Maritime Compliance: Load Lines

A ship’s waterline is the line where its hull meets the surface of the water. A load line, also called Plimsoll mark, is a marking indicating the extent to which the weight of a load may safely submerge a ship, by way of a waterline limit. It is positioned amidships on both sides of a vessel’s hull and indicates the draft of the ship and the legal limit to which a ship may be loaded for specific geographical areas and seasons of the year. The purpose of the load line is to ensure that a ship has sufficient freeboard (the height from the waterline to the main deck) and thus sufficient reserve buoyancy (volume of ship above the waterline). It should also ensure adequate stability and avoid excessive stress on the ship’s hull as a result of overloading. Ships intended for the carriage of timber deck cargo are assigned a smaller freeboard as the deck cargo provides protection against the impact of waves.

The exact location of the load line markings is calculated and/or verified by a classification society, which then issues a load line certificate.

The first international convention on load lines was adopted in 1930. It was based on the principle of reserve buoyancy. In 1966 the IMO adopted a new convention, determining the freeboard of ships by subdivision and damage stability calculations. The International Convention on Load Lines 1966 applies to all vessels engaged in international trade and determines the permitted draft/freeboard for a vessel in different climate zones and seasons, which are defined in a special international load line zones and areas map.

Load line markings are as follows:

TF           Tropic Freshwater – the deepest permitted draft considering the relatively benign weather conditions in tropical waters and the fact that the vessel floats deeper in freshwater due to lower density than in saltwater.

F              Freshwater – the deepest permitted draft in freshwater considering that the vessel floats deeper in freshwater than in saltwater.

T              Tropics – deepest permitted draft in tropical waters considering the benign weather conditions in tropical waters.

S              Summer – deepest permitted draft during summer considering benign weather conditions.

W            Winter – deepest permitted draft during winter considering rougher weather conditions.

WNA     Winter North Atlantic – deepest draft permitted considering the rough weather conditions likely to be encountered during winter in the North Atlantic.

Draft surveys

In addition to the association with reserve buoyancy and stability, load lines make it possible to determine, with reasonable accuracy by draft survey, the amount of cargo on board a ship.

A draft survey is used to determine the weight of any materials being loaded into or discharged from a vessel. It measures the displacement of the water both before and after the loading or unloading, with the resulting difference between the two displacements representing the weight of the cargo.  A draft survey is based on solid mathematics but usually involves one of the ship’s officers gauging the draft of the vessel from visual reference to the vessel’s forward, amidships and aft draft marks along with the ascertained list the vessel may have. The combination of pure science and practical experience allows the officer to calculate the amount of cargo on board to within more or less 0.5 per cent of the actual quantity.

In many ports, a draft survey is the only way of independently confirming the amount of cargo the shipper declares as having been shipped and thus the only way of checking the accuracy of the quantity stated in the bill of lading (which is normally based on the shipper’s figures) and how much cargo was on board the vessel prior to the start of discharge. 

https://maritimecyprus.com/2022/09/25/maritime-compliance-load-lines/

Maritime Risk focus: Lithium-ion Batteries - A growing Fire risk to shipping

Randall Lund, a senior marine risk consultant for AGCS, said the combination of ever-larger vessels and more hazardous cargo is leading to “astronomical” losses for insurers. Fire/explosion was the most expensive cause of loss for marine claims in 2021, accounting for 18% of US$9.2 billion in total losses, according to an analysis of 240,000 marine insurance claims over the past five years.

Lund said “without a doubt” the risk of fire at sea is going to keep growing.

“The increase in the volume of electric vehicles transiting across our oceans and the demand coming worldwide is continuing to increase,” he said. “Everybody is looking for the longest-lasting batteries. That just means there’s much more energy stored in that battery that is going to be released if something goes wrong.”

Damaged or defective lithium-ion batteries can experience a chemical reaction known as "thermal runaway" that generates heat and can ignite surrounding substances. Lund said batteries can be damaged while loading and quietly smolder without being noticed.

