Jobs still out there

A new employment report by specialist shipping recruitment agency and Maritime London member Faststream has revealed that base salaries for experienced shipbrokers are up, but bonus expectations down. On average an experienced shipbroker placed by Faststream between October 2008 and May 2009, was hired for a basic salary of £77,240. Despite the poor markets, companies are still continuing to make critical hires and jobs are still available for experienced commercial people.

Faststream group managing director Mark Charman notes: “ The picture which has emerged is a mixed one and perhaps not as pessimistic as might be expected in the midst of a global recession and a collapse in vessel earnings across all asset types. There has not been a huge wave of layoffs as there has been in the financial services sector. However we believe that these numbers could increase over the next two quarters of this year as the results of the previous six months turmoil come to the surface. But still companies are all too aware of the importance of experience and understand the need for safe hands to guide them through turbulent times.”

The report also notes that the market for good chartering managers - whether for shipping companies or cargo interests - remains tight.

According to Faststream, there continues to be demand for good and experienced chartering managers with an eye for detail. Contracts are being scrutinised more closely than ever and experience counts for a great deal in this area. Faststream also notes that new shipowning principals are also emerging as steel mills, energy companies and coal miners stung by several years of very high freight rates look to take advantage of cheaper vessel prices and develop an in-house shipping function. Faststream’s Singapore office reports enquiries from several new entrants to the market seeking experienced teams to acquire and run these assets. Salaries in this sector remain stable with the average in-house charterer placed for close to £75K plus bonuses.

The recruitment agency also speculates that the era of Norwegian/British shipbroking co-operation is coming to an end with more British shipbroking companies expected to set up shop in Oslo and the west coast of Norway whilst more Norwegians are opening offices in the UK.

See www.faststream.com for a full copy of the report.

Despite the current overcapacity of tonnage and disastrous shipping rates, the world containership fleet is expected to continue its rapid growth curve, albeit at a slightly reduced rate, as deliveries are taken from shipyards and new shipbuilding orders start to pick up later this year, says Lloyd's Register - Fairplay (LRF) Research. That is the conclusion of LR-Fairplay's report Shipbuilding Market Forecast for Container and Roll-On Roll-Off (Ro-Ro) Ships released this month.

The report notes that, by any measure, the current picture for containership operators is grim, caused by the severe imbalance in supply and demand under the sluggish economic conditions worldwide. Spot rates of as low as US$250 to move a container from Hong Kong to Rotterdam are being quoted by some lines. That compares with $1,400 a year ago.

“It is no wonder,” the report says, “that a large portion of the fleet is idle, with a record 1m TEU of capacity in lay-up, and many other ships riding at anchor hoping for a near-term revival. While most larger fleet owners have amassed sufficient reserves from the boom years to survive the crunch, some smaller lines have already succumbed.

Nonetheless, the LRF Research report predicts an upturn in 2009 toward modest levels. New shipbuilding orders have not fallen to zero, and there has not thus far been a rush to cancel existing orders at shipyards. The global containership fleet stands at 4,671 ships with a total capacity of 12.4m TEU. It is expected to grow by 13 percent in 2009, as new ships ordered during the boom years are delivered to their owners. The growth rate will slow somewhat to 9.3 percent annually through 2013. Significantly, the growth rate will be highest for very large ships bigger than 8,000-TEU capacity, which will achieve a staggering average growth rate of 25% through 2013.

Normally, LR-Fairplay notes, removals help to keep a fleet in balance, as older ships are scrapped to make room for new ones. In the case of the current containership market, however, a large percentage of tonnage is relatively new, and removals are only expected to erase some 904,000 TEU of capacity from the fleet over the next five years. It also says that South Korea is expected to continue its domination of the shipbuilding market for very large containerships, while China will continue to capture a larger market in the smaller containership sector.

"USD 103bn expected to be invested in 2011"

While other shipping sectors are in trouble, prospects for the offshore support industry appear relatively bright.

Market research firm Infield Energy Analysts has released a new report on the state of the specialist offshore vessel market through to 2012, in which it claims that despite the current recession the offshore sector should remain strong.

