David Cameron

Prime Minister David Cameron's announcement that gun laws would be relaxed to allow private armed guards aboard UK flagged vessels has received a heavily qualified welcome from shipping industry organisations. InterManager, which is an active member of the Save our Seafarers (SOS) campaign, gave one of the most enthusiastic responses, saying that it was “after months of campaigning, delighted to hear the public vilification of piracy issued by the UK Government”.

Alastair Evitt, president of InterManager, said that it was a quantum leap in public perception to hear the issue of piracy and merchant shipping addressed by the UK Prime Minister David Cameron so openly and frankly. Mr Cameron told the BBC: “Somali piracy is a complete stain on our world.”

The shipmanagers’ body went on to say: “The UK Government’s recognition of the value of armed guards and the right of the owner and manager to deploy them, in the right circumstances and in accordance with BMP4, is a great lead by the UK government and it is InterManager’s firm belief that this stance should be adopted by all flags and charterers that still do not openly support it.”

InterManager re-iterated its position that it is not calling for every vessel to have armed guards onboard, rather that when a detailed risk assessment deems this the preferred option, then individual flag state legislation or charter party clauses should not obstruct owners and/or managers in taking this decision. The organisation also supports ongoing initiatives to licence the companies providing armed guards, based on qualification, competence and experience, to define the rules of engagement in the event of a pirate attack and to control the type and flow of weapons deployed both onboard and while in transit to and from vessels.

Adopting a more guarded tone the Gavin Simmonds, head of security and defence at the UK Chamber of Shipping said: “We have supported the move to decriminalise the carriage of private armed security, but believe it needs to be decision of individual ship owners to use them where they think appropriate. However, the use of private security not only risks escalating confrontations with pirates but also causes a very serious legal liability and other dilemmas for major UK corporate decision makers who are unwilling to take on international protection duties privately. There is a strong principle and belief that it should instead be the responsibility of UK Government to do that.

“We are also seriously concerned that there is a mismatch between the supply of ex-UK serviceman in this new industry and the demand for their services.”

In a similar vein seafarers' union Nautilus International cautiously welcomed the Prime Minister’s announcement that British-flagged vessels will be able to carry armed guards to protect them from pirate attack. The union agreed that the deployment of armed guards on vessels would help to further secure the safety maritime professional sailing through high risk areas, but believed that there are still “questions to be asked and concerns to be addressed.”

Nautilus International general secretary, Mark Dickinson said: “There continue to be grave unanswered questions about liability and responsibility associated with the use of weapons onboard merchant ships. Whilst it may be reassuring to see that no ships carrying security teams have been hijacked – so far, at least – there are a number of unresolved issues arising from their deployment. There needs to be consideration and agreement on key issues including the liabilities of masters and officers in the event of something going wrong, or the problem of flag states, coastal states and port states facilitating the carriage of weapons onboard. The thorny of issue of the cost of providing security has the potential to give further incentives to shipowners to flag out and the quality and regulation of private armed security guards.”

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The Government’s independent body which identifies how the UK can meet national greenhouse gas reduction targets, the Committee on Climate Change (CCC), has recommended that greenhouse gas emissions from shipping should be included in future UK carbon budgets. Currently, the UK is committed to reducing greenhouse gas emissions by 80% by 2050 based on 1990 levels, but to date international shipping and aviation are not included. In a new report, the CCC advises: “Shipping emissions could account for up to 10% of emissions allowed under the 2050 target and therefore needs to be incorporated into reduction targets but could create further reduction pressures on other sectors such as electricity, heat and surface vehicles.”

The UK should be responsible for half of all the emissions associated with ships entering or leaving national ports – the other half being borne by whichever countries lie at the other end of the journeys. The Chamber of Shipping has welcomed the publication of this important review from the Committee on Climate Change (CCC) and agrees that shipping should not be excluded from carbon targets in the future. But it added that the introduction of any such measures must be done globally through the International Maritime Organization (IMO) rather than through any regional solution that will only serve to distort trade and potentially damage shipping.

