The impact of the ballast water management convention on shipowners and banks

Abstract

Ballast water, routinely taken on by ships for stability and structural integrity can contain thousands of mi- crobes, algae and animals. When discharging this ballast water holding these organisms in a non-native ecosystem, new invasive aquatic species can be introduced. This can have to devastating consequences for the local ecosystem. To prevent further disruption of different ecosystems across the globe, the Ballast Water Management Convention (BWM) was adopted by the IMO in 2004.
NIBC has a wide portfolio of vessels which will have to comply with the IMO BWM convention. However, the possible solutions and the actual impact of this regulation is still unknown to the bank. Ship owners expect a significant impact on the shipping industry and it is suggested that a lot of vessels will have to be scrapped due to the high investment cost.

This research is conducted for ship owners and banks and will reveal the actual impact of the BWM convention. This is realised by calculating the impact on the internal rate of return (IRR) for each specific vessel. It provides the bank with a tool to monitor what effect the BWM convention will have on their clients. In addition, the tool is able to identify high risk vessels with an internal rate of return below 9%.