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the Baltic




Autumn 2012

Staying afloat in rough waters Organised crime in Africa Prestige effect

T h e O f f i c i a l Ma g a z i n e o f t h e B a l t i c E x c h a n g e

Autumn 2012

COMMITTED TO QUALITY EVERY STEP OF THE WAY ROSNEFT MARINE UK SUPPLIES HIGH QUALITY 1% LOW SULPHUR FUEL IN RUSSIAN PORTS Arkhangelsk / Kaliningrad / Kozmino / Murmansk Nakhodka / Novorossiysk / St. Petersburg / Tuapse Ust-Luga / Vladivostok / Vostochny Address: One Kingdom Street / Paddington Central / London, W2 6BD Tel. +44 (0) 203 402 3633 Fax. +44 (0) 203 402 3501


BALTIC The Baltic is the official magazine of the Baltic Exchange Tel: +44 (0) 20 7623 5501 E-mail: Website: The Baltic is published for the Baltic Exchange by Maritime Media Ltd The Diary House, Rickett Street London SW6 1RU Tel: +44 (0) 20 7386 6100 Fax: +44 (0) 20 7381 8890 E-mail: The Baltic annual subscription rates £110 for UK, Europe or the world, sent airmail including P&P


W H Robinson editor

Sandra Speares Tel: +44 (0) 1483 527998 E-mail:

SALES manager

David Scott E-mail:


Justin Ives

ISSN 0967-0394 This publication is printed on PEFC certified paper. PEFC Council is an independent, non-profit, non-governmental organisation which promotes sustainable forest management through independent third party forest certification.

The Baltic is published on behalf of the Baltic Exchange and is supplied to members as part of their annual membership package. However, the views expressed in The Baltic are not those of the Baltic Exchange, its directors, its officers or the publishers unless expressly stated to be such. The Baltic Exchange is the world’s premier and oldest international shipping market. Most of the world’s open market bulk cargo chartering is negotiated at some stage by Baltic members who represent leading international companies. Other activities include the world’s most important market for buying and selling ships, specialist freight by air and commodity dealing. The Baltic Exchange operates a strict code of business ethics encapsulated in its motto ‘Our Word Our Bond’. The Baltic Exchange disclaims any responsibility for the advertisements contained in this magazine and has no legal responsibility to deal with them. The responsibility rests solely with the publisher.

theBaltic Autumn 2012


World World

Bunke Bunkering Cha ring AUTUMN 2012






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Publisher: W H Robin son Editor: David Hughes (edito Deputy Edito r@mar-med ANDROID APP ON r: Sandra Speares (sandr Project Mana a.speares@m ger: Dawn Barley (dawn Project Consu ) .barley@mar ltant: Alex Corboude (alex.corbou ) de@mar-me Designer: Justin Ives (www.justin The views )

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expressed in World Bunke those of IBIA, ring are not or the publis necessarily be such. IBIA hers unless expressly stated disclaims any responsibil contained to ity for adver in this maga tisem zine and has to deal with no legal respo ents them. nsibility The respo nsibility for with the publis advertisem Nigel ents rests her. World Bunke Draffi solely Media Ltd ring is publis n on behalf of hed by Marit IBIA and is ime part of their supplied to annua nolthe memT mem bers bership packa hrease r issu e of Wo ge. approa risk rld ches and the Bunkering been man dropp edi agers much tor ing gen my ma of the ilbox! tle hin has educa e tas xp ts kept k is one ting the in lain me occ The last ind three shed Th rou Publi views up ustryby: of informing ho mo and inv ied with and its INTERTA gh and w to Maritpa reque nths have IBIA; itation imertiMedi sts cip atia Ltd regulator ho Africasurv s Oithbu are exp NKThe s. on on wh wever, I hav to speak on for interBranch Diary ive and in oinke mode ere we sub e e been l prrHous behal sulph loring in vel the l that where mon ices -committe the f of ur/ Ricke tt efficie can ma adevo oping sustain fluct we wa are as an focussed and the low msulphthStree , keept ncy more ke ou lati a ing. nt to ua the e, we associ os urSW6 Lond I wa r workle business be in ing of tin comchang secu ences impact onton We hav 1RU high 12 mo ation and Han toverfu g up eo breunsel growt nt to see the pa to re be me e con UK Nev mbnies nths’ s Er tween h of the the a new kf-er ab for butin $20 pe tin erth ers .of elrou ik Ch claim budg the ver commi in memb CE in time. out im the mark the dif dges eles com ets andr ba association ued to kee Tel: +44 riste ership s ific tmen et fit me the is rr ati pl th s, (0) po s ferp the t to pro no rcia on pro hig em a ch the elboinard st, as your educa at it20 7386 nsen and proen et. 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Total par ma© Thetransportati y on pro tiosio buvic e co ics wil mpa FIC in lar n on l Ri nw bal - wit year enda sed d to dge tan a stre for e en vidin tak s half yea y only Intern tegy al Bunk nying l con mpa terest ingco-opeenrafor cem be onationon Risk surplu for er Indus ith sk hin nn d is an MAGAZIN IAL succthe to ex , we sample ent. et. Soks as sspar test rs. th vietio wn sale for trauspro associpandtinue Mtoanbe s in 20 ny is ex in man es com of June Wen are tio du try Assocraiation clien is justbeon eede E OF Ltd strong if you t of thMARPimpos e you The agem . This publica pare d veationth, eand perie agem disen- 11/12 andct t.hav o tand inge of ma throu withact tion is printed Intwth ively ly re do no e impa OL rtant com d tional current reg en ry cr e nc us ex gh ve PEFC to my on t, en a a ny t part ed d esePEFC certifie com well t supar paow ry so on gag the or ulaCounc of pr difficu ny nan we ha ceeds ing ve tionsil is an indepe IBI-w para ndent, paper. unce it thethbo minenthealready ct of anto loo Aor k at pplyticu ith an ed throu lties organis ice Asitha and work wof ry $2 still hav is ye ve a lar subund, met non-pr ard rtain ofit, non-go and ation which gh promo locot risnte telltop-qujec l lbe Chthe ar. an inesental e tes er able t we If d to pe worked .8 millio positive vernm secfin ve a wiloi al me d yoFar Easha its sustain you indepe certain retmanag do ou our obserthroughun con ndent thirdoperas- ba forest nsenthe sec r mb u pr rform aricia s hardwork he ality wwa ill nt an w sidere ris n. at.ement ver sta ept ha r best ties whparty forestnk be us d, ap If you THE . Th ret the s an ing exefuelers certific coat ris and ar the kbo . ill be d for l tim tus ari to cla mation. ich, nsuland hiring art fro financiard for se dupot; the cutive k expe e one, ardan rify and at IMO, es are d th workin furethe ne ONLY OFFICIAL in tancit m ou vera mor we lly. wil,l ke We areher yfin g bo rw act refine e br y beeping Singapore and rt.”Nig fo ion . As alw will ployby for ou e empl r finan We ha l th at em Wor alsoMAGAZINE , loo ancia ple aseto OF tion acr el Dr cusing anch ve ld Bu ays, ees oyee cial rm todg waffi l in d bu the see you k oss the develop Interview with David Peart ithnlar strong office any re nker s et is . the str outio whole ingstitu in Si head at Glo World ing ly on new in orde sult ge r th rep on on Au em ba fu g of of ng Bunker ns resen e of local sup cli th Afr l fic r tum ap selve el co ing AuWB ok tathe n 20 nsum e Amer ore. Fu e in M Risk M ents,” to port fro ica, buildilong s ag tum AUTU “O sa 12 n 20 m our onat whe MN 1220 actu ften, ou ainst oi ption ican m rtherm iddelfa anagem ys IBIA Convention preview n South arke ally rt, D l price have ore, ent r cli ern db m WB AUT the 27 fluct discov t, where the co enmar price ake. M ents ar UMN fluct any lar e surp uations ered th many mpany k db 7 ris uatio com e va . ge is WB AUTUM Singapore upgrades N lue ns an fuel co ed at ho db 1 of se panies w ns d th curin us th umers big a di g an ffe e in secu d supp rence re bu lie we ca dget rs just n ac s an WB AUTUMN 2012.indb 1 03/08/2012 11:16 d di cept fficu lt 03/08/2012 7


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This publica tion is printed PEFC certifie on d PEFC Counci paper. l is independent, an non-profit, non-governme organisation ntal which promotes sustain able forest management through independent third party forest certific ation.

Counter piracy and ship security MSI boo



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Kidnap and Ransom

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StoryDam, ullum quunt ex et lamet pore, et autem debis simillandis ipsam alicture num exerferibus soluptas maLa

StoryFuga. Itatiorero min repernam assitem porruptur audit preste sumet, ut lam quate illandit pre eost dis repuda

StoryUntibus nobit, cone volenimolum, sitisquiam, ipsundaniet ex eum simi, voluptatem ex et anient, qui torem

Shipowner/operators carbon management strategies Fuel markets New technologies Key environmental issues

Contents Chairman’s message 7 Quentin Soanes Baltic briefing  7

8 Chairman’s cocktail party 10 Baltic Irish gathering 11 Setting the standards 12 FFABA Dry Derivatives Forum


13 Clarksons lifts Fehr Cup for first time 14 HFW beats Baltic 15 Sporting contacts Logbook


16 A POSH parade People, places, plcs 18 Refinery under investigation


Baltic comment 21 Michael Grey State of the market 22 Tankers


23 S&P 26 BIMCO 29 Dry Bulk 31 Shipmanagement, crewing and education


35 Registries theBaltic Autumn 2012


8 - 10 October 2012 Trident Hotel, Nariman Point, Mumbai

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Where the world of shipping meets in India

Contents FFA 37 Staying afloat in rough waters Green shipping 37

39 Examining efficiency Oxford Analytica 40 Organised crime entwines with state in West Africa


United Arab Emirates 43 Terminal velocity Canada 45 Natural selection


Breakbulk 49 Breaking news Insurance news 51 Commission closes International


Group investigation 53 ITIC Legal news 54 Prestige problem


Finance 56 LIBOR vs BDI Marine technology 58 Information at the edge of the world


64 Events theBaltic Autumn 2012


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Chairman’s message Quentin Soanes

A collective strength Not only does the Baltic Exchange have an important role to play in the shipping market, but membership offers a degree of protection


s the new Chairman of the Baltic Exchange, I step into the role in a very challenging market for many of our members. Economic gloom, poor

freight markets and sanctions are all playing their part in the hurt that many shipowners, brokers and charterers are feeling. While chairmanship of the Baltic Exchange does not imbue me with the power to dispel all these woes, it does give me the opportunity to help ensure that the collective strength of the Baltic membership provides us all with some degree of protection. As a neutral body at the heart of the shipping market, the Baltic Exchange has always had an important role to play in not only the provision of freight market data and indices, but also in supporting its membership when facing reluctant payers. For many years, we have successfully exerted pressure on those companies that have not honoured arbitration awards or paid commissions. As a shipbroker myself, I fully understand the difficulties that a brokerage company can sometimes face in collecting commissions owed to it. Further on in these pages you will find an interview with Stephen Baldey, Chairman of the Baltic Membership Committee, explaining the

Quentin Soanes

role played by our disputes resolution service. I have had first-hand experience of the success that a warning from the Baltic Exchange can

the fast-growing maritime business hubs of

very tough for many members. However, I

bring on the client reluctant to prioritise a

Singapore, Hong Kong and Shanghai. We have

believe that those that conduct themselves in

payment owed to a member.

already taken significant steps towards this by

a professional manner, adhering strictly to the


opening an office in Singapore and changing

tenets set out in the Baltic’s code of conduct,

members all around the world, we seek to

the reporting times of some of our routes. We

will find that they continue to enjoy good levels

ensure that the quality of service we offer our

will continue to build on these services and

of support.

members in key shipping centres around the

ensure that the Baltic Exchange provides a high

Client loyalty and respect is earned over a

world is of a consistently high standard.

level of support to all shipbrokers, owners and

long period of time, and those that have acted

charterers, wherever they may be.

with the integrity through both the good and





We all know that the continued success of the Baltic will depend on its ability to provide

These are difficult times for all of us in

relevant services to companies operating in

the shipping industry and it is going to get

theBaltic Summer 2012

bad times can expect to remain in business for the long term.


