Partnerships, Prodding Propel the Ballast Water Treatment Game
By Joseph Keefe
As the regulators inch towards the finish line, stakeholders and industry players are not sitting on their hands. For the OEM sector, partnerships and strategic alliances are emerging in advance of global mandates to install the equipment.
Ballast Water SITREP
The International Maritime Organization (IMO), in response to proposals by INTERTANKO and other industry advocates, has agreed to commence a review of the ballast water management system (BWMS) type approval guidelines. At the same time, IMO agreed not to penalize those owners who have already installed BWMS that are approved in accordance with the current approval guidelines. That’s nominally good news for the international ocean shipping community, whose collective group of 70,000 ships of all shapes and sizes will eventually have to invest as much as $US90 billion in new ballast water treatment systems once the IMO Ballast Water Management Convention enters into force.
It’s anyone’s guess as to when the convention will be finalized, but most stakeholders are hoping that it comes before the end of 2016. At the most recent IMO Marine Environment Protection Committee (MEPC) meeting, the combined instruments of ratification from Turkey, Japan and Jordan brought to 43 the number of countries comprising approximately 32.5% of the world’s tonnage, who have ratified the BWMC. With two other countries also nearing ratification, the tonnage figure could soon increase to about 34.2%, less than one percentage point away from the Promised Land of 35% which would bring the convention into force.
Even global harmony on the issue won’t bring it to fruition, however, especially when the U.S. Coast Guard has yet to grant ‘final’ approval to any manufacturer and the alternative compliance nods touted by two dozen OEM’s provide no guarantee that, five years after installation, that those systems will receive final Coast Guard approvals. Add to that the fractured, Balkanized individual U.S. state benchmarks – with as many as 16 in play at last count – and one can understand the lack of confidence that shipping companies have as they face very expensive new equipment installations that have no guarantee of being approved.
IMO approvals are nice, but a large percentage of this tonnage will eventually trade in U.S. waters. Unanswered questions also remain about the perceived lack of robustness of current IMO type-approvals, ballast water sampling criteria and the need for ‘grandfathering’ of type-approved equipment already or about to be fitted.
It can be argued that it is unreasonable to expect shipowners to invest millions of dollars without assurances that the equipment will not have to be replaced. Nevertheless, stakeholders, and BWT manufacturers are moving forward to ensure that the right equipment, in the quantities required, will be available when the bell rings. At this summer’s SMM maritime exposition held in Hamburg, Germany, it was clear that path forward for many resides in the formation of strategic partnerships with key players.
It turns out that ballast water treatment system manufacturers don’t necessarily want to be installation engineers. They prefer to concentrate on what they do best: produce equipment for the task at hand. Beyond this, many of these BWT players simply don’t have the market access and/or relationships to adequately penetrate the coming multi-billion dollar global bonanza. On the other hand, the shipyards and equipment distributers do.
The Way Forward: Partnerships
When Damen Shipyards in September announced that it had established three strategic partnership agreements with Ballast Water Treatment (BWT) system suppliers, it cemented the concept of a worldwide One Stop BWT Retrofitting Service. Designed to gives shipowners peace of mind in their challenge to comply with ballast water regulations in the most cost effective and timely way, it also provided three BWT manufacturers with not only expedited and well-connected market access, but also the engineering and design expertise of one of industry’s best known shipyard names.
Gert-Jan Oude Egberink, Damen Manager Ballast Water Treatment, told MarPro in late October, “By working with selected BWM partners we will be able to offer a total cost effective package in a coordinated timely way. We need to ensure installation is done one time right as the vessels need to be compliant when they leave the dock. This can only be done in close partnerships and by standardizing and specializing as much as possible. With the current selection of partners we can cover a very broad range of vessel types and customer.”
Also according to Damen, its BWT experts will use 3D scan techniques to create a customized engineering package at any one of Damen’s 32 ship- and repair yards located worldwide. Systems will also be installed at a customer selected non-Damen yard or during operation.
