Maritime services are important part of the City's contibution to UK

The continuing importance of UK maritime services is demonstrated in TheCityUK’s new report which highlights its direct contribution to GDP of £1.5bn, tax revenue of £644m, overseas earnings of £2.2bn and employment of 12,000.

This contribution is based on a broad range of services as London retains its position as the world’s leading maritime centre providing a broad range of services. The multiplier effect of business procured through the supply chain and spending of those involved in maritime services, more than doubles its GDP and tax contribution to £3.9bn and £1.4bn respectively, while employment dependent on maritime services is raised to over 63,000.

Shipbroking: The 200 shipbroking firms operating in the UK generate about a third of activity in UK maritime services, as they employ 4,200 people and generate overseas earnings of £744m. Shipbrokers have established a substantial UK market share in the chartering business, with Baltic members accounting for an estimated 50% of the global tanker and 30-40% of dry bulk. The Baltic Exchange Dry Index (BDI) has averaged 1,500 in the first ten months of 2011, a fraction of its 2008 peak, owing to surplus capacity in shipping and concerns about the global economy.

Derivatives: Trading of Forward Freight Agreements (FFAs) permits charterers and shipowners to hedge the future movement of freight rates. In 2011 turnover of FFAs is expected to be around the 1.4m lots traded in the two previous years.

Insurance: With 20% of premiums in the international marine insurance market in 2010, the UK remains the leading centre in the face of stiff competition from Japan, the US, China and Germany. The UK is also the largest centre in the management of protection and indemnity insurance, with P&I Clubs operating in the UK accounting for 62% of the global market in 2010.

Ship finance: The total loan book of $64bn of 13 banks operating in the UK accounted for 15% of the global ship finance portfolio of $452bn at end-2010.

Ship classification: Lloyd’s Register is the second largest ship classification society in the world making up 16% of the world’s fleet.

Education: New research indicates that there are 10,500 students on marine courses at 24 universities and colleges around the UK.

Legal services: The UK is a leading centre in legal services involving over 40 law firms. English law is applied widely to shipping disputes. The London Maritime Arbitrators Association saw a drop in appointments to 3,492 in 2010 from the high point of 4,445 in 2009.

Although TheCityUK report notes that London remains the leading centre of expertise, the Baltic Exchange has highlighted industry concerns about its future prospects: these concerns relate to growing competition from other centres, such as Hong Kong, Singapore and Dubai, as well as to the stability and predictability of the UK tax framework, particularly as it applies to non-domiciles. The Greek Shipping Cooperation Committee has reported that a third of its membership, 50 out of 150 companies, has left the UK since the Remittance Basis Charge on non-domiciles was introduced in 2008, taking 1,500 jobs overseas.

Duncan McKenzie, head of research at TheCityUK, said “Maritime services in the UK continue to make a substantial direct economic contribution notably through 12,000 jobs and £2.2bn generated in overseas earnings. While most maritime services are clustered in London, some services, such as the maritime education offered by universities and nautical colleges, are evenly spread throughout the UK”.

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Durban: host of UN Climate Change Conference and also Africa's largest port

The International Chamber of Shipping has joined forces at the United Nations Climate Change Conference in Durban, South Africa, with Oxfam and WWF to call on delegates to give the International Maritime Organization (IMO) a clear mandate to continue its work on regulating shipping's CO2 emissions, including the development of market based measures.

Samantha Smith, leader of WWF’s Global Climate and Energy Initiative, said: "We are very pleased that the shipping industry acknowledges its responsibility to play its part in further reducing greenhouse gas emissions. With around 3% of the world’s total emissions, full participation of the shipping sector will help greatly towards keeping global warming below the 2°C target agreed by governments. Putting a charge on carbon in the global shipping sector can have huge benefits in meeting our climate change objectives."

"We agree with shipowners that the best place to work out the details of how shipping’s emissions can be tackled using Market Based Measures will be at the International Maritime Organization, and that a strong political signal by political leaders in Durban showing their determination to make progress on this will help accelerate that process."

