David Milliband challenged

The general secretary of Anglo-Dutch seafarers union Nautilus, Mark Dickinson, has sent an unusually forthright letter to Foreign Secretary David Miliband challenging his stance on the payment of ransoms, following the minister's alleged failure to acknowledge an earlier letter, of 12 November.

Mr Dickinson also criticises Mr Miliband's reported intervention to block the payment of a ransom to free the Chandlers, British citizens who were kidnapped from their yacht in October.

London Matters has seen the letter and understands it is only the latest in a series of representations by Nautilus opposing Mr Miliband's view that ransoms should not be paid which started following comments he made over year ago when the VLCC Sirius Star was hijacked.

In his letter, dated 8 December, Mr Dickinson writes: “Nautilus has spent many years seeking action to address the problem of piracy and to reduce the appalling risks of death, injury and kidnapping that it presents to our members. There has long been a concern that successive governments have not treated the issue with the seriousness it deserves. The absence, so far, of even an acknowledgement to my letter of 12 November does little to dispel the impression that piracy is not something that your government considers worthy of a place high on the agenda.”

He continues: “Nautilus cannot allow such an attitude to prevail. Piracy is a deadly serious subject and the stakes are very high. The Observer's report [on the Chandler case] exacerbates our concern about your reported policy of opposition to ransom payments. We can see no other option but to pay to secure the release of seafarers who have been taken hostage and until we hear of a viable alternative that would ensure the safety of our members in such circumstances.”

A Nautilus spokesman told London Matters that the union had become very frustrated that the Foreign Office continued to repeat the “no payment of ransoms” formula but refused to spell out a an alternative way of securing the safe release of kidnapped seafarers or of preventing hijackings taking place. The union is supporting an International Transport Workers' Federation statement that shipowners could be failing in their legal duty of care by sending seafarers into the danger area in the current circumstances.

In his 12 November letter Mr Dickinson wrote: “Nautilus believes there are a number of significant issues that need to be addressed further, including: How to make the counter-piracy operations more effective What the government could do to improve onboard protection for merchant seafarers The presence onboard high-risk merchant ships of armed military personnel What could be done to address concerns about the adequacy of the International Ship & Port Facilities Security Code The UK government policy on ransom payments for those held hostage by pirates. We remain concerned at moves to dissuade shipowners from making such payments, and seek assurances on what is proposed as an alternative.”

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Thomas Miller-manager Hellenic War Risks Club is to extend its Additional Premium Area (APA) to cover a massive area of the Indian Ocean in response to attacks by Somali pirates that have been taking place further and further from the coast. Since February 2009, the club's APA has extended 600 miles from the east coast of Somalia but one entered ship was attacked more than 1,000 nautical miles away and two more than 700 miles into the Indian Ocean. The club says that seven entered vessels have been seized so far this year.

Thomas Miller's John Culley says: “Piracy is a growing concern for our members so we have made piracy loss of hire cover available as an optional additional insurance. Recent incidents far from the Somali coast highlight the need for defences against piracy to be implemented and maintained for ships within the limits of the voluntary reporting schemes operated by the UK MTO Dubai and MARLO Bahrain.” From 1 January the club will increase its APA to “extend to longitude 65°E south of latitude 15°N, with the southern boundary running along 11°S and 12°S”. This area extends almost to Madagascar in the south and well beyond the Seychelles tot he east.

Meanwhile the club has also decided to keep general premium rates for 2010 the same as those for the present year. The gross annual rate for Hellenic war risks cover will remain at 0.01205 per cent of the entered fleet value. All members will receive at least 20% on the gross rate. The club will continue to operate a sliding scale of additional commissions, ranging from a further 5% for fleets valued at up to US$100 million (25% in total) to an extra 30% for fleets with over $1bn entered value (50% in total). At 31 December 2008, the club’s reserves stood at $47m, allowing it “to offer these competitive annual rates despite higher claims, including those arising from Somali pirate incidents”.

A statement says: “The club’s reserves and a positive 2009 year to date mean that it can, if necessary, retain risk without having to increase annual rates to members. Membership now stands at about 2,300 ships, which represents a marginal increase on a year ago. Total entered value is around $88bn.

