Navigating the Future

Challenges await the tug-and-barge industry as it prepares for Subchapter M, increased use of LNG as a fuel, and cybersecurity threats. Will it be ready?

The tug-and-barge sector of the maritime industry is a vital component of the U.S. economy, moving more than 880 million tons of cargo each year. According to American Waterways Operators (AWO), the industry’s largest trade group, there are more than 4,000 tugboats and towboats and more than 27,000 barges operating in the U.S. today.

These workboats provide high-skilled and high-wage jobs for U.S. mariners who perform their duties safely, securely and with less impact on the environment than any other mode of industrial transportation. The sector encompasses the majority of the U.S. domestic fleet and has significant impact on national security, the economy, commerce, and employment. It operates largely out of the public eye, but there are major changes on the horizon that will significantly impact its future.

These changes include safety (Subchapter M), LNG, and cybersecurity. Interwoven within all three is the need to develop and empower a diverse workforce capable of meeting the demands of a rapidly changing operating environment.

Raising the Safety Bar

No longer are safe operations good enough. Today, the world demands continual improvement and unceasing dedication toward operational excellence. By learning to ask not only how to do it right, but how to do it better, a self-sustaining safety culture is created that expects and achieves high performance. A well-functioning safety management system (SMS) inherently has this type of culture, where everyone is involved and takes ownership for safety.

A handful of coastal tug and barge companies adopted the International Safety Management (ISM) Code in the late 1990s and early 2000s. They were required to implement this particular SMS framework because their fleets included vessels that were over 500 gross tons (GT) and sailed internationally. Others adopted the Code voluntarily to better manage safety and improve business opportunities with potential customers. With the impending implementation of Subchapter M in 2016 and cascading requirements from stakeholders, more tug-and-barge operators will be stepping into the SMS arena.

The U.S. Coast Guard is scheduled to publish a Final Rule on 46 CFR Subchapter M in the first quarter of 2016. It will be applicable to all towing vessels equal to or greater than 26 feet in length and to some towing vessels less than 26 feet in length when towing a barge carrying oil or other dangerous or combustible cargo. The proposed rule offers two options: Coast Guard inspections or implementation of a Towing Safety Management System (TSMS) or other recognized SMS like the ISM Code. Both options include:

• User fees
• Certificate of Inspection (COI), issued only by the Coast Guard
• Coast Guard Inspection for Certification before initial issue and reissuance of COI every five years.

The COI will be valid for five years if annual inspections/surveys/audits are completed, drydock is current, and the Internal Structural Examination (ISE) is current. Importantly, vessels can’t legally operate without a valid COI.

After the Final Rule is issued, a company has two years to develop its TSMS if they utilize that option. The initial COI must be obtained within four years from the TSMS approval date. Certain requirements for electrical and machinery systems, such as pilothouse alerter system and remote shutdown devices, were deferred until five years after the initial COI. Towing vessels moving oil or hazmat in bulk also have certain electrical and machinery requirements deferred until five years after the first COI.

The AWO was way ahead of the curve and in 1994 established its Responsible Carrier Program (RCP) to ensure safe and environmentally responsible operations. Today, RCP compliance is a condition of AWO membership. As of January 2016, members will need to implement additional RCP requirements to bridge the gap from a safety program to a continually improving SMS within their companies.

The benchmark for safe operational requirements is rising, and with it the demands on the industry. Be prepared, and make sure you have an SMS in place.

LNG as the New Fuel

LNG is quickly gaining traction in the tug-and-barge sector as a replacement for conventional oil-based bunker fuel. The reasons are obvious. It is cleaner burning and substantially reduces exhaust gas emissions (carbon, sulfur and nitrogen oxide) to meet ever-more-stringent regulatory requirements. In the last year alone, LNG-powered escort tugs have entered into service and LNG bunkering barges are in the process of being designed and developed to meet future needs at ports for LNG-powered vessels.