David Balston, director safety & environment at the UK Chamber of Shipping said: “I am very pleased that the Committee on Climate Change has involved the Chamber in producing such a well balanced and thought provoking review of shipping emissions. This work is hugely important and complements ground breaking work that the UK Chamber has been doing in leading and shaping the debate on how shipping can drive down carbon emissions. We do stress, however, that any solution must be global rather than regional to avoid distorting world trade and potentially damaging an industry that is vital to the future prosperity of the United Kingdom’.

The Freight Transport Association has also welcomed the proposals, but has similarly warned that maritime emissions reductions should be tackled at a global level through the IMO.

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A new publication from the UK P&I Club focuses on tanker cargo contamination which the liability insurer says is one of the major sources of cargo-related claims in the tanker sector.

The Club stresses that loading and discharging of a cargo is a joint operation between the crew of the tanker and the terminal staff. Therefore it is essential that the chief officer should strive to establish a good working relationship with the key terminal personnel so as to reduce the risk of subsequent problems. Contamination, for example, can occur both on board the vessel and in the lines and tanks ashore.

The “Tanker Contamination Claims Checklist” identifies the main causes of cargo contamination arising from both on board and shoreside and compiles the key points to consider in seven sections running from the pre-loading phase through to discharge and sampling.

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Mutual P&I insurer the Shipowners’ Club has once again held its premiums to the previous year’s levels, and has reported an increase of 7.3% in earned premiums for the half-year ended August 2011.

In its half-yearly report, Shipowners says that its strong results are a reflection of the organic growth it has experienced during the 2010 policy year, principally from the offshore sector. Entered tonnage increased by 6.5%to 19.45m gt, driven by new business.

Commenting on the results, Shipowners’ chief executive, Charles Hume, stated: “We are very pleased to announce there will be no general increase to our premiums for the coming year. Despite a recognition that claims are starting to increase again, Shipowners continues to grow, reserves are strong and the underwriting performance for the first half of the year is producing some encouraging signs. We are also conscious that many of our members continue to experience very difficult operating conditions, and we believe it is part of a club’s role to help owners keep insurance costs to a minimum.”

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Maritime London member Steamship Mutual has increased its premium ratings by 5% across all areas of the Club’s business, and increased deductibles to a minimum of US$5,000 and by US$1,000 for deductibles below US$25,000. Release calls have been reduced for the 2009 and 2010 policy years, to 5% and 15% respectively, and for the 2011 and 2012 policy years set at 20%.

Gary Rynsard, CEO, commented, “The Board was naturally sensitive to the extremely difficult conditions in the freight market. Although claims in the current year are not a cause for concern there are signs of claims inflation, in particular crew claims. This allied to the effects of the replacement of older higher rated tonnage with new lower rated tonnage means that premiums must be increased. The Board decided that a 5% increase in premiums over all covers and a modest increase in deductibles was the appropriate response to ensure the continued financial strength of the Club.” A

ccording to the P&I Club, claims in 2011 thus far, especially crew related, are higher in both number and amount than those reported at the same point last year, with more high value (excess of US$1 million) claims for Cargo, Fixed and Floating Objects and on charterers’ covers. These developments appear to reflect a degree of upward pressure upon claims which, it seems, has not yet been reversed by slowing global growth.

The combined portfolio of the Club and Trust has maintained an overall return of 2.2% to date.

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At the recent Moore Stephens Ship Operating Costs: Current and Future Trends seminar in London Martin Stopford, managing director of Clarkson Research Services and well known shipping economist, painted a gloomy picture of the market in the coming decade. 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. Over the coming years cost management will have a much greater urgency than in the past decade, according to Dr Stopford.