Baltic briefing

Chairman’s cocktail party O

nce again, Baltic members and their guests enjoyed a champagne reception at London’s Christchurch in Spitalfields. The evening

attracted members from around the world and is always a highlight of the Baltic calendar.

Anna Sofia Espinosa and Patricia Jones (Baltic Exchange)


theBaltic Autumn 2012

Baltic briefing

David Lawrence (Pacific Basin), Stephen Baldey (OP Secretan),

Guy Campbell (Clarksons) and Joerg Bornhoft (Toepfer)

Yiannis Floutakos (Ursachart)

Duncan Dunn (SSY) and Tim Cutliffe (Trayport) with guests

Koert Erhardt and his daughter

Jeremy Penn (Baltic Exchange), Quentin Soanes (Braemar Seascope), Bob Childs (Howe Robinson) and Anna Sofia Espinosa

theBaltic Autumn 2012

Paul Evans (Baltic Exchange) and of Hugh McCoy


Baltic briefing

Baltic Irish Young Baltic gathering night T

he Baltic Exchange Irish Society celebrated its 30th anniversary in style at a packed Brewery, London, earlier this year. There was plenty of

oppotunity to meet new people – and enjoy a sing-song.


embers of the Young Baltic Association enjoyed a night on the tiles at London’s Revolution bar. Open to all Baltic members under the age of

35, the association holds regular get-togethers throughout the year.

Rajit Sharma, Natasha Visser and Tom King (V Ships)

Natalie Burrows (Clarksons Research) and Julia Tilley (Infospectrum)

Leonora Lawson, Ignacio Silva and Clementine Hendry (GFI)

Amy Cardale (EG Arghyrakis & Co), Marc Pauchet (ACM Shipping), Pinar Demirel (EG Arghyrakis & Co), Russell Taylor (Petrolneos Trading Ltd)


theBaltic Autumn 2012

Baltic briefing

Setting the standards The Baltic meets Stephen Baldey, chairman of the Baltic Exchange’s Membership Committee


he strength of the Baltic Exchange can

join the exchange. All new members must be

a company that has had a poor track record

be attributed to not only the diverse

proposed and seconded by an existing member,

and which has been reported to us.”

range of its membership, but also its

financial details provided and the applicant’s

The Baltic can begin the process of chasing

members’ involvement in the running of

name circulated among the membership. This

payments as soon as it is informed of an issue

the organisation. Nowhere is this more apparent

has already resulted in a couple of applicants

by a member. Initially this will consist of writing a

than in the work of the Membership Committee,

being rejected this year and Baldey notes that

letter and calling the company to obtain further

a group of four directors and two co-opted

the Baltic will continue to ensure that only

clarification of the situation. Often this step alone

members who provide expertise and input into

companies and individuals of good-standing

will see the problem resolved, but if not, the

the Baltic’s services that are not related to the

can join.

Baltic will list the company on the passwordprotected members’ area of its website.

production of freight market data. This covers

However, much of the day-to-day work of the

areas as diverse as helping members recover

committee is in the area of disputes. The Baltic

But it is not just the serious business of

monies owed to supporting the Baltic’s social

Exchange has a system of “posting”, which

business ethics and debt collection that the

and sports activities.

dates back to its trading floor days whereby the

Baltic’s membership committee looks at. The

The committee has spent much of the

Exchange lets its entire membership know if a

Baltic has a very active social scene, with the

past 12 months revising and updating the

company has withheld payment to a member,

exchange providing financial support to a range

Baltic Code, a guide to shipbroking practice,

perhaps by not paying a commission or having

of sports and social clubs. These range from

which will be reissued this September. It is a

honoured an arbitration award.

sailing weekends to quiz nights.

widely referenced document that covers both an

Members of the Baltic have access to a

Membership of the Baltic has always been

introductory guide to shipbroking and explains

comprehensive database of companies with

about being able to trust a fellow Baltic member,

the business ethics that Baltic members are

whom other members have experienced

and the work of the Membership Committee

expected to adhere to.

difficulties in the past.

ensures that this remains the case.

“Updating the Code has been a lengthy and

Baldey says that there has been an upswing

time-consuming task,” says Stephen Baldey,

in cases that have been brought to the Baltic’s

“But it’s vital that this document reflects all areas

attention in the past year.

that Baltic members are involved with, including

“In a weak freight market, shipowners may be tempted to take a gamble with charterers

freight derivatives.” The new Code addresses 19 different

they’ve never used before. We advise members

aspects of ethics and standards, as well as

to check with us first before fixing. Unfortunately,

providing a solid overview of modern shipbroking

there are a number of counterparties who

activity and terminology. Areas covered by the

choose to delay payments as long as possible

document include the misrepresentation of

and, in some cases, simply do not have the

authority, holding multiple vessels or cargoes

funds to settle outstanding balances. Often a

firm, the withholding of commissions, subjects,

warning from the Baltic that we will take action


and let the rest of the market know is enough to




contractual obligations.

elicit swift payment.”

Stephen Baldey, himself a shipbroker of

Indeed, the service has recovered around

40 years standing, believes that standards

$800K for members in the past 12 months,

are key to being a successful shipbroker and

enough says Baldey for many companies to

Baltic Exchange Membership Committee

comments that while many aspects of business

justify their membership subscription for several

Stephen Baldey (OP Secretan)

practice such as formalities may have gone

years. Most of the cases dealt with involve dry

Andy Carroll (Gray Page)

forever, the levels of professionalism have

bulk market charters, but the committee does

Tony Westbrook (Maersk Broker)

not dropped.

handle disputes in the tanker and sale and

Colm Nolan (Agelef)

purchase markets from time to time.


As a self-regulated organisation, the Baltic Exchange expects the highest standards from

“It is in these difficult times that reputation

its members and the Membership Committee

is more important than ever,” notes Baldey.

vets all new companies and individuals that

“Baltic members will avoid doing business with

theBaltic Autumn 2012

Basil Mavroleon (Bray Shipping) Richard Goodall (Dromon Maritime Agency)


Baltic briefing

Baltic FFA courses London T

FFABA Tanker Derivatives Forum – 15 November T

he 2012 Tanker Derivatives Forum organised by the Baltic and the FFA Brokers

Association (wet) will take place in Geneva on 15 November. This sees players from across the sector as well as those from related markets who are interested in trading wet FFAs discussing the major issues affecting the industry. There will be a reception hosted by the FFABA after the Forum. Please email ceccleston@ for more details.

he next round of Baltic Exchange training courses takes place this October in London

Three Peaks Challenge

at the Exchange.

Freight Derivatives & Shipping Risk Management – 15-16 October


ongratulations to the many Baltic Exchange members who took part in the Three Peaks

Challenge and raised over $600K for the Sailors’

• Introduction to shipping risk

Society. The challenge involved climbing the

• Freight rate risk management

UK’s three highest mountains – Ben Nevis,

• Freight rate options

Helvellyn and Snowden – over a 24-hour period.

• Clearing & settlement of shipping derivatives contracts

Winners were Bunge’s “Force Majeur” team,

• Bunker risk management

which completed the climbs in 5 hrs 22 m. Next year’s challenge involves climbing

• Financial risk management • Ship price risk management

Borneo’s Mount Kinabalu (5-8 April). Contact

• Value at risk in shipping for further details.

• Credit risk in shipping

Advanced Freight Modelling & Trading – 18-19 October • Spot freight rate dynamics • Relationship between spot and time-charter markets • Constructing and using freight forward curves • Modelling freight rate volatility • Back-testing and stress-testing risk models • Writing and hedging options on freight

Baltic diaries 2013

• Pricing options in freight markets • Different types of real options abandon, expand contract; spot vs time charter; option to lay up) The highly regarded courses are led by Prof Nikos Nomikos and Dr Amir Alizadeh of Cass Business School. See for further details.


he Baltic is now taking orders for its popular range of pocket and desk diaries.

Available in a range of finishes, the diaries can be personalised. See diaries.pdf for full details or contact Chaz Albrecht at


theBaltic Autumn 2012

Baltic briefing

Clarksons lifts Fehr Cup for first time Richard Fehr, grandson of Frank E Fehr CBE, reports on the day’s tennis in Surbiton


he final of the Fehr Cup was won


for the first time in the history of the

Braemar 1


Clarksons 3


Baltic Exchange Secretariat


Harper Peterson

W/O 6/4

76-year tournament by Clarksons, which especially delighted Graeme

Murray, who had first entered 32 years ago and Richard Wetzki. This denied Braemar Seascope 1 a hat-trick (Charles Morrison and Tim Mellet). Although the score looked a little one-sided, the match was played in good Baltic spirit, umpired in his usual calm

Clarksons 2


Howe Robinson 1

Nomikos 1


Holman Fenwick


E A Gibsons




Vogt & Maguire


Nomikos 2


Braemar 2


Howe Robinson 2


Clarksons 1




way by Costas Maramenides, who was able to say “game, set and match” minutes before


the heavens opened on cue at 4.05pm. In the

Braemar 1


Clarksons 2


third place play-off, EA Gibson’s Andy Lawson

Clarksons 1


E A Gibsons



Braemar 1

6/2 6/2



Clarksons 2

6/1 7/6

American Tournament


Braemar Seascope 2

American Tournament


Baltic Exchange Secretariat

and Chris Thompson overcame Clarkson 2’s Hugh Moines and Allan Kent-Lemon in a more


closely fought encounter, the second set going

Clarksons 1

to a tie-break. Three cry-offs, two on the previous evening, resulted in 13 pairs contesting the Baltic Inter Firms Fehr Cup Tennis Tournament at the Surbiton Tennis & Fitness Club. Despite long delays on the M25, play in reasonable tennis weather was on schedule at lunch time, with


referee Perry Perera restricting the first round to Thanks again to Perry

one set per match on the hard courts and the

Perera, the match referee

Club’s new artificial clay courts. Following the recent appalling weather, the






grass courts were strictly out of bounds. Our



man in touch with the Met Office was told that

much behind the scenes for


rain could be expected at 4 o’clock and so the

organising the tournament

quarter-final matches were again restricted to




one set. This allowed the semi-final, the final




and third place play off to be contested over the

for umpiring the Final and

best of three sets.

organising the two section





tournament for the early round losers resulted


in Braemar 2 (Ben Jeans and Hugh Twort)

who came to the rescue

heading Section 1 and a convincing win for the


Baltic Exchange Secretariat (Crispin Ecclestone

digital camera to record the

and Oliver Lyth) in Section 2.

prize-giving ceremony.