The Hellenic Club insures about 70% of the Greek-controlled fleet for war risks. Mr Culley says: "There have been claims during 2009, mainly in the Gulf of Aden and the Indian Ocean. The Club’s income has, however, increased because of higher AP income so we still expect a surplus for 2009. As a result, we will be able to maintain the Club’s sound financial base and continue offering members the advantages of mutual cover at very competitive rates." He adds: “Piracy is a growing concern for our members so we have made piracy loss of hire cover available as an optional additional insurance. Recent incidents far from the Somali coast highlight the need for defences against piracy to be implemented and maintained for ships within the limits of the voluntary reporting schemes operated by the UK MTO Dubai and MARLO Bahrain.”

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Maritime London will be publishing a directory containing the contact details of UK based companies providing professional services to the international shipping industry.

Available online, the directory will also be distributed at the Maritime London pavilion during Posidonia 2010 and by post to shipping companies globally.

All companies will be provided with a free entry, but advertising space and enhanced listings are also available.

See www.maritimelondon.com/media_pack2010.pdf for full details.

Space is also available within the Maritime London pavilion at Posidonia. Contact Bill Lines for further details. Email: blines@maritimelondon.com

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The Conservative party has reacted coolly to renewed European Commission plans for a greater role at the International Maritime Organization (IMO), and even “full membership” for the Commission.

Responding to a recent paper on the Commission's proposals by the International Chamber of Shipping (ICS) and International Shipping Federation (ISF), the Conservative transport spokesman in the European Parliament, Jacqueline Foster,told London Matters: "This is one area where on the whole we believe that 27 member states acting individually would carry more weight than if speaking through a single European Union voice. As a country with a proud maritime tradition and an island nation, we would seek to maintain our independent voice at the IMO. However we will continue to cooperate fully with other nations around the world as we have for many years."

In their comments on the draft EU Maritime Strategy until 2018 ICS and ISF note that the Commission proposes “formalising the EU co-ordination mechanism and granting formal observer status, if not full membership, to the EU” at IMO. ICS and ISF say: “The long-standing ‘gentleman’s agreement’ between the Commission and Member States has acknowledged the advantages of allowing Member States to pursue independent positions at IMO. In the interest of maintaining the quality of technical decision making at IMO, the industry does not believe that increasing the status of the EU at IMO will actually contribute to the improvement of this institution or its impact on issues such as safety and environmental protection.”

They say that they fear that excessive co-ordination of EU Member States’ views at IMO - even falling short of full EU membership - would be to ‘politicise’ discussions on complex safety and environmental issues which are best decided on the basis of informed technical and scientific arguments.

The employers' bodies argue that the 27 EU Member States already enjoy substantial influence at IMO, since the majority of EU States are traditional maritime countries with considerable expertise within their maritime administrations, which they are able to utilise and communicate articulately during international regulatory discussions.

On a practical level they say that IMO has a complex specialist committee structure which normally seeks to develop consensus across the international community rather then resorting to votes or imposing the will of the majority. The spectrum of technical expertise available to the 27 EU IMO Members means that the different emphasis they can bring to particular issues in turn means that they are actually far more influential in contributing to an international consensus than would be the case if they were to speak with a single EU voice.

The EC does already intervene in IMO affairs and ICS and ISF note: "When the EU decides to co-ordinate the votes of EU Member States, the result can be to undermine the well known ‘IMO spirit’ of consensus. Many third countries, including those with large fleets, might then feel they no longer have strong ‘ownership’ of what is decided at IMO, with the result that international agreements may be less likely to be ratified after adoption or implemented on a truly global basis."

ISF and ICS warn: "The Commission and Member States should think very carefully about the pursuit of objectives which could do very serious damage to the long term authority and effectiveness of IMO, which is so vital for maintaining a safe and efficient shipping industry."

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More nuclear ships in the future?

Lloyd’s Register is exploring the possibility of the reintroduction of nuclear propulsion for merchant ships. LR says research is focused on the application of nuclear propulsion to tankers, bulk carriers, container ships and cruise ships Early in 2007, LR began research into the implications of nuclear propulsion for merchant ships. The UK-based classification society says the initiative was built on LR’s extensive experience in the traditional nuclear industries and from studies which led to the formation of its Rules for the Nuclear Propulsion of Ships.

