2001 Maritime

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April 27, 2001

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ABS reports steady growth
ABS Chairman and CEO Frank J. Iarossi has reported a solid financial performance for 2000 with consolidated gross revenues of $357.9 million, an 18.2 percent increase or more than $55 million over the previous year---even though the class society continued its moratorium on fee increases throughout 2000. It claims to be the lowest cost, major provider of classification services.

"I believe marine classification will continue to be plagued by intense competition as shipbuilders play one society against the other to design and build the cheapest ship, and as shipowners continue to push for the lowest newbuilding, repair and survey expenses," Iarossi cautioned. He predicted that such a scenario will create "an irresistible need to cooperate more fully, and on a more timely basis, in order to reverse the mounting criticism of class."

Iarossi pointed to the ABS, Det Norske Veritas and Lloyd's Register joint initiative, announced last month, as a significant step towards strengthening the classification profession. "Looking ahead, we will need to foster much greater cooperation including most likely the eventual merging of our technical rules for building and classing vessels," he forecast.

Commenting forcefully on the EU response to the Erika casualty, Iarossi said. "We are in an era of zero tolerance and the impact on class could be dramatic,This is an age where the indictment, the guilty verdict and the sentencing are all rendered even before the relevant facts have been established. Class is becoming the designated scapegoat, regardless of its culpability."

Although revenues from marine classification activity remained stagnant in 2000 at $215 million, they were supplemented by robust growth from the expanded business activity conducted through the ABS Group of Companies. ABS Group financials posted record returns largely due to the acquisition of independent risk management provider, EQE International, Inc.

ABS President Robert D. Somerville who reported that the ABS fleet closed the year at 105 million gross tons, an increase of 4.7 million gross tons over the previous year.

It is the largest fleet ABS has had in class since 1983. According to year-end statistics from IACS, the ABS share of the total IACS classed fleet stood at 19 percent, the equal second largest fleet share.

The ABS newbuilding orderbook stood at 15.6 million gross tons, up from 12.6 million tons at the end of 1999 and the highest level in 23 years.

Somerville reported "remarkable success" in attracting new tanker tonnage to ABS class. He attributed this to the ABS SafeHull system.

"The risks associated with operating tankers today are too great for the responsible operator to take any shortcuts that may compromise the robustness of his ship," he said.

At the end of 2000, 34 percent of all tankers under construction or on order worldwide were to ABS class, including 32 percent of all VLCCs and 67 percent of all Suezmaxes on order.

A continued strong performance in the bulk carrier, post-panamax containership and passenger/cargo ferry sectors was also highlighted by Somerville. He stressed recent successes in China, where the society has secured the leading position among the non-national classification societies. This is in addition to maintaining a 24 percent share of all orders placed with Korean shipbuilders and a 23 percent share of all Japanese new construction activity.

Somerville also reported that ABS maintained its leading position as the preferred provider of classification services to the offshore sector in 2000 with a 75 percent share of the worldwide offshore exploration fleet and a 47 percent share of the total worldwide production fleet. Notable contracts for Truss Spars, Tension Leg Platforms, semisubmersibles and FPSO conversions were received in 2000.

The ABS President told members that in 2000 ABS was the first class society to achieve certification to the environmental management system standards of ISO 14001. "We continue to demonstrate our leadership in the areas of safety, quality and environmental awareness with the attainment of this new standard," he said.

Another significant milestone achieved in 2000 for ABS was again to lead the US Coast Guard's Port State Control statistics. For the second consecutive year ABS had the best detention record of all class societies. Most notable, for the first time not a single ABS classed ship was detained in a US port for a class-related deficiency.

"ABS was able to increase its fleet by almost 5 million tons, maintain a more than 20 percent share of the newbuilding market and increase its newbuilding orderbook by more than 3 million tons," Somerville told the meeting. "Our successes were many, our disappointments few, our confidence in the future unshaken and our commitment to excellence renewed."