The vast size of modern container vessels and car carriers makes detection and firefighting more challenging. AGCS says container-carrying capacity has increased by around 1,500% since 1968 and has almost doubled over the past decade.

Lund said it can take several hours to get to the base of a fire on a container ship that has 20,000 containers on board, stacked ten high.

Fires in electric vehicles with lithium-ion batteries burn more ferociously, are difficult to extinguish and can spontaneously reignite hours or even days after they have been put out, the bulletin says.

Car carriers that are loaded and unloaded by rolling vehicles on and off them present unique safety issues that lead to “disproportionately high losses,” according to the bulletin. Lund said the batteries of electric cars are almost always carried on the bottom of the vehicles, which can strike any protrusions coming out of the vessel.

Often, fires on vessels lead to total loss. In 2021, fire was the cause of eight of 54 total losses reported, second only to foundering, with 12 losses, as the most frequent cause.

High-profile losses continued in 2022. In February, a fire that broke out on the Felicity Ace while the car carrier was crossing the Atlantic Ocean caused it to sink in 10,000 feet of water. Numerous Porsches, Bentleys and some Lamborghinis went down with the ship. Russell Group, a London-based risk consultant, estimated total losses of more than $400 million.

The cause of the fire is unknown. Lund said that is a common problem with fires started by lithium-ion batteries. The fires burn so intensely that all evidence is lost.

Lund said AGCS first issued a bulletin about the risk posed by lithium-ion batteries in 2017. He said the carrier decided to follow up on the report this month because of the growing frequency of high-dollar losses.

At present, there is no unified legislation for the safe storage of lithium-ion batteries. What’s more, fire testing has been limited because the technology is continuously evolving.

Lund said loss-control measures will improve over time and awareness about the fire risk increases. He said quite a few new products are being developed. Car carrier operators are exploring the use of “fire blankets” that can be thrown over an electric vehicle with batteries that are experiencing thermal runaways.
In the meantime, AGCS offers these tips to prevent losses:

·        Transport only batteries from reputable manufacturers to avoid substandard product, which is known to self-ignite.

·        Ensure that batteries being transported are at 30% to 50% state of charge, the exact amount depending on the manufacturer’s recommendation.

·        Beware of short circuits that can occur when the protection between the cathodes and anodes is compromised.

·        Follow packing instructions and train staff on dangerous goods recommendations.

Ammonia: an emission-free fuel to decarbonize the shipping industry

 The transportation industry is the largest polluter in the U.S.

The United States Environmental Protection Agency (EPA) recently revealed that, in 2020, transportation accounted for the largest share (27%) of all U.S. greenhouse gas (GHG) emissions. Because of the significant amount of transportation emissions, public and private actions are being taken to reduce pollution in this sector. This includes the shipping industry, which is notoriously dirty.  Most recently, The Clean Shipping Act of 2022 was introduced in Congress. Its goal is to eliminate emissions in ports as soon as 2030, and it will prohibit any ship berthing or anchoring in U.S. ports that don’t meet zero GHG emissions guidelines.

According to the International Maritime Organization, 85% of net greenhouse gas emissions from the shipping industry come from ships of 5000 gross tonnage and above. Because battery technology is not feasible for these vessels due to the vessel’s size and weight, hydrogen technology has emerged as the leading alternative for powering commercial vehicles.

Ammonia, which doesn’t have any carbon molecules, has tremendous potential as a zero-emission renewable fuel because it can effectively carry hydrogen, which faces challenges around storage and transportation, to a fuel cell. Because ammonia has been used in the farming industry as a fertilizer for many years, there is already existing infrastructure, including an ammonia pipeline, for its production and transportation, which advances the chemical’s potential as a renewable fuel. Furthermore, ammonia is easily stored as a liquid, which reduces the cost, complexity, and space requirements for storage compared with hydrogen and liquefied natural gas. Finally, ammonia has a high volumetric energy density compared to other renewable energy sources, which means that vehicles can be small, light, fast, and travel for longer periods.