The Rules, available from 1966 until 1976, were developed in response to the interest shown in nuclear propulsion in the early 1960s, which resulted in ships such as Savannah and Otto Hahn, two ships that were technically successful. At that time, LR says, operational and economic conditions were not conducive to commercial success of nuclear propulsion. But both ships, nevertheless, traded worldwide for some years. Over the years, there has been a steady, slow development of nuclear propulsion for merchant ships -- principally with ice breakers -- but also extending to a lash barge carrier and a containership. Indeed, two nuclear ice breakers presently are utilised on popular passenger cruises.

However, LR believes, the steady increase in the price of fuel oil -- and the probable introduction of either a carbon-emissions trading scheme or a related tax -- now presents the possibility that nuclear propulsion could be more competitive. LR’s research programme is revisiting the technical challenges of nuclear propulsion for ships, as well as refuelling and waste-disposal issues.

The scope of the programme has been expanded to include public health, manning, training, operational, risk and regulatory requirements. The principle maritime sectors of focus are how these propulsion systems could benefit tankers, bulk carriers, container ships and cruise ships, although a range of other ship types may also benefit. “The technology is there to commence building nuclear ships.

"The issues regarding their acceptability and the need for a cultural step-change in shipping still need to be addressed so that society is comfortable any risk is being managed", commented John Carlton, global head of LR's marine technology & investigations.

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Lloyd’s Register's FOBAS has published a guidance document “to help shipowners and others to understand the operational realities of compliance” with the the EU's Sulphur Directive. The guidance comprises questions and the responses related to the ‘at berth’ requirements.

LR says: “EC Directive 2005/33/EC has been the cause of considerable interest, concern and uncertainty. The entry into force date - January 1, 2010 - of the Directive’s ‘at berth’ requirement that ships burn 0.1% maximum sulphur fuel oil when in port, is certain. However, considerable uncertainties still exist as to compliance, associated technical issues and how the requirements are likely to be enforced.”

FOBAS says that it has handled many questions on these ‘at berth’ requirements as it has been alerting the industry to the pending requirement over the four-and-a-half years since the 2005 Directive was published.

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Clay Maitland, who is best known as managing partner of International Registries, Inc (IRI), launched a blog, with a press lunch in London that coincided with IMO Assembly meeting. He said he had set it up to: “Start a dialogue and debate in the shipping industry worldwide to stimulate support for my quality objectives”.

Mr Maitland said he wanted to build support for action to create safer ships, cleaner seas and greater protection for the environment. He said: “The achievement of these goals is vital during the current recession, to prevent slippage in quality due to financial pressures.”
He stressed that he wanted to involve “upstream” players in the shipping chain, such as insurers, charterers and, especially, bankers. He was at pains to stress that he was “blogging entirely as an independent person, expressing my own views” and not those of IRI nor those of the Marshall Islands ship registry which it administers.

Describing his initiative as a “ginger group” he introduced three other industry figures involved, former Germanischer Lloyd head Hans Payer, former Lloyd's List editor Michael Grey and former Lloyd's List deputy editor Neville Smith.

He said that the importance of ensuring high quality operations was now widely accepted throughout the shipping industry. In that respect it said it was now a different world to 20 years ago. He warned however that there were still “bottom feeders” who cut costs by running substandard ships. He was particularly concerned about the role of the banks.

He cited the example of the collapse of the major New York-based company Eastwind. He said that banks had continued to lend to the company even though it had become clear it was having big quality issues. He said that Marshall Islands had thrown the company's ships, 35 of them, out of its register a couple of years ago but bankers had continued to back it, and it was able to re-flag elsewhere. He said that the banks had taken a hit as a result.

Dr Payer warned of the consequences of cutting down on maintenance or on training. He said: “Although we have made great progress in the past in improving shipping safety from the situation in the eighties and nineties, society will not tolerate any noticeable decline in ship safety and environmental protection performance now.” He added: “We all have to be vigilant and alert to any indication of slackness developing in safety standards in shipping.”

