
tained its dividend, albeit at a reduced
rate, and certainly looks undervalued
at its current price of $10 per share.
Similarly, other well-managed companies
like Diana Shipping (NYSE: DSX) and
Navios Maritime (NYSE: NM) could not
escape the impact of depressed drybulk
21
rates and saw their stocks tumble by 17
and 13 percent, respectively. Move to the next level!
Oddly enough, that whipping boy of
the drybulk sector, DryShips (Nasdaq:
DRYS) managed to lose only six percent GL Academy – Where experts learn more
in 2010, beating the average eight
Upcoming GL Academy courses:
percent decline for the sector as a whole.

THE MARITIME EXECUTIVE

Topping the list of losers was Aegean
Marine Petroleum (NYSE: ANW), a
company mentioned often (and usually
favorably) in these pages, whose stock
collapsed 62 percent in 2010 on the heels
of an overaggressive expansion program
and unexpectedly fierce competition.
Aegean is one of three Peter Georgiopou-
los companies to make our hit parade for
2010, the others being tanker operator
General Maritime (NYSE: GMR), down
54 percent, and drybulk carrier Genco
Shipping & Trading (NYSE: GNK), off
36 percent. It was a stunning reversal for
Aegean and Genco, which were among
the year’s best performers in 2009, and
testifies to the cyclical nature of the mari-
time industry.
Also falling from grace in 2010 was
Tsakos Energy Navigation (TNP), a ma-
jor carrier of crude oil and refined prod-
ucts, whose stock declined 32 percent
despite rising oil prices and higher global
energy demand. Tsakos’ conservative
chartering strategy and steady-as-she-
goes approach could not overcome the
impact of falling freight rates and higher
financing costs, and it began reporting
quarterly losses for the first time in its
history. The company nonetheless main-
DryShips is now toying with a foray into
the tanker sector.
Outlook for 2011
Here’s what we know now: In a year of
global economic recovery and strong
demand for oil and other commodities,
most shipping companies struggled to
break even. Why? Because freight rates
remained stubbornly low due to the vast
oversupply of tonnage. Too many ships
chasing too few cargoes. Those compa-
nies that managed to do well were either
in the cruise line business or had unusu-
ally strong balance sheets.
Will things change in 2011? Prob-
ably not. Despite the fact that (a) the
economic recovery will continue and per-
haps even accelerate, (b) the price of oil
could be at or above $100 a barrel by the
time you read this, and (c) global E&P
spending is expected to be up another 11
percent in 2011 (on top of last year’s 11
percent rise), don’t expect any miracles
from shipping stocks. The unending
influx of newbuildings will see to that.
And while the absolute number of new
ships will not approach the levels of the
last two years, it will be sufficient to keep
freight rates – and the prices of maritime
• ISM – A Risk Management Approach
Houston, February 3-4, 2011
Stamford, June 6-7, 2011
• STCW & ISM Code 2010 Amendments
Norfolk, February 28, 2011
Miami, March 7, 2011
New Orleans, March 14, 2010
• Damages to Machinery and Repairs
Miami, April 4, 2010
Stamford, April 11, 2010
Houston, April 29, 2010
• Bulk Carriers – Technical and
Operational Aspects
Houston, May 2, 2011
• TMSA Workshop – Risk Assessment,
Change Management, Incident Investigations
Houston, May 16-17, 2011
San Francisco, May 26-27, 2011
• ISPS Internal Auditor for Shipping Companies
New York, June 27, 2011
We look forward to welcoming you.
GL-Academy-Houston@gl-group.com
www.gl-academy.com

MarEx_42.indd 21 1/26/11 11:38 AM

 JACKO’CONNELL
equities – depressed. Investors are better
off looking elsewhere for profits. As we
pointed out in these pages a year ago,
shipping stocks tend to sink faster than
almost everything else in a falling market
and recover more slowly than everything
else in a rising market. In other words,
they’re the first to fall and the last to
recover, a kind of FOLI situation, as they
might say in accounting – first out, last in.
Only in a raging bull market, such as we
had from 2002-2007, do they dramatically
JANUARY/FEBRUARY 2011
outperform, and a raging bull market is
not something that is even remotely in the
cards for 2011.
On the other hand, following the theory
that the cup is always half full, now might
be the ideal time to get in. These stocks
are cheap. Get’em while you can.
Playing the Dogs
22
Here’s another idea: dividend stocks.
Companies are sitting on tons of cash.
They’re making money hand over fist
and reluctant to spend it on things like
plant and equipment and, heaven forbid,
THE MARITIME EXECUTIVE
BUILDING UPON
PRIOR LEARNING.
Save time. Save cost. Gain expertise.
Learning is cumulative. Take advantage of completing your
courses at partner institutions such as MITAGS, by requesting transfer
credit into any of our many relevant degree and certificate programs.
Visit the AMU booth at the Maritime Security Expo
in Baltimore, MD, May 4-5.
MarEx_42.indd 22
new hires. Many are boosting dividends
instead, a far more welcome way of
rewarding shareholders than stock buy-
backs. With the extension of the Bush tax
cuts, dividends will continue to be taxed at
preferential rates for two more years – a
strong incentive. Moreover, the yield on
many dividend-paying stocks exceeds
what you can get on Treasurys and other
fixed income investments.
There’s a famous strategy called the
“Dogs of the Dow.” You may have heard
of it. It means buying the 10 highest yield-
ing stocks in the Dow Jones Industrial
Average (there are 30 stocks in the DJIA).
They’re called “dogs” because the high
yield suggests they didn’t appreciate much
in the year just ended and therefore lagged
the market. Last year the ten “Dogs of the
Dow” had a total return (price apprecia-
tion + dividends) of 21 percent, versus
14 percent for the entire Dow. How do
you like 21 percent? For your guidance,
the Dogs are (with their yields in paren-
theses): AT&T (5.8), Verizon (5.5), Pfizer
(4.6), Merck (4.2), Kraft (3.7), Johnson &
amuonline.com/tlm | 877.777.9081
Johnson (3.5), Intel (3.4), DuPont (3.3),
McDonald’s (3.2) and Chevron (3.2).
If you insist – despite all of the above –
on buying shipping stocks, go right ahead.
There are lots of high-yielding equities in
that universe too. Let’s dub them “Dogs
of the Deep.” I’ll even name some for you
(yields once again in parentheses): Capital
Product Partners (11.0), Teekay Tankers
(10.0), Genmar (9.3), Navios Maritime
Partners (8.1), Knightsbridge (7.2),
Teekay Offshore Partners (6.7), Nordic
American Tankers (6.4), Ship Finance
(6.2), OSG (4.7), Horizon Lines (4.0).
There. Now you’re all set. You’re welcome.
Happy New Year, and happy investing!
MarEx
Jack O’Connell, the senior editor of this
magazine and a former maritime execu-
tive, is a private investor who may own
shares in some of the companies men-
tioned in his columns. The views expressed
in this column are his and his alone and
are not in any way to be construed as
investment advice.
1/26/11 11:38 AM
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MarEx_42.indd 23 1/26/11 11:38 AM

JANUARY/FEBRUARY 2011
Why America Needs the
24
By H. Clayton Cook, Jr.
Jones act
THE MARITIME EXECUTIVE
“The Jones Act is an essen-
tial feature of U.S. national
security policy as it provides
required capacity to support
national security needs and
avoid complete dependence
on ships controlled by for-
eign nations. Since the U.S.
maritime position in interna-
tional trades has declined
significantly in the last three
decades, the Jones Act is the
primary market for U.S. ship-
yards and operators, and its
maintenance is key to Ameri-
can Shipping Company’s
continued success.”
– American Shipping
Company Web Site
MarEx_42.indd 24
The Jones Act is periodically criticized by Ricardian economists and
certain elements in U.S. society and by non-citizen maritime interests seeking to pen-
etrate the U.S. market. However, it serves as an incentive to maritime sector investment
by providing a barrier to entry for lower-cost foreign carriers that are not subject to the
same wage, labor and environmental regulations as U.S. shipbuilders and operators.
Legal Precedents and the Concept of “Dual Use”
The reservation of the economic benefits of the nation's domestic waterborne com-
merce to U.S. citizens owning and operating vessels built in the United States was first
introduced by the Continental Congress and later incorporated in our Navigation Act of
1817 (1817 Act). Our "Jones Act," Section 27 of the Merchant Marine Act of 1920, now
codified as Section 55102 of Title 46 of the United States Code, is simply its most recent
form. In the post-World War II world, we have seen similar reservations of commercial
opportunities for U.S. citizens, with broad support in both Republican and Democratic
circles, in the Outer Continental Shelf Lands Act of 1953, the Fishery Conservation and
Management Act of 1976, the Law of the Sea, Exclusive Economic Zone Proclama-
tion of 1983 (EEZ), and the American Fisheries Act of 1998. In economic terms, the
Jones Act is neither a U.S. nor an international anomaly. Worldwide, EEZ national-build
requirements are widespread. Consider the current situation in Brazil.
The first naval battle of our War of Independence involved the June 1775 seizure of
the HMS Margaretta by two patriot-armed commercial sloops in waters adjacent to
Machias, Maine. The importance of the commercial vessel and privateer fleets commis-
sioned by the Continental Congress and by the individual states was manifest in both the
Revolutionary War and the War of 1812. The 1817 Act simply confirmed the importance
of this U.S.-owned and U.S.-built "dual-use" tonnage.
Commercial vessels were converted to war time use by the Union and the Confedera-
cy. President Theodore Roosevelt’s Great White Fleet required the support of commer-
cial colliers. In the run-up to and during World War I, the U.S. found itself lacking ves-
sels for its commercial trades and its North Atlantic wartime requirements. The Shipping
Act of 1916 and the Merchant Marine Acts of 1920 and 1936 were intended to prevent
a recurrence of these problems. The 1916 Act addressed U.S. citizenship. The 1920 Act
dealt with the role of our domestic trades in meeting these objectives with its Section 27
U.S.-build requirement. The 1936 Act required U.S. ownership of U.S.-built vessels for
participation in Maritime Administration (MARAD) "differential subsidy" programs that
allowed the U.S.-flag owner to approximate the operating and capital costs of lower-cost
foreign competitors with reserve funds to provide a tax "neutrality." The Merchant Ma-
1/26/11 11:38 AM

Aside from its strategic importance,
a revitalized maritime industry would
boost the struggling U.S. economy,
relieve highway congestion, and create
badly needed jobs.
rine Act of 1970 extended the differential subsidies to the inter-
national bulk trades and provided a revised Capital Construction
Fund (CCF) tax-deferral program for the liner and bulk trades
and Great Lakes and non-contiguous domestic services.
The 1936 Act helped to support our U.S. shipyards in the
run-up to World War II. The 1970 Act ushered in a decade of
U.S. shipyard expansions and series productivity improvements.
The decade witnessed new vessel concept designs by U.S. naval
architects and marine engineers for container, LASH and Ro-Ro
vessels. These were built by U.S. shipyards, financed by U.S.
banks and leasing companies, and proven as first-in-service
designs by U.S. and international carriers. The designs for these
1970 Act dual-use vessels incorporated national defense features
funded by the U.S.
In the 1980s, "subsidies" became politically unfashionable. Follow-
ing the Reagan Administration's termination of the differential sub-
sidy programs and unable to compete in operating or capital costs,
U.S. international fleet operators who had provided the Depart-
ment of Defense (DOD) with access to the majority of its dual-use
tonnage sold their fleets to foreign shipping lines or simply ceased
international operations. With the termination of these programs,
the shipyards that had been the largest private sector employers in
Massachusetts (General Dynamics in Quincy), Pennsylvania (Sun
Shipbuilding & Dry Dock in Chester) and Maryland (Bethlehem
Sparrows Point in Baltimore) were closed. Other yards on the East,
Gulf and West Coasts were downsized or converted from commer-
cial to military production, and the jobs associated with the supplier
infrastructure simply disappeared.
Today, our U.S. shipyards build few large commercial vessels.
The lack of multiple-vessel series contracts and volume purchases
of ship components makes new vessels significantly more costly
than foreign builds. Yet the U.S. shipbuilding industry remains
strategically important and cannot be sustained by military orders
alone. Recent foreign-partnering, series-production successes at
the Aker yard in Philadelphia and National Steel & Shipbuilding
in San Diego have confirmed that these yards can build commer-
cially priced vessels for the Jones Act market.
MarEx_42.indd 25
jones act
America’s Marine Highway
The merits of maritime alternatives to highway-based
truck transportation are well recognized. The urbanized
northeastern seaboard of Jean Gottmann's Megalopolis
is well-suited to Atlantic Coast Ro-Ro services that
would provide a water alternative to highly congested
Interstate 95 and Interstate 81. This “highways to
waterways” shift can bring more fuel-efficient transportation,
lower highway and bridge maintenance charges, and improved air
quality and safety.
The Energy Independence and Security Act of 2007 con-
tained provisions establishing a formal marine highway program
JANUARY/FEBRUARY 2011
within the federal government. The act required the Department
of Transportation (DOT) to establish a program for the designa-
tion of transportation projects to mitigate landside congestion
and the designation of water transportation routes as extensions
of and alternatives to the existing surface modes. Special atten-
tion was to be given to coastal corridors. But the act failed to
provide funding.
Congress and the Administration have provided modest
amounts for the America's Marine Highway (AMH) Program,
25
which have been used for shipyard grants and port infrastructure
improvements. However, private sector entrepreneurs are the
real “drivers,” and the program must attract these to succeed.
Successful alternatives to highway transport require frequency of
service and multiple-vessel fleets with individual vessels costing
$100 to $200 million and a fleet in the $1 billion range. Attract-
ing this type of investment in the private sector will be difficult,
THE MARITIME EXECUTIVE
if not impossible, and provides an obvious basis for the use of
MARAD Title XI financing guarantees and other U.S. govern-
ment assistance.
Rebuilding America’s Shipyards
The U.S. shipbuilding industry serves both military and com-
mercial markets, and it cannot be sustained by either market
standing alone. When shipyards close – with skilled workers laid
off and efficiencies and institutional knowledge lost – they are
not easily reconstituted. In Louisiana, the state’s largest private
sector manufacturing employer, Avondale Shipyard – having been
converted from commercial to military construction to survive –
now faces closure when it completes its current U.S. government
contracts in 2012.
Today, DOD and DOT are engaged in a project to develop
and design, and see to the construction and operation of, a series
1/26/11 9:08 PM
 jones act

