HM Revenue & Customs (HMRC) has decided to revise its UK Tonnage Tax Manual to at least partly restore, on an interim basis, the pre-2009 interpretation of the strategic and commercial management tests.

Welcoming the move accountant and shipping adviser, Moore Stephens said it had been working for some time with the shipping industry, and in particular with the Chamber of Shipping, in campaigning for HMRC to reconsider its 2009 reinterpretation of the tonnage tax rules. According to the accountant, this reinterpretation created a lack of certainty and sent completely the wrong signals to international shipowners who had relocated to the UK to take advantage of its tonnage tax regime.

Moore Stephens tax partner Sue Bill says, “The HMRC changes to its reinterpretation of the strategic and commercial management test are very good news for a number of shipowners who are in the UK tonnage tax regime. At the moment, this is only an interim measure. However, although the location of technical management in the UK is no longer a pre-requisite for qualification for the regime, the current interim guidance emphasises the need for a company to review its activities in light of EU guidelines and comments that the management activities must contribute substantially to economic activity and employment within the EU. Therefore it is not clear from the latest guidance whether the pre-2009 position has been completely restored. But this move does aim to address the immediate concerns of most shipowners in relation to the 2009 reinterpretation, and a full consultation will be carried out.

She added: “The revised guidance includes some helpful comments regarding the application of the strategic and commercial management tests where ships are time-chartered in. The UK government has recently stated that it is keen to support the UK maritime sector. This is very good news. It is important that progress continues to be made and that the consultation process results in a consensus regarding the future position. The government should take the opportunity to consider other areas of the tonnage tax regime where changes to the rules would assist the UK shipping sector, which is currently facing difficult trading conditions and competition from other jurisdictions.”

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Clarkson Research Services' (CRSL) managing director Martin Stopford told a delegates at seminar last week that in the face of overcapacity owners would have to concentrate on controlling costs.

Speaking at Moore Stephens' Op Cost seminar Dr Stopford outlined three themes for the 2010s: shipyard overcapacity; energy costs; and the environment. All were correlated, he said, and would lead to a renewed focus on costs. He said that shipbuilding overcapacity will mean cheaper ships and greater willingness to do innovative work while lower ship earnings will push the strategic focus towards cost control. High energy costs will push up the bunker prices.

But he cautioned that society has only accepted this at a "macro" level while micro-decision-making is only partially committed. He likened the situation to that of the 1980s. Environmental pressure will increase because shipping is seen to have an oversized carbon footprint. Heavy fuel oil is seen as “super dirty” and shipping is a growth industry so its emissions are increasing.

But, again, commitment at a macro level is not reflected in micro-decision-making. Shipbuilding technology is very mature and so has no magic solutions. Cutting energy costs and carbon footprint will involve compromise and difficult choices.

The options will include lower speed, modified designs and multiple fuel systems (eg oil or LNG). These factors, Dr Stopford argued, mean that cost management will have a much greater urgency than in the past decade.

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Ferries not attractive to insurers

Few underwriters are now prepared to cover ferry industry risks according to Simon Swallow, commercial director of the UK-based Shipowners P&I Club.

He told delegates to the recent Interferry conference in Barcelona, that his informal research had revealed increasing anxiety in the market. He said he had found that only three or four Lloyd’s insurers were prepared to accept ferry hull & machinery business after consistently losing money and failing to achieve the required increase in premiums.

One market leader had revealed loss ratios of 153% on ferries and 189% on ro-ro ships compared with 115%across all sectors. This was mainly due to machinery incidents, notably because of the strain of maintaining tight schedules and because, Mr Swallow said, “there are a lot of old ferries out there”.

He added that hull & machinery insurers did not like high-speed craft because engines were working at full capacity and spares costs were high. On the other hand liability insurers preferred fast ferries to conventional vessels because passengers were strapped in, there was high technology on board and stopping distances were short, but were alarmed at major increases in exposure under the EU passenger liability convention due in force late next year. Crew fatigue, competence and over-familiarity with scheduled routes were common concerns.

Me Swallow advised ferry operators: “Ultimately your company’s solvency could depend on the quality of your insurance company. Work with them, show them your attention to safety and you will see your costs reduce.”

Meanwhile Shipowners’ has appointed David Heaselden to the new post of loss prevention director, with immediate effect.

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The UK P&I Club is supporting an initiative by the European Harbour Masters’ Committee (EHMC) on mooring safety. EHMC has released of a new DVD entitled “The Missing Link, improving the mooring process”.

The new DVD has been produced by the EHMC in partnership with, amongst others, the Nautical Institute and the UK Club, which the EHMC says “delivered valuable input and know how”.

The Nautical Institute will launch the Missing Link in its November issue of Seaways and will dedicate the issue to safe mooring while the UK P&I Club will distribute the DVD directly to vessels as part of its ongoing training programme.