That keeping costs down will be however be difficult has been underlined by Moore Stephens' latest ship operating costs survey. Vessel operating costs are expected to rise by 3.8% in 2011 and by 3.7% in 2012, with lube expenditure and crew costs identified as the categories most likely to produce the highest levels of increase The survey is based on responses from key players in the international shipping industry, predominantly ship owners and managers in Europe and Asia. Those responses identified lubricants as the cost category likely to increase most significantly over the two-year period – by 3.6% in 2011, and by 3.1% in 2012.

Crew wages, meanwhile, are expected to increase by 3.1% in both 2011 and 2012, while the cost of spares is expected to escalate by 2.7 % and 2.6 %, respectively, in the two years covered by the survey. Expenditure on stores is expected to increase by 2.5 % in each of the two years.

The cost of repairs and maintenance is expected to increase by 2.8% and 2.6 % in 2011 and 2012 respectively, while the increase in P&I costs for those two years was estimated by respondents at 2.4 % and 2.3 % respectively. As was the case in the previous survey, in 2010, management fees was identified as the category likely to produce the lowest level of increase in both 2011 and 2012, at 1.8 % and 2.0 % respectively.

“Bunkers and lubes are our biggest cost,” said one respondent, while another observed, “The cost of bunkers is unrealistically high. There is no reason for that. If the price of bunkers remained at a reasonable level, shipowners would not be struggling in the way they are at the moment.”

One respondent expected dry cargo crewing costs to increase more than tanker crewing costs, while another noted, “The Manila amendments to STCW will result in significant increases for ‘other’ crew costs, especially in respect of training.”

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Lloyd's Register has published a new pocket guide to help ship owners and operators understand the importance of professional maintenance and survey preparation for marine lifting appliances. The new guide -- Survey and Examination of Ships’ Lifting Appliances -- is the latest in Lloyd’s Register’s series of pocket guides that have been produced in conjunction with the UK P&I Club and, in this case, with the crane manufacturers, MacGregor and Liebherr.

"Lifting appliances need to be thoroughly examined and it is important that operators understand the seriousness and consequences of failure, as well as what they need to do to support the safety framework," Joanna Townsend, fleet services manager for Lloyd's Register, said. "Poor preparation before surveys is a common problem among operators. Other issues include a lack of knowledge about rocking tests, difficulties in obtaining maintenance records and problems accessing the key areas that need to be surveyed."

"These are key safety issues," said Ms Townsend. "This pocket guide has been designed so that it is handy to use, inexpensive to produce and will be free to the industry. We highly recommend its use."

“Personal injuries to crews from breaking wires or a lack of maintenance on stores and cargo cranes hit P&I Clubs the hardest because personal liability claims can be very costly," said Karl Lumbers, the UK P&I Club’s loss prevention manager. "The guide is a very good way to help address this."

Other problems identified during research conducted for the guide included a lack of preparation for surveys, difficulty in conducting the appropriate surveys and operators not having adequate understanding of the issues.

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Will we be seeing more LNG powered vessels in the future?

The International Bunker Industry Association's (IBIA) board has taken a formal decision to “become more closely engaged in LNG matters”.

The move was announced at last week's IBIA's Annual Convention, held in Barcelona, by its acting chief executive Trevor Harrison. He told delegates that the association would become more involved in the ongoing discussions on LNG as a fuel at the International Maritime Organization (IMO).

The potential of LNG as a fuel for merchant ships received considerable attention. Several speakers referred to the issue while addressing industry concerns about the 2015 implementation of the 0.1% sulphur content cap in bunkers used within Emission Control Areas (ECAs). In addition one session was entirely devoted to the prospects for widespread use of LNG.

While there were some cautionary voices, the focus on LNG reflected IBIA's considered view that now is the time for the bunker industry to become involved in the development of gas powered ships. IBIA board member Nigel Draffin is to work closely with the Society of International Gas Tanker and Terminal Operators (SIGTTO) to provide input into the development of IMO's Code for Gas as Ship Fuel (IGF-Code).