Bacon the


(Cargill) referee’s

theBaltic Autumn 2012

Richard Wetzki and Graeme Murray


Baltic briefing

HFW beats Baltic Jamie Freeland reports on an evening’s cricket against the lawyers


fter a washout against Lloyd’s, the

remarkable run chase in tricky conditions.

has been mooted, but given the hospitality on

Baltic started its cricket season with

So once again the post tea (or in this

offer at the JP Getty estate, this is probably

a 15/15 fixture against legal giants

case “mid-innings evening refreshment”) curse

not realistic. Therefore, the only hope relies on

Holman Fenwick Willan (HFW) in

continues to plague the Baltic’s brave cricket

greater application of flair and the undoubted

Dulwich in a game threatened first by pre-

team. The imposition of a sporting Ramadan-

talent that exists within this fine group of

Olympic traffic and later by familiar inclement

style fast for the flagship City T20 tournament

players, so further entertainment is guaranteed.

weather. However, both sides were committed to playing and took to the field with great enthusiasm for this inaugural match. Baltic master blasters Russell and Walpole opened the batting and after initial struggles on a damp, seaming pitch, exerted increasing dominance over the HFW attack – reaching 63 for no wicket with some spectacular boundaries peppering the South London area. Walpole departed in glorious fashion (caught at long on), but Russell continued on his way until a bout of modesty saw him retire for a well-made 45. Oli Dannatt and new cap Andrew Pryce were able, if anything, to increase the scoring rate with one straight six from Dannatt rather selfishly delaying the game while fielders and spectators searched for the lost ball in dense undergrowth. However, his classy 28 ensured an imposing 162-3 was attained from the Baltic’s 15 over allotment. Sadly, this marked the high point of the evening from a strategic perspective as the Baltic bowlers suffered a terrible mauling at the hands of their erstwhile master batsman, now captain of HFW, Chris Owen and his big-hitting teammate Toby Savage, who hit some truly monstrous sixes off an increasingly depressed attack. Despite some useful overs of seam from Eccleston and Mastin that brought BECC briefly back into the game and a miserly spell of off-spin from the returning James Sayer, HFW secured the win with five balls to spare – a


The Baltic cricket team

theBaltic Autumn 2012

Baltic briefing

Sporting contacts There are many sports clubs associated with the Exchange. In most cases, they are open to both members and staff of member companies Baltic Association Football Club

Golfing Society

Sub-Aqua Club

Stephen Calafti

Chris Cox, c/o Frank Symons Ltd

Lorraine Burns

Anglo Greek Chartering

Devonshire House

The Baltic Exchange

The Baltic Exchange

146 Bishopsgate, London EC2 M4J

38 St Mary Axe, London EC3A 8BH

38 St Mary Axe, London EC3A 8BH

Tel: +44 (0)20 7377 5423

Tel: +44 (0)20 7369 1638

Tel: +44 (0)20 7283 9621



Cricket Club

Lawn Tennis Club

Young Baltic Association

Jamie Freeland

Crispin Eccleston

Crispin Eccleston

AM Nomikos

Tel: +44 (0)20 7369 1654

The Baltic Exchange

4th Floor


38 St Mary Axe, London EC3A 8BH

40 Grosvenor Gardens, London SW1 0EB

Tel: +44 (0)20 7369 1654

Tel: +44 (0)20 7591 1800

Sailing Association


Simon Cox


Howe Robinson Shipbrokers 77 Mansell Street, London E1 8AF Tel: +44 (0)20 7457 8421

Key Baltic Exchange contacts Management

Government Broker


Tel: +44 (0)20 7283 9300

Pat Swayne

Paul Stuart-Smith

Fax: +44 (0)20 7369 1622/1623

Tel: +44 (0)20 7369 1668

Tel: +44 (0)20 7369 1670

VPN 171 2000

Fax: +44 (0)20 7623 6644




Chief Executive

Dispute Resolution

Robin King

Jeremy Penn

Barrie Wooderson

Tel: +44 (0)20 7369 1637

Tel: +44 (0)20 7369 1624

Tel: +44 (0)20 7369 1674



Fax: +44 (0)20 7623 6644



Freight Market Department

PA to Chairman and Chief Executive


Tel: +44 (0)20 7369 1625

Jill Bradford

Bill Lines


Tel: +44 (0)20 7369 1621

Tel: +44 (0)20 7369 1653



Baltic Exchange Charitable Society

Membership Manager

8 Eu Tong Sen Street

Jackie Harrison

#17-87 The Central

Richard Butler

Tel: +44 (0)20 7369 1633

Singapore 059818

Tel: +44 (0)20 7283 6090


Tel: +65 6377 0654

Willy Lyth

The Baltic Exchange (Singapore) Philip Williams



Events Room Hire Head of Finance

Jill Bradford

The Baltic website

Duncan Bain

Tel: +44 (0)20 7369 1621

Tel: +44 (0)20 7369 1627



theBaltic Autumn 2012



A POSH parade Ambrose Greenway joined in P&O’s 175th birthday celebrations this summer. Here, he presents a photo essay of P&O cruise ships


he Peninsular & Oriental Steam Navigation Co was established in 1837 with a service to the Iberian Peninsula,





was extended to reach all the way to the Far East and Australia. The company grew and eventually obtained controlling interests in many other well-known British shipping companies including British India, Coast Lines, Federal, General Steam, Hain, Moss Hutchison, New Zealand Shipping, Nourse, Orient, F C Strick and Union SS Co of New Zealand.

P&O’s iron-hulled 5,545gt Rome of 1881 became its first cruise ship Vectis in 1904

This made it by far the largest UK shipping group and in the early 1960s the combined fleet numbered 364 ships. P&O was closely involved in the establishment of Overseas Containers Ltd (OCL), one of the first British container companies, and had interests in bulk shipping, ferries, ports and the offshore industry. In the first decade of the 21st century, P&O Cruises was sold to the Carnival Group, OCL – which had joined with the Dutch Nedlloyd –went to AP Moller and the rest of the Group was bought Dubai interests. The turbo-electric Viceroy of India (1929/19,648gt) was a cruise favourite in the 1930s

Celebrations This year marks P&O’s 175th Anniversary and it was celebrated on 3 July with a ceremony aboard Oriana in Southampton, where HRH The Princess Royal cut an anniversary cake. Later, all seven ships in the P&O Cruises fleet departed in line ahead to the accompaniment of fireworks and steamed past the Trinity House vessel Patricia at Spithead, where the Princess Royal, Master of Trinity House, took the salute. Karageorgis’ brightly painted Mediterranean Sea at Corfu in 1975


theBaltic Autumn 2012


The engines-aft 45,733gt Canberra, shown returning from the Falklands Campaign on 11 July 1982, was built in 1961 for the express service to Australia, but later became a much-loved cruise ship

Arcadia (1954/29,734gt) cruised in the Pacific in 1959 and went full time cruising in 1970 minus her mainmast

The 113,000gt sisters Azura (2010) and Ventura (2008)

HRH The Princess Royal and Elder Brothers of Trinity House greet

are currently the largest in the P&O Cruises fleet, but a

Oriana (1995/69,153gt) during the 175th Anniversary Review

two-funnelled giant of 141,000gt is due in 2015

An unforgettable and surely unrepeatable sight as the P&O Cruises fleet heads for the Nab Tower before going their separate ways

theBaltic Autumn 2012


People, places, plcs

Refinery under investigation Venezuela’s Amuay refinery fire comes under the spotlight. Plus: ballast water, incipient impairment; piracy; lending; OSD; ECDIS; testing; ShipServ


nvestigations have begun into an explosion

2013, with the new ECA taking effect 12

at Venezuela’s Amuay refinery, which killed

months later on 1 January 2014.

“Given that the costs of fitting the treatment equipment may be in the order of $1.5m a ship,

48 people. Fires at the refinery – Venezuela’s

it does not make economic sense for older

biggest – continued for four days, with oil min-

ships approaching the end of their lives to incur

ister Rafael Ramirez saying that state-owned

ICS concerns on ballast water

oil company Petroleus de Venezuela was in

With the imminent implementation of 2004

“no hurry” to restart the plant and would carry

Ballast Water Management Convention, the

out an “exhaustive inspection” before trying to

International Chamber of Shipping has called

Incipient impairment

restart processing.

on the IMO to address concerns it has with the

Accountant Moore Stephens says it expects to


see an increase in the sort of pressure recently







investigation into the incident and unions have been calling for the resignation of Ramirez. The plant can process 645,000 barrels a

this huge expenditure,” Tongue said.

According to ICS director of regulatory

exerted on shipping companies by the US

affairs, David Tongue: “Shipping companies

Securities and Exchange Commission (SEC) to


make disclosure when the market value of their





day. What effect the outage will have on the

associations have serious concerns about the

product tanker and crude markets will depend

availability of suitable ballast water treatment

on how long it lasts and how extensive damage



often referred to as “incipient impairment”, has

is to the refinery. As Hurricane Isaac has

approval process and, above all, the difficulties

been reflected in the 2011 filings of many SEC

affected refining capacity in the US, this has

of retrofitting tens of thousands of existing


also put pressure on supplies.

ships within the time frame established by the





BWM Convention.”

vessels is less than their carrying value. The pressure for this type of disclosure,

Moore Stephens partner David Chopping says: “The SEC has seen impairment charges

In its submission to the IMO Marine

in the accounts of a number of shipping

North American ECA

Environment Protection Committee, which

companies in the last few years. But it has

The North American Emission Control Area

meets in October, ICS has requested that

apparently not seen quite as many as it

(ECA), came into effect from 1 August 2012,

the issue of fixed dates for the retrofitting of

might have been expecting. It is easy to

bringing in stricter controls on emissions of

expensive new equipment by large numbers of

understand why the SEC and others might

sulphur oxides (SOx), nitrogen oxides (NOx)

ships, perhaps as many as 60,000, needs to be

consider disclosure of market value to be

and particulate matter for ships trading off

addressed urgently.

useful information and want to see it more

the coasts of Canada, the US and the French Saint-Pierre and Miquelon. There are now three designated ECAs in

ICS believes that a serious discussion is

widely disseminated. It is more objective than

needed at IMO before the Convention enters

valuations based on management estimates,

into force.

it is more comparable across companies and

The ICS has proposed that the IMO should

it sets benchmarks against which companies’

modify the BWM Convention’s requirements

own policies can be assessed. Indeed, for

A fourth area, the United States Caribbean

so that existing ships should not be required

some parties, the information might seem

Sea ECA, covering certain waters adjacent

to be retrofitted with treatment equipment

far more important than valuations based on

to the coasts of Puerto Rico and the United

until their next full special survey. ICS also

projected future income streams.

States Virgin Islands, was designated under

proposes that ships approaching their fourth

“At the same time, it is equally easy to

MARPOL amendments adopted in July 2011,

special survey should be exempted from the

visualise objections to such disclosure. Values

with expected entry into force on 1 January

equipment requirements.

are to be determined on an unfixed basis, so

effect globally, the other two being SOx ECAs in the Baltic Sea area and the North Sea area.


theBaltic Autumn 2012

People, places, plcs the

and exit routes for distressed assets and

vessels are fixed for fairly long periods with

International Maritime Bureau shows that

under-performing shipping portfolios. The joint

high-quality charterers. Similarly, while values

177 incidents were reported in the first

approach brings together the long-term ship

may look comparable, if the fixture position

six months of 2012, compared to 266

management experience and bank contacts of

differs significantly, then such comparability

during the corresponding period in 2011: a

Graig and the freight market expertise of GMI.

might be considered spurious. And even if a

33% reduction.

are arguably of only limited relevance where






Hugh Williams, CEO, Graig Group, says:

vessel is operating in the spot market, or a

“The latest figures published by the IMB

“This is a slow burn crisis for shipping banks

fixture is going to be ending shortly, while other

come as no surprise”, says Tom Patterson,

and it is by no means over. Banks are currently

objections might be less compelling, there are

manager of maritime information services

only really lending to offshore and LNG projects,

still concerns about the volatility of market

at Control Risks. “Somali piracy has had a

while nursing portfolios of tankers and bulkers

values. How relevant is a valuation at a point of

disproportionate effect on global figures for

which may be under the water in value terms

time in a volatile market where an asset might

several years and the reduction does not reflect

and in many cases are underperforming as

have many years still to operate?

a genuine improvement globally but rather a

loans. They want a lot of ships off their books

downturn in one area of the world.”

or under better commercial and technical

“Nonetheless, it seems very unlikely that the SEC will change its mind and decide that

Also notable, Patterson argues, are the

such disclosure is not useful. It is far more likely

figures released by the IMB for West Africa,

that other bodies – and indeed investors – will

which suggest a dramatic rise in incidents.