There is a wide consensus that the shipping industry needs to transition to a new set of fuels and propulsion technologies to meet global emission goals, and ammonia has many qualities that make it a good fit for this industry. The suitability of different carbon-free technologies is determined by the size and operational profile of a given vessel. For example, the energy density requirements for fuels and motor systems are less strict for small and medium-sized ships that make short trips often, like passenger ferries. On the other hand, energy density may be the most important performance measure for large ocean-going vessels such as cargo ships.

Clean Hydrogen’s Promising Pathway

The clean hydrogen community anticipates that federal and state financing programs will allow partnerships between the government and private sector to encourage the sharing of  technology and infrastructure in the U.S. Efforts like establishing regional “Hydrogen Hubs” will make it easier for these groups to work together to advance the policy environment required to implement an ambitious hydrogen agenda. Increased collaboration, funding, and technology demonstrations will empower states and regions to take advantage of their existing assets and infrastructure as they move toward a clean energy economy. These hubs will not only significantly influence the climate and the economy, but they will also produce long-term jobs that will support ports and families for many years. With ammonia power gaining momentum as a viable solution for carrying hydrogen and decarbonizing shipping, it only makes sense to include ammonia technology solutions in these efforts.

Shipping, a major component of global trade, benefits everyone. Food, technology, medications, and more are shipped worldwide daily. To keep the planet from warming further, there must be a complete transition away from fossil fuels, and the shipping industry must do its part to decarbonize.

Updated analysis of MARPOL Annex VI

 The IMO-Norway GreenVoyage2050 Project has released an updated version of its clause-by-clause analysis of MARPOL Annex VI, which addresses air pollution from ships.

The document provides a breakdown explanation of each regulation and it is intended to be a useful resource for countries seeking to draft legislation to incorporate MARPOL Annex VI into national law.

The revised clause-by-clause analysis has been updated to reflect major amendments to MARPOL Annex VI, which were adopted by the IMO Marine Environment Protection Committee (MEPC) at its 76th session in June 2021.

Most notably, these include regulations relating to the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII), and reflects the renumbering of provisions in the 2021 Revised MARPOL Annex VI, set out in Resolution MEPC.328(76) which is applicable from 1 November 2022.

The requirements do not apply to ships solely engaged in voyages in national waters, however, each Party to MARPOL Annex VI should ensure, by the adoption of appropriate measures, that such ships are constructed and act in a manner consistent with the requirements of chapter 4, so far as is reasonable and practicable. The requirements do not apply to ships not propelled by mechanical means, platforms and drilling rigs, regardless of their propulsion.

Some ships with non-conventional propulsion (that is ships which have diesel-electric propulsion, turbine propulsion or hybrid propulsion systems) are excluded from the requirements of regulations 22 to 25 of MARPOL Annex VI. See regulation 19.3 of MARPOL Annex VI for ships exempted from certain provisions under chapter 4 only.

There are also limited exceptions for which the Administration may waive the requirement to comply with the Attained and Required Energy Efficiency Design Index (regulations 22 and 24). This is not applicable if the ship’s building contract is placed or the keel is laid (or similar stage of construction) on or after 1 July 2017 or if the delivery is on or after 1 July 2019. Major conversion of a new or existing ship is treated in a similar manner. Details of any waivers are required to be communicated by the ship’s flag State Administration to IMO for circulation to the Parties to MARPOL Annex VI.

Collection and reporting of ship fuel oil consumption data

This regulation applies to each ship of 5,000 gross tonnage and above and places an obligation on the operator of the ship to collect data related to fuel oil consumption as specified in appendix IX to MARPOL Annex VI, for the calendar year 2019 and each subsequent calendar year or portion thereof, as appropriate, according to the methodology included in the SEEMP.