"The offshore market is perceived to be under significant pressure, as the fleet has experienced exceptionally high utilisation and consequently high day rates," the company said.

"The market view set out in the report in the short term is that the current economic climate will temper demand. However as the specialist vessel market remains vital to the production of offshore oil and gas, the long term view is that the perceived buoyancy of demand is expected to continue. The global offshore market is predicted to see extensive investment throughout the years between 2009 and 2012. The whole offshore oil and gas market is expected to peak in 2011 when over USD103bn is expected to be invested."

Stefan Albertijn, senior freight manager at Hamburg based commodity house Alfred C. Toepfer International, has been appointed the chairman of the Baltic Exchange’s Freight Market Information Group (FMIUG) dry section. He replaces Capt Raghu Raghunath of Noble Group. The group, made up of shipowners, charterers, operators, and freight derivative traders, provides the Baltic Exchange with regular advice on its freight market indices and route assessments.

Commenting on his appointment Mr Albertijn said: “As chair my main focal points will be the Baltic Exchange indices, building grass roots support for the group, best practices and developing user-friendly trading technology. As the indices are a key guide for everybody involved in our industry, the FMIUG will continue to work with the Baltic and the panellists to further improve both the quality and the transparency of the various indices and their respective forward curves. “

He added: “A key goal is to make sure that non-derivatives traders also have a say and can bring their physical market experience to bear on market reporting and index vessel definitions. Going hand in hand with this are issues surrounding best practices such as how to trade using the Baltic Code and services and appropriate documentation. The FMIUG will also continue to strive for a harmonization of derivatives trading screen rules which might be a first step to a Baltic Exchange FFA overlay screen.”

The Department for Transport's (DfT) recent announcement that light dues will rise to 39p per net registered ton (nrt) from 1 July this year, with a further increase to 43p on 1st April 2010, has caused widespread concern among shipping lines and also shippers. The maximum number of chargeable voyages each year will also rise from 7 to 9, with the upper tonnage threshold of 35,000 increasing to 40,000 nrt in 2010-11. The increase in the voyage cap will mean that the short-sea and ferry industries will see a 43% increase in light dues.

The Independent Light Dues Forum (IDLF), representing the owners and operators of more than two-thirds of the British flagged fleet of merchant ships, said: "Increases of this magnitude are almost unprecedented and certainly have not been seen over the last two decades.

It added: "There is a significant risk that some ships would divert to ports on the continent where lighthouse costs are financed through public expenditure."

The Chamber of Shipping has responded robustly to a House of Commons Environmental Audit Committee attacking the shipping industry for inaction over greenhouse gas emissions.

Tim Yeo points the finger at shipping

It has been particularly troubled by remarks made by the committee’s chairman Tim Yeo who said: “We deplore the prevarication that has prevented global agreement on how to reduce emissions from international shipping. “The shipping industry accepts the seriousness of climate change but has taken little or no action to cut its own emissions in absolute terms. Meanwhile the Government has failed to give this issue attention it deserves.”

The Chamber, noting Mr Yeo had accused the UK shipping industry of ignoring its impact on global warming, issued a statement saying: “This is unfounded. In fact, it has led the way in industry debates with proposals for a cap-and-trade mechanism to encourage emission reductions.”

It adds: “We are also very surprised that the Select Committee feels that little or no action has been taken by the UK Government with regard to the reduction of GHG emission from international shipping. The UK attends all meetings of the International Maritime Organization and has contributed to the debates and off-line work on GHG reduction. While there are areas in which industry would also wish to see more detailed input by the UK (and other governments), it is unfair to say that the government’s position lacks coherence. “

The Chamber notes that the Committee report’s own conclusions make clear that ‘tackling the climate change impacts of shipping is necessarily complex’ – not least because of the need, as identified by the committee, to ‘ensure that any regime that increases costs or imposes carbon limits on shipping does not act in isolation [as] doing so might lead to modal shift from sea to road or air’.

