The launch of IMO's action plan to fight piracy last week was overshadowed by news that pirates had apparently murdered a seafarer in retaliation for the death of a gang member during a failed rescue attempt and tortured other.

A joint shipping industry statement warned that ship owners and their crews will be “re-evaluating their current determination to ensure that this vital trade route remains open”.

UN Secretary-General Ban Ki-moon said the escalating problem of piracy off the coast of Somalia was “completely unacceptable” and required an urgent and coordinated response when he visited IMO's London-based headquarters last week for the launch of IMO’s action plan to promote the 2011 IMO World Maritime Day theme: “Piracy: orchestrating the response”.

Shipping industry organisations BIMCO, the International Chamber of Shipping, INTERCARGO, INTERTANKO and the International Transport Workers’ Federation expressed outrage at the murder of a seafarer on the Beluga Nomination.

A statement said: “We express our deepest sympathy to the seafarers involved and to their anxious families.” The organisations added: “The international shipping industry is truly disturbed at reports that pirates have been torturing seafarers physically and mentally, often in the most barbaric ways, including hanging them over the ship’s side by ropes around their ankles with their heads under water and even subjecting them to the horrendous practice of keelhauling.”

They cautioned that the shipping industry will be “looking at all possible options, including alternative routes, which could have a dramatic effect on transport costs and delivery times - piracy is already estimated to cost the global economy between $7-12 billion per year. London Matters understands behind-the-scenes discussions on a concerted industry response are continuing.

Speaking at IMO’s London headquarters, Mr Ban welcomed the decision of IMO to pay special attention to piracy during the year ahead, saying: “This is a timely and important initiative.”

IMO Secretary-General Efthimios E. Mitropoulos said: “Piracy and kidnapping have blighted the maritime community for too long and it is seafarers who bear the brunt.”

He added, “We believe that we can use the experience gained and the successes achieved in reducing piracy elsewhere to good effect in the current arena as well, but to do so requires a well orchestrated response.”

Speakers at the launch of IMO’s action plan also spoke of the economic cost of piracy.

Mr. Ban said, “Ransom payments adding up to hundreds of millions of dollars have created a ‘pirate economy’ in some areas of Somalia that make them more resistant to efforts to develop alternative livelihoods. Economies throughout East Africa and beyond are experiencing the fallout.”

IMO’s action plan for 2011 has six prime objectives:
• increase pressure at the political level to secure the release of all hostages being held by pirates;
• review and improve the IMO guidelines to Administrations and seafarers and promote compliance with industry best management practice and the recommended preventive, evasive and defensive measures ships should follow;
• promote greater levels of support from, and coordination with, navies;
• promote anti-piracy coordination and co-operation procedures between and among States, regions, organizations and industry;
• assist states to build capacity in piracy-infested regions of the world, and elsewhere, to deter, interdict and bring to justice those who commit acts of piracy and armed robbery against ships; and
• provide care for those attacked or hijacked by pirates and for their families.

back to top

Maritime London is collecting responses from the maritime market regarding the review of the 1996 Arbitration Act currently being led by Lord Mance.

According to the review committee, which comprises Lord Mance, Dame Hazel Genn, Johnny Veeder QC, Mike Telford, Chris Andreas and Paul Arditti, there is a view in some markets that arbitration should be wholly divorced from the courts and that the high threshold for appealing an award provided by the 1996 Act is necessary to preserve London’s pre-eminence in the field of dispute resolution. Others feel that the reputation of London depends more on the quality of the legal precedent on which quality awards rely and that too high a threshold has a “stultifying effect on the timely development of the law.”

The committee also notes that there are also complaints that the same points are being repeatedly arbitrated often with different results.

Responses should be sent to Maritime London chief executive Doug Barrow. Email: dbarrow@maritimelondon.com

The committee is also seeking funding for its review and invites contributions towards its estimated £25,000 costs. Please email paul.arditti@compass.gg or telephone 07775647994 to discuss funding issues further.

back to top

The European Commission’s Directorate-General for Employment, Social Affairs and Equal Opportunities (DG EMPL) has moved to force the UK government to stop owners of UK ships paying EEA nationals different rates based on their country of residence, prompting opposing responses from owners and unions.

DG EMPL has issued a “reasoned opinion” to UK Shipping Minister Mike Penning. DG EMPL claims that the UK is in breach of its EU Treaty obligations by retaining Section 9 of the Race Relations Act 1976 on the statute book and gives the government two months in which to comply.