“We know there is a queue of ship

start expecting to see such information. This

“Piracy in West Africa has not attracted the

managers outside every banker’s door offering

can happen without any need for changes

same level of international attention as East

technical ship management and there is private

in the rules and indeed the SEC has not

Africa in recent years, primarily due to under-

equity in the marketplace looking to pick

explicitly changed the disclosure requirements.

reporting and the fact that the crime takes

up opportunities.

It seems to have relied more on the ‘Al Capone’

many different forms in that area, not purely

“This link-up with GMI brings the two

approach of a kind word: everyone already

hijacking for ransom, but the problem is no less

together in a powerful combination, which

knows it has a gun!”

critical. Attacks are violent and the threat to


crew safety is significant.”

commercial presence to help banks clean up

management and with GMI alongside us we can deliver that.





their portfolios.”

No room for complacency The drop in global incidents of piracy in the

Safe havens for lenders

first six months of 2012, which has been

The Cardiff-based Graig Group has teamed

OSD secures new contracts

driven by a sharp reduction in Somali pirate

up with Global Maritime Investments to

Offshore Ship Designers UK division OSD-IMT

attacks, reflects the effectiveness of counter-

provide shipping lenders with tailor-made

has been awarded a contract to supply the

piracy measures, but should not be a cause

solutions for problematic shipping exposures.

design for a modified version of its IMT 982

for premature celebration, according to Control

Working together, the two groups will provide

Platform Supply Vessel to be built at the new

Risks, a global business risk consultancy.

lenders with workout solutions, safe havens

shipyard facility of Honghua Offshore Oil & Gas

No room for complacency

theBaltic Autumn 2012


People, places, plcs Equipment in Jiangsu, China. The contract is the result of increased

ships in the Mozambique Channel that would


have been approximately 1,000 miles long.

ShipServ has recently announced the launch

marketing and technical collaboration between

On 1 July, new mandatory IMO requirements

of a new reporting tool, which will enable

OSD group companies. It is contracted

for ECDIS entered in force, something which

maritime suppliers and brand manufacturers

through OSD-Shanghai, with OSD-Singapore

ICS has long supported provided that sufficient

to track their entire marketing spend across

providing design engineering technical support

Electronic Navigation Chart availability could be


to OSD Shanghai for design modification.

met before the phased-in carriage requirements


first become effective.

ShipServ TradeNet.





documentation and design licence is provided

“Disturbingly, it has become apparent


maritime and

search its










that not all ECDIS systems may be fully

available to all 40,000 suppliers registered on

effective, with the International Hydrographic

ShipServ Pages free of charge and shows in

Organisation (IHO) advising that some systems

one simple dashboard all the results of their

FONASBA Supports Container Weight Verification Initiative

have reportedly failed to display significant

marketing activity broken down into banner

underwater features in the ‘standard’ display

advertising impressions, searches, profile

FONASBA, the international ship brokers and

mode, necessitating the continued use of paper

views, contact views, request for quotes and

ship agents federation, is backing to international

charts,” the ICS says.

purchase orders.

by OSD-IMT Ltd, Montrose, UK.

government and industry efforts aimed at

ICS director marine, John Murray, remarked:

ensuring that shipping containers for export are

“ICS welcomes IMO’s recognition of the

accurately weighed.

problem and its development of a circular

Baltic training

The initiative, which is being led by the World

providing advice on the issue to mariners, with

Baltic Exchange members are asked to

Shipping Council together with shipowners’

a meeting with ECDIS manufacturers planned

consider sending their young colleagues to be



for September that will hopefully get to the

trained in preparation for the annual professional

Association of Ports and Harbours, the

root of this serious problem. But in view of the

exams of the Institute of Chartered Shipbrokers

International Chamber of Shipping and the

potential danger presented by ECDIS operating

(a Baltic Exchange member organisation).

International Transport Workers Federation, as

anomalies, ICS will continue to monitor the

Evening classes are offered by Maritime

well as the maritime administrations of Denmark,

situation very closely.”

Education & Training Ltd and organised by



the Netherlands and the US, will be launched

IMO Member States have also rejected a

Jeffrey Blum (a Baltic Exchange individual

at the 17th session of IMO’s Sub-Committee

proposal to establish a new recommended

member) starting Monday 10th September.

on Dangerous Goods, Solid Cargoes and

route for all ships in the Mozambique Channel

Please see ‘’; or write to him at

Containers (DSC 17) in September.

that would have been approximately 1,000

‘’ for more details.






miles long.

unverified containers is a serious one for ports

John Murray said: “We are pleased that

and ships. A paper to be put forward at the

IMO has carefully listened to shipowners and

Mission event



made the right decision. Support for such a

A CHAMPAGNE fish ’n’ chip supper in aid of

containership accidents, some boxes had

concept could have set a very unwelcome

The Mission to Seafarers has received a financial

been up to 10 tonnes heavier than the manifest

precedent for the management of deep sea

boost from the Baltic Exchange.

weight, leading to stack collapse, capsizes

navigation elsewhere.





and even contributing to the break up of

The supper, which will be held after the

“The compelling need for the measure was

Annual National Service for Seafarers on

unclear and no statistical evidence had been

October 10th, will bring together industry

FONASBA general manager, Jonathan

provided regarding shipping casualties or near

leaders for the traditional British seaside dish

Williams FICS said: “Ship agents see the

misses. This omission made it very difficult

in the beautiful Victorian surroundings of the

problems that inaccurately weighed containers

to quantify the anticipated benefit that the

Punch Tavern on Fleet Street.

cause ports and ships every day. It is extremely

proposal might have delivered.”

the vessel.

“We are delighted that the Baltic Exchange

worrying that there is currently no obligation for

has chosen to support The Mission to Seafarers

containers to be accurately weighed anywhere

by sponsoring this event,” said Tara Fox, the

along the transport chain. FONASBA hopes

Ship testing

charity’s head of corporate partnerships. “The

that this initiative will rectify this anomaly and

Class NK has started full scale ship tests to

Baltic has long championed the Mission’s work

bring considerably more certainty, resulting

develop a feedback scheme on the design for

and this partnership will help to further our

in increased safety levels for all parties in the

ships performances in real time sea states in

range of essential services to seafarers around

container shipping sector.”

collaboration with Imabari Shipbuilding and

the world.”

Sayonas Shipbuilding. During the joint research

There are still places available for the

project, the energy saving operation support

evening, which starts at 6pm following the

ECDIS and route measures

system ClassNK-NAPA GREEN will be installed

service at St Paul’s Cathedral. If you’d like to

The International Chamber of Shipping has

in ships built by the two yards, following

book a place, contact Katherine Wylie at the

welcomed the decision by the IMO Sub-

which the effectiveness of energy saving will

Mission on 020 7246 2939 or email katherine.

Committee on Safety of Navigation to take

be monitored.

action to address operating anomalies with

The project’s objective is to help with a

Electronic Chart Display and Information

total optimisation of performance as far as fuel

Systems (ECDIS) and to reject a proposal to

efficiency, not only in calm seas but also in actual

establish a new recommended route for all

sea states.


theBaltic Autumn 2012

Comment – Michael Grey

Changing of the old guard Another historic shipping firm closes its doors for good


hen something has been around

Clarke has been partly due to all this nonsense

for all of your working life, it is

of the Climate Change Act and its absurd targets

sad when you suddenly discover

for the subsidy and promotion of “sustainable”

that it is no longer there. In the

energy, which has surrounded our shorelines,

shipping industry, it is just part of the everlast-

our moors and hills, with pointless wind turbines.

ing change, but it doesn’t mean that you should

In a UK that sometimes seems intent on

not feel a little pang of regret when it vanishes

seeing its population freezing in the dark as

forever. Somebody once described the shipping

governments dally on “politically acceptable”

industry as being like a big room with two doors,

energy decisions, and which has seen nose-

with newcomers entering through one to join the


throng within, and people who had been around

perimeters and chaining themselves to collier

for a while disappearing out of the other. I sup-

anchor cables, you sometimes think that the

pose it is a comforting way of coping with loss.

lunatics have indeed taken over the asylum.





The demise of the short sea operator

Perhaps Stephenson Clarke missed a trick

Stephenson Clarke, which has been around in

and the agility which saw it smoothly move from

one form or another since 1730, is a bit special

sail to steam and meet so many other challenges,

in this scale of loss because of its extraordinary

rather eluded it in the end. Perhaps it was just too

antiquity. Robert and Ralph Clarke, master

Michael Grey

mariners, first began with coastal coal and the

small to take a punt on wind farm installation and maintenance, or oil-rig demolition and recycling,

company remained in this business throughout,

ships and managed the same number for pretty

or the snake oil of trading in carbon rather than

branching out into deep sea trades and the

well all the electricity generating boards that

coal, which I am told are the new favoured flavours

management of other owners’ fleets.

supplied British power.

of the times we are living through. The climate of

The company first ran collier brigs that would

I remember it from my childhood, biking over

the times, which has seen the disappearance of

take the ground on the southern beaches and

to Shoreham by Sea to watch its ships squeezing

far better resourced shipping companies, doesn’t

when steam came along, morphed smoothly

through the locks into the floating harbour, along

exactly incline towards shipping investment.

into steamship operations, embraced technical

with all the other coastal colliers that fed the old

Who knows, maybe someone will reactivate

innovations like water ballast tanks, self-trimming,

power station and the fires of Brighton and Hove.

this famous shipping brand, with its ships named

steel hatchcovers and diesel propulsion, when

I remember being allowed to look around one,

after Sussex villages, when the times are more

each of these clever ideas came along. It built

with its black and Silverene funnel and going

propitious. We still need ships and there is

ships for the St Lawrence Seaway and its small

home covered in coal dust. Now it is gone for

something of a renaissance of coastal trade,

bulkers could be found in all sorts of improbable

good, joining the Everards, Shoreham Shipping &

thanks to clever shipowners like the Neapolitan

foreign charters.

Coal, Crescent, General Steam, Metcalf, Rix and

operator Grimaldi or the Belgian genius of

Cory, and so many others in the huge pantheon

Cobelfret. Those old master mariners Robert

of British coastal shipping.

and Ralph would look down with approval at

It was a survivor, firmly wedged into that room with its ever-changing population of shipowners down the centuries, as so many others came

High costs, fuel prices and rotten rates have all

the sheer efficiency of their smart freight ferries

and went. It survived wars, depressions, coal

been contributors to the demise of this venerable

re-establishing the coastal roads between the

strikes, the nationalisation of the coal industry

company, which until the last contrived to run a

Baltic and the Mediterranean. These, they might

and even the Labour government handing over

few small bulkers feeding the shrinking number of

think, are very suitable successors in the long line

coal transport to the newly nationalised British

power stations still fired by coal. And maybe that

of short sea ships which began with those collier

Rail, on very favourable terms. It even survived the

is the clue, with all the climate change hysteria

brigs, as the door closes behind Stephenson

disappearance of the UK coal industry, although

and terror of “carbon”, that has forced many

Clarke after 282 years.

by then it was a much shrunken company from

of these coal fired units into premature closure,

Behind me, too, after writing this Baltic

the enormous operation it had been in the 1950s

despite this country still sitting on at least 40 years

Comment for a dozen years or more. It seems

and 60s, when it ran a fleet of nearly 50 owned

of coal. I would suggest that the end of Stevie

time for a change.

theBaltic Autumn 2012



Tankers on the turn? Conditions remain challenging in the tanker business with some companies carrying high levels of debt, but there are also some positive developments


n an open letter to shareholders, Herbjorn

Ship Finance

Golar LNG

Hansson, chairman and CEO of Nordic

Ship Finance International also had good news

Golar LNG reported operating income of $58

American said last month that while it was not

to report in the second quarter with net income

million for the second quarter of 2012, an

possible to predict when the markets were

of $61m, compared to $39m in the previous

increase of 108% from the first quarter.

going to recover, the fundamentals ”seem to be

quarter, as did James Fisher, although Odfjell

According to the company: “Far East

slowly turning in our favour. In our sector, the

continued to experience weak results through

demand, particularly in Japan, increased during

orderbook for new Suezmax vessels is shrinking

reduced demand and softer freight rates for

the quarter, which created competition with the

rapidly. By the end of next year, fleet growth will

chemical tankers.

counter seasonal markets in the Middle East

virtually come to a standstill.