The Chamber says: “We welcome the Committee’s explicit acknowledgement that this aspect merits deeper investigation. The complexities are so enormous (big enough to warrant exclusion from Kyoto, the EU’s ETS and the UK’s Climate Change Act) that industry cannot reasonably be expected to provide the answers on its own. Accordingly we are actively working with Government to unearth and then resolve all the possible options. Specifically on the call for the Government to estimate the UK’s share of international shipping emissions, the Chamber made clear in its evidence to the Committee that this was “extremely difficult, with almost all of the options failing to provide an accurate representation”. In a proactive effort to find a solution, the Chamber of Shipping and WWF UK have already submitted a joint paper to the Committee on Climate Change offering suggestions on the most appropriate methodology and we look forward to working with the Government to refine these proposals. According to the Chamber international shipping emissions have to be treated as a separate entity – like a country. This will mean assessing all emissions outside the context of individual countries and addressing them on a global basis through IMO. These are also good practical reasons, the Chamber claims, why international shipping must not simply be shoe-horned into regional emissions regimes (such as the EU’s emissions trading scheme)."

It says: “We can agree some recommendations readily, eg the call for a global regime (“involve as many nations as possible”) and actively support also a strong emphasis on R&D into new technologies. Other elements, such as the suggestion of differential port dues are not favoured and are more likely to become “just another tax” – especially as the Committee appears to have underestimated the complexities of measuring the environmental performance (as opposed to mere fuel burn) of any given ship.”

The Committee report concludes that “emissions from shipping cannot be allowed to grow uncontrolled”. The Chamber responds: “The UK industry entirely shares the sense of urgency and accepts that it must take responsibility to reduce emissions as far as possible and will work actively on that. Much work has been done to improve the carbon efficiency of this, already the most carbon-friendly form of transport, and the industry is actively considering mechanisms to achieve global reductions. However, it is important to recall that shipping serves world trade – which is growing – and the demand for shipping is directly derived from the world’s demand for commodities to be carried.”

The results of the 18-month investigation by EU competition officials into the International Association of Classification Societies (IACS) and proposed changes to the way IACS operates have been published by the European Commission.

In the current form of the agreement between the two bodies, IACS has offered to set up "objective and transparent membership criteria and to apply them in a uniform and non-discriminatory manner".

The proposed commitments foresee detailed rules, including clear deadlines, for the different steps of the membership application, suspension and withdrawal procedure. With regard to IACS' technical working groups, which develop IACS' technical resolutions, IACS has committed itself to ensure that classification societies which are not members of IACS will nonetheless be able to participate. In addition, all current and future IACS' resolutions and their related technical background documents will be put into the public domain at the same time and in the same way as they are made available to IACS members.

IACS will also set up an Independent Appeal Board to settle possible disputes about access to, suspension or withdrawal of membership of IACS, participation in IACS' technical working groups and access to IACS' resolutions and to their technical background documents.

The London P&I Club says claims, net of reinsurance are reducing. The mutual liability insurer made a 2008/9 financial year surplus of USD34.6m and an increase in free reserves of 43 per cent, to $115.5m. For the second successive financial year, The London P&I Club saw a fall in claims incurred net of reinsurance, with a 2008/9 reduction of US4m, to a figure of USD98.8m.

Also, following two consecutive years in which claims on the International Group’s pooling system had run at record levels, 2008/9 saw a welcome return to lower pool claims activity, at least in terms of cases reported to date. However the club's investment performance was adversely affected in the year to February 20 by the global crisis and it experienced a 13.4% fall in the value of the club’s investments, equating to USD39m, despite a decision taken in first-half 2008 to move a significant part of its equity exposure into fixed income in light of the prevailing uncertainty in the worldwide economic environment.

Ian Gooch, Chief Executive of The London P&I Club management team, says, “Notwithstanding the change in asset allocation, the mark-to-market value of the club’s investment portfolio was negatively impacted, especially during the latter part of the year, by the effect of the unparalleled financial turmoil, principally on its remaining equity holdings.” Additional calls made in October supplemented other measures taken by the club to strengthen its financial resilience, including the general increases in premium set for the 2008/9 policy year and at the last renewal.