This data is required to be sent by the ship to its flag State Administration, which upon verification, will issue to the ship a Statement of Compliance related to fuel oil consumption reporting. The Party to MARPOL Annex VI is obligated to transfer to the IMO Ship Fuel Oil Consumption Database the reported data on fuel oil consumption supplied to it by its registered ships within a month of the issuance to the Statement of Compliance.

Operational carbon intensity

This regulation applies to every ship of 5,000 gross tonnage and above and requires that each ship calculate the attained annual operational carbon intensity indicator (CII), after the end of calendar year 2023 and after the end of each following calendar year. The regulation also establishes the method of determining the required annual operational CII, and operational carbon intensity rating (A to E), taking into account the guidelines developed by the IMO2.

Where a ship is found not to have achieved the required operational carbon intensity rating then it is required to develop a plan of corrective action within the ship’s SEEMP, subject to verification, to achieve the required annual operational CII.

Fuel oil availability and quality

This regulation places an obligation on Parties to regulate fuel oil suppliers within their jurisdiction through the competent authorities of the State.

Regulation 18.1 requires Parties to take “all reasonable steps” to promote the availability of compliant fuel oil and to inform IMO of such availability. However, subject to the needs and requirements of the maritime sector of the country, this need not be addressed in the national legislation itself and may be provided in administrative procedures.

Importantly, to enable enforcement action against foreign registered ships entering ports and/or territorial waters of the Party, obligations are also placed on Parties to take action against ships which do not use compliant fuel oil, while fuel oil delivered to and used on board ships should meet the standards laid down in regulation 18.3 of MARPOL Annex VI. The obligation to report instances of non-compliant fuel to other Parties and to take action when reports are received is also set out in the regulation.

Ships subject to regulations 5 and 6 of MARPOL Annex VI are also required to record the details of the fuel oil delivered to and used on board in a Bunker Delivery Note (BDN) including the sulphur content of the fuel oil. The BDN is to be provided to the ship by the local fuel oil supplier (regulation 18.9 of MARPOL Annex VI) and that the BDN contains at least the information specified in appendix V to MARPOL Annex VI. The BDN has to be retained onboard for three years after the fuel was delivered onboard.

Regulation 18.8.2 identifies the requirement to use the verification procedure set out in appendix VI to MARPOL Annex VI for analysing fuel oil samples delivered to the ship. Reference to this verification procedure set out in appendix VI should be made in the relevant national legislation as this is the international standard for fuel oil testing for ships trading internationally.

Regulation 18.9 also requires the Party to ensure that it designates an appropriate authority or agency to carry out the registration and control of local suppliers of fuel oil.

https://safety4sea.com/wp-content/uploads/2022/09/IMO-Clause-by-clause-analysis-of-2021-Revised-MARPOL-2022_09.pdf

With tanker ownership having moved from oil and chemical companies to independent ship owners in the 1980s, public concerns on serious tanker accidents were raised. To evaluate the risks of a vessel, the Oil Companies International Marine Forum (OCIMF) developed the Ship Inspection Report Programme (SIRE), which later became an obligatory step in chartering so substandard oil tankers can be eliminated.

Essentially, SIRE is a comprehensive database of up-to-date information about the vessels, proving that they can transport cargoes safely, responsibly, and competitively. Today, SIRE covers the following ship categories: tankers, chemical tankers, LPG ships, LNG ships and combination ships (Category 1 and 2 based on tonnage) as well as offshore barges, inland barges (manned and unmanned) and integrated barges (Category 3).

As the industry continues to evolve, OCIMF has decided in 2017 to develop SIRE 2.0, an enhanced and risk-based vessel inspection programme that will supersede the existing SIRE programme. SIRE 2.0 is expected to provide more accurate information to enable OCIMF members and programme recipients to make judgments on the quality and the likely future performance of a vessel. It is projected to become operational in Q4 2022.

How will SIRE 2.0 work?

What documents are needed?

