TCS Daily

Loss of Prestige

By Bruce Barnard - November 25, 2002 12:00 AM

The shipping business is in the dock again after the break up of the oil tanker Prestige off the north west coast of Spain triggered a predictable knee-jerk reaction from politicians, labor leaders and environmentalists looking for instant scapegoats.

The drama played out on television screens around the globe and has reinforced the clich├ęs of an opaque and unscrupulous industry sailing rust-buckets under flags of convenience to shave costs at the risk of ecological mayhem. It also threatens to unleash a new rash of regulations that are unlikely to improve maritime safety, but sure to raise the cost of transport.

At first glance, the Prestige appears to justify the outsider's prejudices about the tanker business summed up by French president Jacques Chirac, who vowed to free Europe of "ships fit only for the dustbin." The vessel was 26 years old and faced a mandatory trip to the breaker's yard in 2005, when 30-year-old single-hulled vessels, which are easier to pierce than double hulled ships, must cease trading under international regulations.

But the rest of the facts don't fit the public image. The Japanese-built Prestige met U.S. safety standards, the strictest in the world following the Exxon Valdez catastrophe. She had been "classed" as seaworthy by repeated surveys by the respected American Bureau of Shipping [ABS] since her launch. And 10 years of U.S. Coast Guard inspections throughout the 1990s - including several internal investigations of her ballast tanks - yielded only minor safety items. The vessel also was regularly vetted by major oil companies and passed an on-the-spot inspection in Rotterdam in 1999.

What's more, the Prestige's ownership structure was relatively transparent - the same company, Mare of Greece, has traded the vessel for 13 years, hardly the stereotypical fly-by-night operator.

Policymakers in Brussels, Madrid and Paris have rushed to compare the Prestige incident with the sinking of the Erika in 1999, which resulted in thousands of tons of fuel polluting Brittany beaches and prompted a raft of new EU safety measures. But in contrast to the hunt for the owner and charterer of the Erika and the owner of its cargo, all the major players involved in the Prestige's ill-fated voyage went public within hours of the accident.

The investigation into what caused the Prestige to break up is complicated by the fact that the key evidence is on the seabed. Initial theories focus on whether the 300 tons of steel that were replaced in the midship section in China to help the vessel pass a mandatory special survey last year contributed to structural failure.

It may be investigators will draw a blank. But the Prestige has bequeathed plenty of lessons for policymakers prepared to look beyond the sterile accusations of shadowy money grabbing shipowners sailing unsafe ships.

Problem is most of the failures are due to the policymakers themselves. The Spanish authorities, desperate to save their coastal industries, forced the salvors to tow the ship into stormy international waters where it broke into two, rather than offer it refuge in a port or sheltered area which would have instantly eased the stresses on its hull and provided an opportunity to pump out the remaining cargo. Portugal even sent a frigate to ensure the Prestige stayed clear of its coastline. This shortsighted "not in my back yard" behavior is not uncommon. A few months ago, Taiwan forced a supertanker with a damaged engine into a risky ship-to-ship transfer on the high seas and last year a slightly cracked vessel was forced to sail the length of the North Atlantic in search of shelter to offload its cargo onto another ship. Britain, by contrast, towed the stricken tanker Sea Empress into sheltered water and averted a full-scale ecological disaster six years ago.

Some leading European politicians are long on words and short on action. France forced the EU to rush through several tough safety initiatives in the wake of the Erika disaster and President Chirac, fearing the Prestige's cargo could yet end up on French beaches, wants to put maritime safety on the agenda of the EU summit in Copenhagen in mid-December. But France is facing legal action by the European Commission for checking only 9% of ships calling at its ports in 2001 against an EU minimum of 25%. Perhaps someone will point out to President Chirac when he repeats his call for "draconian" action in Copenhagen that this places France at the bottom of the EU vetting table.

There are hopeful signs some lessons will be learned with the shipping industry driving the initiatives and the politicians taking the credit. The world's leading shipping lobbies, Intertanko, the independent tanker owners club, and Bimco [Baltic and International Maritime Council] have called for a global agreement that stricken vessels should be offered safe refuge, a suggestion that's likely to be taken up by the International Maritime Organization [IMO], the UN's shipping agency.

The shipping industry was involved in behind the scenes efforts to improve tanker safety only days before the Prestige thrust the issue onto the front page. Intertanko, Bimco, Intercargo, a dry bulk shipping lobby, and the International Chamber of Shipping were urging Japanese and South Korean yards, which have a near monopoly on building tankers, to accept new practices to ensure more efficient and safer vessels.

The major oil companies, meanwhile, have given their support for a proposal for a single set of rules for new tankers from the ABS, Lloyd's Register and Det Norske Veritas, the Norwegian classification society.

The European Commission, meanwhile, has called for a total ban on all single-hulled tankers carrying fuel oil in EU waters - but it's unlikely Greece, home of the world's biggest tanker fleet, will champion the measure when it assumes the EU presidency in January. The fact is freight rates for older single-hulled tankers have fallen because they are being shunned by publicity conscious oil majors and this makes them attractive to charterers moving crude out of the Black Sea and the Baltic.

The fact that the Prestige was flying the Bahamas flag triggered the expected onslaught against flags of convenience. This is a long lost battle, however, not least because the Bahamas has an exemplary record whose flag flies on many ocean liners based in Miami.

Moreover, many of the traditional maritime nations have so-called offshore registers - French bulk ships, for example, fly the flag of Kerguelen Island, a rocky outpost south of the Indian Ocean - designed to prevent domestic shipowners migrating to traditional flags of convenience like Liberia and Panama. The emergence of flags in landlocked Bolivia, Cambodia and tiny Pacific islands raised hackles but the new registers have met with limited success and don't have large tankers on their books. Cyprus, once associated with old vessels operated by invisible owners, has largely cleaned up its act as it prepares to join the EU in 2004.

On the positive side, the Prestige incident has shown shipping to be the foremost free market global industry lubricating world trade and delivering ever-cheaper costs to consumers. Oil and bulk shipping freight rates are determined solely by supply and demand much as the commodities they haul though government subsidies to shipbuilders slightly distort the cost of ships.

The other Prestige lesson is that tanker accidents and oil spills come with the territory - the bulk of mishaps are still caused by human error regardless of the vessel's age or ownership.

And even as they bay for blood, policymakers should take time to look at the statistics that will show them that tanker shipping has never been safer.



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