The organisations say that an effective regulatory framework for curbing emission of CO2 from international shipping must be global in nature and designed so as to reduce the possibility of ’carbon leakage’, while taking full account of the best interests of developing countries and the Kyoto principle of ’common but differentiated responsibilities and respective capabilities’ (CBDR).

A statement says that this includes the possibility of the adoption by IMO of a compensation mechanism through which a significant share of any revenues collected from international shipping could be directed to developing countries and provide a new source of finance to support their efforts to tackle climate change. Such revenues could be directed through an appropriate channel, such as the Green Climate Fund, which will be discussed by governments in Durban.

The statement says: “While there are some differences over the detail of such an approach, both the civil society and shipping industry organisations emphasise that the immediate priority for governments meeting at COP 17 in Durban is not to work on technical details for shipping, but to provide the signals needed to allow resolution of the key political question of how to apply CBDR in the shipping sector, and assist the speedy completion of the IMO’s work.”

It adds: “With respect to any carbon charges that might be proposed by governments, they agree that the recent IMO agreement on technical and operational measures to reduce shipping emissions demonstrates that the IMO is eminently capable of developing a further international agreement for shipping on MBMs. In light of the urgency required to avoid catastrophic climate change, they called on all governments to take all steps necessary to expedite such an agreement at the IMO.”

Tim Gore, Oxfam climate change policy adviser, said: "We welcome the constructive engagement of the shipping industry in the search for solutions to the climate crisis. Industry and civil society actors agree that shipping emissions can be regulated in a way which is fair to developing countries and could help generate the resources they need to tackle climate change. It’s vital that governments meeting this month at the UN climate talks in Durban give the signal needed to move such a deal forward in the International Maritime Organization".

ICS secretary general, Peter Hinchliffe, said: "The shipping industry welcomes the recognition by these important actors from the environment and development fields that it is in the best interests of both the environment and developing nations for shipping to be regulated via our industry regulator, the International Maritime Organization, with the same rules for carbon reduction applying to all internationally trading ships, but in a manner which respects the principles of the UN climate convention."

"If governments decide that shipping should contribute to the UNFCCC ’Green Climate Fund’, the industry can probably support this in principle as long as the details are agreed at the IMO, with the industry’s clear preference for a Market Based Mechanism being a compensation fund linked to the fuel consumption of ships, rather than an emissions trading scheme."

ICS also repeated that the “clear preference of the majority of the shipping industry” - if governments decided to implement a shipping MBM - is for an IMO compensation fund linked to fuel consumption, rather than a system based on emissions trading.

It said in a statement: “Most shipping companies, perhaps 90%, are small to medium sized enterprises that have a sound dislike of unnecessary complication. An IMO compensation fund linked to fuel consumption is therefore the option with which most shipping companies could probably accept and support, if agreed by governments at IMO.”

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Ferry owners’ association Interferry has warned that the low-sulphur legislation will prompt an environmentally damaging modal shift from short-sea to overland transport and pose severe financial implications for the overall European economy.

It says that ferry operators in northern Europe face a “near-impossible” choice in trying to meet the 2015 deadline for ultra-low sulphur emissions from bunker fuel.

The association also says the European Commission’s (EC) so-called “toolbox” of measures to assist the industry is unrealistic and will not stop a modal shift.

Talking to London Matters at the recent International Bunker Industry Association Annual Convention, Interferry's executive director of EU and IMO affairs, Johan Roos, said it was a myth that UK ferry trades would not be affected by the modal shift. He said that in many cases consignments would be trucked to the Dover Strait to cross by either the Channel Tunnel or the shorter Dover Calais ferry route rather than the several other, longer sea routes.

Under pending IMO and soon to be agreed EU environmental requirements, vessels operating in the Baltic, North Sea and Channel Emission Control Areas (ECAs) will have to comply with a 0.1% limit on fuel sulphur content from 2015. Interferry says it acknowledges ferry operators’ responsibility to reduce emissions and supports the move to lower sulphur limits globally by 2020 - but claims that the 2015 time-scale is ‘mission impossible´ due to unsustainable cost increases.

It argues that, despite the ferry industry’s efforts to develop alternative technologies and feasible alternative fuels, abatement technologies and financial support will not be available or sufficient enough to avoid a modal shift from sea to road. These alternatives are the elements in the EC’s ‘toolbox’ of technical and financial solutions.