of dual-use vessels that will be both commercially viable and

capable of meeting a portion of DOD's military sealift needs. The
project envisions a Ro-Ro vessel that can be constructed in series,
benefitting from shipyard learning curves and quantity purchas-
ing to reduce the per-ship costs for prospective owners. The I-95
corridor is at the heart of this, and one of the main attractions
is the use of LNG dual-fuel engines with DOD paying for the
increased costs as "national defense" features.
If successful, this DOT/DOD project will meet the objectives
of both DOT’s America’s Marine Highway Program and DOD’s
Strategic Sealift Program. It will help sustain and perhaps revital-
ize the struggling domestic shipbuilding industry that is essential to
JANUARY/FEBRUARY 2011

the construction and repair of the DOD fleet. This important effort
would not be possible without Jones Act protection. Will it succeed?
I look at Saltchuck's TOTE and its successful Portland-to-Anchorage
Ro-Ro service with NASSCO 2003-built, $150 million Ro-Ros.
TOTE has publicly stated that an I-95 corridor Ro-Ro service with
U.S.-built Ro-Ros would be feasible if more favorable shore-side
labor agreements could be achieved. So I am optimistic.

Persuasive Economic Benefits
26
I’m sometimes told that a particular project cannot succeed
because the cost of the Jones Act vessel is some multiple of the
cost of a similar foreign vessel. But isn't the real test whether the
vessel's fully financed cost will fit into a business plan that will
provide acceptable returns to investors? When I inquire about
this and the use of MARAD programs to reduce the vessel’s fully
financed costs, I am often told that “No, no, the computations
THE MARITIME EXECUTIVE
study for the Transportation Institute concluded that, for the most
recent year for which information was available, the Jones Act was
responsible for 499,676 Jones Act-related jobs, $100.3 billion in
economic output, and $11.4 billion in federal, state and local taxes.
So on this benefits issue I am a bit of the view that, while everyone
is entitled to their own opinions about the merits of the Jones Act,
they are not entitled to their own Jones Act “facts.”
Critics also say that the Jones Act stifles domestic trade vessel

have not been done because the U.S. price is just too expensive.”
So I wonder about the relevance of these foreign shipyard price
comparisons and view them with some skepticism.
Critics are fond of saying that the Jones Act only benefits a
small number of unionized shipyard workers. But the U.S.-build
requirement benefits workers in both union and non-union
shipyards and component manufacturing jobs across the U.S.
It benefits employees at naval architect firms and ship classifica-
tion societies, in ship broker and ship insurer firms, and at banks
and ship financing and law firms. And it protects the substantial
federal, state and local tax revenues involved.
The American Shipping Company’s Web site catalogs the cur-
rent Jones Act benefits as “$14 billion in annual economic output
and 84,000 jobs in U.S. shipyards, 70,000 jobs working on or with
Jones Act vessels, and over 39,000 vessels of all sizes representing
an investment of $30 billion.” A 2010 PriceWaterhouseCoopers
investment. But I believe the very opposite is true – that the Jones
Act provides an attractive investment environment in which barriers
to entry are high and investor returns are reasonably assured. I look
to the more than $5 billion in Jones Act trade renewals and expan-
sions of the past decade as evidence of this proposition. And I look
to the $1.2 billion Aker Philadelphia Shipyard/Overseas Shiphold-
ing Group petroleum tanker project as evidence of the Jones Act
trade's attraction to thoughtful non-citizen investors such as the
Oslo-based, predominately Norwegian-owned
American Shipping Company, which considers
the Jones Act to be “key to American Shipping
Company’s continued success.” MarEx
H. Clayton Cook, Jr. is Counsel to Seward &
Kissel LLP and a former General Counsel of the
Maritime Administration.

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AM
 CARNIVALCORPORATION

Carniv
JANUARY/FEBRUARY 2011

28 C O R P O R A T I O N
The world’s biggest cruise line just keeps getting better.
By Robert C. Spicer
THE MARITIME EXECUTIVE

Our cover story this issue focuses on the world’s largest cruise line and its
dynamic leader, Micky Arison. Founded in 1972 with one ship by Micky’s
father, Ted Arison, Carnival today operates ten distinct brands and a total
of 98 vessels. It reported revenues of $14.5 billion in fiscal 2010 and
net income of $2.0 billion. It carries roughly half of all global cruise
passengers and has its headquarters in both Miami and London. In
this Case Study we will examine the origins and growth of one of the
world’s most innovative organizations. It is a story of innovation and
creativity that created a unique vacation experience for people of
all ages and economic backgrounds. In the accompanying
Executive Interview, we will explore the personal story
behind the success story.
HUMBLE BEGINNINGS
From its inception in 1972 as a subsidiary of American International
Travel Service, Carnival has grown steadily under the leadership of
first Ted and then Micky Arison. Its first vessel, the TSS Mardi Gras,
famously ran aground on its maiden voyage from the Port of Miami.
From such humble beginnings are great enterprises made.
Ted Arison purchased the company from AITS in 1974 for $1 and the as-
sumption of the company’s $5 million ($21.5 million when adjusted for inflation)
in debt. Micky Arison became the Reservations Manager and began working with his
father to develop new sales strategies. Through the successful implementation of more af-
fordable pricing and all-inclusive packages, Carnival Cruise Lines was able to grow, acquiring
existing tonnage to meet the needs of an expanding market.

ival
In 1975 Carnival purchased the Empress of Britain and
entered her into service as the TSS Carnivale. In 1978 came
the S.A. Vaal, which underwent a $30 million refurbishment
before entering service as the Festivale. At the time she was the
CARNIVALCORPORATION
JANUARY/FEBRUARY 2011
29
THE MARITIME EXECUTIVE
The Coral Princess at sea.
largest and fastest vessel sailing from Miami to the Caribbean.
By 1980 the company’s steady growth led to the announce-
ment of a newbuild vessel, the Tropicale, which would enter
service in 1982. The announcement stunned the cruise
industry – it was the first newbuild in years – and sparked a
shipbuilding boom, fueling the future growth of the industry.
In another first, the company in 1984 began advertising on
network television. This first-of-its-kind advertising featured
Kathie Lee Gifford (then Johnson) as the spokeswoman for the
company. A L L P H O T O S C O U R T E S Y C A R N I VA L C O R P O R AT I O N
 CARNIVALCORPORATION

Growing consumer demand, fueled in part by the new TV ads
and the popularity of the sitcom “Love Boat,” led to the debut
of the 46,052-ton Holiday in 1985, the 47,262-ton Jubilee in
1986, and the 47,262-ton Celebration in 1987. By then Carnival
had earned the distinction of “Most Popular Cruise Line in the
World,” a title it holds to this day.
GOING PUBLIC AND FUNDING GROWTH
In 1987 the company went public under the direction of Micky
Arison, selling 20 percent of its stock and generating $400 mil-
lion, which would be used to promote further expansion through
the acquisition of existing tonnage. The company’s first and
JANUARY/FEBRUARY 2011
class and the first passenger vessel to exceed 100,000 tons. She
was the largest cruise ship in the world at the time.
In 1997 Carnival Corporation acquired 50 percent of Costa
Cruises. The Italian-based operator was Europe’s leading cruise
company and was fully acquired three years later. In 1998 Carni-
val Cruise Lines introduced the seventh Fantasy Class Vessel, the
Carnival Elation, and for the first time entered a new vessel into
service on the West Coast. That same year saw the eighth and
final Fantasy Class vessel, the Carnival Paradise, enter service,
and the acquisition of a 68 percent stake in Cunard Line, the
prestigious operator of the world-famous Queen Elizabeth 2.
Carnival purchased the remaining 32 percent the following year

most notable purchase was Holland America Line in 1989. The and acquired full control of Seabourn as well.
purchase also included Westours, which would later be renamed
Holland America Princess Alaska Tours. “FUN SHIPS” AND THE PRINCESS MERGER
Carnival launched the Fantasy, the first and namesake vessel The last two years of the twentieth century saw the launch of the

30
THE MARITIME EXECUTIVE

The Carnival Cruise Line’s Carnival Dream heading back to sea.

of an entirely new class, in 1990. Upon entering service she

became the first new cruise ship to be placed on three- and
four-day Bahamas cruises out of Miami. The Fantasy Class
would be so successful that Carnival would eventually construct
seven more, making it the most ships in one class ever built. In
1992 Carnival purchased a 25 percent stake in the ultra-luxury
Seabourn Cruise Lines. At the time Seabourn consisted of
two 208-passenger, all-suite vessels. Carnival’s ownership of
Seabourn increased to 50 percent in 1996 and full control in
1999. Seabourn’s fleet was eventually expanded to four with
the construction of two new 450-passenger vessels.
The third Fantasy Class vessel, the Carnival Sensation (the
Carnival Ecstasy had been launched in 1991), was intro- Fun in the Atrium aboard the Carnival Dream.
duced in 1993. She was followed by the Carnival Fascination
in 1994, the same year that Carnival’s parent company was second Destiny Class vessel, the Carnival Triumph, in 1999 and
renamed Carnival Corporation to distinguish it from its flagship the third, the Carnival Victory, in 2000. In 2001 came the first
brand, Carnival Cruise Lines. The fifth and sixth Fantasy Class of a new class of vessel, the 88,500 ton Carnival Spirit. Setting
ships, the Carnival Imagination and Carnival Inspiration, were new standards for the industry, the Carnival Spirit became the
launched in 1995 and 1996. Carnival Cruise Lines also intro- first new “Fun Ship” ever positioned in the Alaska and Hawaii
duced the Carnival Destiny in 1996, the first of an entirely new markets.
 CARNIVALCORPORATION

Following the trend of new development it had started, Carnival
introduced three new ships in 2002: a second Spirit Class vessel,
the Carnival Pride; the third Spirit Class vessel, the Carnival
Legend; and the debut of the 110,000-ton Carnival Conquest,
unveiling yet another class for the growing company.
A year later the second Conquest Class vessel, the Carnival Glory,
began her year-round, seven-day cruises from Port Canaveral,
Florida. Carnival Corporation took its expansion efforts to a new
level in 2003 with the completion of the merger with P&O Prin-
cess Cruises, a merger that in-
cluded Princess Cruises, P&O
Cruises, AIDA, P&O Cruises
truly global cruise company, Carnival Corporation & plc.
In 2004 the Carnival Miracle, Carnival’s fourth Spirit Class
vessel, began a series of voyages from Jacksonville, Florida, the
first “Fun Ship” to operate out of this facility. That same year Car-
nival Cruise Lines launched its third 110,000-ton Conquest Class
vessel, the Carnival Valor, which became the largest “Fun Ship” to
offer year-round, seven-
day cruises out of the
Port of Miami. In 2005 a

JANUARY/FEBRUARY 2011
Australia, and the tour operator
Princess Tours. The combina-
tion of Carnival and Princess
marked the creation of the first

31

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 CARNIVALCORPORATION

fourth 110,000-ton Conquest Class vessel, the Carnival Liberty,
was launched, becoming Carnival’s first Mediterranean cruise
option. The fifth Conquest Class vessel, the Carnival Freedom,
joined the fleet in 2007 and also served the Mediterranean market,
offering stops in the Greek Isles and Turkey.
Carnival brought another new class of vessel to market in
2008: The 113,000-ton Carnival Splendor introduced the line’s
first twelve-day cruise program in Northern Europe. Carnival
further expanded its European operations when it finalized a joint
venture with Spain’s Orizonia Corporation in 2008. The multi-
ship joint venture created a new company called Iberocru-
ceros to serve the Spanish cruise market. Carnival acquired
JANUARY/FEBRUARY 2011
have continued to improve for both our North American and Eu-
ropean brands, particularly for our peak summer season,” noted
Micky Arison. “We are optimistic these positive trends are an
indicator of a strong ‘wave’ season, our heaviest booking period,
which begins in early January. Given the recent cold weather and
snow, particularly in the northern U.S. and Europe, there is no
better time to book a cruise vacation.” With a fleet of 98 ships
in operation and 10 new vessels scheduled for delivery between
now and May 2014, Carnival is well positioned to lead the way as
cruise industry traffic rebounds from recession lows. MarEx
Wet and wild aboard the Carnival Fantasy.

