Thursday, April 27 2000

Income up at Teekay
Teekay Shipping Corporation yesterday reported net income of $19.9 million, for the quarter ended March 31, 2000, compared to $1.9 million for the quarter ended March 31, 1999. Results for the current quarter included a loss of $1.0 million, or 3 cents per share, on the sale of two of the company's oldest vessels. Net voyage revenues for the quarter were $120.1 million, compared to $70.0 million recorded in the same period last year, while income from vessel operations increased to $37.8 million, from $10.6 million. The results for the current quarter reflect an improvement in tanker charter rates and an increase in fleet size as a result of the acquisition of Bona Shipholding Ltd. on June 11, 1999.

Teekay says it benefited from a significant increase in Aframax charter rates during the past three months as tanker demand increased, while tanker supply declined slightly.

The International Energy Agency estimated that global crude oil consumption, an indicator of tanker demand, averaged 76.2 million barrels per day, down 0.1% from the quarter ended March 31, 1999 but is forecasting that oil consumption during the remainder of 2000 will be 2.8% higher than in the corresponding period in 1999.

Teekay notes that the size of the world tanker and OBOfleet declined to 301.2 million deadweight tonnes (``mdwt'') at the end of the quarter, down 0.2% from last quarter, as the pace of scrapping exceeded newbuilding deliveries. Deliveries of tanker newbuildings during the quarter totalled 5.6 mdwt, down from 5.7 mdwt in the previous quarter, while scrapping totalled 6.5 mdwt despite a strong tanker market, compared to 7.0 mdwt scrapped in the previous quarter.

The world tanker and OBO orderbook measured 39.5 mdwt at March 31, 2000, representing 13.1% of the total world tanker and OBO fleet. The Aframax tanker orderbook declined from 37 vessels last quarter to 36 vessels as of March 31, 2000, or from 5.9% to 5.8% of the world Aframax fleet (including OBOs).


The following is a summary of the Teekay fleet as of this date:

Type                                 Number             Dwt

Double-hull or double-sided
Aframaxes (1):                          38                 3,765,600

Single-hull Aframaxes:            18                 1,828,300

Ore/Bulk/Oil Carriers (2):           8                   625,900

Time-chartered-in Aframaxes:  5                   514,000

Other size tankers (3):                5                   670,200

Total:                                             74                 7,404,000
(1) Includes one 50%-owned Aframax tanker.
(2) Includes one 67%-owned OBO carrier & one 52%-owned OBO carrier.
(3) Includes two 50%-owned Suezmax tankers.

Sulzer RTA96C past the 50 mark
Wärtsilä NSD Corporation reports that orders for Sulzer RTA96C two-stroke engines, the most powerful engines in its marine engine program, have reached 51 engines of 4,026.330 bhp (2,960 MW), making them popular choices among the world's leading containership owners and shipyards. The engines are all for fast post-Panamax containerships of up to 6.800 TEU capacity.

As industry experts predict that the trend towards larger containerships will continue, Wärtsilä NSD is in close contact with leading operators as well as shipyards and engine builders in Asia and Europe discussing the propulsion requirements for the next steps in these ever larger container ships. Case studies are being developed for ships with capacities of 10,000 TEU (Suezmax) and 15,000 TEU (Malaccamax). Apart from the traditional single-engine arrangement (including alternatives possibly with 13- and 14-cylinder RTA96C engines), alternative propulsion concepts with twin two-stroke engines, direct- and podded-drive combinations, and diesel-electric drives are being evaluated in detail.

Meantime, the most recent orders added seven 9RTA96C and five 12RTA96C engines to the orderbook. The nine-cylinder engines are for Reederei Claus-Peter Offen's recent order of 4.700 TEU container vessels at Samsung Heavy Industries Co Ltd, while the twelve-cylinder engines will power a series of five 6200 TEU post-Panamax container ships contracted by NYK Line also at Samsung. The 9RTA96C has an output of 67,230 bhp (49 410 kW), while the 12RTA96C engine gives 89,640 bhp (65 880 kW) at 100 rev/min. All RTA96C engines are built under licence by Wärtsilä NSD's largest licensees: Diesel United Ltd (Japan), Hyundai Heavy Industries Co Ltd (South Korea), and HSD Engine Co Ltd (South Korea).