The toolbox suggests the use of ‘clean’ LNG fuel or, for vessels that continue to run on heavy fuel oil, the use of scrubbers -exhaust gas cleaning systems. It also points operators towards EU funding initiatives and state aid.

Interferry responds that these are not realistic options for implementation by 2015.

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Maritime London participated in the Institute of Chartered Shipbrokers (Chennai) centenary two day conference "Towards Sustainable Shipping" at the end of November. The seminar was opened by G.K. Vasan, the Indian Minister of Shipping in the presence of Alan Marsh, president of the ICS. Topics covered over the two days included piracy, the environment, the challenges for Indian shipping, maritime business services, maritime education, bulk markets and concluded with a mock arbitration.

Amongst more than 300 delegates Maritime London members were to be seen from the Baltic Exchange, Braemar Seascope, the London P&I Club, Steamship P&I Club, RightShip (UK), Southampton Solent University, Marsh, and of course, the ICS itself.

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The London P&I Club has set a general increase of 5% in annual P&I call rates for the 2012/2013 policy year.

Explaining the decision, Ian Gooch, chief executive of the club’s management company A Bilbrough & Co, says, “Prior open policy years are developing in line with expectations. In the current year the news is conflicting. On the one hand, we have seen some signs of increased claims activity, mainly involving cargo cases in the $100,000-$1m band. But at the same time we are finding that claims above that band, as well as at the attritional level, are currently running at lower levels than at the same stage in the two prior policy years. International Group Pool claims for the year are presently in line with expectations.”

Adding a note of caution Mr Gooch said: “This can be interpreted overall as encouraging news, but there is a long way to go and the position could of course change significantly before the 20 February year-end. There also seems to be little doubt that the underlying trend in P&I involves increasing claims costs. Moreover, our own experience last year of an unusual number of expensive casualty cases serves to underline the unpredictability of such costs.” On the investment side, the club’s portfolio produced a return of 1.2% for the year to 31 August.

But Mr Gooch warns, “The recent volatility in the markets is such that we are taking a cautious approach to planning for investment contributions. Putting all this together and recognising the tough trading conditions faced by members in most shipping sectors, the committee authorised a general increase in rates of 5 per cent for P&I and FD&D.”

The club’s owned mutual tonnage has increased by more than 1.5m gt during the year so far. The charterers’ portfolio has also continued to grow, so that the club’s total entry now stands at 44.3m gt.

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Joe Hughes, chairman and ceo of Shipowners Claims Bureau Inc., managers of the American Club has warned of tough times ahead for shipping and also for P&I insurers. He says: “The current imbalance between supply and demand appears unlikely to experience a positive readjustment any time soon. Thus, shipping industry earnings are unlikely to rise significantly over the short term. However, depending on the extent to which the global economy avoids a further downturn and continues to expand, however modestly, over the next two years, there is hope that prospects will improve for 2013 and beyond.” Nevertheless he warned that the unrelenting hostility of the political, regulatory and judicial environments will continue to assert a “baleful influence on future P&I exposures”.

He added: “These adverse circumstances will be compounded by the creeping extension of levels of shipowner liability under existing conventions and those likely to come into effect in the future.”

Mr Hughes's comments came following an announcement that the club is seeking a 5% increase in all classes of premium (mutual and fixed-premium) for both P&I and FD&D for the 2012 policy year that starts on February 20 next. This was decided by the club's directors when they met in New York recently. There is no expectation of any unbudgeted supplementary calls for any open year. However, the directors ordered the levying of the 25% supplementary call, as originally forecast, for 2011, for both mutual P&I (Class I) and FD&D (Class II) entries. The release call for the year will remain at 25% over and above the supplementary call.

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DP World's London Gateway is one of a number of major projects on the Thames

Maritime London member, the Port of London Authority (PLA) says that the tidal River Thames is attracting investment of almost £2.5 billion in new passenger piers, cargo handling terminals and vessels. PLA says the number of new development schemes coming forward is unprecedented in recent years. Their research shows that the value of Thames investment projects just completed, underway and planned, totals almost £2.5 billion. DP World’s £1.5bn London Gateway container port scheme in Thurrock, Essex, is the biggest single investment in the River Thames and is forecast to create more than 12,000 jobs. The port is scheduled to open at the end of 2013.