100 percent of Iberocruceros in 2009, which marked

the debut of yet another ship: The 130,000-ton Carnival
Dream became the largest “Fun Ship” ever constructed. In
2010 six new vessels were added, including Cunard Line’s
much-anticipated, 2,068-passenger Queen Elizabeth,
which was christened by Her Majesty Queen Elizabeth II in
October. Carnival intends to launch two more 130,000-ton
ships in the near future: The Carnival Magic is scheduled to
enter service in Europe during the spring of 2011 and the
32
Carnival Breeze in the spring of 2012.

AN IMPROVING WORLD ECONOMY MEANS EVEN

BETTER TIMES AHEAD
Today’s Carnival is comprised of a portfolio of distinct
brands operating in markets worldwide. “Booking trends

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 THE POWER OF
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MarEx_42.indd 33 1/27/11 10:36 AM

 MICKYARISON
JANUARY / FEBRUARY 2011

Micky
34

The dynamic leader of

the world’s largest cruise

Arison
company speaks out on
the influence of his father,
THE MARITIME EXECUTIVE

the future of Carnival

and the industry, and the
The dynamic young Miami Heat.
leaderByand Robertfounder
C. Spicer
of Hornbeck Offshore
Chairman & Chief Executive talks about Officer,
his vision
Carnival Corporation for the future and
keeping the company
“one
MarEx: There is a plaque with a picture of your step
father, ahead.”
Ted Arison, in the lobby of
Carnival’s Miami headquarters. I am always impressed when I see that plaque
because it reminds me of the great things people can do at any age. Your father
was in his early fifties when he formed Carnival. How did he influence your business
thinking and your leadership style?
Arison: Ted was the ultimate optimist. He launched Carnival Cruise Lines in 1972
after the breakup with his partner in Norwegian Caribbean Lines and watched as
many of his employees joined NCL. Nevertheless, he was determined to remain in
the cruise business and was optimistic that Carnival would be successful although
it wasn’t so apparent from the beginning. My father created a wonderful, family-
like atmosphere at Carnival and lived by the credo of hiring good people and letting
them do their jobs – and we strive to live up to this philosophy to this day.
 MICKYARISON
My father created a wonderful, family-like atmosphere at Carnival and lived by the
credo of hiring good people and letting them do their jobs – and we strive to live
up to this philosophy to this day.

MarEx: Carnival has a famous and important story in its his-
tory that is remembered by all those who were there in the
beginning. It’s the grounding of the TSS Mardi Gras on her
maiden voyage. What was that experience like and how did it
help bring the Carnival team together?
Arison: My memories of Carnival’s early years are quite vivid.
come up with the idea?
Arison: My father believed that cruising was such a wonderful
vacation that it should be made available to everyone, not to
just the well-heeled, as it was back in the 1970s. He thought by
creating a fun onboard environment that Middle America could
afford, Carnival could carve out a niche in the cruise market.

JANUARY / FEBRUARY 2011

I remember being on the bridge wing of the Mardi Gras when
it ran aground on a sandbar outside the Port of Miami in 1972,
garnering worldwide media attention. With the media monitor-
ing the ship’s radio communications, my father and Meshulum
Zonis, his trusted confidant and Senior Vice President of Op-
erations, began communicating in Hebrew to avoid having their
conversations intercepted and reported by the press. With the
help of the tides, the Mardi Gras was eventually freed. Howev-
er, the struggles continued, When the ship arrived in San Juan
we were unable to get credit to buy fuel, so we had to empty the
cash registers to pay for fuel for the return trip to Miami.
MarEx: I have always been amazed at the Carnival story. Your
father created an entirely new industry from the ashes of the
dead transatlantic liner era. He envisioned a unique kind of
vacation experience that would be available to the average
family and that you then built into today’s Carnival. How did he
He obviously was correct as within 15 years we went from the
back of the pack to the world’s largest and most successful
cruise company.
MarEx: Carnival has always had an exceptional and dedi-
cated management team with longevity who helped grow the
company into the largest cruise ship operator in the world.
When you first assembled your own management team, what
attributes did you look for?
Arison: At Carnival Cruise Lines I really inherited most of the
senior management team from my father when I was named
35
president in 1979. He had hired very talented and dedicated
people in whom I had a great deal of trust. With some of the
other brands we’ve acquired over the years we made a number
of management changes and conducted searches to make sure
we had the right people leading these companies. We were
looking for bright, trustworthy people of integrity who had

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 MICKYARISON

…it only takes one big success to be

a successful entrepreneur.

demonstrated excellent management skills in previous posi-

tions. Some had a cruise industry background while others
came from the outside.
MarEx: Looking back, could you ever imagine Carnival would
become the industry powerhouse it is today?
JANUARY / FEBRUARY 2011

Arison: Very early in the creation of Carnival we had no grand

scheme – it was really just about survival. My father bought a
second ship, the Carnivale, so that just in case something hap-
pened to our first ship we wouldn’t be out of business. When I
took over the Carnival presidency in 1979, our revenues were
$44 million with earnings of $12 million. I didn’t have a grand
scheme either, but I knew we had a winning formula with our
“Fun Ship” philosophy. By the 1980s when we were launching
the Tropicale – the first new cruise ship in many years – and
debuting the cruise industry’s first national TV ad campaign,
36
we were on our way to becoming a cruise industry innova-
tor and leader. But we knew that a Carnival cruise wasn’t for
everyone and that there was tremendous potential in other
segments of the market in North America and beyond. We
ultimately developed a strategy for becoming a global operator.
We looked at launching new brands but ultimately decided on
acquisitions. That started with the purchase of Holland Amer-
ica in 1989 and continued with Seabourn, Costa and Cunard
THE MARITIME EXECUTIVE

until 2003 when we completed the P&O Princess merger. By

then, we were truly a global company with some of the world’s
most successful and respected cruise brands in our portfolio.
MarEx: Early in your career you worked in Reservations and
helped develop new sales strategies with your father. You
worked in most of the other departments as well. Which one
did you enjoy most?
Arison: I was bitten by the cruise bug very early and knew
there was no other business I wanted to be in. All of the
positions I held gave me a greater understanding of how the
business works. My very first job on board was as a cruise
staff member, and it helped me understand the challenges that
shipboard employees face each and every day. I really enjoyed
Reservations though because working there felt like you always
had your finger on the pulse of the company. Even today, we
get pretty detailed reservations reports from our 10 brands.
MarEx: Innovation is defined as the creation of something
new. Your father created a new business and put tens of thou-
sands of people to work, maybe hundreds of thousands if you
count all the related industries surrounding Carnival. Why was
he so innovative? Was he like that in his other ventures also?
Arison: My father was very entrepreneurial and an optimist in
a “glass half full” kind of way. No matter what happened, he
wasn’t afraid to take chances and follow his instincts. Not all
of his ventures turned out as well as Carnival, but it only takes
one big success to be a successful entrepreneur.
MarEx: What is the greatest lesson you learned from your
father?

We’ve been operating in China under our Costa brand since 2006. While there are
challenges with any new source market, China is a growing cruise region with
tremendous potential.
Arison: The best lesson I learned from my father was to hire
good people to run your businesses, give them the support they
need to be successful, and let them do the jobs you hired them
to do.
MarEx: In 1978 Carnival acquired the S.A. Vaal, which under-
went a $30 million refurbishment before entering service for
Carnival as the Festivale. At the time she was the largest and
fastest vessel sailing from Miami to the Caribbean. Compared
to today, however, she was a small ship. What is the optimal
size of cruise ships in your view? Do you see larger ships
entering the marketplace or will the next generation be scaled
down?
Arison: The optimal size ship is different depending on the
market segment. For a luxury brand such as Seabourn, smaller,
low-density ships in the 32,000-ton range are a better fit
whereas contemporary operators such as Carnival or Princess
build higher-density ships in the 130,000 to 140,000-ton range.
That’s not to say we wouldn’t build ships a little larger for these
brands, but I would not expect any quantum leaps. Our largest
ship currently is the Queen Mary 2 at 150,000 tons, and it is
unlikely we will build anything larger than that.
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MarEx: Carnival is recognized for carrying more passengers
than any other line in the world. Yet the market has been
mostly North American and European-based. Do you see a
more aggressive outreach to market China in the near future?
Arison: There is a tremendous opportunity in China. We’ve
JANUARY / FEBRUARY 2011
been operating in China under our Costa brand since 2006.
While there are challenges with any new source market, China
is a growing cruise region with tremendous potential.
MarEx: Carnival has multiple distinct brands offering service in
North and South America, the United Kingdom, Germany, Italy,
France, Spain and Australia. How large do you see the Carnival
fleet becoming during the next decade? Will the number of
ships level off?
Arison: The cruise industry went through an incredible period
of growth in the 1990s/2000s, and there was simply no way
37
that it could maintain that pace for an extended period of time.
For Carnival, we don’t envision introducing more than two
to three vessels a year on a corporate-wide basis. In fact, we
have 10 new ships scheduled to enter service between now
and 2014, which works out to two to three ships a year for the
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 MICKYARISON
Emission Control Areas (ECAs) …will require us to use a higher grade of fuel,
which currently is some 15 to 20 percent more expensive than the fuels used
today. …demand will increase so supply availability could be an issue too.
MarEx: When you go to sleep at night what is your biggest
worry?
Arison: The things that have the most potential to hurt our
company are things we have no control over. I learned long ago
that we can only worry about the things we can control.
JANUARY / FEBRUARY 2011
MarEx: What do you see on the horizon as the biggest chal-
lenges to the cruise industry generally and Carnival specifi-
cally?
Arison: Emission Control Areas (ECAs) are going to be a
challenge for the entire shipping industry. ECAs will require us
to use a higher grade of fuel, which currently is some 15 to 20
percent more expensive than the fuels used today. And with all
of shipping required to comply, demand will increase so sup-
ply availability could be an issue too. ECAs could have wide-
ranging impact, including on ports of call and homeports. We’ll
38
need to generate higher pricing to offset at least a portion of the
expected increase in fuel costs.
MarEx: Business is about risk. What is the biggest risk you
took in growing Carnival?
Arison: Probably the biggest risk we took was undergoing such
a rapid expansion in the 1980s – introducing four new ships
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in a period of five years, nearly tripling our capacity – that it
propelled Carnival Cruise Lines from a middle-of-the-pack
brand to the world’s number one cruise operator. We were bet-
ting that the market was ready for expansion, and obviously we
were right.
MarEx: Do you have any plans for turning over the helm soon?
Arison: Right now I have no plans on going anywhere. I still
really enjoy the cruise business and my job. When that time
comes, however, there is plenty of great talent within our com-
pany to fill my shoes.
MarEx: Finally, the answer we all need to know: As the owner
of the Miami Heat, when do you think we will see the next Heat
championship?
Arison: Can you ask me this question in June? I’m supersti-
tious so I’m not going to make predictions, but this team is
really fun to watch.
MarEx: Fair enough. And thanks for a great interview.
Robert C. Spicer is a former cruise line executive and Chief
Engineering Officer in the U.S. Merchant Marine. He is currently
working toward a Doctor of Education degree in Organizational
Learning. He may be reached at rspicer@gseacs.com. MarEx
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MarEx_42.indd 1/26/11 AM
 40
Emerald Isle:
By Barry Parker
The Prospects
Really Are Greener
JANUARY/FEBRUARY 2011
Some of the best brains in shipping are
choosing Ireland for their base. Here’s why.
40
THE MARITIME EXECUTIVE
The Irish Maritime Development Office (IMDO)
was established in 1999 for the express purpose of promot-
ing shipping in Ireland, and it is reaping rewards. According to
Glenn Murphy, IMDO’s Director, Ireland has been successful
in attracting international businesses across a range of industries
because of its skilled workforce and attractive taxation arrange-
ments for cross-border transactions. He added, “Because we are
an island nation, with a long maritime tradition, we have built up
a special expertise in shipping. There are currently 10,000 people
employed in the shipping industry in Ireland.” The roster of liner
companies with an Irish presence includes, for example, Maersk,
OOCL, MSC and CMA-CGM.
Ardmore and d’Amico
In line with IMDO’s efforts to go beyond the mainstay short-
sea and ferry companies connecting Ireland to Britain and the
Continent, Ardmore Shipping, a specialist in the product tanker
sector, set up shop in Cork this past summer. Its CEO and
founder, Tony Gurnee, is an ex-U.S. Navy officer and Citibank
honcho and the CFO who took Teekay public in the mid-1990s.
The Chairman of the Board is Reg Jones, III, the one-time
head of transportation banking at Goldman Sachs, who now
MarEx_42.indd 40
runs Greenbriar Equity Group, a private equity powerhouse in
transportation. Greenbriar, whose funds have logged investments
from notables such as the Bill & Melinda Gates Foundation, has
worked with Irish financiers on other portfolio deals as well.
Ardmore, running several modern product tankers fixed out
on time charters, is building an organization that draws on the
talent pool available in Ireland. The expertise of Ardmore’s top
operations man, Mark Cameron (also a Teekay veteran), in
emission rules and “green” fleet practices hints at the direction in
which Ardmore will add value in the increasingly regulated E.U.
and elsewhere. The big boys who contract out to demanding cus-
tomers in the oil business have taken notice. The Japanese-built
(2004), Marshall Islands-flagged, oil/products carrier Ardmore
Seamaster (46,000 dwt., ex-Formosa 12), for instance, is on
charter to the listed Danish operator Norden and trades in the
Norient Product Tankers Pool, a Norden venture run jointly with
Cyprus-based Interorient Ship Management.
Tony Gurnee’s new entity is in the company of other well-
known international shipping entities that have chosen to operate
from Ireland. D’Amico International Tankers, a subsidiary of
d’Amico International Shipping, is based in Dublin, where it
maintains chartering and operations offices. Glenda Internation-
1/26/11 11:39 AM