Available on the UK Club’s own website www.ukpandi.com is a recent publication on the same subject. This is entitled “Risk Focus: Moorings”. The UK Club says that it has for a long time been very concerned about the number and severity of accidents which occur when ships are under tow or are engaged in mooring alongside. Even fatalities to crew and to shoreside mooring gangs are not rare occurrences while far too many incidents result in injuries that will end a seafarer’s or stevedore’s career.

Despite much publicity regarding the risks, the ‘do’s and do not’s’ when working as part of a mooring party, the Club says the claims still keep coming in, often accompanied by horrific photographs.

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The International Transport Intermediaries Club (ITIC) says that a recently concluded claim brought against a newbuilding supervisor helps illustrate the level of diligence which might realistically be expected of such a specialist service provider.

In the latest issue of its Claims Review, ITIC cites the case of a newbuilding supervisor appointed by a technical management firm to oversee the building of a number of chemical carriers. It became apparent that the newbuilding supervisor had possibly failed in his duty to adequately supervise the newbuilding, especially in failing to detect an attempt by the yard to cover up poorly adhering paint. The claim was eventually settled for USD350K. The dispute concerned two hulls which were scheduled for delivery in early 2009.

In his monthly report for December 2008, the newbuilding supervisor stated, “There are no known matters at this stage with regard to the construction and commissioning of the hulls which may affect the scheduled target date”.

On the basis of this report, the technical manager nominated the two vessels as performing vessels under a contract of affreightment. Upon completion of sea trials, deficiencies were identified relating to the tank coating of the first vessel. An independent surveyor was appointed and reported that the tanks were badly corroded. It appeared that some remedial action had been taken by the yard to cover up poorly adhering paint. In respect of the second vessel, deficiencies were found in the form of ‘mud cracking’ in the tank coating, and there was further evidence that the yard had covered up areas of poorly adhering paint.

The delivery of both vessels was delayed by two months until later in 2009 as significant work had to be carried out re-blasting and re-coating all cargo tanks on both vessels. The technical manager brought a claim against the newbuilding supervisor for losses of USD830K.

The newbuilding supervisor argued that the defects only became apparent at the sea trials and that he was not responsible for the yard’s failure to properly apply the paint.

ITIC says, “The main point at issue was what could realistically be detected by a newbuilding supervisor.” A key concern was in relation to one of the hulls, as the mud cracking and unauthorised repairs were evident in 20-30 per cent of the total tank area.

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The UK Club’s directors have decided on a 3% general increase. The club says the decision taken at a recent meeting in Athens was in response to continuing underlying claims inflation. Although the frequency of claims had reduced significantly in 2009, 2010 and 2011, the average cost per claim has continued to increase over this period. At 20 August, the UK Club’s total capital stood at USD486m, an $8m improvement on the position since 20 February this year.

In a statement the club says: “This further increase in the Club’s capital base has been achieved whilst maintaining a consistent and prudent approach to claims reserving. Investment return for the half year to 20th August was USD14.5 million, equivalent to a 1.8% return. The club says that it reduced portfolio risk in September reducing equities to 9%of the portfolio and increasing fixed interest holdings to 72%. Ninety-nine per cent of all bonds invested in by the Club are A grade or better. The Club is expecting to see its combined ratio below 100% for the current year.

Speaking after the decision on the general increase, club chairman Dino Caroussis said: “We were determined to strike a balance between ensuring our premium does not fall behind claims inflation while at the same time doing all we could to limit the impact of the increase on our shipowner members. Although we have been fortunate to enjoy lower claims numbers, there is still an average inflation on P&I claims of around 5%. This underlying inflation will quickly manifest itself in our claims costs once the frequency picks up again, as it surely will one day. Taking all of this into account we set the general increase for 2012 at 3t.

Mr Caroussis continued, “This strengthening of our financial position has been largely brought about by a reduction in the number of claims, driven mainly by the drop in world trade. But we have also been able to contribute to that reduction by careful management of our risks.”

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The first version of the BIMCO EEDI Calculator which is now ready for download from the BIMCO web site.

The shipowners' association says it has developed the easy-to-use EEDI Calculator to assist its members calculating the EEDI and plotting a ship’s index against the relevant ship type specific regulatory limits imposed by MARPOL Annex VI.

The EEDI Calculator works to the calculation guideline contained in IMO Circular MEPC.1/Circ.681. As calculation guideline is still being reviewed by IMO, BIMCO says it will issue updated versions of the EEDI Calculator as amendments are published in the future.

BIMCO hopes that the EEDI calculator will make EEDI performance of known ship designs more visible, as well as providing an easy way to assess changes in EEDI when design parameters are altered.

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Braemar Shipping Services is bringing together of its business units operating in the marine and offshore services sectors under the umbrella control of the Braemar Technical Services (BTS) division. The company says BTS will bring a broader service as well as operating efficiency benefits to customers of its technical services businesses - Braemar Casbarian, Braemar Falconer, Braemar Steege, Braemar (incorporating The Salvage Association) and Braemar Wavespec/Wavespec.

A Braemar statement says that the establishment of BTS will benefit both customers and shareholders by providing a pool of wider industry expertise; encouraging synergy between the business units and forming a wider global network of offices.