Commenting on the results, SFI chief

and South America pushing up LNG prices.

“While no guarantees are given, seen in the

executive Ole Hjertaker said: “We continue to

Considerable supply moved into Argentina,

context of potentially growing oil demand, this

deliver positive results and have paid quarterly

much of it replacement cargoes following

would suggest that a recovery in spot rates

cash dividends since our operations began

Repsol’s cancelled supply contracts.

for our vessels could be on the horizon; the

in 2004. Our fleet renewal is progressing

“Brazil also appeared as a new entrant

markets often turn quickly. The main point

well and we have sold six older OBOs and

into the trading market, trading spot cargoes

for NAT is that we have a strategy that is

VLCCs over the last year and at the same

that were originally intended for Brazil. While

designed to work in all markets no matter how

time taken delivery of seven newbuilding

demand in Europe remained weaker, LNG

challenging they are. We see now, however,

drybulk vessels. We still have another six

prices rose on the back of strong interest to

that 3Q2012 is expected to be weaker

newbuildings to be delivered in 2012-2013,

re-export cargoes to markets in the Atlantic and

than 2Q2012.”

but very low remaining net capital expenditures

Pacific basins.”


said that the company was

“actively considering opportunities to invest

after financing.

While prices softened towards the end of

“The spot market is challenging in many

the quarter, Golar said that the lull could be

when ship prices are down. Over the recent


past, we have inspected several vessels that

have access to capital for new investments

are candidates for acquisitions. We also keep

right now. Concurrently, we have seen both

Keith Bainbridge, a partner in RS Platou told

a close eye on possible distressed situations

secondhand and newbuilding prices fall sharply

a London Shipping Law Centre seminar recently

in the industry. NAT is well positioned to take

over the past 12 months, to levels not seen for

that he believed that from 2014 onwards there

advantage of historically very low asset values.

a decade.

will be more LNG ships than there is product





short-lived as Asian countries begin to stock up on supplies for the winter.

We are, however, exercising prudence and

“While we have been cautious and not

and therefore prices would come down. Prices

caution, and are very conscious not to make

made new investments for some time, the

could also be affected by the number of new

investments prematurely. The passage of time

current market environment could prove to

ships coming in without contracts.

works in our favour. Our feedback from the

be an interesting time to invest selectively

Both Golar and Awilco have been reported

shareholder community has clearly supported

in modern assets with the aim to build our

to be holding back on fixing their newbuildings

this approach.”

long-term distribution capacity.”

in the hope of getting better contract prices.


theBaltic Autumn 2012


Tanker tradition Crowley Maritime is looking forward to the delivery of two new Jones Act tankers. Plus: Frontline; LNG order; Hartmann; Hellenic; Norden; COSCO; DST



operators in the US, we have a proven

for a premium of about 30% over its scrap

petroleum and chemical transporta-

reputation for providing economical, reliable

value. The 1996-built, 298,306 dwt Hampstead

tion group announced in August that

service while adhering to the most stringent

is understood to have been sold to Chinese

it had purchased two new Jones

safety and environmental protection standards.

buyers for around $24m.

Act tankers, the Pennsylvania and the Florida,

This tradition is certain to continue with the

from Aker Philadelphia Shipyard. The tankers,

delivery of these two new tankers.”



Frontline has also signed a deal for up to six 83,000-cmb VLGCs at Jiangnan Shipyard

scheduled for delivery this month and in March

The US-flagged vessels are the 13th and

in China for $63.5m each. Platou Markets

2013, mark Crowley’s re-entry into the Jones

14th in the Veteran Class built at Aker. The

has been quoted as saying that this is lowest

Act tanker market since its last tanker was

vessels are classed with ABS. With a length of

price, allowing for inflation adjustments in the

retired in 2011.

183.2 m, a breadth of 32.2 m, and a depth of

past 20 years. Given the Chinese yards’ lack of

The addition of these new tankers also

18.8 m, the 45,800 dwt tankers have a draught

experience in building gas ships, the Frontline

positions Crowley to offer a more diverse

of 12.2 m. Powered by the first Tier II large-bore

order represents a good opportunity for them.

fleet of petroleum and chemical transportation

engines, MAN-B&W 6S50MCs, the speed of

While China is the biggest shipbuilder overall, a

vessels to its customers. The tankers will be

the Pennsylvania and the Florida is expected

large proportion of its newbuilds have been for

capable of carrying nearly 330,000 barrels

to average 14.5+ knots. In addition to being

the bulk carrier market and it will therefore need

of a wide variety of petroleum products and

double hulled with segregated ballast systems,

to diversify, and quickly.

chemicals. Once delivered, the vessels will

safety features also include water and CO2

operate in the US coastwise trade.

firefighting systems, as well as a foam water

“Crowley is thrilled to partner with Aker

spray system.

LNG order

Philadelphia Shipyard and to take delivery of these new Jones Act tankers,” said Crowley’s

Nantong Mingde Heavy Industry obtained an

Chairman, President and CEO Tom Crowley.

Frontline activity

order in July to build around 21 LNG ships

“We are bringing the best available technology

Frontline has agreed with sister company Ship

for Bermuda-based Cambridge Energy Group.

to our customers, who understand and

Finance International Limited to terminate the

The deal has been much discussed, not least

appreciate safety and operational excellence.

long-term charterparty for the OBO carrier Front

because of China’s inexperience in building

This is yet another example of our on-going

Climber and Ship Finance has simultaneously

ships in this segment.

investments in new equipment and technology

sold the vessel. The charterparty is expected

As the yard itself acknowledged that

to meet the current and future needs of

to terminate in late September 2012. Frontline

although the first LNG carrier has been built in

our customers.”

will make a compensation payment to Ship

China, independent design and construction

“Putting these vessels into service continues

Finance of approximately $600,000 for the

ability is “still far from mature”. The co-operation

our commitment to offering a wide variety of

early termination of the charter. The transaction

between the parties will be of great significance

solutions for the safe and reliable transportation

will reduce the company’s obligations under

for the Chinese shipbuilding industry to achieve

of petroleum products and chemicals for our

capital leases by approximately $1.7m and

a breakthrough in such a high tech business.

customers,” said Crowley’s Rob Grune, senior

the company expects to record a loss of

vice president and general manager, petroleum

approximately $4.2m.

services. “As one of the largest independent

Frontline recently sold a 16-year-old VLCC

theBaltic Autumn 2012

According to the Strategic Co-operation Agreement, nine ships of 140,000 m3 will be built, 10-12 of 20,000m3 to 40,000 m3 LNG



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S&P carriers and two FLNGs, which have annual

subsidiary Patmos Shipping has completed the

strategic focus on fuel efficiency, Norden said.

output of two million metric tonnes each.

sale of the 1991-built 65,434 dwt Panamax

Furthermore, Norden has also recently sold two

“This is a new breakthrough and challenge

dry bulk carrier, Hellenic Sea. The Hellenic

handysize dry cargo vessels with a positive cash

for Mingde Heavy,” Ji Fenghua, Chairman of

Sea was sold to nominees of Dianik Bross

flow effect of USD 42 million.

Mingde said. “For this LNG carriers project, we

Shipping, an unaffiliated third party, for a

have recruited experts on LNG carriers in China

total cash consideration of $5.3 million. The

and created a R&D team.”

vessel was delivered to her new owners on

COSCO offshore

23 August 2012.

COSCO (Qidong) Offshore, a subsidiary COSCO

The vessel was initially acquired in March

Shipyard Group Co, has secured a contract

Hartmann deal

2002 at a price of $9.6 million. During the

valued over $20m from BAM International

Tufton Oceanic and Blackstone have bought a

past 10 years of her operation, the vessel has

Australia and Clough Projects Australia to build

majority stake in nine tankers from the German

contributed approximately $40.6 million to the

a jack-up barge.

Hartmann Group. The private finance players

company’s net profit.

are understood to have a 75% stake in seven medium range and two long range tankers. Hartmann is expected to continue to manage the ships, with commercial management from

The barge will be built to the GustoMSC

Taking into account the vessel’s net book

SEA-1250 design will be able to operated in

value and expenses related to the sale,

water depths of up to 30 metres. The vessel is

Hellenic expects to realise a net book loss of

scheduled for delivery within a year.

approximately $0.2 million on the sale.

United Product Tankers, Hartmann’s joint

DST Shipping

venture with Schoeller Holdings.

Norden activity

DST Shipping, Greece is understood to

Norden has ordered two handysize product

have placed an order at IHI for a pair of

Hellenic renewal

tanker newbuildings from Guangzhou Shipyard.

56,000dwt Supramaxes. The vessels are



The vessels have a significantly lower fuel

believed to be scheduled for delivery in early

announced that as part of its ongoing fleet

consumption than comparable vessels in

2014 and brokers suggest pricing is in the


the market and thus support the company’s

higher $20m range.






Carriers wholly


China COSCO Shipyard

theBaltic Autumn 2012



Meeting the challenges Pernille Kaervad Jacobsen reports on BIMCO’s diverse work programme


ver the past decade or so, the range

familiarity of the present edition while reflecting

Hull fouling clause

and complexity of BIMCO standard

current commercial practice and latest develop-

Work is currently on-going to develop a standard

contracts and clauses has increased

ments in the law.

time charter clause to help regulate the alloca-

significantly. The current work pro-

Revision work began in July with a BIMCO

tion of costs and responsibilities for dealing with

gramme is a diverse list of projects ranging

team reviewing suggested amendments pro-

marine growth on the vessel’s underwater parts,

from the development of a time charter party for

posed by ASBA and brainstorming a few ideas of

which affects performance if the growth is due

offshore wind farm transfer vessels to a clause

their own. The team will meet again in September

to an extended stay in port on the charterers’

to deal with OFAC (US Office of Foreign Assets

in London and it is hoped that the revised edition

orders. The Clause will also provide for partial

Control) and similar regimes.

of NYPE will be ready for adoption by BIMCO’s

cleaning, for instance cleaning of the vessel’s

Documentary Committee when it meets to cel-

propeller and/or sea chests, recognising that

ebrate its centenary in Paris in May 2013.

cleaning may not be possible in the port or area

However, in between dealing with technical challenges and new international legislation, BIMCO is not overlooking its historical roots in

where the vessel has been sitting.

developing and revising traditional charter parties.

This project is aimed at providing owners

WINDTIME: time charter party for offshore wind farm transfer vessels

with a flexible solution to inspection and clean-

Increasing focus on renewable energy resources

ties and clear guidelines on suspension of


has resulted in a boom in the construction of

performance warranties.

The NYPE form is the industry’s most widely used

offshore wind turbine farms, predominately in

The next meeting of the Working Group will

dry cargo time charter form. The current edition

Western Europe, but also increasingly in other

take place in London in September 2012 and it is

dates from 1993. In the past 20 years there have

parts of the world.

hoped to have a draft ready to be put forward for

One of the most important projects this year is the revision of the NYPE 93 time charter party.

been a number of developments in the law relat-

The installation and maintenance of these

ing to time charters, as well as changes in com-

offshore wind farms is

mercial practice that have prompted the decision

reliant on sea transport

to revise the NYPE 93 form.

and a number of own-

The charter party is being scrutinised by a

ers are offering special-

team of chartering experts from BIMCO and the

ised fleets of vessels to

Association of Shipbrokers and Agents (ASBA),

assist wind farm own-

which are the copyright holders. The intention is


that the revision should take a “light touch” so as

transfer their personnel

not to upset the appeal that the NYPE form cur-

from shore to the wind

rently enjoys in the industry.

farm sites.