al, a joint venture between d’Amico and the commodity behe-
moth Glencore International, operates nearly three dozen vessels
in the Glenda Pool with headquarters in Dublin. D’Amico is also
partnered with Mitsubishi Corporation and operates tankers in
High Pool Tankers out of Dublin. More than merely a postal ad-
dress, the Dublin-based entity’s signature is on time charters with
oil majors and more than $200 million of debt with international
shipping banks.
Show Me the Money
Not surprisingly, the Irish maritime cluster includes a formi-
dable ship finance component. Paul Packard, Head of Maritime
Industries at the Bank of Ireland, observed, “We believe there
remain good opportunities for shipping companies to consider
MarEx_42.indd 41
JANUARY/FEBRUARY 2011
41
THE MARITIME EXECUTIVE
relocating to Ireland.” Although not currently seeking new inter-
national ship finance business, Bank of Ireland provides senior
and junior debt (on a limited basis) along with offerings to hedge
financial, energy and freight risks. Packard added, “We believe
that the combination of an E.U. jurisdiction in the Eurozone
with English as the first language and an attractive tonnage tax
remains as compelling as ever.” A recent arrival on the Irish
maritime finance scene has been Northern Shipping Funds (tied
to the well-known Northern Navigation), a leasing company that
provides niche financing for shipowners.
Perhaps due to the mid-2000s commodity price boom and
public market interest in shipping, maritime companies have
increasingly borrowed from the toolkit of structured finance,
where deal architecture is optimized to benefit legally from differ-
1/26/11 11:39 AM
 ent regulatory and taxation regimes. Catherine Duffy, a Partner
C R U I S E at Dublin-based lawyers A&L Goodbody, sits at the nexus of
aircraft and maritime finance, heading her firm’s practice in both
areas. She described a conscious effort on the part of the Irish
government to create an environment conducive to international
finance and leasing in the field of aviation through the establish-
ment of the Shannon Free Airport Zone and subsequently the
International Financial Services Centre in Dublin. Many of the
fiscal and other incentives associated with those initiatives are

T O F G A LV E S T O N now embedded in Irish domestic law and facilitate cross-border

financing and leasing on a general scale and particularly in assets
R
PO like aircraft and ships.
JANUARY/FEBRUARY 2011

Duffy explained that she was a member of a committee advis-

ing the IMDO following its establishment in 1999 and acknowl-
edged that efforts to attract shipping companies have moved at
a slower pace than aviation. But she is quick to point out that
“There is no reason why the Irish finance and leasing incentives
• 30 Minutes to the that have been so successful with aviation could not work for
Open Sea shipping.”

To Tax or Not to Tax

42 • 17 Million Potential Jim Healy, Director of the accounting firm KPMG’s transporta-
Passenger Market tion practice in Dublin, has also worked closely with the IMDO.
He explained the tax advantages of doing business in Ireland
and the two main choices available to companies considering
• $43 Million Infrastructure moving there: the normal tax regime, where a 12.5 percent tax
Investment rate applies, or the tonnage tax regime, where taxes are assessed
based on a vessel’s net tonnage and irrespective of profitability.
THE MARITIME EXECUTIVE

For regular taxpayers, the ability to depreciate maritime assets

over eight years for tax purposes and a capital gains tax rate of 25
percent enable shipping companies to build up cash.
The Irish tonnage tax, which is sanctioned by the E.U., offers a
permanent saving, unlike the tax “deferral” possible with acceler-
ated depreciation. Companies electing this method of taxation are
not subject to capital gains. It’s very competitive compared with
other, more restrictive tonnage tax regimes for reasons that in-
9
70

clude no connection to national cadet training programs and the

TH

O
BO ability to lease vessels in under various financial arrangements.
Importantly, the vessels need not be flagged in Ireland, and the
tonnage tax can also apply to ship managers without a require-
ment that they own the vessels. Beyond seagoing boxships, tank-
ers and drybulkers, other segments that qualify include ferries,
EVERYTHING FOR HOMEPORT passenger ships, and certain vessels in the towing, salvage and
offshore support areas. The numbers themselves, with annual tax
CRUISE CALLS AND MORE! bills based on the vessel’s net register tonnage, sell the advantag-
es: Healy cited $10,000/ year as the tax liability for a Suezmax
tanker and about half that for a Panamax bulk carrier.
IMDO’s Murphy pointed out that the interaction of a 12.5
percent corporate tax rate, which he said was “the lowest in
the E.U.,” with the Irish tonnage tax offered potent benefits for
shipowning companies. “Under some circumstances,” he stated,
Ph 409.766.6113 • Fax 409.766.6107 “shipowners are effectively paying under two percent in taxes.”
website: www.portofgalveston.com He emphasized that the 12.5 percent rate will remain despite
recent widely reported problems in the Irish financial markets.

The Nexus Between Aviation

and Shipping
KPMG’s Healy is adamant that Ireland’s network of international

MarEx_42.indd 42 1/26/11 11:39 AM

 PORTS & OCEANOGRAPHY • NEVA EXHIBITION & CONFEREN
ING, OFFSHORE ENERGY, PORTS & OCEANOGRAPHY • NEVA
FOR SHIPPING, SHIPBUILDING, OFFSHORE ENERGY, PORTS
HIBITION & CONFERENCE FOR SHIPPING, Emerald Isle
SHIPBUILDING, OF
OCEANOGRAPHY • NEVA EXHIBITION & CONFERENCE FOR S
SHORE ENERGY, PORTS & OCEANOGRAPHY • NEVA EXHIBIT
tax treaties, which has been so attractive to aircraft owners, would
be equally applicable for vessel-owning companies. Healy PING,
works SHIPBUILDING, OFFSHORE ENERGY, PORTS & OCEANO
& CONFERENCE FOR SHIPPING, SHIPBUILDING, OFFSHORE E
closely with financiers, lawyers, and vessel owners on structuring
deals and says there is no withholding required on lease payments
out of Ireland, or on rents coming in from a charterer based in
RAPHY • NEVA EXHIBITION & CONFERENCE FOR SHIPPING, S
most of the jurisdictions which have signed a reciprocal ENERGY,tax treaty PORTS Confirm
& OCEANOGRAPHYyour position • NEVA in EXHIBITION & C
with Ireland (more than 50 countries). Healy noted, “The favor-
the Russian
SHIPBUILDING, OFFSHORE
able tax treatment on aircraft leases works the same way for ves- marketPORTS
ENERGY, at... & OCEANOGRAP
sels.” Building on the example of the Irish lessor, Healy FERENCE
described FOR SHIPPING, SHIPBUILDING, OFFSHORE ENERG

11
the attractiveness to providers of both debt and equity: BecauseNEVA EXHIBITION & CONFERENCE FOR SHIPPING, SHIPBUIL

2 0
there is usually no withholding tax on either interest payments
or dividends coming out of Ireland when the recipient isPORTS situated & OCEANOGRAPHY • NEVA EXHIBITION & CONFEREN

VA

JANUARY/FEBRUARY 2011
11

E
within the tax treaty network, financiers have the flexibility ING,to OFFSHORE ENERGY, PORTS & OCEANOGRAPHY r 20 • NEVA
mbE

N
P t E
fund their operations in the most suitable manner. - 2 3 SE
Another ongoing but less well-known success story from FOR the SHIPPING, SHIPBUILDING, uSSi
A, OFFSHORE
2 0 ENERGY, PORTS
u r g, r
aircraft sector may also be applicable to shipping. A&L Good- HIBITION & CONFERENCE EtE
rSb FOR SHIPPING, SHIPBUILDING, OF
body’s Catherine Duffy is Chair of the Legal Advisory Panel to St. P
the Aviation Working Group to the 2001 “Cape Town Conven-
OCEANOGRAPHY • NEVA EXHIBITION & CONFERENCE FOR S
tion.” The Convention (officially the United Nations Convention SHORE ENERGY, PORTS & OCEANOGRAPHY • NEVA EXHIBIT
on International Interests in Mobile Equipment) provides for an
PING, SHIPBUILDING, OFFSHORE ENERGY, PORTS & OCEANO
international and uniform set of rules and remedies applicable to
& CONFERENCE FOR SHIPPING, SHIPBUILDING, OFFSHORE 43 E
interests in mobile assets listed on the international registry es-
tablished under the Convention. The Convention is to beRAPHY read in • NEVA EXHIBITION & CONFERENCE FOR SHIPPING, S
conjunction with protocols specific to particular types of mobile
equipment. The aircraft protocol was the first to be put in ENERGY,
place PORTS & OCEANOGRAPHY • NEVA EXHIBITION & C
and has been up and running since 2006. The protocol SHIPBUILDING,
in respect OFFSHORE ENERGY, PORTS & OCEANOGRAP
of rolling stock followed with space on its way.
There is provision for a protocol on shipping too, butFERENCEit has FOR SHIPPING, SHIPBUILDING, OFFSHORE ENERG

