Maritime London and Shipping Minister in Greece

Maritime London will lead a delegation of companies to Athens to present to Greek shipowners

Maritime London will be leading a delegation of British maritime professionals to Athens next month. The high level group will present to an audience of shipowners at the British Ambassador’s Residence on 17 June. The delegation will be accompanied by UK Shipping Minister, Stephen Hammond, and Sir Alan Massey, Chief Executive of the UK Ship Register.

Maritime London chief executive Doug Barrow said: “The Greek British maritime relationship has always been strong and I’m delighted that we have government recognition of the importance that Greek shipowners play in the UK economy. Getting out and seeing the cluster’s clients is vital and collective trips like this really help to cement ties.”

Companies taking part in the trip include the London Stock Exchange, PWC, Norton Rose, Clyde & Co, Ince & Co, UK Ship Register, Control Risks, Navigate Response, Thomas Miller, ICAP and the Baltic Exchange.

At mid-March, according to the Greek Shipping Co-operation Committee, Greek interests controlled 3,677 vessels of 264.1m dwt and 155.99m gt. Greeks control just under 23% of the world’s oil tanker fleet in ships, 15% of the ore / bulk fleet, 9% of the liquid gas fleet, 6% of the pure container fleet, but just 1.9% of the world's general cargo fleet.

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Interim solution agreed for harmful cargo residues

Shipowners will be able to discharge HWW outside of special areas if receiving ports do not have adequate facilities intil 15 December 2015

Shipowners’ pleas for greater clarity on required procedure when port reception facilities are not adequate to receive cargo residues deemed to be “Harmful to the Marine Environment” (HME) have been “substantially answered”, according to bulk carrier owners' organisation Intercargo.

Last week's meeting of IMO's Marine Environment Protection Committee (MEPC) decided that, until 31 December 2015, Hold Washing Water (HWW) from holds previously containing solid bulk cargoes classified as HME under the amended MARPOL Convention (International Convention for the Prevention of Pollution from Ships), may be discharged outside Special Areas.

Shippers and shipowners had difficulties meeting the requirements of the amended MARPOL Annex V regulations, which entered into force on 1 January 2013, because they did not know whether there were suitable facilities to process the dry residues and HWW at their receiving port.

According to Intercargo, a few shippers did not even realise that the IMO had clarified, in circular MEPC.1/Circ 791, that they had to declare whether a commodity was HME or not with immediate effect, albeit with some flexibility on the criteria until the end of 2014. The organisation said many shippers and shipowners were left confused as to how to comply with the regulations.

IMO will now send an official circular providing shipowners and operators with clear guidance and flexibility on procedures to be adopted when encountering a lack of adequate port reception facilities for HWW.

This guidance will state that, until 31 December 2015, HWW from holds previously containing solid bulk cargoes classified as HME may be discharged outside Special Areas. This is the case providing several conditions are met, including that, based on the information from the receiving port, the master determines that there are no adequate reception facilities at the receiving terminal or at the next port of call.

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Bird deaths lead to calls for PIB review

Wildlife conservation charities are calling for an urgent review of the hazard classification of PIB

Timed to coincide with last week’s IMO MEPC meeting, leading wildlife conservation charities, animal welfare charities and the UK Chamber of Shipping, supported by the wider industry body MaritimeUK, came together as a single voice to call for an urgent review of the hazard classification status of polyisobutene (PIB).

The move follows two incidents off the UK coast that killed some 4,000 sea birds. Although not directly toxic to sea birds, polyisobutene becomes sticky when it comes into contact with seawater, coating the plumage of sea birds, restricting their movements and preventing them from feeding.

Currently, it is legal under MARPOL to discharge PIB in small quantities, based on certain conditions. However, the impacts of PIB on marine ecosystems, as well as the amount of PIB released routinely as part of legal shipping operations, are not well known or understood.

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Marine Navigation Bill gains royal assent

The Marine Navigation Bill received royal assent on 29 April and will be known as the Marine Navigation Act 2013 when it comes into law in the UK within the next few months.

