Spotlight on Classification Societies: ABS and DNV Report Good Earnings and Expanded Fleets

A robust newbuilding market and expanding fleets provided the underlying support for positive reports from both the American Bureau of Shipping (ABS) and Det Norske Veritas (DNV), two of the world’s largest ship classification societies. ABS reported this week that “a significant number of older vessels undergoing survey to extend their service life in the buoyant market led to 2006 being the most active year ever in the long history of ABS, the world’s third largest classification society.” Also disclosed to ABS members at their annual meeting held in New York were details of the continuing growth in the ABS fleet and the positive outlook for the society based on its record order book.

DNV reported that its share of the world fleet by gross tonnage was about 16%, but its share of newbuildings contracted during 2006 was much higher, 26% or 605 ships. A total of 5,228 trading vessels totaling 113.5m gross tons were classed by DNV at year-end; an all-time high for DNV. In comparison, at year’s end, the ABS classed fleet had reached 126.5m gross tons for the third consecutive record year. Its fleet size of almost 10,000 vessels is thought to be the largest classed fleet, based on numbers of vessels.

A continued high level of demand for new ships of nearly all types and sizes throughout the past year raised the ABS year-end order book to yet another record level of 1,746 vessels, aggregating 28.1m gross tons, with tankers forming the mainstay of new-contract activity. Once again, preliminary figures show that an additional 12m gross tons of newly-contracted tonnage has been added in the first quarter of 2007. In response to the added capacity, ABS reported it had expanded its worldwide work force by about 250 people, or an increase of 14 percent, over the prior year.

As a private, not-for-profit entity, ABS is not required to, and does not release detailed financial information. In contrast, DNV reported making a USD 123-million operating profit last year, up significantly from the year before. In response to this, a DNV press release announced, “This has led to positive developments for DNV, and the company has achieved a growth of 16 percent in its core activities. Following the adoption of a new strategy in June 2006, the past year laid emphasis on shaping and growing the DNV organisation. The business areas have been restructured to reflect a clearer focus, and we recruited 1000 new professionals to gear up for the growth required to meet the targets in our strategy. The changes have been well received in the marketplace and we have strengthened our position in all the sectors activities throughout 2006.”

•ABS

Founded in 1862, ABS is a leading international classification society devoted to promoting the security of life, property and the marine environment through the development and verification of standards for the design, construction and operational maintenance of marine-related facilities. A full copy the ABS 2006 Annual Review is available from the ABS Web site at: http://www.eagle.org/news/pubs.html. The review contains more complete statistical data and a summary of the organization’s activities in 2006.

•DNV

Det Norske Veritas (DNV) is an independent foundation with the objective of safeguarding life, property, and the environment. Its history goes back to 1864, when the foundation was established in Norway to inspect and evaluate the technical condition of Norwegian merchant vessels. DNV can be found on the Web at http://www.dnv.com/.