Koch Shipping Inc.Koch Shipping Inc.Intertanko VettingIntertanko Vetting

PresentationPresentation

The Baltic ExchangeThe Baltic ExchangeLondonLondon

2 October 20062 October 2006

How Koch views officer How Koch views officer experience:experience:• The following guidelines apply to Koch The following guidelines apply to Koch

Shipping Inc’s vetting process for tankers:Shipping Inc’s vetting process for tankers:– To be chartered by KSI, orTo be chartered by KSI, or– To carry Koch affiliate owned cargo, orTo carry Koch affiliate owned cargo, or– To call at a Koch owned or term-leased To call at a Koch owned or term-leased

terminal.terminal.• Each OCIMF member has a different Each OCIMF member has a different

criteria for reviewing crew experience.criteria for reviewing crew experience.

How Koch views officer How Koch views officer experience:experience:• The basic KSI vetting “flag” check for Crew The basic KSI vetting “flag” check for Crew

Officer Experience is the total “Time in Rank” Officer Experience is the total “Time in Rank” (TIR), for all officers on board – Deck + (TIR), for all officers on board – Deck + Engine.Engine.

• Radio Operators and Electricians are not Radio Operators and Electricians are not counted.counted.

• Koch sets the “bar” at 25 years – total or Koch sets the “bar” at 25 years – total or aggregate for all officers – with “reasonable” aggregate for all officers – with “reasonable” distribution.distribution.

• Range of TIR experience for vessels reviewed Range of TIR experience for vessels reviewed has ranged from 5 to 143 years total TIR.has ranged from 5 to 143 years total TIR.

How Koch views officer How Koch views officer experience:experience:WhyWhy::• 1963: the Secretary of the Treasury's 1963: the Secretary of the Treasury's

Committee on Tanker Hazards reported Committee on Tanker Hazards reported that "safety problems relate more to that "safety problems relate more to personnel than to materiel." personnel than to materiel."

• 1994: the U.S. Coast Guard recognized 1994: the U.S. Coast Guard recognized that roughly 80% of all marine-related that roughly 80% of all marine-related accidents are rooted in the human accidents are rooted in the human element---with the majority of these element---with the majority of these caused by organizational factors.caused by organizational factors.

How Koch views officer How Koch views officer experience:experience:Why? An example:Why? An example: A cadet and a First Assistant engineer A cadet and a First Assistant engineer

are sitting at the control station of a are sitting at the control station of a steam tanker underway in confined steam tanker underway in confined waters. There is a sudden noise.waters. There is a sudden noise.

The cadet says: “What was …..”The cadet says: “What was …..”The Engineer says: “damn!” and The Engineer says: “damn!” and

disappears down the ladder to the feed-disappears down the ladder to the feed-pump flat.pump flat.

How Koch views officer How Koch views officer experience:experience:

Or – Or – to put it another way,to put it another way,

we fail ships with low TIR we fail ships with low TIR because we think that because we think that

the officers have not seen the officers have not seen enough troubleenough trouble

yet.yet.

How Koch views officer How Koch views officer experience:experience:• Exceptions:Exceptions:

– The officers with low TIR also show high The officers with low TIR also show high numbers in years of “Time on Same numbers in years of “Time on Same Type Tankers”, Type Tankers”, andand

– There are few procedural errors or There are few procedural errors or omissions noted as observations omissions noted as observations elsewhere in the SIRE report, elsewhere in the SIRE report, andand

– There are no training or certification There are no training or certification observations in the SIRE report.observations in the SIRE report.

Koch and TIR – some Koch and TIR – some examples:examples:

Koch and TIR – some Koch and TIR – some examples:examples:

Koch and TIR – some Koch and TIR – some examples:examples:

Koch and TIR – some Koch and TIR – some examples:examples:

Koch and TIR – some Koch and TIR – some examples:examples:

TIR issues – drilling down:TIR issues – drilling down:In the last previous example, the owner In the last previous example, the owner

appealed.appealed.We asked for and received the vessel’s:We asked for and received the vessel’s:• Chief Officer’s records for work and Chief Officer’s records for work and

rest hours for the last 4 port calls, andrest hours for the last 4 port calls, and• The vessel’s Statement of Facts for The vessel’s Statement of Facts for

the same 4 port calls,the same 4 port calls,which revealed:which revealed:

TIR issues – drilling down:TIR issues – drilling down:• On the face of the records: 2 On the face of the records: 2

incidents of breach of STCW incidents of breach of STCW work/rest hours requirements, andwork/rest hours requirements, and

• In comparison of the work hours to In comparison of the work hours to SOF reports: two apparent cases of SOF reports: two apparent cases of under-reporting of work hours, andunder-reporting of work hours, and

• No non-conformities raised as a No non-conformities raised as a result of work hours being exceeded.result of work hours being exceeded.