THE MARITIME EXECUTIVE

been slow to get off the ground. The Convention does not NEVAover- EXHIBITION & CONFERENCE FOR SHIPPING, SHIPBUIL
ride the parties’ ability to contractually agree to the terms of their TWENTY YEARS DEVELOPMENT
financing; but it does, through a series of rights and remedies
PORTS & OCEANOGRAPHY
OF THE RUSSIAN • NEVACOMMERCIAL EXHIBITION & CONFEREN
MARITIME INDUSTRIES
ING, OFFSHORE ENERGY, PORTS & OCEANOGRAPHY • NEVA
applicable to an interest registered against the aircraft, introduce
an element of certainty, making financing more accessible and
FOR SHIPPING, SHIPBUILDING, OFFSHORE ENERGY, PORTS
less costly. Describing the successful uptake in the aviation sector,
Duffy pointed out that “A uniform code of rights and remedies HIBITION & CONFERENCE FOR SHIPPING, SHIPBUILDING, OF
CONTACT: that apply does not take away from the provisions that are already
OCEANOGRAPHY • NEVA EXHIBITION & CONFERENCE FOR S
there.IP7It7ZY,
ions, P.O. Box 68, Ipswich, enhances
UK the ability to do business.” In the context of
Ireland,
4 1449 741628 • E-mail: she said, “For a Contracting State where it has in
info@dolphin-exhibitions.co.uk SHORE
the past ENERGY, PORTS & OCEANOGRAPHY • NEVA EXHIBIT
www.transtec-neva.com
been difficult or expensive to raise finance, the Convention PING,would SHIPBUILDING, OFFSHORE ENERGY, PORTS & OCEANO
apply
nternational Organisers: and make it easier and more cost-effective to raise money.
xhibition ManagementThe Ltd.,same
Monaco
& CONFERENCE FOR SHIPPING, SHIPBUILDING, OFFSHORE E
benefits could apply to the shipping sector if they were
to put together a protocol.” RAPHY • NEVATHE 11TH NEVA
EXHIBITION EXHIBITIONFOR SHIPPING, S
& CONFERENCE
ENERGY, PORTS &&OCEANOGRAPHYCONFERENCE FOR • NEVA EXHIBITION & C
Putting It All Together
All of these factors have contributed to Ireland’s ability to SHIPBUILDING,
attract OFFSHORE SHIPBUILDING,
SHIPPING, ENERGY, PORTS & OCEANOGRAP
new business. A 2006 transaction in which BNP ParibasFERENCE financed FOR SHIPPING, SHIPBUILDING,
12 vessels for the liner giant CMA-CGM included an Irish bor- OFFSHORE ENERGY, OFFSHORE ENERG
rower in the capital markets and a dozen special-purpose NEVA
Irish EXHIBITIONPORTS & CONFERENCE
& OCEANOGRAPHY FOR SHIPPING, SHIPBUIL
shipowning entities, which then put the vessels on bareboat PORTSchar- & OCEANOGRAPHY • NEVA EXHIBITION & CONFEREN
ters to CMA-CGM. In Tony Gurnee’s deal, individual special-
purpose Irish LLCs chartered the tankers to Ardmore, which ING,then OFFSHORE ENERGY, PORTS & OCEANOGRAPHY • NEVA
Contact Dolphin Exhibitions:
leased them to users such as Norden. FOR SHIPPING,Tel: SHIPBUILDING,
+44 1449 741801 • Fax: OFFSHORE
+44 1449 741628 ENERGY, PORTS
With the global reach of bluewater vessel operators and E-mail: info@dolphin-exhibitions.co.uk
ship’s service providers, who operate amid increasing regulatory
HIBITION & CONFERENCE FOR SHIPPING, SHIPBUILDING, OF
Web: www.transtec-neva.com
OCEANOGRAPHY •
scrutiny, Ireland has proven to be an excellent base of operations.
Clearly, the smart money agrees. MarEx

Barry Parker writes frequently about maritime matters.

MarEx_42.indd 43 1/26/11 11:39 AM

 LifesavingEquipment
JANUARY/FEBRUARY 2011

44

Advances in Survitec's Seasava liferaft.

Lifesaving Equipment By MarEx Staff

When it comes to It all began with the Titanic. The sinking of the world’s
greatest ship on April 10, 1912, taking with her 1,517 victims – many

safety at sea, these

of them rich and famous – galvanized the media and focused worldwide
attention on the issue of safety. The fact that the luxury liner was carrying
just 20 lifeboats when she went down, enough for roughly half of her
companies have 2,227 passengers, only added to the uproar, stirring outrage and spurring
demands for reform.

what it takes. Investigations followed on both sides of the Atlantic. They found
that many safety rules were simply out of date, such as the require-
ment that the number of lifeboats on board be based on a ship’s gross
tonnage rather than on the number of passengers it could carry. By this
antiquated measure the Titanic complied with the lifeboat requirement
which, when tragedy struck, proved woefully inadequate. Investigators
also learned that the ship had sufficient lifeboat space for all first-class
passengers but not for the lower classes. In fact, most third-class pas-
sengers had no idea where the lifeboats were, much less any way of get-
ting up to the higher decks where they were stowed. As a result of these
and other findings, numerous safety improvements for ocean-going
vessels were implemented, including updated lifeboat requirements, ac-
cess throughout the ship for the movement of passengers, improved hull
and bulkhead designs, new life-vest designs, the holding of safety drills,
and better passenger notification in the event of emergency.
Today, safety has become big business, and there is no shortage of
companies offering the latest and greatest in lifesaving equipment. Here
are a few of them.

MarEx_42.indd 44 1/26/11 11:39 AM

 LifesavingEquipment

Fassmer – “More Than

One Step Ahead”
Germany’s Fassmer is a 160-year-old
maker of everything from freefall lifeboats
to housing for wind turbines. Its U.S.
subsidiary, Fassmer Service America, is
based in Miami, conveniently close to its
biggest customers, and is run by General
Manager Tim Klaybor. Klaybor says the
SOLAS requirements for one- and five-
year inspections of lifeboat equipment
and especially the all-important onload

JANUARY/FEBRUARY 2011
release mechanisms are big business
for his company. The U.S. subsidiary
has established a Safety Management
System to ensure that all work is done in
accord with the highest standards and by
certified personnel who are authorized to
issue and sign the mandatory Certificate
of Serviceability. “We offer our customers
peace of mind,” said Klaybor, “and more
45
importantly, we save lives.”
Added Hans-Christian Mornhinweg,
Managing Director of Fassmer Services
Germany, who is responsible for world-
wide after-sales service, “We like to stay
more than one step ahead. For instance,
VIKING's Quick Donning Suit.
you may have read that the IMO has

THE MARITIME EXECUTIVE

pushed back the effective date for the
implementation of new requirements
for lifeboat onload release mechanisms.
Well, our stainless steel hooks are already
fully compliant with the newly drafted
regulations, so our customers don’t have
to worry.”
The fifth-generation, family-run
company outfitted the Norwegian Epic
with 22 state-of-the-art lifeboats, each
with a capacity of 292 passengers. These
Space Age vessels are like nothing you’ve
ever seen. On the Epic the loading and
embarkation points for the lifeboats are
the same, an unusual feature that makes
it easier (and quicker) for passengers to
board in time of emergency. In addition
to lifeboats, Fassmer makes tenders and
fast rescue boats, special ops vessels for
the military, offshore survey vessels, and
deck equipment like gangways, boarding
systems, davits of all kinds and winches.
Viking – Global
Safety Solutions
Denmark-based Viking bills itself as “a
market leader in marine and fire safety
equipment,” and its five manufacturing
facilities churn out marine evacuation
systems, offshore evacuation and crew
transfer systems, liferafts, boats, lifesav-
ing appliances, and protective clothing
such as immersion suits, work suits, fire
suits and lifejackets. It’s an especially big
supplier to the military, where its inflat-
ables, chute and slide-based evacuations
systems, and immersion suits are in high
demand both on the water and in the air.
The company recently received final ap-
proval from the U.S. Naval Air Force to
supply up to 4,500 of its PS4049 Quick
Donning Suits. Designed specifically
for use by U.S. military flight crews, the
innovative suits will be employed on the
P-3, C-130, E-6 and the new P-8. "We've
been working closely with NAVAIR to
deliver a suit that greatly improves the
safety of naval airmen," stated Kurt
Bertsch, Sales Director for the Americas.
Bertsch is based in Miami, where Viking
Life-Saving Equipment (America) is
headquartered.
Liferafts are another big item. They
come in all shapes and sizes, including
self-righting, and can be easily entered
from the water. Viking’s six-person
RescYou liferaft was instrumental recent-
ly in the rescue of a couple off the coast
of New Zealand who had just completed
a spectacular 10-1/2 month adventure

MarEx_42.indd 45 1/26/11 11:39 AM

 LifesavingEquipment
JANUARY/FEBRUARY 2011
Survitec's Marin Ark marine evacuation system.
cruising from Port Townsend, Washington across the Pacific
Ocean. The couple’s Golden Wave 42 Kattywompus unexpectedly
hit a reef, quickly started taking on water and capsized. With a
little help from an EPIRB (“Emergency Position-Indicating Radio
Beacon”) and, of course, their Viking raft, the couple was located
and quickly rescued.
Viking’s innovative Shipowner Agreement service contracts
46
have been a big hit with customers. They offer fixed-price services
covering the life of the contract for liferafts, immersion suits,
lifejackets and other required safety equipment at any of the
company’s 270 servicing stations around the world. The latest to
sign up was Stolt Tankers, a leader in the chemical tanker trade.
The Stolt agreement provided for a liferaft exchange program
to satisfy the carrier’s requirements for years to come. “The
THE MARITIME EXECUTIVE
transparency offered by fixed price contracts and the convenience
of one-stop shopping for all of a customer’s safety needs are key
selling points for the Shipowner Agreement,” noted Bertsch.
Survitec – Where Survival
and Technology Meet
Belfast-based Survitec has been around for more than 150 years.
During that time, it has laid claim to a number of “firsts”: the
first life preserver, the “Mae West,” in 1940; the first Submarine
Escape Suit in 1952, and the first Marine Evacuation System in
1979. The company is built around a collection of market-leading
brands like RFD, DSB and Beaufort. It serves a broad range of
customers including the UK Ministry of Defence, the U.S. Navy,
Shell, Lockheed Martin, Carnival Cruises, Royal Caribbean and
Princess Cruises.
Perhaps its most innovative products are Submarine Escape
and Survival Systems and Marine Evacuation Systems (MES).
The company pioneered the development of submarine escape
technology in the 1950s, and its latest generation RFD SEIE
(“Submarine Escape Immersion Equipment”) MK 11 – an inge-
nious whole body suit and one-man liferaft – enables free ascent
from a stricken submarine without hypothermia and provides
extensive protection for the submariner upon reaching the sur-
face. In the last 15 years more than 30,000 SEIE suits have been
supplied to over 20 navies around the world. The MES, intro-
duced in 1979, involves sliding down a chute to an enclosed raft
and is a viable alternative to lifeboats. The best-known MES, the
Marin Ark, was introduced about ten years ago and encompasses
two fully enclosed chutes and four fully-reversible liferafts, each
capable of carrying more than 100 passengers. The entire system
MarEx_42.indd 46
Fassmer freefall lifeboats in triple installation.
can be stored in a single stowage unit.
Since its acquisition by private equity firm Warburg Pincus
last year, Survitec has been in a growth mode. Its latest purchase
was U.S.-based Revere Supply, a leading distributor of inflatable
liferafts, lifejackets and immersion suits. Revere’s product mix
complements Survitec’s nicely and will enable Survitec to expand
its U.S. presence.
ACR Electronics – The
Science of Survival
The undisputed leader in the manufacture of EPIRBs (“Emergen-
cy Position-Indicating Radio Beacons”) and PLBs (“Personal Lo-
cator Beacons”) is Fort Lauderdale-based ACR Electronics. The
company notes facetiously that it has been “Putting Vultures out
of Business Since 1956” and that its vast selection of EPIRBs and
PLBs represent “Your Best Last Chance.” Its products have been
credited with helping to save thousands of lives over the years,
including the crew of Apollo 13 in 1970. The company is, in fact,
a major supplier to the military. Its survival beacons, hand-held
VHF radios and Firefly emergency pocket strobes are standard
gear for combat troops. For the marine market, in addition to
EPIRBs and PLBs, ACR makes emergency VHF radios, man-
overboard lights, strobe lights, and AIS (“Automatic Identification
System”) and SAR (“Search and Rescue”) transponders.
ACR’s products rely on GPS technology, which “takes the
search out of search and rescue.” A worldwide network of
polar-orbiting and geostationary satellites, together with Russia’s
Cospas spacecraft, makes up the international Search and Rescue
Satellite-Aided Tracking System known as Cospas-Sarsat, which
has been credited with more than 28,000 rescues and relies on
the 406 MHz frequency. The notification process – from the time
the first signal is sent to when rescuers are dispatched – can take
as little as three minutes with GPS embedded in the transmission.
ACR is part of $3 billion Cobham plc, whose stock is traded
on the London Stock Exchange and whose best-known product
is the Aegis surveillance and fire-control radar system used on the
newbuild Arleigh Burke Class of U.S. guided missile destroyers.
AMVER – Saving Lives at Sea Since 1958
No article on lifesaving equipment and search-and-rescue tech-
nology would be complete without mention of AMVER, whose
initials originally stood for “Atlantic Merchant Vessel Emergency
Reporting” system but today mean “Automated Mutual Assis-
tance Vessel Rescue” system. AMVER is a unique, computer-
1/26/11 11:39 AM
MarEx_42.indd 47 1/27/11 9:08 AM
 LifesavingEquipment
based, voluntary global ship-reporting system used worldwide by
search and rescue authorities to arrange for assistance to vessels
in distress. More than 22,000 vessels of all sizes and shapes, from
140 nations, are enrolled in AMVER, which is based at the U.S.
Coast Guard’s Martinsburg, West Virginia facility. Prior to depar-
ture, these vessels file a voyage plan with the AMVER computer
center and then report in every 48 hours until arrival at their
destination. In an emergency, the AMVER coordination center
can identify vessels in the vicinity of the stricken vessel, which are
then dispatched to the scene.
AMVER began as an initiative of the U.S. Coast Guard, and it
still remains under the Coast Guard’s umbrella. Its basic premise
JANUARY/FEBRUARY 2011
is to enable mariners to help mariners, regardless of national-
ity, and it couldn’t really begin until the advent of the Computer
Age. In fact, AMVER’s history closely parallels the evolution of
computer technology and, up until AMVER’s founding in 1958,
there was no global emergency reporting system for the world’s
commercial shipping fleet or its burgeoning airline industry.
AMVER’s first computer, an IBM RAMAC (“Random Access
Method Accounting Control”), relied on “dead reckoning”
to determine the location of vessels. A Control Data main-
48
frame followed in 1971 and from there the progression went
roughly like this: vacuum tubes→punch cards→printed circuit
board→microchip. This past September AMVER announced its
most ambitious update yet – a new system using state-of-the-art
Blade server technology to replace its aging Hewlett Packard
THE MARITIME EXECUTIVE
MarEx_42.indd 48
Hook-testing on Fassmer onload release mechanism.
9000 series. “With the number of enrolled vessels doubling in
the last decade and a tripling in the number of daily messages
sent to AMVER each day, it is imperative to keep our system in
line with technological advances,” stated Ben Strong, AMVER’s
Maritime Relations Officer.
“We’ve come a long way from the Titanic, when ships passing
within sight of the stricken vessel were unaware it had hit an ice-
berg and was sinking,” added Strong. “They apparently mistook
distress flares for celebratory fireworks. Today we have satellite
technology and GPS and EPIRBs and AMVER and, while we
cannot prevent accidents at sea, we can maximize the efficacy of
rescue operations.” MarEx
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 ECDIS Revolution
JANUARY/FEBRUARY 2011