The deal(s) address the coming possibility of BWT equipment supply problems and the lifecycle support that will eventually be needed to support this globally mandated hardware. Damen, perhaps best known for its ability to quickly produce (and stockpile) quality hull forms that bring vessels to market sooner, now promises the same sort of equipment availability in the ballast water game. The three partners include BWT systems manufacturers Trojan Marinex, Bio-UV, and Evoqua Water Technologies. All three boast IMO type approvals and are U.S. Coast Guard Alternate Management System (AMS) accepted.
And, while Damen arguably made famous the “just in time” delivery of vessels through its stock hull forms, the BWT game is just a little bit different, says Gert-Jan Oude Egberink. “A BWT retrofit needs to be prepared well to ensure ‘one time right.’ It will never be a full off the shelf solution because of the variety in vessel designs, engineering and class requirements.” And he cautioned those getting ready to choose a system, “Customers therefore need to anticipate that they need to start preparing their BWT retrofit at least 10 months before their renewal survey.”
Explaining the selection process, Gert-Jan Oude Egberink said, “We want to standardize as much as possible, but one technology/system type does not fit all. Based on the vessels characteristics, operational requirements and customer preference, Damen BWT experts select the most appropriate BWT technology for retrofitting. There are about 50 systems on the market and it is impossible to specialize in all and do a proper engineering and installation job. Besides not all type approvals of these 50 systems are the same. Some have not been tested under the most difficult conditions and will probably not meet USCG test standards.”
For its part, Trojan Marinex delivers BWT systems purpose-built for the marine environment, providing filtration + UV in a single, compact unit. The Canadian-based firm touts, among other things, the low power draw of its equipment and deep roots and decades of experience in water treatment. Bio-UV designs and manufactures the BIO-SEA BWT system. The system, according to Damen, is a reliable, innovative, modular and cost efficient UV based system. BIO-SEA, with its smaller footprint, is especially attractive to smaller vessels needing BWT systems. Evoqua Water Technologies provides their SeaCURE BWTS. Operable in all salinities, it is based upon proven electrochlorination technology.
The Trojan Marinex market outreach isn’t confined to just Damen, however. Jim Cosman, Market Manager at Trojan Marinex explains, “We’ve also partnered GEA Westfalia on a non-exclusive basis and they will be offering our product. They already have a ballast water treatment system, in fact, a filter / UV system. So why partner with them? It makes sense for three reasons: their existing system is targeted to smaller vessels. Our system is explosion proof, addressing the concerns of the tanker sector. And, finally, Trojan gets access to the people they are already talking to.”
Separately, BWTS supplier Hyde Marine recently followed its 2013 announcement that it had named W&O Supply as its exclusive sales distributor in the U.S. and Canada for its Hyde GUARDIAN solution with a number of other strategic moves. These notably included the news that Goltens Green Technologies division will assist shipowners in determining how to best fit Hyde’s equipment onto their vessels.
Trojan Marinex: First in the Game, Late to the Water
Trojan Marinex might just be biggest water treatment company that you never heard of. That’s probably about to change. In terms of UV, they are today the largest supplier in the world for water treatment markets. With direct access to nearly 40 years of shore-based water treatment expertise, key markets include municipal plants that treat both drinking water and waste water. For example, all of the water in New York City – as much as 2.2 billion gallons daily – is treated by Trojan Marinex systems, as are City of Hong Kong and Chicago, too.
A part of Danaher Corporation (DHR : NYSE), Trojan Marinex enjoys the support that comes with a corporation that took in over $19 billion in revenue in 2013. And, while Trojan considers the BWT market an important one, they aren’t going to go under waiting for it to happen. Not everyone in the market can say that.
Trojan Marinex originally entered the market in an exclusive agreement with Wärstilä, says Jim Cosman, Market Manager at Trojan Marinex told MarPro in November. “Things were moving along nicely. And then, Wärstilä purchased Hamworthy. They had two existing Ballast water treatment systems so we severed that agreement and it is in part why we’re doing what we do now. Right now, we have minimal experience on the water, but we also have more lamps installed globally than any other OEM in the water treatment game. Our installed base in that regard dwarfs our marine competitors combined.”