BTS will be headed up by two joint managing directors – Nigel Carpenter, the head of Braemar Steege, and Chan Yew Wah (Michael) who leads Braemar Falconer. With 385 employees, BTS will be the largest employer in the Braemar Shipping Services plc group.

"We are creating a single entity which will help each of the BTS business units operate even more effectively in the markets they already serve while also provide a platform to offer division-wide solutions to clients in the marine or offshore sectors," says Mr Carpenter.

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Maersk Mc-Kinney Møller

The achievements of Maersk Mc-Kinney Møller were celebrated at a lunch attended by the legendary Danish shipowner and held in his honour recently at London’s Baltic Exchange. The occasion marked his 20 years as a Life Honorary Member of the Exchange.

Welcoming Mr Mc-Kinney Møller to the Baltic Exchange, its chairman Mark Jackson said: “It is a delight that you have been able to accept our invitation and I very much hope that you will feel that you are back among friends.”

Mr Mc-Kinney Møller first visited the Baltic Exchange in 1936 as an apprentice to the British shipping firm H Hogarth & Sons.

AP Møller -Maersk has conducted its business through Baltic Exchange members since the early 20th century and its London company has been a member since 1951.

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London based provider of fleet management, ship security and asset monitoring solutions Pole Star Space Applications has launched Industry Zones, adding a new layer of safety and security functionality to its Fleet Management and SSAS Alert Advanced products.

Industry Zones enables Pole Star users to select from a series of pre-defined areas that carry additional environmental regulatory requirements or security risks and apply them to their voyage management and reporting procedures. Industry Zones provides automatic notification when a vessel enters and exits the pre-defined zone and can be configured to increase frequency of reporting while in the zone.

Paul Morter, Pole Star director of sales said: “Shipowners today face both increased security threats and a greater regulatory burden, so there is a need to simplify compliance while at the same time sharpening security monitoring. To manage these issues effectively they need tools that bring together all the information needed for voyage planning and execution. Pole Star Industry Zones provides that functionality within a proven and widely-adopted system and in a single screen view, vessel by vessel, across a whole fleet.” Pole Star systems are currently used to track nearly 25,000 ships worldwide.

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Shipping industry recruiter and Maritime London member Halcyon Recruitment has published the results of a survey looking at employees’ attitude to employment in the maritime sector. Conducted in association with training provider Coracle and based on over 2000 responses, the report shows that job security remains a significant issue with 59% of respondents indicating concern.

According to the report, job security is also featuring increasingly as a key element when considering a career move.

The report’s authors also say that career development top of the agenda. "Our participants indicated that promotion and advancement opportunities outweigh salary in importance in a career move. With a large percentage of maritime organisations having relatively flat structures internally, this is not always easy to achieve. There is also currently very little movement in senior management positions. That’s not to say managers aren’t looking to move, we know that they are, but only for the ‘right opportunity’."

Click here to download a full copy of the report.

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Michael Parker President of the Chamber of Shipping, presents the 2011 Thomas Gray Silver Medal to Christopher Moss, consultant surveyor with the MCA

The Marine Society honoured eight high achieving maritime professionals at its Annual Court held in London on 12 October.

For the first time the event also played host to the Maritime & Coastguard Agency's Officer Trainee of the Year Award.

Introducing the awards Marine Society director Brian Thomas said:

“Seafaring is a tough profession. Perpetual motion, constant vibration, cramped conditions, long hours and incessant noise are the daily norm. To study, sit exams and achieve impressive results in such conditions merits the highest praise. The Marine Society is immensely proud of its work in support of seafarers and offers hearty congratulations to today's worthy award winners.”

Marine Society Awards were presented to:


Christopher Moss – Thomas Gray Silver Medal;
Steven Gosling – Marine Society Lifelong Learning Award;
Richard Scott - Greenwich Maritime Institute Prize for Outstanding Achievement;
Darren Findlay – J.W.Slater Memorial Fund Outstanding Scholar Award;
Adam Taylor – Open University Outstanding Seafarer Student Prize;
John Mcloughlin – Middlesex University Outstanding Student Achievement;
Adam Hampton – National Extension College Outstanding Student Award.

The MCA Officer Trainee of the Year Award was presented to Hazel Bryan, who had attended Fleetwood Nautical College, and was sponsored by Anglo-Eastern.

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Southampton-based maritime charity Sailors’ Society is inviting participants to enter the London Marathon 2012. This year 30 Sailors’ Society runners raised £45K. All runners are asked to raise a minimum of £1,750 for the Sailors’ Society and will receive plenty of training advice, as well as fundraising support in the lead up to the event.

The Sailors’ Society also hosts a reception at the Institute of Directors for runners after the marathon, with complimentary massage included. Operating in 30 countries in almost 100 ports, the charity aims to enhance and enrich the lives of the 1.2million seafarers who often lead dangerous and lonely lives at sea, many miles from home.

For more information please contact Emma Barlow on 02380 515905 or email ebarlow@sailors-society.org.

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