Admitting that it had been a difficult decision for the club’s committee to set the additional calls, especially given the prevailing economic climate, Mr Gooch says, “The committee was determined to act decisively to bolster the club’s position, and the steps taken appear to have been largely understood by our members, whose continuing support is greatly valued and appreciated.”

He adds: “Claims costs involving The London Club’s own membership were in line with expectations. Although an increase in the cost of attritional claims, primarily involving crew illness and injury, is apparent, it is the frequency and severity of those very few cases which exceed $1m which is the primary driver of claims volatility from year to year. And at the expiry of the 2008/9 policy year, while the frequency of such claims was not unusual, individual claims severity was favourable, with only one claim forecast to exceed $2m.” Mr Gooch concludes, “The London P&I Club continues to attract new entries. These are mainly from existing members, but a number of new members, from Europe and the Far East, have also entered ships during the past policy year. Overall, tonnage now stands at nearly 42m gt, an increase of about 2m gt on the entry following the 2008 renewal.”

Prominent UK shipowner Sir Michael Bibby will be addressing this year’s Shortsea Shipping Congress which takes place in Liverpool 30 June – 1 July. The two day event will offer insight into ports and planning policy, the effectiveness of EU shipping policy and feature specialist unitised and bulk cargo sessions.

Commenting on the Congress, Sir Michael said: “This event is an excellent opportunity for like-minded shipping people to meet and discuss business. I am delighted that our great city of Liverpool will host the conference and I looking forward in championing Liverpool as a thriving place to live and work.”

This year’s Congress will also feature a number of networking opportunities including a pre-dinner reception sponsored by local law firm Hill Dickinson, a formal dinner in Liverpool’s Town Hall and a tour of the port hosted by Peel Ports.

www.shortseacongress.com

Latest figures on port freight throughput from National Statistics show year on year declines. Total port traffic for the year to Q1 2009 was 5% down on the four quarters ending Q1 2008. Inward traffic was down 5% and outward traffic down 4%. The number of units handled was down 8%. Inward traffic was down 11% and outward traffic down 6%.

Total traffic in Q1 2009 was down 9% compared to the same quarter in the previous year. Inwards traffic fell by 10%, whilst outwards traffic fell by 6% compared to Q1 2008. Unitised traffic was down 14% compared with the same quarter in 2008. Inwards unitised traffic was down 19% and outwards unitised traffic was down 7% compared to Q1 2008.

The Department for Transport notes: “The provisional figures for freight traffic at each major UK port in Quarter 1 2009 are based on those ports which had made returns for Q1 2009 at the time of publication. Only one port had not yet reported, and so these figures are based on almost 100 per cent of total expected traffic.”

What is described as the marine industry’s first ever course designed to provide all the essential information needed to prepare, plan and execute a successful dry-docking is to be launched by Lloyd’s Register’s Marine Training Services in Piraeus on 29 June .

The three-day Essential Dry-Docking Course, is aimed at existing marine superintendents, technical managers, fleet managers, senior sea staff and anyone involved in planning a docking. Lloyd’s Register decided to develop the course after market research revealed a shortage of qualified superintendents capable of carrying out dry dockings efficiently.

Steve Robson, Lloyd’s Register’s Senior Technical Training Specialist, says: “A dry docking has huge financial implications for owners, and requires a set of skills, and a need for awareness from those responsible, that cuts across several job specifications. From financial, to repair work, to coatings.”

Hugo Wynn-Williams has been elected chairman of Thomas Miller Holdings, succeeding Peter Donnellan who had been chairman since 2006. Mr Donnellan remains on the board continuing as the leader of Thomas Miller’s risk management and captive business based in Bermuda.

Mr Wynn-Williams has worked in the management of the UK P&I Club throughout his career at Thomas Miller, becoming CEO of Thomas Miller P&I in 2004. He will continue in this position for the UK Club. He was elected to the former partnership of Thomas Miller in 1989 and has been on the holdings board of Thomas Miller since incorporation in 1999. He has been its deputy chairman since 2006. He is the current chairman of the Reinsurance Sub-Committee of the International Group of P&I Clubs.

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