There is currently no

NYPE with additional or new versions of stand-

standard form of con-

ard clauses to help reduce the number of rider

tract available to use for

clauses that are commonly added by practition-

this purpose. WINDTIME

ers. Furthermore, where there is a perception of

aims to fill that gap. Drafting


adoption in November 2012.


team will look at ways of addressing the prob-

WINDTIME is expected

lem by clarifying the wording or expanding the

to be completed towards

provisions. The end product will retain the

the end of 2012.


fair apportionment of costs and responsibili-


The main objective of the revision is to update

or actual imbalance in the charter, the revision

ing, that is, when and where, as well as a

Horns Reef, offshore wind farm (courtesy of Vestas Wind Systems A/S)

theBaltic Autumn 2012

BIMCO POOLCON: pooling agreement

the use of armed/unarmed guards under a time

better dealt with in a separate free-standing

The Standard Pooling Agreement – POOLCON

charter party whereby the charterers request,

Virtual Arrival Clause. A first draft of the clause

– has been developed to provide shipowners

arrange and pay for the security guards – but

was reviewed by the Documentary Committee

and operators with a voluntary and negotiable

where the registered owners remain the party

in April this year. The aim is to produce a final

standard agreement to assist in establishing

signing the employment contract with the private

draft for consideration by the Committee when it

tramp shipping pools. POOLCON was adopted

maritime security company.

meets in November.

OFAC clause Foreign Assets Control) clauses in maritime con-

Radioactivity risk clauses: voyage charters and ship management

tracts – particularly those involving a US entity

The Radioactivity Risk Clause for Time Charter

– is increasing and such clauses often place

Parties – first published in April 2011 following

a considerable burden of compliance on

the leaking of radioactivity from the Fukushima

non-US owners.

Nuclear Plant in Japan – has been updated to

by the Documentary Committee in April 2012 and is currently being prepared for publication later this year. A second, agency-based pooling agreement is also planned.

SERVICECON: standard service agreement

The use of so-called OFAC (US Office of

BIMCO is working on a Standard Service

The intention with this project is to draft a

Agreement for the liner sector – a type of volume

standard wording that appropriately addresses

contract for containers. The agreement is being

the application of OFAC in other countries to

At the same time, BIMCO has received

developed by representatives from a number

owners and charterers – mainly to raise aware-

requests to develop similar clauses for the

of major liner operators working together with

ness of OFAC between the parties. BIMCO is

use in voyage charter parties and ship


working closely with the international Group of

management agreements.





take into account useful feedback received from users on how the Clause might be improved.

P&I Clubs on this project.

Shippers’ Forum. The target market for SERVICECON is the small- to medium-sized shippers, who sign the majority of such volume contracts. The project is due to be completed in 2013.

MLC 2006: recommended clauses

Arbitration: BIMCO dispute resolution clause BIMCO’s Standard Dispute Resolution Clause is

Although the ILO Maritime Labour Convention

being revised to incorporate a new Asian arbi-

(MLC) 2006 is not yet in force, the BIMCO

tration venue – Singapore – as a fourth choice

CONWARTIME 2004 and VOYWAR 2004 revision

Secretariat has received a number of enquiries

under the clause (the others being New York,

from concerned shipowners about the potential

London and a free choice).

BIMCO has initiated a revision of the War

consequences of the new legislation on com-


mercial contracts – particularly in the offshore






(code name: CONWARTIME 2004) and the

and ship management sectors.

What’s new?

War Risks Clause for Voyage Chartering, 2004

Of particular concern is the relatively broad

A number of new clauses have been published

(code name: VOYWAR 2004) to reflect com-

definition of “seafarer” under Article II of the

recently, including updated versions of the EU

ments received from members concerning the

Convention, which may lead to owners being

Advance Cargo Declaration Clauses for Voyage

interpretation of these clauses and to take into

held responsible for the health and welfare of

and Time Charter Parties; a Slow Steaming

account a recent decision at the English High

personnel who are not directly employed by

Clause for Voyage Charter Parties to com-

Court of Justice.

the owners.

plement the Slow Steaming Clause for Time

A specialist working group is currently being

To address this concern, BIMCO has formed

Charters that was published in December 2011;

formed and it is expected that work on the

a working group to further explore the poten-

and a clause to protect shipowners and ensure

revision will begin shortly, with a first draft ready

tial consequences on commercial agreements

the safety of the crew, vessel and cargo during

for review by the Documentary Committee in

and, if necessary, to develop some recom-

the transportation of solid bulk cargoes that

November 2012.

mended clauses to address this issue for incor-

can liquefy.

Piracy clauses

poration onto existing standard contracts such

A list of BIMCO-approved clauses can be

as SHIPMAN 2009, CREWMAN 2009 and

found on our website in the ‘Chartering’ section.


They are available to download free of charge

The Piracy Clauses are kept under continual

and are also available to users of BIMCO’s IDEA,

review to ensure that they continue to reflect

via the Clause Manager.

industry needs and practices. The next review

Virtual arrival clause

will take place after the summer.

Following the successful launch of the Slow Parties, work continues on the development of a

A peek into the future work programme

GUARDCON: time charter party clause

Virtual Arrival Clause. It was originally the inten-

Further to the projects mentioned above,

tion to address the concept of ‘Virtual Arrival’

BIMCO’s Documentary Committee is currently

Following the very successful publication of the

in the voyage charter party version of the Slow

considering engaging in the development of a

GUARDCON standard contract for the employ-

Steaming Clauses.

decommissioning contract for offshore installa-

Steaming Clauses for Time and Voyage Charter

ment of security guards on vessels, BIMCO will

However, the drafting group concluded that

tions and a newbuilding contract for containers

shortly start work on a GUARDCON Clause for

this would result in an overly complex slow

– and, when time permits, a time charter party

time charter parties. This clause will regulate

steaming clause and that virtual arrival was

for roll-on/roll-off vessels.

theBaltic Autumn 2012


Dry Bulk

Dry spell Negative, bearish and more of the same seems to have been the mood in recent weeks for the dry cargo market


hile Fearnley’s detected a cer-

on earliest redelivery dates, we have secured

significant capital expenditures to finance our

tain optimism for the “Brazil/

time charter revenues of approximately $58

newbuilding programme, which is something that

China iron ore trade on specula-

million, out of which $24 million has been


tions that Chinese mills will take

secured in 2012.”

challenging environment.”






advantage of falling iron ore prices”, in the

Low freight rates, lack of liquidity and the

capesize segment, fundamentals, it followed up

effect that the demands of Basel III were making


remain unchanged. As Jinhui Shipping and Transportation commented



on traditional lenders were other challenges.

Navios chief executive Angeliki Frangou said


the company was “pleased to report our

that were down by more than 25% in the

results for the second quarter of 2012. We


second quarter, “the dry bulk shipping market

had solid performance in a market environment

In announcing its second quarter results, Oslo

remains extremely challenging in 2012 against

that continues to be challenging. Our dual

Stock Exhange-listed Belships commented:

this economic backdrop where we face

focus during this difficult time has been on

“Record large stockpiles of coal in China in

overwhelming oversupply in tonnage, excess

what we can control – the efficiency of our

combination with a large excess supply of ships

shipbuilding capacity and generally lower

fleet and strength of our balance sheet. As a

can send bulk rates further down.

demand growth in dry seaborne trade”.

result, vessel utilisation is close to 100% and

“Growth in electricity consumption in China

our operating cost is about 33% below the

is the lowest in three years. 75% of the

industry average.

electricity in China is generated from coal-fired

Jinhui predicted more company defaults, and higher counterparty risks, against a backdrop of bank finance shortages. However

“We also reduced our break-even cost by

power plants, but we are seeing a transition to

it suggested that for those who were prepared

10% in the six months since 2011. In terms

other energy sources, including hydropower,”

to be patient, were well prepared and

of our balance sheet, net debt to capitalization

he continued.

had made liquity a priority in the past few

is 50%, an 80 basis point reduction in the six

years, there could be some interesting

months since 2011.

opportunities available.

Paragon Shipping

“The reduced demand from China will hurt the panamax rates in particular, since coal

“Consequently, we can continue to return

is the main commodity for this ship size. The

capital to our shareholders through dividend

order book as a percentage of the existing fleet

payments and declared a $.06 dividend for the

is largest for panamax and capesize.”

second quarter of 2012,” she concluded.

The company suggested that India might be

Michael Bodouroglou, chairman and chief

a saving grace as the country has only limited

executive of Paragon Shipping commented

stocks of coal and growing import needs.

on announcing the company’s second quarter


“New orders for bulk carriers for delivery

results that: “Since the beginning of 2012,

Funding ships on order has been an issue

in 2014 have picked up, the company said,

the drybulk market has been fluctuating at

for DryShips, which reported a net loss of

and the ships have significantly lower fuel

depressed levels and we expect the downturn to

$18.2 million for the second quarter.


Chief executive George Economou said:

“Belships’ vessels are sailing on long-

“We still have contract coverage of 44% on

term charters to a very reputable counterpart,

continue also during 2013, as the overcapacity problem remains. “Nonetheless, Paragon has secured the

the dry bulk fleet for the remainder of 2012.

and short-term market fluctuations will not

majority of its revenue days in 2012 and

However, unless the freight market recovers

affect the company’s earnings and cash flow.

2013, ensuring visible cash flows during this

the shipping segment will remain a drag on

Existing charters represent future revenues of

challenging period. As of June 30, 2012, based


$145 million.”






theBaltic Autumn 2012



rih Lüt i k fen ay ed in i


13 November 2012, The Ritz-Carlton, İstanbul, Turkey

Trends and opportunities for Turkish shipowners A unique mix of presentations, panel discussions, debates and social networking will provide a great platform for the industry to focus on the real issues facing Maritime Turkey and its business partners. Plan now to attend.

Discover the hidden opportunities in Turkey’s shipping industry – book your place now!

Welcoming speech: Suay Hayri Aka, Deputy Undersecretary, Ministry of Transport Maritime Affairs and Communications

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On the agenda • Global macro economic and geopolitical outlook • Operations / Running your shipping business • Staying afloat in a difficult market • Turkish shipyards – what’s next? Speakers include • Barry Rogliano Salles • Besiktas Shipyard • Clarksons Research Services Ltd • Geden Line • Kaptanoglu Holding • Lloyds Register • Ministry of Transport Maritime Affairs and Communications, Republic of Turkey • Torvald Klaveness • Turkish Chamber of Shipping • V. Ships




Shipmanagement, crewing and education

One stop shop for labour standards The Maritime Labour Convention comes into force in one year’s time. Plus: Queensland; Wilhelmsen; ISF; salaries; e-learning


he news that the Maritime Labour

for real change. It has the potential to make

An important feature of the convention’s

Convention will enter into force in one

a real difference to all seafarers, regardless of

enforcement will be the issue of “Maritime

year’s time has been welcomed by the

nationality or the flag of the ship on which they


industry and unions alike, but plenty of

serve. Its entry into force will be the culmina-

tions following an inspection. There is also





tion of over 10 years of collective effort by the

a requirement for ships to complete and


ILO social partners. At last, we will have a ‘one

maintain on board a “Declaration of Maritime

Federation and the International Shipping

stop shop’ for labour standards that we are

Labour Compliance”.

Federation (ISF) are united in welcoming the

confident will be genuinely implemented and

The MLC addresses a wide range of mat-

news that the ILO Maritime Labour Convention

enforced on a global basis. It means that all

ters, including the obligations of shipping com-

(MLC 2006) will enter into force in August 2013,

seafarers should soon be able to enjoy compre-

panies with respect to seafarers’ contractual

following the announcement that it has been

hensive protection of their fundamental rights. It

arrangements, the responsibilities of manning

ratified by 30 ILO Member States, the latest

also means good employment practice across

agencies, working hours, health and safety,

being Russia and the Philippines. The tonnage

the industry so that responsible employers, as

crew accommodation, catering standards, and

requirement of at least 33% gross tonnage has

represented by ISF, are not disadvantaged by

seafarers’ welfare.

also been well exceeded and currently stands

the irresponsible minority.”

training will be needed. The



at just below 60%.