In response the Chamber of Shipping, which has consistently warned that ships will leave the UK fleet if the current situation is changed, issued a statement saying it “considers the actions of DG EMPL to be most regrettable”.

Seafarers' union Nautilus International, on the other hand has urged DG EMPL to take such and welcomed the “long overdue” move by the UK government to curb pay discrimination between seafarers of different nationalities on British ships.

The Chamber noted that Mr Penning is to publish secondary regulations that will replace Section 9 with a measure that conforms with the EU Treaty provisions. Its statement says: “The Chamber, whilst profoundly regretting the fact that Section 9 is to be replaced, recognises that the government has no choice over whether to act.

Mr Penning – who has gone to considerable lengths to minimise the impact of the change on UK-flag operators – has been clear that the regulations will go no further than is necessary to ensure compliance.” The Chamber added that it awaited with great interest the publication of the regulations that will apply Part 5 of the Equality Act to seafarers.

It said: “The impact on UK-flag shipping operations will depend on the precise wording of the regulations and the circumstances of individual companies.”

In a very different vein, Nautilus general secretary Mark Dickinson comments, “We’re glad the UK is finally acting on this, although we are concerned at reports that pay discrimination continues in some other EU member states. We are disappointed that the minister is saying he will do only the bare minimum required to comply with the EU directive, which means that non-EEA seafarers will not be provided with any statutory protection with regards to their pay.”

He continued: “Nautilus also reiterates its wish to work with shipowners to avoid the threat of flagging out, and to find ways of constructive compliance that keep UK ships internationally competitive. We have achieved this in the Netherlands through effective social partnership and if the political will exists in the UK we could achieve it here too. However, we will also spare no effort in tracking down those owners that do switch their UK ships to other flags to evade their responsibilities for decent working conditions.”

back to top

Changes to the UK capital allowance regime which came into effect on 1 January 2011 encourage owners to regard ships as having a useful life of less than 25 years. Shipping accountant and adviser Moore Stephens warns that the tax advantages available in respect of capital expenditure on ships may be greatly reduced by the changes.

Moore Stephens tax partner Sue Bill says, “Companies which incur expenditure on ships after 1 January 2011 will now have to consider whether the ships may reasonably be expected to have a useful life of at least 25 years when new when claiming capital allowances. It is likely to be beneficial if this is not the case.”

The firm notes that ships have traditionally enjoyed significant tax advantages over other types of assets. Prior to 1 January 2011, ships outside tonnage tax were specifically excluded from the long-life asset regime, and the normal rate of writing-down allowances therefore applied.

But, following changes to the capital allowance rules, expenditure on ships incurred on or after 1 January 2011 is no longer excluded from the regime, under which the writing-down allowances are considerably lower than those for other assets. Ships acquired prior to 1 January 2011 will continue to be excluded from the long-life asset rules. The writing-down allowance available on ships outside the long-life asset regime is 20% per annum up to 1 April 2012, and 18% thereafter, on a reducing balance basis.

The comparable allowances for long-life assets, meanwhile, are 10% and 8% cent per annum. An asset may be regarded as long-life if it is reasonable to expect that it will have a useful economic life of at least 25 years when it is new.

Ms Bill says: “Some ships may reasonably be expected to have a useful life of at least 25 years when they are new, and may therefore be regarded as long-life assets. But this will depend on the type of vessel involved. Broadly speaking, the date when expenditure is regarded as having been incurred for capital allowance purposes is the date when there is an unconditional obligation to pay. In the case of a shipbuilding contract, although the obligation to pay for that part of the asset that has been completed becomes unconditional when the work is certified, there are exceptions to the general rules.”

back to top

International Union of Marine Insurance (IUMI) president and leading hull underwriter Ole Wikborg, has warned that the excess capacity is now rampant in both the shipping industry and in the marine insurance market and is challenging underwriters’ efforts to achieve some stability in their business, allied with underwriting discipline.

Speaking at IUMI's winter meeting in London two weeks ago Mr Wikborg said: “While new ships are leaving shipyards in a steady flow, old tonnage going for scrapping is still but a trickle by comparison. With fluctuating sums insured, underwriters’ exposure also fluctuates and which we must respond to. There is always the issue of over/ underinsurance, although conditions generally take care of this, which means that underwriters must be ever more vigilant in their appraisal and rating of the risks shown to them.”