In the present SIRE system, there are two documents that must be provided by the operator prior to inspection: An up to date harmonized vessel particulars questionnaire (HVPQ) and a crew matrix. In SIRE 2.0, there are four documents needed:

• Harmonized vessel particulars questionnaire (HVPQ)
• Pre-inspection questionnaire: This is expected to be an online questionnaire completed by the vessel operator providing information about the vessel and supplementing HVPQ. This might include crew matrix and details of internal and external audits carried out on the vessel such as ISM audit, navigation audit, TSI report, etc.
• Certificates: The operator will be required to upload copies of all the vessels’ certificates and keep them up to update, such as after class surveys.
• Photographs: A representative and standardized set of photographs of the vessel must be uploaded. It needs to be refreshed at around 6 months intervals or when any materials change in the vessel.

How will the new question set be graded?

A bespoke, risk-based vessel inspection questionnaire will be generated using bow-tie methodology. Questions will cover these four key areas:

Core: A minimum question set required to meet the fundamental assessment criteria of the vessel type. These questions are related to significant risks on board a vessel as defined by OCIMF.

• Rotational: An algorithm will assign the non-core questions embedded into the inspection program. These questions may be allocated over several inspections of the same vessel but the order can’t be predicted.
• Conditional: Vessel-specific questions based on available data on the vessel, its operator, or the ship type such as an aspect of the vessel’s operational history.
• Campaign: Time-limited questions covering an area of specific focus in response to incidents or an industry trend. It might be similar to the campaigns used by port state control organizations targeting specific areas of a vessel and its management for a

What about the human element?

A core element of SIRE 2.0 takes a human-centered approach which will provide a defined process to uncover systemic issues that might lead to risks. The human-centered approach will take into consideration the physical, psychological, and social factors that affect human interaction with equipment, process and with other people.

This is achieved by assessing Performance Influencing Factors (PIF). Inspectors will be prepared with a human response toolkit. For each question which is associated with Performance Influencing Factors, the inspector will be asked to provide objective responses to nine areas. These areas cover a variety of factors relating to human errors such as accessibility and usefulness of procedures, human-machine interfaces or the opportunity to learn or practice.

What is the technology involved?

Instead of a static questionnaire with yes/no answers, SIRE 2.0 inspections will be conducted in digital format, in real-time, with inspectors completing a Compiled Vessel Inspection Questionnaire (CVIQ) using a tablet device. This aims to improve the overall quality of the inspection report and also increase the assurance of data. The tablet system will also record all interactions such as auto-logging of start and finish times and auto-submission of inspection reports via inbuilt GPS tracking.

How will the inspection be conducted then?

The inspector will carry out a document review prior to boarding by checking all the certificates and information given in the PIQ, certificates, etc.

The time for onboard inspection is fixed at eight hours. All the questions are allocated a period of time for the inspector to review the item in question and write their answer. The format of the CVIQ will be entirely different to the present VIQ7 format. It will be compiled specifically for that ship on that occasion for that inspection. Human and process deficiencies may be linked to TMSA KPIs. The onboard document review will be a brief sample review to confirm the certificates uploaded are correct.

The inspector must validate the photos posted by the operator and take their own photos, particularly for observations. Also if an operator's photograph is not truly representative, then the inspector may take a photo of the same scene. All questions must be answered during the course of the inspection such that the report is largely complete before the inspector leaves the vessel. The time period for the operator responses to the observations may be reduced from 14 calendar days to seven working days.

Easing into SIRE 2.0

Inspection programs are designed to lower risks. However, many inspection regimes require extensive preparations and take a long time, which causes various headaches to tanker operators. According to research, the average price of the inspection is at least 33,600 USD per oil tanker, and the inspection workload has become an additional burden to crews.

The big overhaul in the SIRE regime will require additional adaptation in the vessel’s technical operations. The requirements have become more specific, which means the normal technical operations of the vessels need to be adjusted.