The IBIA Annual Convention 2011 at Barcelona's Hotel Rey Juan Carlos I did however cover many other topics of concern to both bunker suppliers and buyers. A record breaking 170 delegates registered this year to take part in a packed programme spread out over three days.

IBIA chairman Bob Lintott remarked: “This has been a highly successful convention. I am especially pleased that there has been lively debate from the first to the last sessions.”

Among speakers tackling hot topics was Interferry's executive director of EU and IMO Affairs, Johan Roos who said that fitting scrubbers to existing ships in a bid to meet the 2015 0.1% sulphur cap within ECAs was not a realistic option. He said that the actual costs were much more than the scrubber lobby was suggesting.

He said: “The manufacturers are saying scrubbers have payback times of 8 or 14 or 22 months on a outlay of perhaps $2m. The ferry operators say: 'Do you think we are stupid.' They can calculate costs and revenues. Installing scrubbers on a ferry may cost euro5m and the pay back would be perhaps five or seven years.”

It is not only an issue of cost according to Mr Roos.

He said: “No supplier will guarantee performance.” He added that ferry operators could find that instead of meeting the 0.1% standard the expensively installed scrubbers only performed to the equivalent of a 0.2% sulphur content cap. Or, just as bad, a scrubber might meet the 0.1% standard for 97% of the time.

“We can't use a scrubber like that,” he said. The situation was quite different however, Mr Roos said, in the longer term and with newbuildings. He accepted that by 2020 scrubber technology might have proved its reliability on ocean-going ships. That would also be the time when European ferry operators would generally be replacing existing tonnage.

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The Sustainable Shipping Initiative (SSI), a coalition of global companies and NGOs, presented their collective vision for the sustainable future of international shipping. It is the first time such a wide-ranging approach has been taken to the challenges facing an industry which carries 90% of world trade.

Jonathon Porritt, founder director of Forum for the Future, the global non-profit organisation co-ordinating the Initiative, said: “Shipping has reached a crossroads. After years of focusing on a commodity-focused ‘boom and bust’ business model, leaders in the industry have aligned to ask more of themselves – emphasising the urgent need to take the lead in reshaping the entire industry ahead of regulation.”

Speaking to Lloyd's List, Porritt attacked the shipping industry for a lack of leadership and criticised the slow progress of moves at IMO to reduce emissions from shipping. He was quoted as saying: “It drives me bonkers and I fear that aspect of the IMO process is doing the industry no favours whatsoever.”

The Vision, supported by four implementation work streams, has five key objectives for the industry:

Communities
To become a more trusted and responsible partner in the communities in which the industry operates.

Employment
To provide a safe, healthy, secure and rewarding work environment to the over 2 million people working in shipping.

Energy & Environment
To diversify the industry’s energy mix and ensure greater resource efficiency, make dramatic reductions in greenhouse gas intensity and ensure responsible governance of the oceans.

Governance
To promote greater transparency and accountability at corporate and industry levels.

Innovation
To enable the financing and large scale uptake of technological and operational innovations that will lead to a step-change in the industry’s performance on sustainability.

AP Moller – Maersk is supporting the initiative. Maersk Line chief operating officer, Morten Engelstoft, said: "We are in business for the long-term and therefore take an active role in defining the future we want to be part of. Delivering on a joint vision for our industry will help drive a needed change in operating models – thereby allowing economies to grow, trade to develop and social wealth to spread."

Carnival UK ceo David Dingle, said, “From Carnival’s perspective the Sustainable Shipping Initiative should support an expanding, well-rewarded and supported workforce and network of suppliers and to enhance significantly the economies and services of the communities its ships visit. From an industry perspective it will ensure that future growth across the shipping industry is maintained economically, socially and environmentally. It is a tough challenge but one to which we are fully committed.”