Cosman continues, “We have the financial wherewithal to weather this, but we also have the vision. We understand and we’ve been through this in other markets. And we understand how these markets evolve, and while it is frustrating in the early stages, we understand regulated markets. That’s one of the things that Trojan does very well – we work in regulated markets. It is why we are doing the right things now, getting the right validations in place, designing for the US Coast Guard standards, because we understand how this will evolve.”
Cosman, however, brushes aside the inference that Trojan Marinex is late to the party, insisting, “We’ve been working on our IMO approvals and just got that. We would have certainly liked to have entered this market far sooner than we did. But, it took an incredible amount of work and testing to get the product stable. Our approach – and sure we had plans to be in 2-3 years earlier – but we did a lot of testing and we found we weren’t ready. Others – and here’s what’s different – pushed their products on the market and they’re now on version 3 or 4. We did a lot of that testing behind closed doors. So version 4 is our final version and it’s the one we bring to market.”
Cosman also says that while many competitors can claim that they have 200 systems on the water, the majority of those systems aren’t even turned on, adding, “We waited and stabilized the technology. Some early systems are going to have to be redesigned. And, we think we will get U.S. Coast Guard approval far sooner than others. Our testing has been done far more recently in Coast Guard facilities. We didn’t want to impact our good name and reputation just to get into this market. We came out with the right solution when we were ready.”
There’s no ‘silver bullet’ when it comes to ballast water treatment systems. And, arguably, there is a place and a vessel for every type of application. Cosman laments that, in some circles, UV treatments are still misunderstood – especially on the water. “Unfortunately, misconceptions about UV’s ability to treat poor quality water remain high. There is a long track record of utilizing UV disinfection to treat wastewater, and, in most cases, wastewater is of poorer quality or lower UV transmittance (UVT) than ballast water. UV can, unequivocally, treat murky ballast water, as long as the system is engineered to the highest of standards. Our certainly is.”
Cosman’s final point involves testing and geography. Every port is different, he says. No matter where in the world your vessels trade – whether it’s clear seawater or murky fresh water – your ballast water treatment system has to work. And, because water quality varies from port to port and day to day, different water quality parameters become more or less important depending on the type of ballast water technology used. Cosman adds, “In the case of Electrochlorination systems, the salinity and temperature of the water will have a dramatic impact on the overall efficacy of the system. For UV systems, UVT is the most important parameter impacting the effectiveness of the system.” It is therefore important to test for all possible water conditions.
Approvals: IMO, AMS and Everything in Between
There are – at last count – as many as 53 IMO-type approved systems on the market. According to Jim Cosman, one of the notions out there right now is that Trojan Marinex was late to the game. Nothing could be further from the truth, he says, adding, “Part of that was by design. We did our IMO approvals and essentially killed two birds with one stone, doing the IMO testing at the same time as we did all of our USCG testing. What’s different from everyone else is that we did it all according to the USCG ETV protocol, which is the protocol that governs how you actually do the testing. So, at the end of the day, we got our IMO approvals but also performed a key step in the Coast Testing process, as well. Building on that, we got our IMO approval in March 2014, and we’re now in the process of applying for USCG type approval.”
Cosman targets mid-2015 for his final approvals, but no one really knows how that will play out. In truth, no one yet has the full approval. As of September, 23 companies had achieved interim AMS approval. Cosman has his own thoughts about AMS, however. “AMS – and we have AMS as well – is surely a political solution and just because a company has AMS approval, it carries no guarantee that the system will eventually be type-approved. We’ve also been trying to educate the market about the pitfalls about believing some of the creative claims being made by other OEM’s about what AMS means. What does it mean? It means that you can use that system to discharge ballast in US waters for a period of five years, after which you have to comply.”
