Ian Luder is the Lord Mayor of the City of London

The Lord Mayor recently hosted a maritime education summit to look at how UK maritime academies may better market their offerings overseas. Sponsored by Lloyd's Register Educational Trust, the event welcomed delegates from across the country and across the spectrum of maritime education. From seafarer training to degree courses for shore based maritime occupations, the attendees' common commercial objective is to market their product overseas.

According to Maritime London chief executive Doug Barrow, the UK is the centre of maritime global excellence and maritime education is no different.

He said: "With such a high standard and diverse offering of maritime education, ways were considered in which the separate bodies could work collectively to promote the country's offering. This initiative of the Lord Mayor, was met with keen interest and a working group is being formed, initially under the auspices of Maritime London, to consider how a collective marketing policy could be developed and operated. The remit was not to consider the many other issues associated with maritime education or seafarer shortages, only to look at collective overseas trade promotion, whether this be increasing the number of overseas students studying in the UK or marketing the courses to overseas establishments."

Will piracy spread to other areas of the globe?

Shipping and international commerce face what amounts to a piracy tax to keep trade flowing off East Africa, according to a study drawn up for the Lloyd’s insurance market. In the report on the twin threat to international business of global recession and political instability, Lloyd’s gives a stark prognosis for the spread of piracy and mounting costs for shipowners, shippers and consumers.

The Lloyd’s 360 Insight report, Global recession: The magnifying glass for political instability, said: “Somali piracy looks set to migrate from a chiefly business transaction towards a militarized conflict, with a possible increase in violence, bringing new human and financial costs for shipping companies.”

The report says “if current piracy levels continue, companies everywhere will pay a growing ‘piracy tax’ to maintain their global trading networks over the next few years,” adding an extra strain to the burden created by the recession.

Clive Washbourn, chairman of the London market’s influential Joint War Committee, said: “Things are going to get worse before they get better. I do not see the piracy crisis off Somalia improving when conditions onshore are so unstable.”

Shipowners face an increasing toll for maintaining global supply routes, from the extra fuel and time-related expense of re-routing around the Cape of Good Hope to security and insurance costs. With an average additional daily cost of $5,000 for the 16 extra days to circumnavigate southern Africa, shipping faces potentially hundreds of millions of dollars worth of additional costs if more owners choose to avoid the Gulf of Aden. Lloyd’s, which undertook the report with consultants Control Risks, pointed out that this cost burden, as it escalates and the recession bites, will be passed on the supply chain.

According to insurance broker Marsh & McLennan, the cost of insuring ships against piracy has increased 1,900% since January. Markus Baker, head of marine insurance at Marsh & McLennan, said shipping firms that were paying 0.05% of the value of their goods for insurance premiums are now paying as much as 0.1%.

“Piracy is a pretty challenging piece of risk to underwrite,” Baker said. Faster ships are cheaper to insure, Baker added, as they are more challenging for pirates to attack.

The Lloyd's report notes that even aside from what is happening off the East African coast, piracy is likely to remain a significant risk in many other regions over the next few years. As global recession leads to higher unemployment and reduced public spending, other piracy hotspots may emerge.

Southeast Asia has been hit hard by the collapse of global trade, which is likely to contribute to an increase in maritime theft, and low-intensity incidents of maritime theft and armed robbery will continue to increase in Latin America.

Although the conditions for piracy around Africa may not be easily replicable elsewhere, successful hijackings here will continue to fuel the globalisation of kidnap risk. Already there are signs that some groups are operating across borders. The report says that as these groups develop their capabilities and increase their operational range, both expatriate and local staff will be at greater risk of being kidnapped in a growing number of recession-hit regions, particularly in Africa and Latin America.

The London-based Greek Shipping Co-operation Committee (GSCC) has reiterated its opposition to any tax or 'market based instrument' on greenhouse gas emissions from shipping, options which are both up for forthcoming discussion at the IMO and the UN FCCC meeting in Copenhagen later this year.

"The maritime sector, on the basis tonne miles of cargo carried, is by far the most fuel efficient means of transport and produces the least harmful atmospheric emissions of any mode of transport," GSCC chairman Epaminondas Embiricos said.

"Emissions from ships are different from those typical of other industry sectors. They are not of the same nature nor do they have the same impact on the environment, as those from other industrial sources and modes of transport."