50

The ECDIS Revolution

THE MARITIME EXECUTIVE

By Art Garcia
Clearly waiting on the horizon is the deadline for the IMO’s
directive calling for mandatory carriage of Electronic Chart Display and
Information Systems (ECDIS) by deepwater vessels. But there’s been no “full-
ahead” response by some shipping companies to meet the 2012 requirement to
switch from paper charts to electronic navigation. Besides not making a move to
install the new computerized system, some lines and individual owners haven’t
yet addressed training the bridge crews that eventually will use ECDIS.
Two years (well, almost) might seem adequate for carriers to prepare for a
new age of all-digital bridges, and it may be for those who begin making their
conversion moves soon; but as Jens Schröder-Fürstenberg points out, “There’s a
big gap between the IMO requirement and the ECDIS knowledge of the people
who have to operate the ship.” He’s head of the National Applications Branch
of the German Hydrographic Agency in Rostock, a port city on Germany’s
Baltic Coast, and he should know. Schröder-Fürstenberg also sees “problems”
ahead in the tardiness of shipping lines in scheduling the training needed by their
bridge personnel before the ECDIS 2012 deadline for vessels of more than 500
dwt. “It’s clear the shipping industry must

Like it or not, the age of paper

fulfill the carriage requirement and there’s no
doubt it will,” he said. “The problem is not

charts for navigation is quickly

just having the systems on board in time but
rather ensuring that the people who have to

coming to a close.
operate them are adequately trained. That’s
the main issue – training.”

MarEx_42.indd 50 1/26/11 11:40 AM

 ECDIS Revolution

Old School Versus New

 Some of the stalling reflects a resistance to go
digital on the part of older captains and bridge
crews. “They are very, very reluctant to give up
their paper charts,” said Paul Welling, Sales Man-
ager for Marine Technology at Transas USA in
Fort Lauderdale, FL. Added George Toma, Tran-
sas’ President and General Manager in Bothwell,
WA, near Seattle, “There’s a natural tendency to
fight any sort of change where you already have a
navigation officer with a high comfort level using
paper charts.” 

JANUARY/FEBRUARY 2011
“You see two generations,” agreed Mark
Theissen, Vice President of Telemar Yachting in
Fort Lauderdale. “There are the old school guys
who are used to their way of navigation and then
the new generation that’s more comfortable with
computer systems. It’s sort of in their genes. The
new officers coming on board are more accept-
ing of ECDIS, whereas the old school captains
tend to lean more to running the boat like they’ve been running fitted with ECDIS. “What they’re trying to make sure of, though,
51
it for years.” is do they know how to use it properly,” said Mariner. “So while
 At the Maritime Institute of Technology and Graduate Studies the number one concern is getting ECDIS on the ships that need
(MITAGS) near Baltimore, an average of 50 to 70 students week- it, the second is making sure their people are trained to use it.”
ly attend a one-week ECDIS course, said Bob Becker, Business Transas’ Toma has seen a more aggressive reaction to the
Development Manager. Each class has about 16 students. “We’ve ECDIS deadline. “We’ve found the response to be very positive
seen an uptick in the number of people seeking training,” added
John Brennan, head instructor, who has been teaching ECDIS

THE MARITIME EXECUTIVE

at MITAGS since 2006. Students primarily are Second Mates
looking to earn their Chief Mate’s license, and most are respon-
sive to making the switch to digital navigation. “They don’t have
any problem with it,” said Brennan. “Being younger, they’re more
comfortable with electronics than we were. I try to emphasize
ECDIS is a great tool, probably one of the best tools ever put on Cost-effective access to high-speed data services.
the bridge of a ship as far as situational awareness is concerned. n Simultaneous voice and IP data up to 432kps
Every mate who’s sailing should be looking to get this training. n Global coverage
It’s mandated now; it’s coming and to be sailing on a ship with n Unrivalled reliability
ECDIS and not having had ECDIS training, you’re worse off n Easy IP network integration
than you were before because now you’re putting your faith in a n Highly cost-effective
n Completely secure
piece of equipment you really don’t know enough about. That can
get you into more trouble than if you didn’t have it.”

A Wealth of Providers
Meanwhile, “In terms of shipowners jumping in with their money
and saying, ‘Yes, let’s pay cash for ECDIS,’ I’d say the response
has not been very good,” stated Steve Mariner, Business Devel-
opment Director for London-based Kelvin Hughes, maker of a
“turnkey” ECDIS solution including hardware and software. “A
lot of companies are deciding what they want to do and putting Delta Wave is a mobile satellite services provider.
off the actual decision until nearer the 2012 date. I think they’ll be Products and Services include:
cutting it pretty close, but it doesn’t really surprise me,” he added. Inmarsat®, Iridium®, Asset Tracking,
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MarEx_42.indd 51 1/26/11 11:40 AM

 ECDIS Revolution
JANUARY/FEBRUARY 2011

Transas Navi-Sailor Kelvin Hughes

George Toma,
4000 ECDIS console. ECDIS console.
President of Transas USA Inc.

overall,” he noted. “Many shipowners, from small tug operators
and owners of large vessels to the U.S. Military Sea Lift Com-
mand, have jumped the gun on the mandated regulations and
have already chosen to place ECDIS in their fleet, so by the time
the deadline does hit, they’re already prepared. Typically, unless
52
a product’s been mandated for safety purposes, you don’t see it
going on board a vessel until it has to. But with ECDIS I’ve seen
something different. I’ve seen a more proactive position with
respect to not only placing ECDIS on board but in providing the
training to use it.”
THE MARITIME EXECUTIVE
Transas USA, the $10 million company that’s a division of
Transas Marine International of Gothenburg, Sweden, manufac-
tures an IMO-approved ECDIS system called the MFD (Mul-
tifunctional Display) 4000 that includes core ECDIS software.
It has the ability to integrate an entire bridge system with the
company’s INS (Integrated Navigation System). The division
provides training tools that include an ECDIS classroom simula-
tor that provides a week-long IMO model course for ship’s of-
ficers for upgrading and endorsing their licenses with the ECDIS
certificate. It also services its equipment. “If somebody wants to

PLAN NOW TO ATTEND

The Global Perspective: Norwegian offshore has attracted its share of global investors for good reason
as the nation’s players have risen from modest beginnings to become world leaders in the sector.
Many Norwegians point to innovation as the key, while others say speculative ordering has been the largest
factor behind Norway’s success. But what do the international players think? Is Norwegian know-how
providing the gateway to deepwater riches? But is Norway exporting its offshore advantage to tomorrow’s
sector leaders? While the flipside of innovation is huge prices on assets, the flipside of speculation is
over-ordering – so do the benefits outweigh the damage? A high-level panel of well-known international
business leaders, all with various ties to the Norwegian offshore arena, will bring their global perspectives to
the sector. A series of short introductions will be followed by an open discussion.

Offshore Marine Broker’s panel discussion

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• Innovation and the technology drain
• Operating in ice – could Deepwater Horizon play out in the Arctic?
Offshore Marine as an Investment
• Exploring the right business model for PSV operators
• Achieving the right fleet and balance sheet
• Shareholder shudders – coining capital for white elephants?
• Post 2008 recalculation of risk, is there any financing for smaller, private investments?
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Email: info@nhstevents.com
Website: www.nhstevents.com

Organised by

Photo: Bourbon

MarEx_42.indd 52 1/26/11 11:40 AM

 ECDIS Revolution

put ECDIS on a ship, we’re

a one-stop shop,” noted Paul
Welling. “What we see a lot of
is, say, a ship needs new radars
and it’s never had ECDIS.
Then, of course, it makes a lot
of sense to install ECDIS at
the same time because if you’re
going to rip the bridge apart
anyway, you might as well do
the whole thing.”
Welling said many carri-

JANUARY/FEBRUARY 2011
ers are ready to adopt ECDIS
Byron Stilwell, because they see both safety
President of Telemar USA. and financial advantages: “You
don’t have to carry paper
charts anymore. You don’t have to have this laborious process of
updating the charts and publications because it all goes into elec-
tronics. You download the updates and put them into your system
and it takes seconds versus hours and hours of manually updating
paper charts. It’s an enormous savings.”
53
Order backlog is strong for Transas, which has more than
5,000 vessels equipped with its ECDIS systems. “We’re do-
ing very well,” said Toma. “I would say we have more than 30
percent of the ECDIS market worldwide.” Cost of a Transas
paperless modular or console system and a redundant backup
is about $40,000. The IMO requirement is that, with a single
ECDIS, a qualifying vessel can’t go paperless. It must have a fully

THE MARITIME EXECUTIVE

redundant, dual ECDIS system and the ability to download and
upgrade charts.
Byron Stilwell, President of Telemar USA in Pasadena, TX,
also sees the maritime industry’s response to the ECDIS edict as
being very positive: “We have a number of clients that are already
making plans to select OEMs (original equipment manufactur-
ers) right now.” His company’s clients include ocean-going
transporters, among them tankers, bulkers, container vessels and
passenger ships. “We have some clients who are hesitating, but
the vast majority of our clientele sees the value and advantages
of ECDIS,” he reported. “A number of them have been single
ECDIS users and are ready to go paperless. Most of our clients
are fairly rapidly moving toward a dual paperless system as fast
as they can. Other than some companies that are continuing to
struggle from financial issues, we’re not seeing a lot of hesitation
on this particular regulation.”
In early 2011, Telemar’s orders already were up about 20 per-
cent from year-earlier sales of $10 to $12 million. Stilwell projects
volume of $13 million to $14 million this year. The company
doesn’t get involved in training, relying instead on vendors. One
of Telemar’s key vendors is Transas, which he describes as having
“a phenomenal training ability, right here in the U.S.”

