Salvage Masters of the World

THE TSAVLIRIS BROTHERS RUN A TIGHT SHIP FOCUSED ON EMERGENCY RESPONSE AND THE USE OF LLOYD'S OPEN FORM.

case study

By Wendy Laursen 2017-11-17 14:59:32

(This article was originally published in the 2017 Sept/Oct edition)

TSAVLIRIS SALVAGE is among the world’s most active emergency response contractors for maritime casualties, having handled over 2,500 such incidents in the last 45 years. With tugs stationed permanently at strategic locations worldwide and highly experienced personnel, the group’s international activities embrace every service relating to marine salvage and towage, extending to complex wreck removals and pollution control.

THE FOUNDER

Principal George A. Tsavliris runs the group alongside his two brothers, and their shipping roots go back to the mid-1920s when their father, Alexander G. Tsavliris, who founded the business, arrived in Piraeus as a refugee from Asia Minor. Tsavliris says the synergy that drives the brothers’ success today is built on the foundation of their father.

As a young boy, one of Alexander G. Tsavliris’ first jobs was working on a small harbor tug. This sparked his passion to be actively involved in salvage and towage. Working as a deckhand in the morning and company clerk in the afternoon, Alexander also attended night school to acquire an education. He continued his training in London, working his way up through the ranks before establishing his own business in 1939.

At the end of the Second World War he purchased his first ship, a 1,200-dwt collier, as he set about building a fleet of dry cargo ships. Alexander returned to Piraeus in 1956 to become one of the expanding shipping community’s leading shipowners. In 1964 he established Tsavliris Salvage & Towage and by 1970 had assembled a fleet of 29 vessels. The new enterprise soon became the largest operation of its kind in the Mediterranean Sea and beyond.

In addition to being a significant employer with more than 1,000 – mainly Greek – seafarers, Tsavliris had long contributed to supporting the Greek economy by bringing in significant sums of foreign currency. And by maintaining his fleet locally, he helped foster the development of the country’s ship repair sector.

Having created a major international shipping enterprise, Tsavliris sadly passed away in 1973 at the height of his career and the relatively young age of 59. During his 34-year journey in the shipping industry he had managed to establish a solid group that numbered among its activities the largest towage and salvage enterprise in the history of Greek shipping.

THE SECOND GENERATION

His three sons – Nicolas, George and Andreas – took over and sought to strengthen the family’s ocean-going fleet, a process that included ordering two new 26,272-dwt bulk carriers in Brazil, which were delivered in 1978 and 1979. Later they added a newbuilding Handymax from Mitsubishi and acquired various, modern second-hand dry cargo vessels.

By the early 1980s, however, as recession took hold in the shipping markets, they realized they would have to concentrate all their efforts on the salvage sector in the hope of becoming an established worldwide salvor. So as and when the opportunity arose they sold off the dry cargo fleet to focus on salvage.

Even during the worst period of the market crisis, the Greek flag policy of the group was maintained. By showing loyalty to the standards established by their late father, the Tsavliris brothers continued to strengthen the family enterprise while, at the same time, adapting to changing times. With the participation of the younger generation, Tsavliris plans to reenter the dry cargo sector in the near future. In this way they will be able to cultivate the policy of diversification in the areas that essentially lie at the root of the Tsavliris name.

FOCUS ON SALVAGE

Tsavliris cited several examples of major salvage jobs the group has undertaken over the last few years. One was the Panamax bulk carrier Los Llanitos, which grounded on rocks off Mexico’s west coast in 2015 during Hurricane Patricia – the strongest hurricane ever recorded in the Western Hemisphere at the time. The company provided salvage assistance in cooperation with U.S.-based partner Resolve Marine Group.

The operation to remove bunkers and pollutants lasted a month. All the necessary vessels and equipment were mobilized from the U.S. and Panama. As weather conditions did not allow any approach by sea, portable equipment and salvage personnel were transferred on board the casualty by local helicopter. Over the course of the operation, about 500 tons of hydrocarbons were pumped out and transferred safely ashore.

When the container ship Yusuf Cepnioglu, laden with 200 containers, grounded and wrecked on the northwestern coast of Mykonos Island, Greece, in 2014, Tsavliris provided salvage and anti-pollution services and, together with Greek partner EPE, initiated major cleanup efforts. Over 500 cubic meters of debris were collected in the following weeks, and oil booms were positioned near the local power and desalination plants to prevent the intakes from clogging up.