In the meanwhile, with SIRE going mobile, it also indicates that inspection is entering a mobile-based era. It is therefore recommended that tanker operators start to evaluate mobile-based inspection solutions that are flexible, accurate, and able to increase efficiency. In the case of Kaiko Systems, the mobile app not only guides crews to conduct inspections but also allows them to plan, conduct, and upload inspections in one platform. This ensures that standards from SIRE 2.0 can be met while saving crews 50% of time spent on inspections.

In addition, the system can automatically verify and structure the data into a vessel health report. The dynamic analysis can reveal risks to the shore team in clicks and allows them to manage maintenance proactively. Kaiko Systems also brings great flexibility. With Kaiko Systems, intervals can be adjusted easily and reports can be customized. Thus, inspections like SIRE 2.0, Pre-PSC Inspections, routine inspections, and many more can be conducted with accuracy and efficiency.

The adoption of CII measure was the key tangible outcome of the IMO’s MEPC 76 last summer for the future of shipping emissions, which left the shipping industry divided regarding the level of ambition agreed for reducing the sector’s environmental footprint.

Although the measure practically enters into force as late as 2023, shipowners are already in the process of getting their ships certified for EEXI and calculating CII at the same time, in order to be prepared. But what does this CII refer to?

To remind, the IMO’s contradictory MEPC 76 meeting last June adopted the already-agreed amendments to MARPOL Annex VI, setting two new measures into effect at the start of 2023 – the energy efficiency index for existing ships (EEXI) and the carbon intensity indicator (CII), aiming to improve energy efficiency in line with the 2018 Initial IMO Strategy. This strategy aspires carbon intensity for international shipping to decline through a 40% reduction by 2030, and a 70% reduction by 2050 compared to 2008.

What is the CII?

Applying to all cargo, RoPax, and cruise ships above 5,000 GT, the CII is an operational index based on the Annual Efficiency Ratio (AER). This ratio is given in grams of CO2 emitted per cargo-carrying capacity and nautical mile, measuring all carbon emissions from all ballast and laden voyages, anchorage, and port stays, all divided by the deadweight and distance sailed in a year.

In simple terms, the Carbon Intensity Indicator (CII) is a measure of how efficiently a ship transports its cargo. Based on this, the ship is then given an annual rating ranging from A to E:

A – major superior performance level

B – minor superior performance level

C – moderate performance level

D – minor inferior performance level

E – inferior performance level

The rating thresholds will become increasingly stringent towards 2030, with the carbon reduction factor starting from 5% in 2023. After this, 2% will be added yearly. A ship rated D or E for three consecutive years will need to submit a corrective action plan explaining how the performance level can be increased.

What is SEEMP and how does it relate to CII?

The aforementioned performance level will need to be recorded in the ship’s Ship Energy Efficiency Management Plan (SEEMP), a mandatory, ship-specific document that lays out the plan to improve a vessel’s energy efficiency in a cost-effective manner. The SEEMP shall include the Ship Fuel Oil Consumption Data Collection Plan (DCP), which includes a description of the methodology for data collecting and the reporting processes.

What does the CII practically mean for ship owners?

Beginning January 1st, 2023, ship owners will be required to document their Attained Annual CII and verify it against the Required Annual CII to determine their vessel’s operational carbon intensity rating. This means that they can start already to prepare the following as part of their SEEMP:

• A description of the methodology to be used to calculate the ships Attained Annual Operational CII, and the process that will be used to report this value to the Administration;
• The Required Annual Operational CII for the next 3 years;
• An implementation plan documenting how the Required Annual Operational CII will be achieved during the next 3 years; and
• A procedure for self-evaluation and improvement.

How is the CII calculated?

For Bulk carriers, Tankers, Container ships, Gas carriers, LNG carriers, Ro-Ro cargo ships, General cargo ships, Refrigerated cargo carriers, and Combination carriers, the calculation method used is:

For cruise passenger ships, Ro-Ro cargo ships, and Ro-Ro passenger ships, the calculation method used is:

What are possible options for compliance?