TIR issues – drilling down:TIR issues – drilling down:After considerable discussion and After considerable discussion and

advice to the owners to: “think about advice to the owners to: “think about it and get back to us.” the owner set it and get back to us.” the owner set an “expectation” of 2 STCW non-an “expectation” of 2 STCW non-conformities per year for his fleet for conformities per year for his fleet for work/rest violations, compared to:work/rest violations, compared to:

an extrapolated number based on our an extrapolated number based on our “sample” of 4 x 12 x 30 = 1440 STCW “sample” of 4 x 12 x 30 = 1440 STCW violations/year for the company fleet.violations/year for the company fleet.

TIR issues – drilling down:TIR issues – drilling down:Dealing with 1000+ N-C’s/year would Dealing with 1000+ N-C’s/year would

overwhelm most management systems – overwhelm most management systems – so what is so what is reasonablereasonable??

• Accurately recording work/rest hours.Accurately recording work/rest hours.• Setting a criteria for submission of N-Cs.Setting a criteria for submission of N-Cs.• Using a management of change process Using a management of change process

to address the causes of the N-Cs.to address the causes of the N-Cs.One management was noted as doing this One management was noted as doing this

and their vessel received vetting and their vessel received vetting approval.approval.

TIR issues – drilling down:TIR issues – drilling down:• DenialDenial is not an acceptable response is not an acceptable response

to the issue of STCW compliance and to the issue of STCW compliance and crew fatigue. crew fatigue.

• Demonstrating the presence of Demonstrating the presence of management awareness, and an management awareness, and an active management systemactive management system engaged engaged in correcting causes of STCW non-in correcting causes of STCW non-compliance is acceptable – even if compliance is acceptable – even if some N-Cs are continuing.some N-Cs are continuing.

Crew number vs. the vessel Crew number vs. the vessel trade:trade:• Tankers engaged in STS ops need an Tankers engaged in STS ops need an

adequate crew for mooring ops. (not 14)adequate crew for mooring ops. (not 14)• Tankers engaged in short-sea trading Tankers engaged in short-sea trading

cannot be safely operated with 2 officers.cannot be safely operated with 2 officers.• Tankers assigned to short-voyage Tankers assigned to short-voyage

lightering operations need an extra deck lightering operations need an extra deck officer and an extra engineer.officer and an extra engineer.

• See: See: http://www.maib.gov.uk/cms_resources/Bhttp://www.maib.gov.uk/cms_resources/Bridge_watchkeeping_safety_study.pdfridge_watchkeeping_safety_study.pdf

Crew number vs. the vessel Crew number vs. the vessel trade:trade:

(click on the image below to start the video.)(click on the image below to start the video.)

What is STCW compliance What is STCW compliance worth?worth?• Under OPA-90, a vessel causing Under OPA-90, a vessel causing

pollution of US waters must be in pollution of US waters must be in compliance with all laws and compliance with all laws and regulations in order to limit its liability.regulations in order to limit its liability.

• The Athos 1 grounded in Delaware The Athos 1 grounded in Delaware Bay in November 2004.Bay in November 2004.

• The cost of the cleanup (to end 2005) The cost of the cleanup (to end 2005) was $150,000,000. was $150,000,000.

What is STCW compliance What is STCW compliance worth?worth?The US Coast Guard exhaustively The US Coast Guard exhaustively

investigated the incident and investigated the incident and reported:reported:

What is STCW compliance What is STCW compliance worth?worth?The Coast Guard reported that the Master, The Coast Guard reported that the Master,

Pilots and Navigating Officer:Pilots and Navigating Officer:““had not shown any signs of fatiguehad not shown any signs of fatigue

and met STCW and OPA90and met STCW and OPA90rest requirements.”rest requirements.”

**********************************The owners were therefore able to limit The owners were therefore able to limit

their liability to $45,000,000 under their liability to $45,000,000 under OPA90.OPA90.

What is STCW compliance What is STCW compliance worth?worth?So the calculation of the value of STCW So the calculation of the value of STCW

compliance in the case of the Athos 1 compliance in the case of the Athos 1 grounding and spill is:grounding and spill is:

Cost to owners if Cost to owners if notnot in compliance: in compliance: $150,000,000 $150,000,000Cost to owners Cost to owners ifif in compliance: in compliance: $ $ 45,000,00045,000,000 Value of STCW compliance:Value of STCW compliance: $105,000,000 $105,000,000

““Owners” = vessel owner & vessel P&I ClubOwners” = vessel owner & vessel P&I Club

There’s more to tanker shipping than meets the eye.

Thank you!