The UK Chamber of Shipping says: “The very positive effect of the new Act will be to reduce burdens on the ports and shipping industry and improve maritime safety.”

It adds: “It has been a considerable achievement for the UK Chamber to have a new Navigation Act, the primary clauses of which liberalise the granting of Pilotage Exemption Certificates allowing any ‘Deck Officer’ to be eligible for exemption. Through submissions at the committee stages, the UK Chamber highlighted necessary amendments to both encourage and allow a greater number of qualified officers to obtain PECs. Many operators and deck officers will now benefit from the new amendments to the Pilotage Act 1987 which for the last 25 years provided a comprehensive framework for the delivery of pilotage services, but which required modernisation.”

The new Act also makes amendments to clauses in the Harbours Act 1964 regarding the power for Designated Harbour Authorities to give ‘directions’ and be relieved of their obligations when ‘closure orders’ are made. These new non-statutory measures will be subject to oversight of a new Harbour Directions Code of Conduct. The Act also extends the jurisdiction of port constables to allow for more efficient policing of port areas.

The Act extends the abilities of the General Lighthouse Authorities to enter into commercial contracts to utilise surplus capacity to increase commercial revenue, as well as addressing minor issues regarding wreck marking.

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LRQA and IRSS in maritime security collaboration

LRQA and IRSS have joined together to offer maritime security companies help becoming certified to recognised industry standards

Global management system certifier, Lloyd’s Register Quality Assurance (LRQA) and specialist risk and management consultancy, Integrated Risk & Security Solutions (IRSS), are to collaborate to help organisations become certified to maritime security standard ISO/PAS 28007.

The new standard requires maritime security companies to fully identify and demonstrate compliance with all legal requirements to provide privately contracted armed guards onboard merchant ships to guard against piracy in high risk areas.

Together, the two organisations say that they will be able to provide a range of assurance services including certification, verification and training to help support private maritime security companies (PMSCs) looking to meet the rigorous requirements of a range of standards including ISO/PAS 28007, ISO 9001, OHSAS 18001 and ISO 14001.

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Steamship Mutual's results reflect continued upward pressure on claims

Mutual liability insurer and Maritime London member Steamship Mutual says in a statement that, “as with all International Group Clubs”, its underwriting performance for the year ended 20 February 2013 was adversely affected by the worst pool experience on record. Claims within the club retention were also at higher levels than predicted, reflecting continued upward pressure on claims, despite the economic downturn.

Nevertheless, there was an improvement on prior years’ results, “which is consistent with the club’s normal experience”. These factors resulted in a financial year combined ratio of 112.5% and an increase in the three year average ratio to 106.4%.

The club benefited from an investment gain of USD27m, a 3.0% return, and the total of cash and investments increased by 5.2% to USD944.7m.

These investment gains largely offset an adverse underwriting result, and free reserves stand at USD286.2m for 2013, a reduction of USD9.6 million from the position at 20 February 2012.

Colin Williams, head of claims, says: “During 2012 the club experienced fewer claims in the layers below USD250,000, and up to the club retention as compared to the preceding year. However the average cost of claims was higher, in particular for claims above USD1.8 million, and the club had two claims on the pool as opposed to one. Net estimated claims for the 2012/13 policy year, including IBNR provision and after reinsurance recoveries, are USD247.8m, 6.7% above the comparable figure for the 2011/12 policy year at the same point.”

The club's COO, Stephen Martin, comments: “At renewal, the overall achieved increase – including individual adjustments for record and the value of significantly higher deductibles in some cases – was above the 7.5% increase set by the club board. This will enhance the club’s ability to accommodate the possibility of another adverse year for claims.”

CEO, Gary Rynsard, notes: “The club’s directors and managers appreciate that this is an extremely difficult time for shipowners, and it remains their aim to deliver the best possible service to members at the minimum sustainable cost.”

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TT Club's “good performance”

Specialist international transport and logistics industry liability insurer, TT Club, says that it achieved “another good performance” for the year ended 31 December 2012, with further increased gross written premiums, and the club maintaining the A- (Excellent) rating it has held for the past eight years from US rating agency, A M Best.