The environmental ramifications to both marine life and the shorelines of Mykonos, Delos, and Rhenia were highly significant, Tsavliris noted, not least because the incident coincided with the Easter holidays and the start of the tourist season for one of the most-visited islands in Greece.

A third example involved the geared bulk carrier Katherine, laden with 26,400 metric tons of hot briquetted iron, which collided and interlocked with the bulk carrier Baru Satu, laden with sugar, in Greece’s Kafirea Strait in 2013. The Tsavliris salvage tug Megas Alexandros towed the casualty to Neorion Shipyards on Syros Island, and the two-month salvage operation was completed safely and successfully.

As other salvors begin to diversify their operations in the tight salvage market – taking up decommissioning work, for example – the Tsavliris brothers chose to concentrate on contingency response salvage. “This is our specialization,” says George A. Tsavliris, “and we consider that this is our competitive advantage in the market. We want to remain the experts in this demanding industry. We want to remain focused on salvage rather than being distracted with other activities.”

RELIANCE ON LOF

Tsavliris Salvage is the most frequent user of the Lloyd’s Open Form (LOF) contract, earning over 95 percent of its revenue from this “no cure, no pay” contract. “We are ardent supporters of LOF,” says George Tsavliris. “Encouraging the use of the LOF contract, which is undergoing a disappointing decline in use, is very important in promoting investment in salvage equipment, tugs, salvage training and expertise, and in financing the idle time between jobs.”

He adds that “Salvage is a highly capital-intensive business. It cannot be undertaken without large, powerful tugs, an array of expensive equipment and well-trained personnel. Adequate reward is essential for continued investment in this costly and complex business, and the arrival of mega-sized ships means that salvors have to invest in bigger, modern and more powerful tugs.”

The LOF contract is designed to encourage instant action by avoiding delays that might otherwise arise from protracted commercial negotiations. After the job is done, the salvage award, a proportion of the salved value, is fixed by an experienced arbitrator appointed from a panel of Lloyd’s salvage arbitrators.

“Unfortunately, there is increasing use of ‘commercial terms’ involving, for example, daily hire and lump sum agreements, which over time may affect the efficiency and quality of the salvage services,” says Tsavliris. “This practice offers temporary market share to those who choose it but is very harmful to the salvage industry in general. It could be perceived as ‘Winning the battle but losing the war.’ We at Tsavliris Salvage are determined to support the LOF for the sake of the environment and our seas.”

As an example, he cites the 1978 Amoco Cadiz accident, one of the first modern supertanker spills, which “served as the poster-child for LOF in our more environmentally sensitive times. Carrying 69 million gallons of oil, the tanker broke up off the coast of Brittany in France, polluting the shoreline for 300 miles and generating the very first television footage of oil-soaked wildlife in the wake of a tanker accident.”

He adds that “The tragedy was partly blamed on the owners’ refusal to engage a nearby German salvage tug under an LOF contract – because of cost concerns. According to sources close to the incident, the LOF signed by the owners was subject to a private side-agreement that had the effect of restricting salvage remuneration to about $4 million. At that rate, the salvors may have made little or no profit at all from the job.”

CHALLENGES AHEAD

Tsavliris sees challenges ahead for the industry globally as ships become more complex. He notes the grounding of a two-year-old ship in South America. The vessel was going upriver when she suddenly started veering to starboard. The crew couldn’t do anything to correct it, and it turned out there was an electrical motor in the steering gear apparatus that had malfunctioned.

“Over the last five to seven years, the majority of the more modern ships we’ve seen in trouble has been from electrical faults,” he explains. “The electronics involved mean you can’t just open up the engine and fix it. There’s no engine to fix. It’s all electronics. So you’ve got highly sophisticated ships run by a crew that literally hasn’t got the ability or the knowledge or the experience to handle these situations.”

He fears that “This may well be the cause of more accidents and is worrying for the future. Most ships, 15 or 20 years ago, would break down because they were inadequate. They were overaged, and the regulations were perhaps a bit more flexible, not as stringent as they are now. So there were a lot of accidents that were literally caused by lack of regulation. One can say that, 50 years ago, the market was underregulated. Now, the market perhaps is overregulated. And with the sophistication and the technology, I think things are going to come to the point where there won’t be adequate control anymore.”

The industry has much to contemplate, he says. However, salvors are problem-solvers and will not hide from the challenges. “They will continue to stand ready to assist casualties all around the world,” Tsavliris concludes. “Salvors will always respond to a casualty no matter the circumstances or the challenges they face.”     MarEx