Shipyards today will, says Cosman, use AMS to narrow down a very big list of suppliers. With a list of 50+ different BWT providers, that list can be culled down to less than 30 based on AMS alone. He adds, “The danger in that is that these are only interim approvals. Owners need to focus on USCG approval. There are suppliers beyond ourselves who have firm plans to get this approval but we are of the opinion that just 3 to 5 will get USCG approval in 2015. And, that’s why many suppliers are focusing on AMS – they are facing a very long road to get that final approval. The majority of suppliers are not going to be able use their existing testing results and are going to have to revalidate their data that they did for IMO because they did the work five years ago and they didn’t do it to Coast Guard standards, nor did they do it in an accredited facility.” He adds, “This is the key issue in the market today. Some vessel owners are very aware of it. And, others are not.”
The Market Evolves
Gert-Jan Oude Egberink, Manager of Ballast Water Treatment at Netherlands-based Damen Shipyards, also weighed in. “The market for BWT retrofits has been soft so far. Some regional operators will wait until it is clear whether they will be able to receive route exemptions or not. Many may also wait for USCG type approved systems to be available. In the end most will wait with retrofitting as long as possible. The big rush will start after full IMO ratification and we are preparing for that. As IMO is expected to be ratified next year we have seen more requests coming in past few months. We think it is wise of these proactive shipowners to start preparing and build their BWT retrofit strategy.”
But, as owners wait and ponder the progress of the regulations, the time and expense of achieving final Coast Guard type approvals could eventually remove many BWT players from the field. Jim Cosman expects “significant” market consolidation during that timeframe. In the meantime, however, one part of the market that is moving very well is for offshore service and supply vessels – or in other words, Damen Shipyard’s sweet spot. Cosman explains, “A lot of these vessels are being built in or for Norway markets and the systems are being installed so that when they move markets – from Norway or U.S. Gulf Coast to Brazil, for example – they’ll able to load and discharge ballast. It isn’t something that they’ll do regularly, but they want the systems on there so that the vessels are versatile and can be moved from market to market.”
In September, the first fruits of the Damen partnership plan became apparent when Damen selected the Trojan Marinex Ballast Water Treatment (BWT) system for a fleet of Platform Supply Vessels (PSVs) it is building for Atlantic Towing Limited. When launched, the vessels will operate in the challenging, subarctic waters of the Hibernia and Hebron oil fields, off Newfoundland and Labrador.
In the same target rich market, Hyde Marine In September cemented its position as a strategic supply partner for ballast water treatment (BWT) systems by Edison Chouest Offshore (ECO) for use on ECO’s extensive fleet of vessels. At the same time, Hyde executed a Letter of Intent with ECO to guarantee the availability of BWT systems for compliance with regulations for ECO’s growing fleet of more than 250 vessels. ECO has already ordered more than 15 Hyde GUARDIAN systems, with several already installed and in operation.
The ability to provide equipment in a timely manner once the regulatory floodgates are opened will be an important part of the equation. Damen, for example, is counting on BWT partners to be able to produce that equipment as demand increases. To that end, says Cosman, Trojan Marines is more than ready. “We’re early in the relationship and the market has not yet fully evolved to the point where they have that urgency, but that’s a realistic scenario. And, one of the things that differentiates us from other technologies, is that we have robust manufacturing capabilities already, having been in this business for more than 40 years. We have control over our supply chain, and a Danaher business system which is modeled after the Toyota system.”
Partnerships & Wherewithal Will Carry the Day
As the ballast water treatment landscape begins to approach the end game, it is clear that partnerships and staying power will be two key aspects of the successful BWT stakeholder solution. That’s because the need for (a.) market access and (b.) engineering and installation assistance have never been more apparent. Beyond this lurks the reality that final approvals for all markets may be as much as two years distant. Some shipowners will assess their options carefully and take the plunge while others, wary of making the wrong choice, may wait it out a bit further. In the meantime, the BWT field ebbs and surges with all parties questing for the brass ring of a U.S. Coast Guard final approval. When that comes is anyone’s guess. Outlasting the field will therefore take cooperation, staying power – and partnerships.
(As published in the 4Q 2014 edition of Maritime Professional - www.maritimeprofessional.com)