Currently, Coast Guard regulations for LNG vessel operations do not exist. There are only guidelines, which include CG-OES Policy Letter No. 01-15 for LNG Gas Fuel Transfer Operations and Training of Personnel on Vessels Using Natural Gas as Fuel, and CG-OES Policy Letter No. 02-15, Guidance Related to Vessels and Waterfront Facilities Conducting Liquefied Natural Gas (LNG) Marine Fuel Transfer (Bunkering) Operations. The Policy letters provide minimum safety and security requirements. Regulations will still need to be established by the Coast Guard.

In the meantime, recommended documents for safe LNG vessel fuel operations include:

• ABS Bunkering of Liquefied Natural Gas-fueled Marine Vessels in North America, 2^nd Edition, September 2015
• ISO technical specification for supply of LNG as fuel to ships (ISO TS 18683), January 15, 2015
• IMO draft International Code of Safety for Ships using Gases or other Low-Flashpoint Fuels (IGF Code), December 5, 2014
• ABS Guide for LNG Fuel Ready Vessels, December 2014.

How will companies in the tug-and-barge industry coordinate resources and transition to cleaner-burning fuels like LNG? How will industry best partner with the Coast Guard to establish cost-effective and timely safety requirements for LNG operations? These are some of the open-ended issues that will need to be resolved.

Cybersecurity – The New Frontier of Risk

The U.S. Department of Homeland Security’s National Infrastructure Protection Plan, 2013, defines cybersecurity as: “The prevention of damage to, unauthorized use of, or exploitation of, and, if needed, the restoration of electronic information and communications systems and the information contained therein to ensure confidentiality, integrity, and availability; includes protection and restoration, when needed, of information networks and wireline, wireless, satellite, public safety answering points, and 911 communications systems and control systems.”

More and more, computer systems operate and control critical communication, navigation, engineering, safety and environmental systems both onboard the vessel and ashore. What would happen if it all went down? Or the information was wiped out unintentionally by someone who wasn’t trained on how to enter and manage data?

To deal with such cybersecurity threats and incidents, Congress passed five cybersecurity-related bills in 2014, which were signed into law by President Obama. These laws will have far-reaching impacts on government and industry. Earlier this year, the Government Accountability Office (GAO) noted a 1,121 percent rise in cybersecurity incidents from 2006 to 2014. These included:

• Unauthorized access
• Identity and intellectual property theft
• Fraud
• Improper use
• Scans/probes/attempted access
• Malicious code
• Phishing
• Suspicious network activity
• Social engineering.

According to INTERPOL, the world’s largest international police organization, cybercrime is one of the fastest growing areas of activity, exploiting anonymity, convenience and the speed of modern technology. Incidents in the maritime industry have included forcing an offshore drilling rig to shut down for a prolonged period of time, computers being rendered inoperable at one of the world’s largest oil companies, and major cloud storage networks being compromised by hackers.

The following recommended steps may help to mitigate the risk of cyber incidents:

1. Incorporate cybersecurity into the company culture.
2. Include cybersecurity threats in your risk-management practices.
3. Integrate cybersecurity into SMS planning.
4. Monitor computer networks for malicious and abnormal activity to ensure appropriate safeguards are in place to control risk.
5. Report cyber incidents to the National Cybersecurity and Communications Integration Center (NCCIC).
6. Include cybersecurity as part of the maritime curriculum in secondary and tertiary educational programs like STEM.

Forewarned Is Forearmed

In these fast-changing times, it is critical that senior management establish well-defined strategic goals that are communicated and understood throughout the organization. Subchapter M, LNG and cybersecurity are just three of the major issues shaping the future of the tug-and-barge industry.

Be ready: Develop a plan based on sound risk-management principles. Fine-tune your SMS by incorporating security risks and incidents, and ensure your workforce is properly trained and empowered to help you achieve operational excellence. The future is closer than you think. – MarEx

Dione Lee is President of QSE Solutions, a compliance management consultancy for the maritime industry.