From a technical perspective, all ship owners and shipbuilding stakeholders must consider and assess how they will support compliance with EEXI. There are several technical and operational improvements possible for shipowners who must reduce their vessel emissions and improve their fuel consumption, such as:

• Switching to alternative, low-carbon fuels
• Optimizing operations
• Reducing speed
• Retrofitting vessels with energy-efficient technology
• Alternative propulsion techniques (e.g., wind assistance)

Meanwhile, it is possible that charterers will also have a major influence over the CII by selecting the speed of the ships they charter.

What is the difference between the EEXI and CII?

The EEXI is a one-time certification equivalent to its predecessor, the EEDI (Energy Efficiency Design Index) phase 2 or 3 concerning design parameters of the vessels. The EEXI measures CO2 emissions per transport work, purely considering the ship’s design parameters. The CII is an operational indicator to be assessed annually from 2023 with yearly stricter emission limits. The EEXI and CII are applicable to the same ship types. The difference is that CII ratings will apply to ships 5,000 GT and above regardless of propulsion type, according to DNV.

 

BIMCO: Why a CII workable clause is essential

From 1 January 2023, the way in which shipowners and charterers co-operate will need to change fundamentally to allow the shipowner to comply with the CII regulation that enters into force.

Providing an analysis on the matter, BIMCO Deputy Secretary General, Lars Robert Pedersen, and Director, Contracts & Support, Stinne Taiger Ivø, explain the nature and pitfalls of the regulation and why the CII clause needs careful drafting to work in practice.

Legal requirements

A ship must calculate its “required annual operational CII” which is defined as the target value of attained CII for the ship. An implementation plan must be developed as part of the approved Ship Energy Efficiency Management Plan (SEEMP), to document for each ship how the required annual operational CII will be achieved over the next three years.

Within three months of the end of a calendar year, a ship shall report its attained operational CII to its flag state administration. This will determine a ship’s CII rating, from A-E, for the following year. If a ship is rated D for three consecutive years, or rated E, a corrective action plan, also forming part of the SEEMP, must be developed and approved.

Operational considerations

The attained annual operational CII is calculated using emissions from fuel burnt. These emissions will vary depending on a ship’s trade. The distance travelled between ports, the length of port stays, the speed and performance of the ship, the weather, and other factors influence the amount of fuel burnt over distance travelled by the ship in that year.

In addition, Mr. Pedersen and Mr. Ivø added that “a CII rating only says something about a ship’s performance in the previous calendar year and not how it has performed so far this year, nor how it will perform tomorrow or for the rest of the year. A ship can be an “E” rated ship one year and a “B” the next.”

Commercial considerations

According to BIMCO, significant factors affecting the CII rating are the length of sea voyages and the waiting time at anchor. The IMO has decided against applying adjustment or correction factors related to port operations and waiting time prior to the implementation of the CII regulation and will only review these factors by January 2026.

The challenge in developing a suitable contractual clause lies in the fact that the required annual operational CII can only be achieved if the time charterers agree to plan their operations and cooperate with the owners in a CII optimal fashion. Such fashion is not necessarily good business for a charterer.

When the CII regulation comes into effect on 1 January 2023, an owner chartering out a ship on a long-term time charter party will need the charterer to accept some limitation in the freedom to trade the ship. If not, the owner could likely be breaching the regulation.

Drafting considerations

Now, the BIMCO CII drafting committee is working hard to produce a draft, balancing the interests between owners and time charterers.

Critical issues that will be solved in the process include:

• Should owners have a right to claim damages if they suffer a loss, for example due to redelivery of their ship with a lower CII rating than the agreed?
• If it is clear that the charterers’ trade will deliver a lower than required CII rating, does the owner have the right to interfere during the charter party to take mitigating action?
• Do charterers understand, and are they willing to accept, that their trade is directly impacting the next CII rating of the ship?
• Will charterers plan their commercial trade of the ship from an emissions’ perspective – distance travelled, fuel consumed, and the length of port stays etc – to meet the targeted CII rating?
• Can charterers be assured that owners are effectively managing those areas under their control, such as maintenance?