Excess capacity is "rampant"

He gave a mainly assessment of the shipping industry’s prospects, saying: “Looking ahead, all shipping sectors, perhaps with the exception of boxships, will face challenges in 2011 and 2012. Tankers seem to be highly exposed and, in my opinion, unlikely to recover in the near future. The bulk trades are somewhat dependent on China, where things are slowing down, but not China alone. India, for instance, is a big destination for bulk cargo.”

He added: “The tragic floods in Queensland, along with other freak weather events around the world, have highlighted how vulnerable the global economy is to disruptions in the supply chain. The flooded mines in Queensland have stopped all chartering activity and will continue to do so until the mines have dried out. However, the biggest threat to bulk shipping is the oversupply of new tonnage.”

On marine insurance market Mr Wikborg said: “The fierce competition in the market was the subject of comment by broker Willis in its year-end review, stating that ‘the surplus capacity…defies logic as more insurers queue up to enter an already crowded line of business where rates are continuing to fall.”

He added: “However, hull business has shown an overall technical loss for 14 consecutive years. Underwriters are always at the mercy of changes. They need to be aware of the changes in the global economic dynamics that will impact their claim costs. For example, the price of steel that can affect repair costs and repair yard capacity. Volatile exchange rates and falling or rising commodity prices are other exponential factors.”

Mr Wikborg is director and senior underwriter of the Norwegian Hull Club.

back to top

back to top

Lloyd’s Register says its joint-industry project with Shanghai-based Bestway Marine Engineering Design to develop a “trend-setting” environmental bulk carrier, has been completed, “with results far exceeding expectations”.

The new 'Emerald' design exceeded targets in a number of key areas: it reduced the handysize model's steel weight by 12%, making room for more revenue-generating cargo without increasing fuel consumption (the target was a 10% reduction); it also reduced fuel consumption by 19.5% (the target was 15%).

According to the provisional data from the project, the new design for a 35,000 dwt vessel will achieve an 18% improvement in environmental efficiency over comparable previous versions when measured against the IMO's Energy Efficiency Design Index, by which a ship's CO2 efficiency is measured.

“This project clearly demonstrates what can be achieved through the power of technical co-operation," said Nick Brown, Lloyd's Register's country and marine manager, China.

"It showcased our technical expertise and ability to provide timely insights and support to innovative designers such as Bestway right from the initial design stage. This project also highlighted the leadership Bestway is taking in the area of ship design. We are confident about working together again with Bestway on safe and efficient designs in the future.” Both companies have since committed to return to the drawing board to see what further practical gains can be made with 35,000-dwt and other ship designs to answer calls from the market for 'greener' more efficient ships.

“This project demonstrated and strengthened the strong relationship between Lloyd’s Register and Bestway. It is an excellent example of effective co-operation between a local design company and a leading classification society," said Prof. Liu Nan, Bestway chairman and general manager. "I am sure that with more co-operation our ‘Emerald’ series and other bulk carrier ship-types will be optimised and all these ship-types will satisfy a growing demand from the global ship-owner community.”

back to top

back to top

The Shipowners’ Club says it should have been rated A rather BBBpi (Good) by Standard & Poor’s after its latest review. The Club provides protection and indemnity insurance to small and specialised vessels worldwide.

Charles Hume, chief executive of Shipowners says, “While acknowledging S&P’s rating methodology, on this occasion we feel that the Club’s current performance warrants an A rating. We believe that Shipowners’ financial performance and therefore its underlying strength is superior to when it was last A rated in 2008.”

He continues: “Our underwriting has been in balance for the last three years and is expected to show a surplus for this year; despite a very cautious and pessimistic approach to claims estimating we are projecting an improvement in our ultimate claims position for the current year. Free reserves, reported in August last year at US$159.2M, up from US$135M at end- 2009 and US$96M at end-2008, are at the highest level in the Club’s history. A significant reduction in the percentage of equity content in the Club’s investment portfolio to 23% has reduced potential income volatility.”

The club notes that, in explaining its rationale for the pi (Public Information) rating, S&P does acknowledge the Club’s good competitive position, good financial flexibility, good free reserves, good operating performance, strong liquidity and strong half year performance in 2010.

Mr Hume adds: “We are glad that our Members and their brokers understand the real value of the Shipowners’ Club. Shipowners successfully manages a stable and growing underwriting book, does not make additional calls or release calls, and has no intention of doing so.”