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Prominent shippers' advocate Andrew Trail, managing partner of www.shippersvoice.com, has warned against giving subsidies to help liner shipping companies survive the recession. He argues that shipping lines made bad decisions before and should not be helped by the taxpayer to make them again.

“The economic crisis came faster and more deeply than most had thought possible, but it does not change the fact that there were some poor decisions made without paying attention to market fundamentals,” Dr Traill says. He says Shippers’ Voice raised concern some two years ago over what seemed a mad rush to build bigger and bigger ships without actually consulting the customers as to whether they were wanted or needed or indeed practical, given the changing nature of supply chains and concerns over congestion.

Should governments subsidise collapsed liner companies?

He argues: “The writing was on the wall even then, about over-capacity even with the high growth rates that many didn’t anticipate would change; and the US sub-prime market concerns were also building. If governments now decide to prop the sector up, what kind of message does that send out?”

Dr Traill cites the case of private ship owners in Germany seeking state aid to help them pay for new ships which are on order but no longer needed. He says: “It wasn’t that long ago that such people were making obscene amounts of money! It was the prospect of huge returns on investment that fed the frenzy of new ship orders, not a careful consideration of what the market needed.”

He says that if governments start handing out state aid to these ship owners it sends out completely the wrong message: “Don’t worry about making any bad or untimely investment decisions, because the state is here to bail you out so that you can make more bad decisions in the future.” He admits that the same message has already been given to the banks, “but really I think it is time to draw a line in the sand and learn the lessons of the past extraordinary year and the business decisions of recent years which leading up to it.”

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Leading accountant and insurance consultant Moore Stephens says that while there is still significant uncertainty as to whether insurance rates in general will harden in 2010, the marine market is showing signs in that direction. The Maritime London member notes that the uncertainty remains despite the claims environment showing classic signs of worsening in some areas and against a background of sustained demand for cover. It adds that there are likely to be fewer new start-ups until the financial climate improves further, and warns that insurers and brokers are likely to face increasing regulatory demands in 2010.

Writing in the latest issue of the Moore Stephens newsletter Insured Interest, Simon Gallagher, head of the firm’s Insurance Industry Group, says, “The worldwide economic downturn has inevitably had a significant effect during the past twelve months on the insurance industry, with the main challenges divided into two distinct categories – commercial and regulatory. “On the commercial front, there have been small signs of a hardening of rates, for example in the marine market, and there has been something of a step change in costs in the professional indemnity classes, including E&O (errors and omissions) and D&O (directors and officers) business. Overall, risk carriers have started to become more selective in terms of appraising risk, more realistic in terms of pricing it, and more disciplined in their general thinking. The key driver currently holding rates back is the apparent ongoing supply of surplus capacity to the market, which may be an indicator that, despite the challenges, the insurance industry continues to be an attractive place for longer-term investment.”

Next year, Mr Gallagher says, rates are likely to continue to move further from soft to hard in niche areas, and risk carriers to invest more extensively in sophisticated and analytical underwriting and claims analysis.

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Thomas Miller (Americas) Inc says it is keen to “improve standards and increase the productivity” of US-based attorneys engaged to handle UK P&I Club members’ claims. Given the “geographical and jurisdictional challenges facing ship owners in the Americas and the frequency of high value P&I claims” the club’s managers say they have intensified their Value for Money initiative which focusses on improvements in managing expenditure on legal fees, particularly for high value bodily injury claims.

The club says: “Attorneys’ fees are the club’s second largest expense in the US after the payment of claims. Consequently, ‘Value for Money’ pays close attention to relationships with suppliers of legal services worldwide, particularly in the US and London.”

Progress has been reported in the UK Club’s newly published Bodily Injury News, sent to members and associates. In 2002, Thomas Miller (Americas) set up a network of “preferred attorneys” around the United States and Canada to provide legal services to Club members. These attorneys handle claims exclusively, except in rare instances where a member has a strong preference for an attorney outside the network.

