Page 10: of Maritime Reporter Magazine (November 2000)

Investment in Design

Cornering the ULCC Niche by David Tinsley, technical editor

For an independent tanker owner to undertake a newbuild fleet development program amounting to 3-million tons of crude oil carrier capacity in itself demonstrates a high degree of business verve. But to emphatically put one's own stamp on the design, construction and equipping of such tonnage is an added expression of will, given the production- driven tendency in the industry towards shipyard-orientated and class-minimum specifications.

Piraeus-based Hellespont Shipping

Corp.'s commitment to a new generation of ultra large crude carriers (ULCCs) is exceptional on its own account, given the paucity of new investment in the cat- egory over the past quarter-century. The company is already an active exponent of oil transportation on the ULCC scale, controlling six tankers in the 315,000- 421,000-dwt range. The technical chal- lenge presented by a return to new con- struction in the ULCC segment is all the greater for the added structural com- plexity imposed by mandatory double hulling.

In addition to four 302,700-dwt

VLCCs booked with Samsung Heavy

Industries, Hellespont has three 442,470-dwt newbuilds contracted at

Koje Island's other major shipbuilder,

Daewoo Heavy Industries. Confirmation of a fourth ULCC from the Okpo yard is on the cards. It claims that both classes of vessel, due to be commissioned between September next year and

December 2002, will set a new standard for large tankers.

Counter to the trend in the industry, where owners' actual preferences are often subjugated to shipyard production considerations, Hellespont's nascent

VLCCs and ULCCs reflect a very high degree of tailoring to the contractual party's requirements founded on expec- tations of long life and dependable, safe — as well as efficient — service.

The additional features and construc- tion criteria stipulated by the shipown- ing group are understood to have carried a premium in excess of $10 million rel- ative to the going market rate for such tonnage. Judicious timing of the order, including the program's array of options, now largely exercised, presumably made the additional expenditure more palat- able to the company, which is 51 percent owned by Basil Papachristidis' Helle- spont Group and 49 percent by Loews

Corp.

The extra capital outlay is indeed a measure of a long-term trading perspec- tive, and will create a more effective platform for the sound operating and maintenance practices, which are also elemental to the Hellespont philosophy.

The shipowning group is unequivocal in its belief in the inter-relationship between investment in a higher standard of design, construction and equipment in factors of efficiency, market competi- tiveness, safety and environmental pro- tection.

Moreover, the improved ship produc- tivity arising from the adoption of a higher power concentration for a faster speed, coupled with the extra shipment capacity vested in the ULCCs, should place the company in a particularly advantageous earnings position at times of exceptional rates. All longstanding shipowners know from experience that even short-lived peaks can generate enormous revenue gains that more than offset long periods of trading at lacklus- ter rates.

Introducing a higher standard from the outset, and being equally diligent in ensuring the requisite upkeep, also has a signal bearing on asset values in a no less fickle sale and purchase market.

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