"The outlook for both ratings remains stable. The ratings of TTI reflect the integral part it plays in TT Club’s strategy, as well as the extensive reinsurance protection provided by TTB, which is expected to maintain excellent consolidated risk-adjusted capitalisation in 2013," the agency said.

It added: "Its business profile is supported by a superior service standard, which underpins a high policyholder retention rate of roughly 95%, and by its active involvement in loss prevention and risk management within the industry."

The TT Club's gross written premium for 2012 increased to USD182.3m and its combined ratio (total claims and expenses divided by net earned premiums) - the key measure of the health of its operating performance - reduced to 96.3%.

Knud Pontoppidan, chairman of the TT Club, commented: "We are becoming used to very low or decreasing growth levels across the world and that is impacting global trade and as a result all our businesses. Unfortunately, 2013 does not appear likely to break this pattern. In spite of these challenging global economic conditions, the club has maintained a stable financial platform in 2012 from which to deliver our core product and value adding services."

The A M Best statement also noted that, "in 2013, TTB is expected to produce a combined ratio of roughly 100%. Investment income is likely to be modest but positive, reflecting a conservative investment portfolio and the low interest rate environment."

"As a mutual, the club is not pressured to generate high returns, however, TTB is expected to continue to produce small pre-tax profits in most years, in line with its performance record since 2008," the agency concluded.

Invoice error brings shipbroker a massive bill

Minor administrative errors can have huge consequences for large transactions

Specialist intermediaries insurer ITIC has revealed how an invoicing error led to a shipbroker being asked to foot the bill for a bunker supply amounting to more than three quarters of a million dollars.

In its latest Claims Review, ITIC cites the case of a chartering broker which arranged a fixture for a voyage from the Black Sea to Singapore. The recap, which lists negotiated details of the charter, showed the identity of both the registered owner and the disponent owner with whom the negotiations had been concluded.

The disponent owner asked the broker to arrange the purchase of bunkers, and an order was placed with a supplier. The cost of the bunkers was USD777,278. However, instead of ordering the bunkers on behalf of the disponent owner, the broker mistakenly ordered them on the registered owner’s behalf, taking the name from the recap.

The bunkers were duly supplied and the ship signed for them. The bunker supplier invoiced the registered owner, care of the broker, for the cost of the bunkers. The invoice was sent to the disponent owner but was not paid when due. When chased for payment, the disponent owner replied, “Regarding the payment for bunkers, I have passed to the financial side and they should be arranging payment, the delay is due to our company currently being audited and will be ending in the coming weeks’.

When further requests for payment met with a similar response, the bunker suppliers instructed lawyers to collect the amount owed. When lawyers approached the registered owner they were told that the registered owner had never given any instructions for the purchase of the bunkers and that the responsible party should have been the disponent owner. If the bunkers had been purchased in the name of the registered owner, this was a misrepresentation on the part of the party which had provided the information to the bunker supplier.

Lawyers therefore turned their attention to the broker, claiming that it was responsible for breach of warranty of authority. There was no prospect of going after the vessel and the brokers entered a settlement with the bunker suppliers.

Read ITIC's latest Claim's Review here

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UK P&I Club's free reserves at new high

The UK P&I Club, a Maritime London member, has reported a surplus of USD9.5M for the year ended 20 February and increased free reserves and hybrid capital to a new high of USD494 million.

The mutual shipowners' liability insurer's chairman, Dino Caroussis, said: “In the year under review, the club has strengthened financially, increasing its free reserves and capital to USD494 million, a new high. Further, in evidence that the Club's strategy of disciplined underwriting is being recognised as achieving results, S&P has upgraded the club to A- (positive outlook).”

He added: “This last renewal season was one of our strongest in recent years, with mutual owned tonnage growing to 120 million gross tons, maintaining our position at the top of the P&I market. This increase reflects the club’s aim to grow with quality tonnage at the right premium rating.”