Waiting for the Right Price

Telemar Yachting’s Theissen says yacht owners who are “very
much forward-thinking and in tune with safety are jumping on
the ECDIS requirement early and starting to outfit their large ves-
sels. Then there’s the other batch that waits until the last moment,
as with many regulatory requirements. We saw the same thing
happen with the GMDSS (Global Maritime Distress Safety Sys-

MarEx_42.indd 53 1/26/11 11:40 AM

 ECDIS Revolution

tem) and AIS (Automated Information

System).” The main reason for delaying
installation is that some shipowners
see more OEM players coming into
the market and prices moving down
substantially. “They kind of wait it out
and let the manufacturers fight it out.
They shop the price, let it drop as low
as possible, then you see them come
aboard,” Theissen said. “We’ve already
seen prices come down a reasonable
amount.”
JANUARY/FEBRUARY 2011

Telemar doesn’t manufacture ECDIS

equipment. It’s a factory-trained dealer
for Japanese company Furuno, JRC
(Japanese Radio Corporation), Transas, ECDIS bridge display system from Kelvin Hughes.
Maris and Kelvin Hughes. It’s authorized to sell the equipment
and trained to install it.
Bluewater Books & Charts in Fort Lauderdale does marine
navigation outfitting for boats from 35 to 350 feet in length.
A major component of its business is the mega or superyacht
54
category. “ECDIS speaks to megayachts,” said Justin Mann, Vice
President. “Clients of ours are either building new vessels and
considering going with the ECDIS environment or they’re retro-
fitting existing navigation systems with ECDIS.” The company
is a retail seller and distributor of ENCs (Electronic Navigation
THE MARITIME EXECUTIVE
Charts) running on ECDIS systems. It deals mainly with captains
and chief officers rather than yacht owners. “On the newbuild
side, we’re starting to see, with hulls that are launching, a decent
acceptance of ECDIS, but it’s been slow up to this point,” Mann
said. “It hasn’t been a watershed moment where all of a sudden
every boat that’s coming out has decided to go with ECDIS.”
Like the old saying goes, you can pay me now or pay me later.
MarEx
Art Garcia covers technology for The Maritime Executive.

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MarEx_42.indd 55
EPD-8X10.875-Ad.indd 1 1/26/11 11:46:32
9/25/09 11:40 AMAM
 BWTS:
JANUARY/FEBRUARY 2011
BWTS:
56
It Doesn’t Have to Be a Four-Letter Word
THE MARITIME EXECUTIVE
The global maritime industry is well aware
that the proverbial clock is ticking for compliance with the Inter-
national Maritime Organization’s (IMO) Ballast Water Manage-
ment Convention. For companies operating in U.S. waters, U.S.
Coast Guard (USCG) regulations will basically mirror the IMO
Convention, but compliance with California, Wisconsin and New
York’s more stringent requirements will be difficult at best. Like
it or not, it’s time for vessel operators to get their houses in order
and begin contemplating the right ballast water treatment system
(BWTS) for their fleets.
The IMO has been addressing the issue of invasive species
since the late 1970s as have the U.S. and many other maritime
nations. Both the U.S. and IMO began legislatively addressing
the issue in 1998 and set forth voluntary Ballast Water Exchange
(BWE) programs. In 2004, both the IMO and U.S. mandated
Marcon International, Inc.
Vessels and Barges for Sale or Charter Worldwide
www.marcon.com
Tel: 360-678-8880 • e-mail: info@marcon.com • Fax: 360-678-8890
MarEx_42.indd 56
By Tony Munoz
BWE, and the IMO adopted its Ballast Water Management
Convention, which is expected to be ratified by the required 30
member states this year. In the U.S., issuance by the USCG of
the final rule for BWTS has been pushed back till April. Addition-
ally, states like California, New York and Wisconsin are threaten-
ing to implement standards 100 to 1,000 times more stringent
than the IMO or U.S. standards.
The Mega-Dollar Problem
The global invasive species problem is estimated to cost about
$1.5 trillion worldwide annually in terms of control, clean-up,
economic losses and environmental damage. The IMO estimates
losses to the U.S. economy from invasive species to be about
$138 billion annually. Since the late 1800s the Great Lakes
bordering Canada and the U.S. have had over 180 nonindig-
enous species introduced into their waters. In the U.S., at least
21 billion gallons of ballast water are discharged annually. San
Francisco Bay is considered by scientists to be one of the most
invaded ecosystems in the world and has become a virtual labora-
tory for invasive species. But invasive species is a global issue, and
international shipping is the primary culprit. Every country with a
waterway is dealing with it, and governments are demanding that
ships become environmentally safe in their waters.
The cumulative investment required for some 50,000+ mari-
time vessels to install BWTS over the next decade is estimated to
be about $34.3 billion. No question lots of BWTS manufactur-
ers are trying to sell their wares, but earning approvals from the
IMO and USCG has not been an easy task. In fact, it has taken
decades of scientific development to meet international standards.
1/26/11 11:40 AM
 BWTS
Hitching a Ride:
Since ancient man began exploring the world around him by water, a species of some sort has caught a ride and be-
gun breaching the biogeographic barriers that had existed for millions of years. These invading creatures have altered
the evolutionary process by competitive exclusion, displacement, hybridization and predatory behavior, all of which
can and have led to the extinction of indigenous species. The invaders themselves have evolved and mutated and
changed the biological environment – with grave consequences.

Hyde Marine has been involved with BWTS since 1996 when one standard
it partnered with the University of Michigan to study potential In the U.S, the proposed federal
technologies. Hyde began testing equipment in 2000 when it regulations are expected to be more
installed a prototype on the Regal Princess. “Our company has stringent than the IMO’s. But states
been working with the USCG since 2000 and installed the Hyde like California, Wisconsin and New
Guardian system on both the Coral Princess and the Celebrity York are pushing for much higher

JANUARY/FEBRUARY 2011
Mercury,” said Tom Mackey, the company’s Founder. “We are standards, as permitted under the
working very hard to be the first to be granted equivalency by Clean Water Act. Whether the tech-
the Coast Guard. Essentially, when the Coast Guard completes nology exists to meet those standards
its ruling in April 2011, which is about the same time the IMO (it doesn’t), or will exist by the time
Kjetil Leine,
Convention is expected to be ratified, many of the IMO Type the standards are imposed, is any- Vice President of
Approved ballast water treatment system that also meet USCG body’s guess. Operations for Goltens.
standards will earn a Certificate of Equivalency. While there are
many different treatment systems, not all will earn certification.” BWT Science Becoming Mainstream
Developing a BWTS that meets the requirements of the IMO
57
Who’s On First? Convoluted Convention and can be scaled effectively to meet specific flow
Government Messages rates without undue complexity and space requirements is
To ensure effective implementation of its regulations, the IMO has among the greatest challenges for manufacturers. In the case of
set a roadmap for shipowners to follow. Regulation D-1, the Bal- a retrofit, the system must be designed for adaptability, and there
last Water Exchange Standard, requires all ships to achieve a 95 are many special considerations, particularly on ships where a
percent efficiency rate and maintain an approved “Ballast Water system must be installed in a hazardous area. In the case of a
and Sediments Management Plan.” Regulation D-2 sets forth newbuild, and for some retrofits with smaller flow rates, it may

THE MARITIME EXECUTIVE

performance standards and requires all ships to install ballast wa- be desirable to have the system skid-mounted at the factory and
ter treatment systems between 2014 and 2016. The performance delivered as a turnkey system.
standards limit discharges to fewer than 10 viable organisms of 50 Alfa Laval claims the first chemical-free BWTS approved by
microns or larger per cubic meter and fewer than 10 viable organ- the IMO. “Our company has sold 120 units, and there are 30
isms of 10 to 50 microns per milliliter. Systems that use an “active in operation today. In fact, it’s now in its second generation, the
substance” must be further approved and certified by the IMO PureBallast 2.0, which consumes less power,” says John Atanasio,
member state. Regarding implementation, ballast water exchange President and CEO of Alfa Laval US. “The PureBallast 2.0 Ex ver-
is permitted until certain dates based on the ship’s age and ballast sion is ideal for tankers and other vessels with potentially explosive
water capacity and, thereafter, it must have an approved onboard environments. It’s designed for Zone 1, group IIC and tempera-
ballast water treatment system installed and running. ture class T4. These reinforced AOT units are equipped with
Kjetil Leine, Vice President of Operations for Goltens, a global temperature and fluid-level protection, ventilated and pressure-
ship repair company, urges shipowners: “In order to meet the controlled lamp drive cabinets, and cabinet placement outside the
compliance schedules of both the IMO and USCG, it is vitally im- Ex zone. The unit
portant to plan ahead. While it is tempting to wait, shipowners do is protected from
not want to endanger their opera- explosion of gases
tions and should begin planning in ballast water by
now. We foresee a major shortage elimination of the
in the market from 2015 to 2017. ignition source and
Moreover, there are about twelve designed to stop
systems that have received IMO gas from entering
approval and another seven or so from surroundings
in the pipeline. For most vessels, and can withstand
suitable systems exist, but some an explosion from
vessels will require an extensive within without
makeover of the existing engine transmitting energy
room and equipment may have to the surrounds.”
to be relocated.” He adds that it’s Roger Stevens,
in everyone’s interest to have the Environmental
Ballast Water Convention ratified Business Stream
Alfa Laval's PureBallast 2.0 AOT. as soon as possible so that there is Manager at Wil-

MarEx_42.indd 57 1/26/11 11:40 AM

 BWTS

CARTAGENA, COLOMBIA ♦ 23-27 MAY 2011

JANUARY/FEBRUARY 2011

Hyde Guardian BWT system onboard the Celebrity Mercury.

maritimeweekamericas.com
helmsen Maritime Services, noted that his company is second to
none in terms of its global service network. “The performance of
the BWTS can impact a vessel’s operations, which will require
Cartagena, Colombia the ship to go 200 nautical miles offshore to do a ballast water
23 – 27 May 2011 exchange. This alone emphasizes the importance of having a
wide-reaching and reliable service and support network,” he
noted. Wilhelmsen’s Unitor BWTS received its Final and Type
58
Maritime Week Americas is coming Approvals in 2010, thereby demonstrating its ability to meet the
to Latin America, to Cartagena, the D-2 performance standards of the IMO Convention. Stevens
beautiful, historic colonial treasure added that “The USCG will announce its BWTS standards in
April. This will pave the way for the rollout of the USCG Type
on Colombia’s Caribbean coast!
approval program, but until then neither Unitor nor any other
Featuring: system can claim compliance.”
♦ Shipping & Marine Fuels Conference Hyde’s Tom
Mackey noted that
THE MARITIME EXECUTIVE

♦ Advanced Bunker Course

- Operations & Technical more than 80 IMO
Type Approved Hyde
♦ Managing Credit Risk Seminar
Guardian systems
♦ Book Launch: Commercial Issues In Bunkering had been delivered or
♦ Maritime Exhibition ordered with capaci-
♦ Optional Tours: ties ranging from 60 to
Field Trip to the Port of Cartagena 2500 m3/hr, includ-
♦ Spectacular Networking ing a ten-ship order
♦ and much more... for Suezmax crude
oil tankers with three
systems each. Earlier
Sponsors so far include
deliveries included the
Platinum Sponsor: British Navy’s Queen
Elizabeth Class aircraft
Gold Sponsors:
carriers. “Even though
Silver Sponsors: the BW Convention
was not ratified and Wilhelmsen's Type Approved Unitor BWTS.
technologies were immature, it was decided to fit these warships
CODIS

with BW systems,” he explained. “A selection process was initiated

COMBUSTIBLES Y LUBRICANTES

Bronze Sponsors:
and assessed by three groups – commercial, technical and support
Supported by: teams – who all conducted independent reviews. Two bids were
commercially and technically compliant and the best perceived
value was the Hyde Guardian.”
Media A major sticking point for manufacturers and scientists is the
Partners:
concept of “equivalency” as many think it should be replaced with
“comparability.” This was the intent of the original framers of the
For more information
regulations, who envisioned the use of mathematical modeling and/
Louise Tel: +44 1295 81 44 55 or calculations in scaling. The danger is that overly restrictive rules
McKee Email: events@petrospot.com can result in unwieldy systems that are ineffective and vulnerable
to performance issues. Even when the IMO Convention is ratified,

MarEx_42.indd 58 1/26/11 11:41 AM

MarEx_42.indd 59 1/26/11 11:41 AM
 BWTS

certain port states may introduce more demanding standards.