Mike Jarrett, president and chief executive officer of Thomas Miller (Americas), explained: “Our program focuses on early cost-effective settlements where appropriate and, ultimately, a reduction in fees as the process becomes more efficient. To improve performance across all suppliers, the Club and TMA will be using technology to reduce the administrative costs of the legal purchase process and to help Managers evaluate and compare attorneys’ productivity and performance. OASIS, the claims file system used by UK Club claims executives, helps monitor and control the process more effectively.”

Looking ahead, Mr Jarrett said Thomas Miller would be looking at fee structures with preferred law firms that “align their interests with those of the UK Club and its members”. He said: “Whilst the hourly rate is likely to remain the main basis for charging it is not ideal and by definition can reward inefficiency. Recent commercial and financial pressures on ship owners have further reinforced their demand for improved productivity from the service providers involved in the UK Club’s claims handling.”

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Specialist maritime public relations agencies Navigate PR and Helix Media have announced a strategic partnership which will see them extend their reach by providing corporate communications activities to maritime industry clients in Europe and Asia. Based in London and Singapore respectively, both firms specialise in the maritime sector and represent a range of blue chip clients including AET, Korean Register of Shipping, the Baltic Exchange, Maritime London, Neptune Orient Lines, the Isle of Man Ship Registry and Thome Ship Management.

Navigate director Bill Lines said: “Navigate and Helix share a philosophy that to serve the maritime sector, you need to be part of it. From vessel operations to freight derivatives, marine insurance to classification, the sector has its own specialist language, publications and challenges. Navigate and Helix understand the entire spectrum of shipping related activities and provide expert advice to companies seeking to enhance their industry profile.”

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In an attempt to help companies protect themselves against the dangers of counterparty and credit risk, particularly in the bunkering sector, Oxford-based Petrospot is running its Managing Credit Risk one-day seminar in London on Wednesday 13 January 2010 .

According to Adam Dupré, managing director of marine credit reporting and analysis service, Ocean Intelligence Pte Ltd:

"The credit environment in the bunker industry is not going to get any easier. As the flood of more ships into the market and the still sluggish growth in demand worldwide combine to depress prices of commodities and therefore freight, the risk of counterparty default will continue to hang over the supply sector like the sword of Damocles. In this new era of intelligent caution, it is vital that the rudiments of credit assessment and management are understood across the whole supply organisation, and not just by the credit professionals. This course is a perfect opportunity for anyone involved with bunker supply, whether as trader, broker or credit manager, to gain a meaningful understanding of what credit risk means in the bunker industry today, and what tools are available to assess and mitigate it."

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Helen Alexander

The UK Secretary of State for Transport, Lord Adonis, has appointed Helen Alexander, CBE, as chairman of the Board of the Port of London Authority (PLA), with effect from 1 January 2010.

She will succeed Simon Sherrard, who has been PLA chairman since 2001.

Helen Alexander is president of the CBI and has been a non-executive director of the PLA since June this year. She is also chairman of Incisive Media, and a non-executive director of Rolls Royce plc and Centrica plc.

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Ian Gaunt has been appointed as the deputy honorary secretary of the London Maritime Arbitrators Association (LMAA) and will take over as honorary secretary during the course of next year.

Ian was in practice as a maritime lawyer with Sinclair Roche & Temperley for 20 years from 1979 to 1999. In 1999 he joined the Carnival Group and was responsible to the chief executive for the group’s shipbuilding programme.

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Lloyd’s Register’s group business assurance director, Estelle Clark, has been awarded the Coutts Lifetime Achievement Award at the Seventh Annual Women in the City Awards held in London recently. These awards identify excellence and celebrate the achievements of senior and partner-level professionals working in the City of London, Canary Wharf, and Mayfair.

The organisation allows women from across traditionally male dominated business areas in the City to network together and share experience and knowledge on a wide cross section of business issues.

Recognised for her outstanding contribution to supporting the progress and wider participation of women in business, Estelle Clark has worked in four different industries (IT, heavy mechanical engineering, financial services, safety and risk management) in four different countries (UK, France, Belgium, Switzerland) and in four different professions (technical systems engineering, account management, project management, safety and quality management), and has been successful in each despite their being traditionally male-dominated. Acting as a role model for other female business leaders, Estelle puts her success down to leaving the door open for other women to walk through after each career move.

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