ELEVEN days have passed and 22 seafarers are still missing after the Polaris Shipping-owned very large ore carrier Stellar Daisy sank in the South Atlantic.
Another Polaris Shipping-owned very large ore carrier, Stellar Unicorn, has been held off South Africa due to hull cracks.
As both vessels were converted from very large crude carriers to bulkers, the recent incidents ignited concerns over the safety of other bulk carriers that were converted in the last decade.
Polaris Shipping is carrying out a special programme for the immediate safety inspection of the 27 VLOCs in its fleet, of which 21 are crude carrier conversions.
But there are around 47 such vessels which were converted into VLOCs in the current global fleet, according to Lloyd's List Intelligence data.
Most of these vessels have already reached their demolition age of close to 27 years.
A significant number of those conversions occurred when yards were well stocked with newbuildings contracts, between 2008 and 2011, and conversions were seen to be less profitable work often handled by less-established yards, Karatzas Marine Advisors' chief executive Basil Karatzas said.
“Also, as [markets] were strong in terms of freight rates, to get the vessel on the water fast was much more crucial than good workmanship, craftsmanship, et cetera,” Mr Karatzas noted. “Even newbuildings built during those days from greenfield yards are [substandard] ships.”
Mr Karatzas noted that when shipyards were chasing newbuilding orders by the dozen, conversion was done by mostly second-tier yards. Since there was a premium on vessels sold for conversion, many avoided being scrapped since a conversion buyer would pay more compared with a cash buyer, he said.
Moreover, class societies were busy chasing newbuilding orders that would keep paying fees for the whole life of a vessel versus a conversion that was business with lower margins, Mr Karatzas added. He pointed out that there was very high stress on the hull when loading high-density cargoes such as iron ore, and the same held true for custom-built newer vessels specially designed to carry iron ore. There had been cases in the past in which relatively modern capesize vessels snapped in half and sank in port while loading iron ore in Brazil, he said
The stowage factor was another important issue for these converted vessels. Since the stowage factor related to the space actually taken up by the cargo on the ship, this obviously depended on how well the ship was designed to accommodate the cargo.
Although the incident involving the 1993-built, 266,000 dwt Stellar Daisy was a wake-up call for the industry to remove these converted vessels from the trading fleet due to technical issues relating to the conversions, most of these vessels were on long-term charters, he said.
However, the increase in spot market earnings lately meant that even older vessels could earn handsome rates, making them attractive alternatives to expensive modern tonnage or newbuildings.
There would probably be some increased scrutiny of these vessels due to the recent casualty, but the freight market and economics would determine when ships are getting scrapped more than anything else, Mr Karatzas said. “As long as the freight market is cash flow positive for these low-cost vessels, it is to be debated whether there will be an accelerated scrapping schedule.”