“However,” Mr Caroussis cautioned, “the board is very conscious of the need to strike a sensible balance between the financial requirements of the club and the needs of members, in what is a very weak market for most shipping sectors.”

In a similar vein, the chairman of the club's manager, Thomas Miller P&I, Hugo Wynn-Williams, observed: “This is a strong set of results but it does not allow for complacency. The combined ratio for the financial year of 104% is within the club’s tolerances in the short term, taking into account the current elevated claims environment.”

He continued: “The increased claims on the 2012 policy year are a warning that, despite weak global economic growth, claims inflation, particularly in the higher value claims, will continue. It is, therefore, essential to maintain a disciplined approach to underwriting in the coming years to achieve the target of a balanced underwriting result over the claims cycle. We recognise the economic reality facing ship owners and in addition to our financial strategy, we will continue to help members reduce their claims exposure through our extensive loss prevention activity.”

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Braemar celebrates “robust performance in extremely challenging markets”

Maritime London member and international provider of broking, consultancy, technical and other services to the shipping and energy industries, Braemar Shipping Services, has reported increased revenue but reduced pre-tax profit for the year to 28 February. Revenue was up 7.7% to GBP143.8M while pre-tax profit was down 5.0% to USD9.3M. Over half of the company’s income was however generated by non-broking activity.

Braemar's chief executive of shipping services said: “We have reported a robust group performance, in extremely challenging shipping markets, thanks to our progressive diversification into a broad range of maritime services. The momentum in Braemar Technical Services and the Logistics divisions will help in the year ahead and our shipbroking business is well placed to benefit from a recovery in shipping markets in the medium term.”

However, with freight rates low, many shipbroking companies are facing tough times.
ICAP Shipping revealed that it has taken an £8m write-down on its dry-cargo chartering division due to the bleak prospects facing the sector.

“Market fundamentals continue to be challenging in this section of the business with little indication of prospects for improved freight rates over the coming period,” the ICAP report said. The Baltic Dry Index, a leading bulk freight market indicator published by the Baltic Exchange, has averaged 877 points over the past months.

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London International Shipping Week to boost seafarer charities

LISW will support four leading seafarer charities this September

Four leading charities supporting seafarers and their families are set to benefit from the inaugural London International Shipping Week (LISW), taking place in the UK capital this September.

Apostleship Of The Sea, Mission To Seafarers, Sailors’ Society and Seafarers UK have been chosen by the LISW steering group to be the beneficiaries of fundraising efforts during the week-long shipping showcase.

London International Shipping Week kicks off with a charity golf day at Walton Heath Golf Club, Surrey, on Monday 9 September. The four charities will share the entry fees and receive proceeds from various, related fundraising efforts.

In addition, delegates attending the LISW conference on Thursday 12 September will have the chance to boost much-needed charity funding by donating cash in special envelopes provided in each delegate pack and on tables at the evening’s Gala Dinner.

Jean Winfield, Director of LISW organiser Shipping Innovation Ltd, said: “The steering group felt this was an excellent opportunity for the international shipping community to support these vital maritime charities and we are delighted to have the chance to help elevate their profile during a week when the eyes of the world will be turned on London.”

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Baltic Exchange FFA training courses in London

Maritime London member, the Baltic Exchange, still has some space available on its popular freight derivatives training courses in London this June.

Led by Prof Nikos Nomikos and Dr Amir Alizadeh from the Centre for Shipping, Trade & Finance at Cass Business School, the first course, Freight Derivatives and Shipping Risk Management on 10-11 June aims to give participants a solid grounding in the use of derivatives to manage financial risk in a shipping operation. Whilst much of the focus is on freight risk management and the use of Forward Freight Agreements (FFAs), the course also covers bunkers, interest rates, foreign exchanges and credit risk.

Advanced Freight Modelling and Trading takes place on 12-13 June and builds on participants' knowledge of FFAs, with a particular focus on Value at Risk, options pricing and forward curve
construction.

For further details or to book a place, please contact Ben Stack
E: bstack@navigatepr.com or call +44 (0)20 7369 1650

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