"A number of eminent scientific studies show that this is the case and that emissions from ships have a net cooling effect," he claimed. "This is due to the fact that vessels' emissions include aerosols such as OC and SO4, which seed clouds, reflect solar radiation and cause cooling. In fact the cooling effect of SO4 is 200,000 times greater than the warming effect of CO2. Ships burn fuel containing sulphur, when on the high seas and away from populated coastal areas. Indeed reducing these emissions on the high seas would be counter-productive. Shipping's global cooling effect has been accepted by the IMO Study Group, which considered the matter."

Braemar Shipping Services group chief executive and Maritime London member Alan Marsh said that Chinese demand for raw materials dry bulk market has driven the recovery in the dry bulk sector, and in particular for capesize vessels, in the past month.

Writing in the company’s interim management statement, Marsh notes that as well as The Baltic Dry Index coming close to 4,000 compared with 1,986 at the beginning of Braemar's financial year in March, Mr Marsh said the diverse shipping services group has also benefited from a high level of sale and purchase activity especially for bulk carriers. Braemar's demolition business has continued to grow with increased scrapping of older ships, particularly in the container and tanker sectors.

The deepsea tanker market rates have weakened due to the impact of newbuilding deliveries, but Mr Marsh said: “The group’s transaction numbers remain good.”

Meanwhile: “The other shipbroking desks have performed as expected. The technical division has begun the year strongly. All offices around the world are enjoying increased demand for their services. The logistics and environmental divisions are also performing well.”

According to Mr Marsh, Braemar's performance for the first half of this financial year is likely to be similar to that achieved in the second half of the last financial year and overall the company remains confident of a “satisfactory outcome for the year as a whole”.

AM Best has confirmed its assessments of the financial strength the issuer credit rating (ICR) of Through Transport Mutual Insurance Association Limited (TTB) (Bermuda) as A- and “a-” . The two companies collectively trade as TT Club.

The mutual insurer says: “The ratings of TTI continue to reflect AM Best’s view that the company is an integral part of TT Club’s worldwide strategy. The outlook for both ratings remains stable. AM Best believes TT Club will maintain strong consolidated risk-adjusted capitalisation in 2009, despite an anticipated reduction in retained earnings.”

TT's capitalisation is supported by a USD30 million subordinated loan, issued in October 2006,, and the club benefits from a comprehensive catastrophe reinsurance programme with extensive vertical and horizontal protection.

However, AM Best expects TT Club to continue to report a combined ratio above 100% in 2009 in line with 2006-2008. The club’s investment earnings are unlikely to offset underwriting losses, owing to ongoing disruption in the financial markets, and AM Best anticipates a pre-tax loss for the year.

TT Club has taken measures to improve underwriting profitability, including the restructuring of its management in 2008 in order to reduce its expense base.

The new aircraft carriers

Lloyd's Register (LR) is to class the Royal Navy’s new Queen Elizabeth Class aircraft carriers. Last week senior management from BVT - a joint venture between BAE Systems and VT Group - the Ministry of Defence and Lloyd's Register met in LR’s London boardroom to sign a contract for survey during construction of the Royal Navy’s two new aircraft carriers, HMS Queen Elizabeth and HMS Prince of Wales.

Under the contract, Lloyd’s Register EMEA will perform the surveys required to assign the selected class notations from Lloyd’s Register’s Naval Ship Rules. According to LR, this will make a substantial contribution to the safety and technical assurance required by the Ministry of Defence, and build on the design appraisal and support work already undertaken.

Richard Sadler, Lloyd's Register’s chief executive said: “It is Lloyd's Register that has pioneered the concept of naval class, and in doing so we have created something quite unique in the construction of naval ships. So it is a great pleasure for us to sign this agreement today. Not only will this project be the biggest naval project we have engaged in, but probably the biggest in Lloyd's Register’s history.”

Freight, demurrage and defence insurance specialist the UK Defence Club has reported a good performance for the past financial year despite the global recession. Net claims incurred rose to GBP14.5m, compared with GBP9m in 2007/8. However, premium income rose by six percent because of continued growth in entries. Investment return totalled GBP4.3m, GBP1.6m better than the previous year.

The club said this was helped by its cautious investment strategy and the weakness of sterling, which depreciated by 26% against the US dollar and 14% against the Euro.

The International Union of Marine Insurance has come out in support of the changes imposed on the International Association of Classification Societies membership criteria following an EU antitrust investigation. IUMI welcomed the shift to what it described as "qualitative rather than quantitative" criteria for membership of the organisation.

IUMI secretary-general Fritz Stabinger said: "IUMI has always supported and endorsed industry efforts to achieve greater quality and transparency in its operations no matter which sector is involved. The chairman of IACS, which is an affiliate member of IUMI, has said that the primary concern of all its member societies is to promote the safety of life, property and the natural environment. IUMI fully aligns itself with these aims, which are the cornerstone of marine insurance practice, and welcomes what may be a new chapter in the classification of ships."