According to the company’s website Shipowners’ Club has 6,133 members, 28,227 vessels and 16,583,572 entered dwt.

back to top

UK P&I Club, has launched an aide-mémoire for its members on how to meet the requirements of the new Paris MoU port state control inspection regime. The club says many shipowners and their masters remain unsure of what is required from them if they are to meet the new requirements.

The club notes: “Getting it right reduces to the minimum the number of times their ships are selected for inspection. Getting it wrong can lead to detentions and, ultimately, the banning of vessels from major trading areas such as the region covered by the Paris MoU, ie the waters of the European coastal states and the North Atlantic basin from North America to Europe.”

“Clearly,” the club says, “there is a great deal of detailed information concerning the new regime available, for example on the Paris MoU website, but the UK Club believes that a brief checklist of actions that need to be taken prior to entering Paris MoU waters will prove invaluable to busy masters and managers.

In the newly published aide-mémoire, the Club lists the principal tasks to be undertaken prior to vessel entry in Paris MOU region as:

• Determine ship risk profile from online calculator
• Determine company performance from online calculator
• Note when vessel was last inspected in the region
• Establish time window of inspection according to ship risk profile
• Ascertain if vessel is eligible for inspection and, if so, which type of inspection
• Identify vessel selection scheme ? Note type of inspection vessel eligible for
• Is there a possibility vessel eligible for additional inspection
• If vessel is eligible for expanded inspection, comply with reporting obligations and notify Port State at port of call 72 hours and 24 hours before arrival
• Ensure sufficient time in operating schedule for expanded inspection to be carried out (typically eight hours for a capesize bulk carrier by two PSC officers)

Should detention occur, then the following actions need to be taken: ? Master to notify owners and class immediately following vessel detention

• Master/owner has right of appeal against detention
• Correct all deficiencies and notify PSC when deficiencies are rectified.

The club says it trusts that the aide-mémoire will be a useful tool especially during the early days of the new PSC regime, enabling owners to avoid the commercial penalties which come with any detention or banning procedure.

back to top

A 30 strong delegation including the Baltic Exchange, Lloyds Register, RightShip (UK), KPMG, Thomas Miller, Ince & Co, Clyde & Co, Holman Fenwick Willan and Watson Farley & Williams accompanied the Lord Mayor to Turkey last month, showcasing the UK's maritime services. The delegation gave a range of presentations to the Istanbul shipowning community at the Turkish Chamber of Shipping, followed by networking reception sponsored by UKTI. A further reception and dinner were held at the UK's Consulate General.

Maritime London chief executive Doug Barrow said: "We put this event together at short notice and provided our members with a range of business promotion opportunities. We look forward to organising similar trips this year to China, Greece and India."

back to top

The organisers of this year’s Norshipping trade show in Oslo are looking to hear from the next generation of shipping companies which it will feature on its website www.nextgenerationshipping.com.

The companies which will be profiled should be no older than two years and have at least one product or service available. There is no cost to participants.

For further details please contact Ryan Skinner. Email: ryan@say.biz or call +47 992 31 088

back to top

Busy Warsash open day

Warsash Maritime Academy, a Maritime London member and a faculty of Southampton Solent University reports that a recent open day attracted a record 750 visitors with people travelling from as far afield as Switzerland and Bermuda.

A spokesperson notes: “Interestingly, 10% of the candidates were aged 30 or over – proving that this is not just a career choice for school and college leavers.”

The Academy's director and dean, John Millican, said: “This year’s open day welcomed more prospective cadets and more sponsoring companies than ever before. This just goes to demonstrate how attractive the sponsorship package is to aspiring cadets, and that a career at sea is an increasingly popular choice for young people today.”

As well as information and talks there was the chance to take command of a ship ‘at sea’ on the Academy’s ship simulator, see how fires are fought on ships and observe a fly-past and winching demonstration by a coastguard helicopter.

back to top

Load ships in your spare time

Ship It!, an iPhone game developed by UK based maritime education and technology provider Coracle topped the games/educational charts in 10 countries including France, Hong Kong and Turkey this January. The game was also ranked in the top 10 in over 55 countries.

Ship It! helps players understand four basic types of ships, their related cargo, and relative loading times. The aim of the game is to manage all ships and cargo in the most efficient manner.

“This learning-based game from Coracle has the goals of being both educational and lots of fun,” states James Tweed, founder of Coracle. “This game is a great way to promote the maritime industry whilst demonstrating that we can use this platform to build simulated training modules.”

The app sells for $0.99.

back to top