Under the tripartite ILO process, ITF and

ISF Labour Affairs Committee Chairman,

ISF were responsible for negotiating the text

However, the ILO social partners warn that

Arthur Bowring, commented: “Governments

of the new convention with governments, on

shipowners will need to ensure they are ready

are to be congratulated for ratifying the MLC so

behalf of maritime employers and seafarers’

before the new regime of global labour stand-

quickly. This is a convention with a very wide

trade unions, prior to its adoption in 2006. ITF

ards comes into force. Significantly, the MLC

scope, incorporating labour and social security

and ISF, therefore, are keen to see the smooth

will be subject to port state control, including

requirements and therefore requires detailed

implementation of the MLC, 2006 when it

the potential for more detailed inspections

study and potential amendment of local leg-

enters into force in 2013.

if ships are thought not to comply, and the

islation to bring it into effect. We expect many

Bowring added: “The vast majority of com-

possibility of detention in serious cases of non-

more countries will ratify the convention over

panies should have no difficulty complying with

compliance or where hazardous conditions exist.

the coming year, so that entry into force will

the substance of the Convention, since in large

ITF and ISF emphasise that the MLC 2006

be backed up by truly worldwide enforcement.

part this is derived from existing ILO maritime

has been dubbed the “fourth pillar” of shipping

“This convention is the result of tripartite

standards and accepted good employment

regulation, alongside the IMO SOLAS, MARPOL

negotiation over a lengthy period, which means

practice. However, the enforcement mecha-

and STCW Conventions, and as such is likely

that the labour standards that we have all

nism is new, and it will be important to avoid

to be strictly enforced by flag states and port

agreed can be supported by governments,

teething problems when some of the more

state control.

shipowners and seafarers giving us a uni-

detailed requirements are applied and inter-

form global framework of sound employment

preted. It will therefore be most important for all

standards that is required by both shipowners

ship operators to ensure that they are ready.”

Dave Heindel, chairman of the ITF Seafarers’ Section,





seafarers’ bill of rights – is a genuine agent

and seafarers,” Bowring continued.

theBaltic Autumn 2012

Officers union Nautilus, the RMT and the ITF


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sent a joint letter to UK government ministers

President of InterManager, the international

“But this will only come to fruition if our

just ahead of the Philippines signing up to the

trade association for the ship and crew man-

resource employers can effectively manage

convention urging the UK government to follow

agement industry whose members represent

a range of workforce and labour issues and

suit quickly.

almost 250,000 seafarers. “Valuing our seafar-

minimise the adverse impacts of the severely

ers is a first step in attracting new recruits to

deteriorating workplace relations environment.”

According to Nautilus, the UK government’s delay in signing up is due to concerns over red

our industry,” he said.

One issue that has been under discussion

tape and the industry is arguing that the cost of

is fly-in, fly-out workforce practices as indus-

driving through the measures will be eclipsed

tries continues to rely on FIFO workers to ease

by the impact that may result from a failure to

Queensland skill shortages

ratify the convention quickly.

the pressure of skills shortages.

Deciding how to deal with skill shortages in the

“Employers are already experiencing the

According to the letter sent to ministers:

LNG sector has been exercising the minds of

effects of a tightening labour market with

“UK ships will be subject to detailed port state

companies in Queensland that have a number

increased competition driving up wages and

control inspection in other countries under

of major LNG projects in the pipeline.

staff turnover,” Knight said recently.

the convention, without the flexibility that UK

According to Australian Mines and Metals

“As the industry prepares to create an

ratification will bring and the UK will miss



additional 40,000 jobs by 2015, the pressure

an opportunity to be seen as a leading advo-

industry Minna Knight: “Central Queensland

on employers to meet demands for skilled

cate of decent living and working conditions for

is the heart of the state’s $160bn resource

labour will only intensify. AMMA’s advice to

all seafarers.”

industry, with record investment in major coal

the FIFO Inquiry is to support its use in the

and gas projects poised to generate significant

industry and coordinate regional development

economic benefits for decades to come.

to encourage greater localised workforces.”

The new convention has also been hailed a key component to attracting new entrants to the shipping industry.



“The region’s big three LNG projects under

“Establishing minimum standards for the

construction have a combined capital expend-

working conditions of the world’s seafarers is

iture of almost $50bn and, once in production,

Wilhelmsen solution

essential in ensuring best practice across our

will lead the state’s economy for decades.

Wilhelmsen Technical Solutions (WTS) is help-

industry, especially at a time when recruitment

Meanwhile, a strong pipeline of projects in the

ing leading cruise lines Holland America Line

is at a low level and the industry is struggling

Galilee Basin will soon make it the biggest coal

(HAL) and Seabourn Cruise Line to meet

to attract young people,” said Alastair Evitt,

producing region in Australia.

regulatory and safety requirements through


theBaltic Autumn 2012

Shipmanagement, crewing and education in-house training courses tailored to the

for Engine Cadets will be published later on

continues to shrink. This is both the legacy of

requirements of the companies’ respective

this year.

a lack of training in the 1980s during the pre-

The new ISF Book for Deck Cadets con-

passenger vessels.

vious downturn and the often perceived low status of jobs in the shipping industry.”

WTS has teamed up with sister company

tains structured on board training tasks formu-

Wilhelmsen Ships Service (WSS) to deliver

lated around the revised standards stipulated

the US Environmental Protection Agency

by STCW 2010, including new competences

(EPA) syllabus on Heating, Ventilation, Air

such as use of Electronic Chart Display and

Conditioning and Refrigeration (HVAC-R) and a

Information Systems (ECDIS), application

Videotel AND BIMCO joint e-learning

basic marine refrigeration training programme,



Videotel Marine International and BIMCO have

as well as providing training in onboard

and proactive measures to protect the

extended their joint e-learning initiative, offer-

welding inspection techniques.

marine environment.

ing the BIMCO eLearning Diploma Programme





Bjarne Snopestad, technical sales manager,

ISF is in discussion with the Philippines

HVAC-Refrigeration at WTS, says: “Training

and other important seafarer supply countries

capacity for specialist applications available in

to ensure that use of the ISF books are

This new facility allows ship officers on

the market today is limited. As a result, cruise

approved as a part of their national STCW

board to study the same BeDP modules as

lines can struggle to source personnel with

certification process.

their shore-based colleagues, whatever their

(BeDP) throughout the entire Videotel on Demand (VOD) fleet.

sufficient experience to operate and maintain

“Many shipping companies are training

vital equipment. This means they must pro-

cadets across their fleets from more than

According to Nigel Cleave, CEO of Videotel:

vide training in-house in partnership with an

one country and it is important that they are

”The programme enables students to build on

expert supplier.”

able to use a standard international book,”

their knowledge, acquire professional com-

says Hinchliffe.

petencies and contribute to their continuous

The EPA training course covers basic theory, including insight into main HVAC-R

on-board duties and sailing schedules.

professional development.

components and their functionality, system

“Now, with VOD on over 10,000 vessels

types, common operational problems and

Pay rises

worldwide, we can extend this opportunity to

troubleshooting guidelines. The students

The latest Faststream Maritime Employment

maritime students wanting to study in a flexible

are also given a study guide to help them to

Review shows that despite shipping indus-

and user friendly way whilst serving on board

prepare for the closed-book test required by

try woes, salaries across the sector con-

a vessel.”

the EPA.

tinue to rise. Based on the responses of 4000

The BIMCO eLearning Diploma Programme,

The welding training is designed to enable

shipping professionals working in all the

delivered as a stand-alone course on board, is

first and second engineers to evaluate welding

main shipping centres as well as seafaring

a highly-focused, e-learning package enabling

work done during newbuilding, dry dock-

officers worldwide, the survey by special-

maritime students the world over to access

ings and in service by flying squads and

ist maritime recruiter Faststream shows that

training encapsulating the more commercial

crew members.

half of the respondents reported a 5%+

aspects of the shipping industry.

Deck officer training The ISF has updated its On Board Training Record Book for Deck Cadets to meet latest requirements governing seafarers’ training. According to ISF Secretary General Peter Hinchliffe: “The competence of deck offic-

salary rise over the past 12 months. However,

Torben Skaanild, BIMCO Secretary General,

30% of seafarers reported a decrease in

says: “The creation of a unified training

their salary.

system for both seagoing and shore based

Other key findings of the survey include: • Average salaries for master mariners

personal is immensely important in creating a common understanding of the commer-

working on passenger vessels remain the

cial and practical issues facing the maritime

highest at $153K

industry and for preparing and planning

• Benefit packages offered by ship

the training of ships officers, eventually

ers is critical to safety and environmental

management companies have caught up


protection. The updated ISF book enables

with those on offer from shipowners

based functions.”

cadets and their companies to monitor and evaluate their on board training in a structured manner in accordance with the new STCW Convention requirements.” New regulations set out in the 2010 amendments to the IMO STCW Convention

• Asia based ship operators and





In addition to ship’s officers wanting to

shipbrokers are 20% better paid

broaden their knowledge, the diploma course

than their European counterparts

is aimed at students and young people enter-

• 9% of shore-based shipping professionals reported a salary drop in 2012 • Officers who move from sea to shore

ing a trainee or internship programme; staff from shipping companies, agents, brokers, banks and other financial institutions; legal

controlling seafarers’ training standards came

after six to 10 years at sea can expect a

firms; and insurance companies or govern-

into force in January 2012. Use of a training

significant rise in income over their career

ment organisations wishing to learn more about the shipping industry.

record book providing evidence of structured on-board training is mandatory for trainees

Commenting on the results, Faststream Group

The BeDP also benefits shipping practition-

seeking to qualify as ships’ officers, and the

CEO Mark Charman said:“Even though the

ers wishing to refresh and revise their shipping

ISF books are referred to as a model in the

shipping industry is being buffeted by poor


footnotes to STCW 2010. The STCW 2010

vessel earnings, rising costs and ever more

standards must be applied to new trainees

stringent regulations, salaries continue to rise.

from July 2013. A revised On Board Training Record Book

“The sector suffers from a skill shortage and the pool of highly qualified people

theBaltic Autumn 2012

The programme is backed-up by online forums





plenty of networking opportunities for young shipping professionals.


The Marshall Islands Registry service and quality are within your reach

International Registries, Inc.

in affiliation with the Marshall Islands Maritime & Corporate Administrators

tel: +1 703 620 4880 |


Under pressure Ship registries are being called upon to comply with international sanctions. Plus: Maritime Labour Convention; St Kitts



Companies established in Malta or Maltese

the Maritime Labour Convention have been

flagged should abide by the sanctions and

Among the main port state control regimes

much on the mind of ship registries in

co-operate in their enforcement, Transport

where its vessels operate, detentions under the

recent times

Malta said. Failure to do so would result in

Black Sea MOU fell to zero compared with six


in the first half last year.





Last month, the Tuvalu Ship Registry

enhanced supervisory measures 2010.

received official notice from the Government

In the Paris MOU region, the average number

of Tuvalu to proceed with the de-registration

of deficiencies per inspection dropped from

of independent Iranian tanker owner NITC’s

Maritime Labour Convention

six down to four and there was a 20%

tankers and any possible Iranian-linked vessels

The entry into force of the Maritime Labour

improvement in the number of ships with

that are flagged under Tuvalu.

Convention next year has been welcomed on

no deficiencies.

The US has been piling on the pressure to try and force ship registries to de-register Iranian




all sides, but many are urging the importance

Registrar Nigel Smith says: “The trend shows we are on track for our aim of PSC

of training ahead of the deadline.