The European Community Shipowners Association has come out strongly in favour of the UNCITRAL Convention on the carriage of goods (wholly or partly) by sea, otherwise known as the Rotterdam rules.

"ECSA urges all States worldwide and particularly all EU Member States, to sign up to the Rotterdam rules at the signing ceremony in Rotterdam on 23 September 2009 and to ratify these rules soonest so as to have the necessary modernization of cargo liability rules as well as legal certainty and uniformity worldwide," the organisation said in a statement.

"ECSA firmly believes that the Rotterdam rules provide for the necessary legal certainty and uniformity with regard to cargo liability. Moreover, the Rotterdam rules modernize the liability regimes that currently apply to the carriage of goods by sea and also address the gaps that presently exist, e.g. by laying down rules on e-commerce. Furthermore, the Rotterdam rules regulate the multimodal carriage of goods that involve a sea leg. It follows that the Rotterdam rules will greatly facilitate international and European trade. Finally, the Rotterdam rules provide for a well-balanced regime that takes into account the interests of both shipowners and shippers, a feature that is fully recognized and endorsed by all shippers' interests worldwide except the European Shippers' Council in Europe."

"ECSA does not share the views expressed by those opposing the Rotterdam rules. As regards the European Shippers' Council (ESC), ECSA has read with great interest and fully supports the views of the US Shippers’ Organisation (Nitleague), which are also supported by some major European Shippers, that the Rotterdam rules strike a right balance between the shipowners and shippers in terms of liabilities and the allocation of risks between both parties and that "as European shippers did not participate in the negotiation of the Rotterdam rules until the very end of the process at UNCITRAL, their perspective represents a misunderstanding and lack of appreciation of the delicate compromise achieved in the multilateral negotiations"."

"ECSA is of the opinion that the Rotterdam rules clearly represent a last attempt to have a harmonized cargo liability regime at international level providing for modern rules and for legal certainty and uniformity, thereby reducing conflict of laws between the various jurisdictions across the world."

Leading Norwegian shipbroking company RS Platou has opened its first London office, headed by former Clarksons chief executive Richard Fulford Smith. The company already has offices worldwide and is one of the world’s biggest shipbroking companies.

According to the recruitment agency Faststream, the era of Norwegian and British shipbroking co-operation appears to be at an end. The company’s latest maritime employment review has revealed that more British companies are expected to open up offices in Oslo or on the west coast in the coming months and compete directly with their Norwegian counterparts.

Nick Hubbard

International shipbroker and Maritime London member Galbraith’s has appointed Nick Hubbard as its new managing director. Hubbard has twenty-five years’ experience as a shipbroker, most recently as a senior director and major shareholder at Howe Robinson Shipbrokers in London.

He says, “This is an exciting opportunity for me. Galbraith’s is an internationally known and highly respected company which operates with a strong team ethic and has more than its share of high-performing brokers. I see opportunities to develop both corporate and individual potential still further within the company.”

Mr Hubbard, who is adamant that he will continue to generate revenue as a working broker, adds, “We will be recruiting more brokers to develop new opportunities, and we will seek to expand our existing overseas network. Galbraith’s is a vibrant firm with a global outlook which believes in being close to its customers in order to best meet their needs. Our offices in Shanghai, Singapore and New York are trading well, and we will look to expand still further the services which they are able to offer.”

A European Commission-funded project aiming to tackle the problem of seafarer fatigue has been launched with an inaugural meeting at Warsash. Project Horizon brings together 11 academic institutions and organisations with a broad range of interests from the shipping industry in a 30-month research programme to examine the way in which fatigue affects the cognitive performance of ships' watchkeepers. The project seeks to improve safety at sea by developing a fatigue management tool kit for the industry, as well as recommendations for improving work patterns at sea.

"Whilst we now have evidence to show the scale of the problem associated with fatigue amongst seafarers, this project will take the understanding to a new level based on robust and reliable empirical data that can be used to make concrete fact-based recommendations for avoiding or mitigating the dangers," said project manager Graham Clarke.

Sixty deck and engineer officers will be taking part in the project, with their performance being measured by researchers as they undertake typical watchkeeping duties on simulators over a succession of seven-day periods. Experts will use a variety of scientific methods to measure the fatigue levels experienced by the officers and any resulting degradation in performance during a wide range of regular onboard operating conditions.

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