Compliance actions by US regulators coupled with slow shipowner installation trends could have heavy cost ramifications, as thousands of vessels begin the process of installing ballast water management systems (BWMSs) ahead of an initial September 2019 deadline.
Shipowners given compliance extensions by the US Coast Guard (USCG) are being affected by an updated policy published earlier this year. The posting, made on the USCG’s Maritime Commons website on 7 March, acknowledged that upcoming drydock dates can “slip” by a day, a week, or more, depending on circumstances both within and outside the shipowner’s control.
In some instances of a date slip, the USCG noted, owners have requested that their original equipment installation compliance extension, which the USCG began granting in 2015 because of a lack of US-certified ballast water equipment, be amended to reflect the slip.
“If a new extension is granted, it will likely be for two and a half years from the date of the originally scheduled drydock date, rather than extending until the date of the next scheduled drydock (which usually takes place every five years for most shipowners),” the USCG wrote.
For those shipowners that experience a date slip, the new policy essentially halves the amount of time they have to install a BWMS. Shipowner representatives also said that instead of installing the system during a ship’s regular drydock schedule, a special, separate drydocking would have to be made to complete the installation.
Based on USCG data, there are approximately 12,000 vessels with extensions that terminate on the vessel’s entry to its next scheduled drydock and thus could be held to the stricter standard.
Jeanne Grasso, a partner with law firm Blank Rome, said the policy could cost shipowners up to USD500,000 or more in added drydock costs that they did not have to spend under the previous ‘next-scheduled drydock date’ policy.
“It’s a huge policy difference that had only the warning of a blog post, not even a policy letter,” Grasso told IHS Markit. “That amount of money is not insignificant to some operators. And it’s going to come up a lot. It’s not uncommon to have a drydock delay of a few days,” she said.
A more long-term trend affecting shipowners was revealed by Tokyo-based classification society ClassNK in an analysis of retrofits planned over the next six years.
Of the 5,400 ships registered with ClassNK that still require a BWMS retrofit, more than half are scheduled for 2022 (see chart, below).
“As difficulties are expected in the installation of BWMSs if everyone around the world waits until 2022, ClassNK recommends installing early,” the class society stated.
The trend to wait until as late as possible to install a BWMS “is probably not unique to shipowners with ships registered with ClassNK”, noted Norwegian class society Gard.
“There have been reports of operating difficulties with early designs of treatment systems and the limited number of systems with type approval for the stricter USCG regulations. When taking into account the costs associated with retrofitting a system, it is not surprising that shipowners want to increase their chances of success by delaying the decision until the last possible minute,” noted Gard.
Mark Riggio, president of the Ballastwater Equipment Manufacturers Association, warned in an open letter to the industry on 21 September that it is “already the last possible minute”.
For shipowners who have yet to install a BWMS, “you absolutely need to [do so] now so you can learn how the system really works, how the company really performs, and what your crew needs to know before compliance is mandatory [when ballast water will be treated by regulators with the same stigma as oily bilge water],” he said.
Kathy Metcalf, president of Chamber of Shipping of America, which represents US-based domestic and foreign shipowners, said she understands why the USCG is trying to push shipowners into compliance after years of granting them extensions.
“[The USCG] feel like they’ve been yanked around by shipowners that haven’t been preparing sufficiently for this,” Metcalf told IHS Markit. However, she said, “when you’re a shipowner that has a contract signed with a ballast-water equipment manufacturer and you’re set up for installation during a certain outage, we just want to have the same amount of time we would have had but for a slight slip in the drydock schedule.”
The agency explained that extensions “may be granted for no longer than the minimum time needed for the vessel to comply with the requirements”, adding, “The extension will generally not be longer than 12 months from the vessel’s compliance date and may not necessarily coincide with the vessel’s next scheduled drydock date.”
Sean Brady, chief of the USCG’s office of operating and environmental standards, said that for vessels that fail to meet their drydock dates through a date slip, the extra two and a half years would get the vessels to an interim survey – known as an underwater survey in lieu of drydocking (UWILD) – that can be done at a ship repair facility while the ships remains at berth.
“We surveyed ballast-water manufacturers to find out the cost and how practical it is to do an installation in a UWILD, and the vast majority said they could work around the vessel operators’ schedule to begin installation,” Brady told IHS Markit. “Some manufacturers do require at least part of the installation to take place during a drydock, but many others can install a significant amount of equipment [during an interim survey],” he said.
Brady acknowledged that cutting in half the amount of extension time provided to vessels to install a BWMS could be viewed as needlessly penalising vessel owners, particularly those for whom a date slip was out of their control.
“It’s a valid argument that we’ve heard from a few owners and we have a request for reconsideration pending that will be looked at closely. But it’s not valid for a shipowner that’s a week late because he happened to be conducting trade and didn’t bother to inform us. We’re not here to kick out boats. We’re here to help facilitate safe trade through compliance,” he told IHS Markit.
Want to understand more about ballast water compliance? John Gallagher will be hosting a webinar on what owners need to do during the countdown to September 2019. Sign up now