China Navigation Company managing director, Tim Blackburn said, “China Navigation is very pleased to have participated in the development of the SSI Vision 2040. We are committed to the development of solutions that will assist our industry to be more environmentally and socially responsible, whilst simultaneously driving improvements in its economic efficiency.”

Gearbulk chairman and ceo Kristian Jebsen said, "Shipping has a vital role to play in ensuring we achieve environmental, social and economic sustainability. The SSI initiative is a very good platform for ensuring that we, as an industry, are able to fulfil our responsibilities both now and in the future."

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VesselsValue has added containerships from feedermax (500 teu) up to ULCV (18,000 teu) to the range of vessels it values. The online ship valuation service already covers tankers and bulkers.

VesselsValue was launched earlier this year by London based S&P broker Seasure Shipping. The service provides instant, data-driven ship valuations and market insights for vessels and portfolios. The methodology incorporates ship specifications, real time sales and freight earning sentiment enabling market valuations of vessels even in an illiquid market.

According to Seasure Shipping, this model is continually updated and recalibrated daily to give the closest possible fit to reported sale prices. Accuracy is tested and reported by comparing valuations against prices achieved in the market.

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Legal and claims consultancy C Solutions is the latest company to join Maritime London. The company provides advice on all wet and dry shipping legal and insurance matters and acts for ship owners, charterers and managers, cargo owners, P&I Clubs, H&M insurers, cargo, liability and energy insurers, brokers and salvor.

Headquartered in the Lloyd's Building in London, the company has a global network of offices.

www.csolutionslimited.com

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UK Supreme Court judges

The Greek shipping group Metrostar has won a significant case in the UK Supreme Court in a refund guarantee dispute with South Korea’s Kookmin Bank. The bank had contested its duty to repay shipbuilding instalments on a series of handysize newbuildings that were never built after the shipyard, Jinse Shipbuilding, went into receivership.

Ince & Co acted for the successful buyers whose case hinged on questions relating to the construction of contractual provisions in bonds guaranteeing the refund of pre-delivery installments under shipbuilding contracts.

In a judgment handed down on 2 November, the Supreme Court unanimously held that where there are two different constructions of a contractual provision, the construction which is consistent with the commercial purpose of the contract is to be preferred. The decision of the Supreme Court in this case has a wide application, extending beyond the interpretation of refund guarantees and advance payment bonds to the construction of commercial agreements generally. See bit.ly/tSUbnH for further details.

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Maritime London member Seatrade is now taking entries for their 2012 Seatrade Awards. Established in 1989, the prestigious Seatrade Awards reward those who have demonstrated innovative solutions for safe, efficient and environmentally friendly shipping, in keeping with the goals and objectives of the International Maritime Organization.

Official entry forms can be downloaded from the new Seatrade Awards website: www.seatrade-awards.com. Deadline for entries is 16 December 2011.

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Maritime London member Fred Doll passed away suddenly on 25 October. Fred provided shipowners, banks and insurers with market analysis, strategic planning, and assistance with projects through Doll Shipping Consultancy.

Prior to Doll Shipping Consultancy, he managed the consultancy business at H. Clarkson & Company, the world’s largest shipbroker, from 1997 - 1999, and was appointed to the Board of Directors in July 1998.

A graduate of the State University of New York Maritime College with a BSc (Hons) in Marine Transportation, Fred sailed with Exxon Shipping Co. (now SeaRiver Maritime) from 1979 to 1986, gaining his Chief Mate’s license. He spent a four year sabbatical in Florence as a freelance writer and translator before being invited to rejoin Exxon. From 1990 until joining Clarkson, he worked with Exxon Company, International in New Jersey in several different capacities, analysing shipping projects, charters and sales; working with the Sumed pipeline; and developing shipping industry analyses.

In his spare time, he achieved an MBA in Finance and International Business at the Stern School of Business of New York University.

His funeral takes place on 8 November. Family flowers only please, although donations to the Sailors' Society would be welcomed. Donations should be marked ref: 18475Doll.

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