Views on our future

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Views on our future

• Lars Carlsson
• Chairman, Intertanko
• Athens March 2002

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Views on shipping

• Shipping is lousy and will remain lousy
• Ship owners are their own worst enemies
• Ship chartering A rate and a date
• Without ships the world comes to a halt
• God put raw materials and consuming areas well
  apart with oceans in between.
• To save 10 in production cost is impossible. In
  shipping we do it

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• What we do not achieve today as to safety and
  quality in transportation, will be forced upon us
  tomorrow by people less competent and less
  motivated to make a good job out of it than us.

4
VLCC Earnings, deletion and contracting
000/Day
MT VLCC yearly average T/C net rates

VLCC contracting
VLCC deletion
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Newbuilding prices
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Ship building prices and values

• Are we in a long term trend towards lower prices?
• Efficiency increases
• Currencies get lower
• Over capacity of everything

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Orderbook and the effect of rule 13G 2002-2007

• Orderbook Year when 13G Orderbook/13G
• have repl. orderbook outphase -2007
• VLCC 20 2005 70
• Suezmax 24 2005 80
• Aframax 23 2007 90
• Panamax 19 2007 50
• 20-50 18 2005 60
• 5-20 5 2003 10

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Ship building prices

• Can anyone give me a good reason why prices
  should increase in the next few years?
• Why did we order so much???

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What determines yard prices? Shipbuilding
capacity and costs.
Index 94100
Mn CGT
Total Yard Capacity
Total Yard Output
Av Yard (/CGT) Price Index
Av Yard (/CGT)Cost Index
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TANKER SERIOUS CASUALTIESBY FIRST EVENT
CATEGORIESOIL TANKERS gt6000 GRT
17
32
21
27
1990-97 Avr.fleet 2647, Tot.cases 357
Source LMIS Database
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Sensitive areas some examples
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Sensitive areas - definition

• Vulnerable ecology
• Confined waters
• Intense traffic

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Sensitive areas proactive measures

• Traffic control
• Manoeuvrability criteria
• Redundancy criteria

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We have our choices

• Order cheap ships
• See market go down
• Trade spot
• Undermine our balance sheets
• Compete by low cost
• Lowered influence

• Order redundant ships
• High quality crews
• Charter arrangements
• Solid income/depr.
• Compete by quality
• Improved influence

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Higher NB standards(supported by Intertanko,
Union of Greek Shipowners, HK Shipowners
Association, Intercargo, BIMCO, ICS)

• Steel and coating is never as cheap as at the NB
  yard
• Smart, high standard ships are cheap - Ordered
  in low market - Well planned
• - Well inspected - Good Class - Good
  reputation in market - Improved chance for long
  charter - Long life better resale value -
  Good sleep at night

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Smart NB standards

• USD 2.000 per day extra earning capacity
• NPV 9 million dollars

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MT STENA VISION

• Stena Vision
• A good example of a double/double/double tanker

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VISION for tankers

• A globally respected and profitable industry
  based on long term, safe transportation
  solutions in close co-operation with other links
  in the safety chain

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Safe Tanker earnings formula

• Cargo earnings
• Safety earnings
• Economic life

Ship price
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Tool to reach our vision

• TRANSPARENCY!

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The political environment of Intertanko
Consumers and public opinion
Legislators
States/Ports
Oil Companies and charterers
Owners Intertanko
Intertanko influence
Feedback from consumers
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Shipowners role TOTAL RESPONSIBILITY for his
ships!
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• Message The tanker owners are here to do our
  share and an even better job

togetherwith you !
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• Free Competition
• Cleaner Seas
• Safe Transport