9. GET RID OF THE DOWN RATCHET

Everyone at ABS and LR we have talked to off the record about the swash bulkhead issue thinks it's absolutely nuts to build 50 meter long tanks without a bulkhead. So how did we end up in such an imprudent situation? The answer is what we call the down ratchet. In most parts of the Rules, there's a general out clause which says something like "other arrangements are possible if it can be shown by direct computation that they meet or exceed the above standard." Sounds innocuous enough but, when combined with competitive pressures in a litigious world, it results in the direct computation down ratchet.

Here's the way the down ratchet works. A yard pressures a class to accept some cost saving relaxation of the rules by offering a "direct analysis" of the problem. Each yard has dozens of very sharp young naval architects who do nothing more than work on beating the rule. Once a contract is signed every kilogram of steel they save by so doing goes directly to the yard's bottom line. Inevitably some of these efforts are approved, however imprudently. Since the yard pays the newbuilding classification fees, in a commercial sense the yard is Class's customer. Occasionally, in this situation, the first rule of retailing applies.

As soon as that happens, the new lower requirement becomes the standard. The class involved can't admit it was imprudent to approve the change. If it did, it would have legal problems on all the ships that had been approved with the change; not to mention some very angry owners asking why did you approve this mess on my ships and then not on his; and not to mention an extremely angry yard who bid the ship under the "new" rule and finds out it has to build the ship under the "old" rule. (We know of at least one instance where a yard has threatened legal action against class for "changing the rules" in this manner.) The other classes have to fall in line because if they don't, their ships will be more expensive and they will lose owners. Having established a new lower standard, the yards then compete away the saving and must find new ways to save costs at that lower level, and the process repeats itself. Over time the ships get cheaper and lousier.

Figure 9.1 shows that in real terms, a VLCC today costs less than half as much as a VLCC built in the mid 70's despite the 12 to 15% increase in cost associated with double hulls. Yet there have been only incremental advances in ship building technology in the last 25 years. The big tanker yards look much the same now as they did in the mid-late 70's. By far the most important reason the ships are so cheap is the down ratchet.

There's only one way to eliminate the down ratchet: get rid of all the "other arrangements" clauses. If a yard wants to change the rules, make it go through the normal rule change process. As it is, the yards are slowly but surely re-writing the rules. Did any Class Technical Committee get together and say let's get rid of the swash bulkheads in 50 m long tanks? They did not. There was never any such meeting. And if anybody had come into a Technical Committee meeting with such a suggestion, he would have been thrown out of the room. Yet the swash bulkheads are gone.

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