The Sulzer RTA96C engines in service and on order now comprise:

  • Eight 12RTA96C for P&O Nedlloyd
  • Four 12RTA96C for undisclosed owners
  • Five 12RTA96C for NYK Line
  • Two 11RTA96C for NYK Line
  • Two 10RTA96C for Hanjin Shipping
  • Nine 10RTA96C for NSB/Conti
  • Five 10RTA96C for P&O Nedlloyd
  • Seven 10RTA96C for Yangming Marine
  • Two 10RTA96C for Costamare
  • Seven 9RTA96C for C.P. Offen
  • Totals: 51 engines 4 026 330 bhp (2960 MW)

While the majority of the engines are to be installed in Korean-built ships (from Hyundai, Hanjin and Samsung), the first six RTA96C engines in service are propellingJapanese-built vessels and some of the engines are or will be driving European-built containerships.

There are already eleven RTA96C engines in service with aggregate running time totaling some 100 000 hours. The first RTA96C, an 11-cylinder engine, went into service in October 1997 and has since accumulated almost 16,000 running hours. The most powerful engines in operation are the four 12RTA96C engines each of 89.640 bhp (65 880 kW) which entered service from June 1998
onwards in the "P&O Nedlloyd Southampton" class of 6,690 TEU containerships.

Wärtsilä NSD concedes that 'there were some initial shortcomings on the first eight engines," but says these problems have now been overcome and the service experience of the RTA96C is today to the satisfaction of shipowners and engine builders.

European Commission renews block exemption allowingconsortium agreements in shipping
The European Commission has renewed for a period of five years a block exemption allowing shipping companies to enter into consortium agreements covering the maritime transport of cargo. The block exemption regulation, which was adopted in 1995, automatically covers liner shipping consortia which have a market share of below 30 percent.

The Commission notes that "it is common for shipping companies to conclude consortia agreements with a view to provide a joint liner shipping service through the coordination of sailing timetables, the exchange and sale of space on vessels and the pooling of vessels and port facilities."

In 1995 the Commission adopted a block exemption Regulation covering such consortium agreements. Acting on a proposal from Mario Monti, Commissioner for Competition, the Commission has now adopted a Regulation renewing the block exemption for a further period of five years, "confirming its favorable attitude towards liner shipping consortia."

The Commission says that consortia agreements usually allow shipping lines to rationalize their activities and achieve economies of scale, thus improving the productivity and quality of liner shipping services. Provided consortia are faced with sufficient competition, those advantages benefit exporting firms, the customers of shipping lines. "The block exemption therefore only automatically covers consortia which have a market share of below 30% or 35% on any market on which they operate, depending on whether they are inside or outside a so-called liner conference."

A consortium that exceeds the market share limits would not necessarily be unlawful, but would have to be examined for compatibility with the competition rules on an individual basis.

The block exemption forbids price-fixing. It covers, however, both consortia operating within a liner conference and consortia operating outside such conferences. Under a separate block exemption, members of a liner conference may fix maritime transport rates provided that they fulfil certain conditions and meet certain obligations.

The consortium block exemption applies only to consortia providing international liner shipping services to or from one or more Community ports. The service must be exclusively for the carriage of cargo; the exemption does not cover the transport of passengers.


Navy contract for NORSHIPCO
Norfolk Shipbuilding and Drydock Corp., Norfolk, Va., is being awarded a $9,760,302 fixed-price contract for a phased maintenance fixed price availability of the USS Whidbey Island (LSD 41) under job order 0120. Work includes miscellaneous structural, electrical and mechanical repairs and ship alterations. Work will be performed in Norfolk, Va., and is expected to be complete by September 2000. Contract funds in the amount of $8,190,257 will expire at the end of the current fiscal year. This contract was competitively procured via the Internet, with seven proposals solicited and four offers received. The Supervisor of Shipbuilding, Conversion and Repair, USN, Portsmouth, Va., is the contracting activity (N00024-92-H-8637).

RFP: Full-Scale design studies of ballast water
treatment systems

The Great Lakes Ballast Technology Demonstration Project seeks the assistance of the marine industry in designing cost-effective, operationally sound and biologically effective ballast water treatment solutions. To this end, the Project is offering funds for six-month full-scale design studies by teams of ship owners/naval architects and treatment vendors of promising ballast water treatment systems. Designs for installation in both new and existing ships are of interest. The RFP can be obtained by internet at and click on biological pollution, or contacting Allegra Cangelosi at or At 202 544-5200.


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