Newbuildings with keels laid during 2010 and later will need Type-
approved systems installed and operating when the ship is delivered.
Existing ships will need to comply by 2016, and many before that.
“The Wärtsilä BWT 500i is the first and only integrated BWTS
to have both treatment steps, filtration and UV irradiation per-
formed in the same housing,” offered Tom Nyman, General Man-
ager, Water Solutions, Environmental Services for Wärtsilä. “The Wärtsilä BWT 500i.

system is built for maximum efficacy while minimizing the required
installation space. Trojan Technologies is responsible for the design
of the system, which is based on its leading UV lamp technology
and water treatment experience. We are presently at the IMO ap-
JANUARY/FEBRUARY 2011
years of full-scale, real-life operations at sea. The 2.0 system has a
low lifecycle cost with few consumables and requires only minimal
maintenance while running on 40 percent less power.”

proval stage and expect full approval to be granted this year.”
“The quality control and validation procedures utilized in most
existing IMO certifications are unlikely to meet the U.S. require-
ments,” Nyman added. “We think equivalency with U.S. Coast
Guard standards will be a major issue for most existing systems
approved by IMO. As a result, we have chosen to conduct more
comprehensive testing of our systems by land-based and/or ship-
based methods, testing each model in our product suite to ensure
compliance with both IMO and U.S. Coast Guard standards.”
60
Alfa Laval’s Atanasio stated that “Our approach to BWT is
determined not only by legislation surrounding it but also by the
important demands of shipyards, vessel owners and ship operators.
Our next-generation PureBallast 2.0 incorporates the full spectrum
of installation and operational needs as well as lessons learned in
THE MARITIME EXECUTIVE
The Quest for Standardization
Throughout its 50-year history, the IMO has addressed major
global issues in order to standardize international regulations. Yet
despite its significant efforts in this regard, some member states
will have unilateral responses to regulations. The same is true
in the U.S. as individual states claim authority to regulate their
own waters under the Clean Water Act. The approval of a global
ballast water treatment standard is only the latest case in point.
But one thing’s for sure: If a vessel-operating company hasn’t
seriously addressed the cost and conformance of its BWT policies
and operations, the days of reckoning are upon you. MarEx
Tony Munoz is Publisher and Editor-in-Chief of The Maritime
Executive.

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MarEx_42.indd 60 1/26/11 11:41 AM

MarEx_42.indd 61 1/26/11 11:41 AM
 Environmental Directory

Alfa Laval Blank rome Maritime

Alfa Laval delivers ballast water treatment, fuel and lube oil
separation, tank cleaning, bilge and oily waste water, heat transfer,
desalination and oil filtering solutions dedicated to promoting a sus-
tainable environment. Our services are available 24 hours a day,
seven days a week to serve you best.
Blank Rome Maritime regularly advises vessel owners and operators,
managers, charterers, and shippers on complex national and interna-
tional environmental requirements that govern all transportation.  Our
attorneys have been involved in many of the most significant pollution
incidents of the past century, including the Amoco Cadiz, Athos I,
Cosco Busan, Deepwater Horizon, Exxon Valdez, San Jacinto, Morris
J. Berman, Torrey Canyon, Nepco 140, and Amazon Venture spills.

Alfa Laval Inc. Blank Rome LLP

t: +1 215 443 4021 t: +1 202 772 5927
noreen.comerford@alfalaval.com Grasso@BlankRome.com
www.alfalaval.com/pureballast www.BlankRome.com
JANUARY/FEBRUARY 2011

dnv Donjon Marine Co., Inc.

DNV, a leading class society and advisory services foundation
offers a wide range of solutions and benefits for Cruise compa-
nies. DNV can help you in mitigating risks, lower air emissions,
overcome environmental challenges, control noise and vibration,
increase efficiency and lower fuel consumption, manage hull
62 integrity and crew competence.
Donjon Marine Co., Inc. provides a broad spectrum of marine services,
including dredging, marine salvage, heavy lift transport, tug/barge
transportation, demolition, pollution control and remediation, shipbuilding
and repair, as well as land-based metals recycling, demolition and landfill
remediation/site management. Based in New York, New Jersey, and
Erie, Pennsylvania, Donjon and its affiliates maintain offices, assets and
personnel throughout the Northeast, with operations spanning the globe.

DNV Donjon Marine Co., Inc.

T: +47 67 57 99 00 T: +1 908 964-8812
F: +47 67 57 99 11 F: +1 908 964-7426
DNV.Corporate@dnv.com info@donjon.com
www.dnv.com www.donjon.com
THE MARITIME EXECUTIVE

drew marine GL Academy

Drew Marine is a leading marine supplier for ocean-going vessels
recognized for quality and high performance in technology, support
services, and supply solutions. Drew Marine focuses on providing
solutions for water treatment, fuel management, cleaning, mainte-
nance, repair, and safety.
For fifteen years GL Academy, GL’s further training institute, has
been offering seminars in the field of shipping and management
systems. Each of our courses are offered as open or “in-house”
seminars across the United States, supported by a global network
of over 120 countries. Enhance your knowledge and develop your
individual competences-and your scope of work will expand. As you
progress, your company will progress with you.

Drew Marine GL Academy

T: +1 973 526 5700 t: +1 713 543 4356
www.drew-marine.com academy@gl-group.com
www.gl-group.com/glacademy

Hyde Marine, Inc. marine pollution control

Hyde GUARDIAN® -  IMO Type Approved ballast water manage-
ment. Robust and effective shipboard technology kills aquatic
invasive species and reduces sediment.   Automatic filtration
+ UV treatment for any vessel. Chemical-free.  Low pressure
drop.  Low power demand.  Easy maintenance. Compact and
modular design for easy installation.  Affordable and reliable
compliance worldwide.
Founded in 1967, MPC was conceived as a highly mobile, rapid-
response spill clean-up company.  It has evolved from the early
years of oil pollution cleanup into a fully equipped and experienced
company providing effective solutions to clients’ waste management,
industrial services, spill response, and lightering requirements.

Hyde Marine, Inc. Marine Pollution Control

T: +1 800 422 7266 t: +1 313 849 2333
T: +1 440 871 8000 x156 info@marinepollutioncontrol.com
sales@hydemarine.com marinepollutioncontrol.com
www.hydemarine.com

MarEx_42.indd 62 1/26/11 9:00 PM

 BIC Alliance: One-stop shop representing sellers, maximizing value
for its clients.

helps your company grow BIC Recruiting

Since BIC Recruiting’s first place-

A family owned and operated compa-

ny since 1984, BIC Alliance’s mis-
sion is to “connect people in business and
industry with one another for the better-
ment of all.” In a business setting, better
usually means growth. When a company
looks to grow, it can do so in three ways:
an aggressive marketing plan, hiring the
BIC Alliance Founder and CEO Earl Heard,
left, and his partner and son-in-law, Thomas
Brinsko, have developed a unique business
model to help businesses accomplish
growth opportunities. BIC Alliance, along
with its sister companies — IVS Investment
Banking and BIC Recruiting — has recently
begun to expand its presence in the
upstream and maritime industries.
right people and acquiring businesses (or
obtaining capital for expansion). BIC Al-
liance Founder and CEO Earl Heard and
his partner and son-in-law, Thomas Brin-
sko, have developed a unique business
model to help businesses accomplish all
of these growth opportunities.
BIC Magazine
BIC Alliance publishes the “BIC Mag-
azine” (Business & Industry Connection)
10 times a year. BIC reaches 120,000
mid- and upper-level managers and ex-
ecutives in the refining/petrochemical,
drilling and exploration, pipeline, marine,
terminal, pulp and paper, power genera-
tion and heavy construction industries.
IVS Investment Banking
IVS Investment Banking is the merger
and acquisition matchmaking, invest-
ment banking and recapitalization af-
filiate of BIC Alliance. Through relation-
ships and interest from strategic buyers
such as BIC Alliance members and the
limited universe of private equity groups,
IVS is able to run a “dual-path” when
ment in 1999, its focus has been on sales
and marketing management, general
management with P&L expertise and
mid- and senior-level sales executives.
By working with its investment banking
affiliate, BIC Recruiting has expertise in
the placement of C-level executives for
employers in existing as well as new po-
sitions where mergers and acquisitions
have occurred. BIC Recruiting grew
fivefold in 2010.
BIC Media Solutions
BIC Media Solutions is a communica-
tion, training and event planning division
within BIC Alliance. It offers custom
publishing of books about individuals
and organizations and sales and market-
ing training manuals. It also provides
turnkey event planning services and
training via seminars and keynote pre-
sentations.
For more information on BIC Al-
liance, contact Earl Heard in Ba-
ton Rouge, La., at (800) 460-4242 or
Thomas Brinsko in Houston at (281)
538-9996 or visit www.bicalliance.com.

Great things happen when

business and industry connect

Your Connection for Business
and Industry News
With over 120,000 readers,
BIC (Business & Industry
Connection) Magazine is the
Western Hemisphere’s largest
multi-industry, multi-departmental
energy publication. BIC Magazine
targets key decision makers in
the upstream, midstream and
downstream energy sectors, as
well as the power generation
and pulp & paper industries.
Connecting Buyers and Sellers
of Energy Related Companies
IVS Investment Banking offers
complete investment banking
services to help buy, sell or
grow companies in the upstream,
midstream and downstream
energy sectors, as well as the
power generation and pulp
& paper industries. IVS has
completed over $180 million
in transactions since 2008.
Your Talent Acquisition
Connection
BIC Recruiting finds the most
qualified candidates for our
clients’ open positions including
executive management, sales
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positions in the upstream,
midstream and downstream
energy sectors. BIC Recruiting
grew fivefold in 2010.
Connecting Buyers and
Suppliers through Marketing,
Communication and Training
BIC Media Solutions offers custom
book publishing; training manual
development; management,
sales and marketing training;
creative services; event planning;
and keynote presentations on
leadership, entrepreneurship,
thinking outside-the-box,
the “people secret”, the art
of listening, and more.

For more information, contact Earl Heard in Baton Rouge at 800.460.4242

or Thomas Brinsko in Houston at 281.538.9996.
www.bicalliance.com

MarEx_42.indd 63 1/26/11 11:41 AM

 Environmental Directory
PLUG Thordon
PLUG game changing shore power solution offers, typically: Global manufacturing leader of pollution free propeller shaft and
• 20% more time connected to the shore power infrastructure rudder bearings. Fitted to over 2000 ships, Thordon seawater lu-
• 100 times less manpower bricated propeller shaft bearings eliminate stern seal oil leakage (no
• 1000 times less risks pollution risk), while offering excellent operational performance with
• 50 times less maintenance reduced maintenance costs. Worldwide technical support through
• 4 times less capital and operational expenses an extensive distribution and service network.
• 4 times less on board volume.

PLUG Thordon Bearings Inc.

T: +33 6 47 88 11 93 T: +1 905 335 1440
Damien@ng-two.com F: +1 905 335 4033
newgeneration-naturalgas.com www.thordonbearings.com
JANUARY/FEBRUARY 2011

Wärtsilä Wilhelmsen Technical Solutions

The Wärtsilä BWT 500i is the first and only integrated ballast water
treatment system, where both treatment steps (filtration and UV
irradiation) are performed within the same housing. The system is
built for maximum efficacy while minimizing the required installation
space. Trojan Technologies is responsible for the design of the
system, which is based on Trojan’s world-leading UV lamp technol-
64 ogy and water treatment experience.
Wilhelmsen Technical Solutions is a global provider of cost efficient
and fully engineered Environmental, Safety, HVAC-R and Power
solutions. As part of our Environmental offerings we provide
solutions for the management of water, waste, emissions to air
and fuel efficiency that ensure customer’s regulatory compliance
and operational efficiency.

Wärtsilä Corporation Wilhelmsen Technical Solutions

T: +358 10 709 0000 T: +1 95 45 85 58 00
F: +358 10 709 5700 wts.info@wilhelmsen.com
www.wartsila.com www.wilhelmsen.com\techni-
calsolutions

Vice President of Sales and Marketing

W&O Supply, Inc. is the largest marine supplier of pipe, valves, valve automa-
tion services and fittings in the United States. We serve all facets of the marine
community including U.S. and Foreign shipping companies, the U.S. Navy, cruise
companies, barge owners, offshore rig companies and shipyards that build and
repair vessels of all sizes. W&O is committed to being the premier supplier of
total piping solutions to the marine and offshore industries. W&O is a wholly
owned subsidiary of a large, European-based international industrial products
distribution company, is seeking an experienced Vice President of Sales and Mar-
keting. This position is located at the W&O corporate office in Jacksonville, FL.

Responsibilities include but are not limited to: (1) Professional management,
goal setting, account planning, with and for a direct sales force of approximately
20 spread out in North America and Europe.(2) Direct and coordinate sales and
marketing functions, (3) Plan and coordinate public affairs and communications
efforts, (4) Establish and implement short- and long-range goals, policies, and
operating procedures, (5) Supervise the planning and development of marketing
and communications materials, and (6) Promote positive relations with partners,
vendors, and distributors.

Qualifications include (1) 10+ years in sales and marketing with five in an
executive-level position such as general manager or vice president, preferably
in the marine industry, (2) Extensive experience at senior sales level in company
with multiple branches in multiple states (3) International background with geo-
graphical expansion experience and (4) Excellent interpersonal, communications,
public speaking, and presentation skills.

We offer a very competitive salary and extensive benefit package. We are an

equal opportunity employer and committed to a drug-free workplace. Send
resumes to David Black: email david.black@wosupply.com or fax 904-899-4918.
Visit our Web site at www.wosupply.com.

MarEx_42.indd 64 1/27/11 2:27 PM

 specialist

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