But other investments, such as Cory Environmental’s new £3.75m city cruises passenger vessel and fleet of tugs, are also helping the river to thrive. There is also investment at other ports, including the northern expansion project at the Port of Tilbury, while Ford is developing the jetty at Dagenham.

Meanwhile, investment has also gone into the extension of Tower Pier and the recently opened St George’s Pier.

PLA chairman Dame Helen Alexander said the river is receiving “a massive level of investment”.

She said: “This is long term investment, creating good quality, skilled jobs. The introduction of new passenger boats continues to sustain the growth in commuter and tourist travel on the river, underpinning the recruitment and training of skippers, deckhands and support staff.

“The commitment of Crossrail and Thames Water to use the river for their projects is going to trigger a major initiative to train the crews for the barges that will move the goods and materials. Just as important, it will help keep hundreds of thousands of lorries off our congested roads. In short, it’s great news for the economy, for jobs and the environment.”

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Finnish-based Wärtsilä Corporation looks set to take over UK-listed, marine and energy sector engineering company Hamworthy for £383m. Still subject to approval by Hamworthy shareholders and also needing German and Norwegian regulatory approval, the acquisition is expected to be closed during the first quarter in 2012.

The Finnish company says that combining Hamworthy and Wärtsilä will allow both organisations to broaden and enhance their capabilities in rapidly evolving offshore, marine gas applications as well as environmental solutions markets. Both Hamworthy and Wärtsilä will benefit from technology sharing and optimised R&D to enhance position for the global marine and offshore markets.

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Cadets from Fleetwood Nautical Campus, South Tyneside and Warsash Maritime Academy were rewarded for their innovative safety ideas at the Chamber of Shipping’s recent 17th Annual British Shipping Safety Awareness Award ceremony.

The awards highlight the industry’s commitment to world class safety standards, encouraging thought provoking competition entries on future regulations from cadets and trainee ratings in the Merchant Navy. Cash prizes were awarded to the three projects that offered the best contribution for potential improvements in safety at sea.

This year’s winning entry was ‘Ocean Wave Top Trumps’, cadet Thomas Chitseko’s take on the popular card game. Instead of comparing characters or objects, each card features potential hazards, creating a memorable, fun and engaging way to educate seafarers of the dangers they may encounter in their day to day working lives.

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The Maritime Piracy Humanitarian Response Programme (MPHRP), launched in September, has released its first good practice guides. The new guides are intended to help shipping companies and manning agents to offer the best support to seafarers and their families to help them cope with the physical and mental trauma caused by torture and abuse at the hands of pirates. Similarly dedicated guides for seafarers; chaplains and welfare workers; and trade unions will follow in early 2012.

The MPHRP is a cross-industry initiative, funded by the ITF’s Seafarers’ Trust charity and the TK Foundation. Its chair, Peter Swift, said: “Piracy is reaching an all-time high: in the number of incidents, in the vast ransoms demanded and, most of all, in the extreme violence used. The treatment meted out to the victims now frequently crosses the line from savagery into torture.”

Roy Paul, of the ITF Seafarers’ Trust, and MPHRP project manager, added: “We have been listening to shipping companies and manning agents who have been through the terrible experience of having their ships and crew held. Their main concern is to share what they have learnt with others. The main concern for the seafarers is how their families are informed and treated should this happen to them.”

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Tickets are now on sale for the prestigious Chamber of Shipping Annual Dinner at the London Hilton on Park Lane on 6 February. The dinner represents an opportunity to entertain corporate clients in convivial surroundings amongst the top names and industry leaders in British shipping.

Tickets are on sale at £148.50+VAT per person. Contact Donna.Stevens@british-shipping.org for further details.

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Maersk employees working at Maersk House in London raised over £5000 for charity by abseiling from their building.

The money raised went to the Commando Spirit Appeal and Help for Heroes, charities which help wounded UK servicemen and their families.

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