Grey and White List ranking within two and four


The Isle of Man Ship Registry says it is

Howard Berman on the House Foreign Affairs

ready for ship inspections and will start to

Committee, releasing a statement after Tuvalu



“At the 20th session of the IMO Flag State

announced the deregistration of NITC ships

convention is ratified. It is urging shipping

Implementation sub-committee in March, it was

it flagged.

companies to co-ordinate their inspections

very encouraging to hear Paris MOU delegates

so as to save time and costs on MLC

make positive statements about the actions we

compliance investigations.

have taken in the past two years.”

“This reversal by Tuvalu effectively stops these Iranian tankers from operating, denying






years at most.





the Iranian regime oil revenues it desperately is

The Liberian Register says Liberia is

seeking to fund its nuclear weapons programme

continuing to prepare for the introduction of the

has implemented strengthened procedures

and support of terrorism.

convention, by training its personnel thoroughly

including risk profiling, daily analysis of

and well ahead of implementation.


“Iran is learning the hard way that we





will not relent in applying crippling sanctions

The register recently carried out a training

in the case of detentions and a “three

on the regime and others are learning

course in Southampton, after which 35 new

strikes and out” warning system for any

that evading international sanctions is a

MLC inspectors were certified, bringing to 135

repeat offenders.

losing strategy.”

the number of qualified MLC inspectors ready to

The registry’s commitment to inspection

conduct compliance and enforcement duties on

results is backed up by close liaison with the

behalf of Registry.

major PSC MOU regions.

Cyprus, Malta and Tanzania have also been targeted for US attention on the issue

St Kitts & Nevis has become the latest of

of sanctions.

five flag state signatories to the Washington

Malta’s merchant shipping directorate has issued a further warning to Maltese flagged

St Kitts & Nevis results

declaration condemning acts of violence against

ships that they must comply with the EU

St Kitts & Nevis says the first half results from

seafarers – joining Bahamas, Liberia, Marshall

regulations already in place on sanctions

port state control inspections of its ships have

Islands and Panama.

against Iran.

confirmed the registry’s progress since launching

theBaltic Autumn 2012


Corporate viewpoint Singapore Exchange

Advance Your Trading Strategies You have the Option “Risk management” is possibly one of the most

usually use call options to set a price ceiling of the


discussed topics in today’s market as its presence

underlying commodity. For example, a steel mill

The Calendar 2014 time charter rate for Capesize

is significant and its impact enduring.

that expects iron ore prices to rise in future can

vessels is currently quoting at US$14,500 per

purchase a call option to set the maximum price

day in the FFA market. A shipowner felt that

that it is willing to pay for them.

the time charter rate at US$13,000 per day is

In the new regulatory landscape after the 2008 crisis, government and regulators across the globe are stressing the benefits of central clearing

favourable and wishes to secure this income

to the stability of financial markets. The global


stream for 2014. The shipowner decides to lock

migration towards quality and trust has also

The current price of iron ore for delivery into China

in the rate by buying the SGX Capesize Time

seen global investment managers and investors

is trading at US$130 per mt. A steel mill is willing

Charter Put Options:

using Singapore Exchange (SGX) as their trusted

to pay up to US$150 per mt for 100,000 mt of

Quantity: 30 days (i.e. 30 lots) per month

Asian risk-management partner for financial and

the raw material to be delivered in December


commodity products.

2012 for its steel production. It is worried that the

Contract: Cal 2014 (i.e. Jan 2014 – Dec 2014) Premium: US$3,000 per day


Launched in 2006, SGX AsiaClear is Asia’s first

price might rise to US$180 per mt and decides to

and only platform for clearing OTC commodity

hedge the cost by using the SGX Iron Ore CFR

products. Among SGX AsiaClear’s feats is its

China 62% FE Call Options:

flagship iron ore swaps, with a new record volume

Quantity: 100,000 mt (i.e. 200 lots)

there would be 12 settlements (exchange of

in July 2012 of over 10.5 million tonnes cleared,


payments). For each settlement – similar to the

more than double the year before. To-date, SGX

Contract: December 2012

example on call options – the put options would

accounts for more than 90% of the global cleared

Premium: US$1 per mt (based on the prices

be exercised if they are In-the-Money (average

iron ore volume.

quoted in the market under certain price volatility)

spot price for the settlement month falls below

As the Calendar 2014 options expire monthly,


This trend of increasing volumes is mirrored on

the strike price of US$16,000) and left to expire

SGX’s Forward Freight Agreement (FFA) market

The above Call options position gives the steel

worthless if they are Out-of-the-Money. Taking

and it is set to grow with iron ore and FFA options

mill a right, but not the obligation to buy iron ore at

into account the option premium paid up front,

poised for launch in late 2012.

US$149 per mt in Dec 2012. To enjoy this right,

the shipowner has effectively secured a minimum

the steel mill pays a premium of US$1 per mt.

income of US$13,000 per day (US$16,000 –

As the Asian gateway for derivatives and commodities, SGX continues to enhance its

In December 2012, the following could happen:

platform to meet increasing market demands and

Scenario A: Average iron ore spot price for

Options are also flexible instruments for

the needs of its local and global customers.

December 2012 is US$175 per mt. The steel

participants to customise their hedging strategies

mill exercises its “In-the-Money” Call options

to manage their cost or revenue. Participants can

Swaps versus options

and makes a gain of US$25 per mt (US$175 –

also use a combination of calls and puts to lower

Swaps give users an obligation to buy or sell the

US$149 – US$1). This gain can be used to offset

their premium cost and yet achieving their overall

underlying asset, translating into an unlimited

the higher price of US$175 per mt that it pays for

objective of setting a floor or ceiling.

upside as well as downside potential. An option,

the physical purchase.

on the other hand, gives the holder a right, not

Scenario B: Average iron ore spot price for

To find out more about options trading and

an obligation to buy or sell the underlying asset.

December 2012 was US$120 per mt. The steel

hedging, please contact SGX on:

This means that the buyer of an option has an

mill’s Call option is “Out-of-the-Money” and it

Tel: (65) 6236 8388

unlimited upside potential, with limited downside

does not have to exercise its option to buy the


potential – the buyer can simply walk away

iron ore at US$149 per mt. It lets the options


without exercising his or her option to buy or to

expire worthless. The eventual cost per mt would

This advertisement is not intended for distribution

sell, and only forfeit the option premium that has

be US$120 on the physical purchase, plus the

to, or for use by or to be acted on by any person

been paid up front. This essentially reduces the

US$1 premium paid.

or entity located in any jurisdiction where such

may also earn income by writing (selling) options

Put options

applicable laws or regulations or would subject

to collect the options premium. The writing of

A Put option gives the holder/buyer the right

options is usually done in conjunction with holding

to establish a Sell/Short position in the

positions in the underlying swaps to minimise


directional price risk.

use put options to set a price floor of the

relation to, any investment product. Advice should

underlying commodity.

be sought from a financial adviser regarding the

distribution, use or action would be contrary to

capital outlay for hedging. Experienced traders

Call options


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suitability of any investment product before investing

A Call option gives the holder/buyer the right,

time charter rate for Capesize vessels will drop in

or adopting any investment strategies. Further

but not the obligation to establish a buy/long

future can buy a put option to secure a minimum

information on this investment product may be

position in the underlying commodity. Participants

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obtained from


theBaltic Autumn 2012


Staying afloat in rough waters How confident are you that you know the true value of your business on any given day? Are you 100% certain that you have the means to accurately calculate your fleet’s mark-to-market value? Javier Navarro contends that if you hesitate to answer these questions, your company’s future may be at risk


n the turbulent seas of the shipping industry,

standard vessel sizes and a limited number of

the highly personal and often skewed views of

understanding the true market value of your

standard routes. In reality, very few vessels are

the market that many companies use to perform

fleet is the difference between sinking and

a standard size or perform standard voyages.

their MTM valuations. It should go without

swimming. Volatility related to the number of

In order to determine accurate freight rates,

saying that this subjective input can result in very

available cargos and vessels, operating expens-

operators and charterers have to use complex

inaccurate numbers that obliterate all hope for a

es such as bunker fuel costs and other variables

formulas to adjust the indices to account for the

valid valuation.

mean that a fleet’s value has the potential to

proper vessel sizes and routes.

swing wildly from one day to the next.

This is frequently done using antiquated

Performing frequent mark-to-market (MTM)

spreadsheets, a method prone to errors that

When to return a vessel

valuations is an integral part of doing business,

lead to inaccuracies affecting the MTM valuation

The first three challenges lead to the creation of

and is critical to ensuring the financial health

of the entire portfolio. Overvalue the fleet and

an erroneous MTM valuation, but the fourth is

of a commercial shipping operation. However,

there will be a very rude awakening when an

what happens once those inaccurate valuations

due to the highly unpredictable nature of the

unexpected event requires funds that were

filter through to the decision-making process.

industry, the complexity of calculating freight

assumed to exist, but are nowhere to be found.

Time charter contracts specify the minimum

rates, and flaws inherent in popular valuation

and maximum time a charterer will use a vessel.

methods and tools, companies often end up

The accurate market value of a vessel must be

with inaccurate numbers. This provides a false

Valuing multiple voyages

known in order to determine whether it should

picture of financial standing that can result in lost

The second challenge is gaining a clear picture

be kept only for the minimum contracted time or

profits, faulty decision-making and, ultimately,

of another important factor in MTM valuations

longer. If the data driving that valuation is faulty,

the demise of an entire business.

– the value of multiple voyages. A vessel’s

then the resulting decision is also likely to be

Fully understanding the challenges associated

activity is often uncertain, particularly when

flawed, and a charterer may end up hanging on

with calculating accurate MTM valuations and

there are multiple voyages involved. In these

to a vessel that is losing money.

how to address them is critical to staying afloat

circumstances, a valuation can only be based

What makes this worse is that many

in the cutthroat shipping industry.

on a best guess about what the subsequent

companies limit themselves to using simplistic

voyages will be. This uncertainty – combined

in-the-money/out-of-the-money calculations to

with dependence on error-prone spreadsheets

drive valuations instead of other, more complex

Adjusting freight rates

– only adds to the difficulty of producing an

methods that are more accurate, purely because

The first of these challenges is adjusting freight

accurate MTM valuation.

the more complex methods are difficult to

rates. The value of commodities in most markets

manage in a spreadsheet. Companies using the

is transparent and easily determined at any point

in- and out-of-the-money calculation stand to

in time by looking at an index such as NYMEX.

Maintaining objectivity

lose a significant amount of capital, especially

But the rates that play a large part in determining

If depending on antiquated spreadsheets for

when the market is close to the level of the

a fleet’s MTM valuation are not so clear.

performing critical calculations is bad enough,

contracted hire rate because the formula is not

The indices for freight rates, provided on the

depending on subjective information is even

sophisticated enough to effectively account for

Baltic Exchange, only take into account certain

worse. And so the third challenge is overcoming

the frequent swings of the market.

theBaltic Autumn 2012



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Specialised solutions

calculations) that can be used to objectively

and scalable. It should be able to grow and

The good news is that the above challenges can

drive important decisions including how long

change along with your business.

be conquered with specialised solutions that

you should keep a vessel. You should also

comprehensively manage freight risk, chartering,

be able to easily value multiple voyages.

and vessel operations on a single, integrated

• Chartering management capabilities:

platform. They provide complete transparency

The solution ought to provide the ability

Accurate MTM valuations are critical to

across all aspects of the business, presenting

to manage all pre-fixture activities of a

protecting profits and remaining competitive

an accurate view of a company’s exposure and

commercial operation including voyage

in the maritime industry. Too many companies

financial standing in real-time.

estimating, cargo management, and vessel

are unwittingly jeopardising their bottom lines

Here’s what to look for when choosing one for

management. For charterers, it’s important

and incurring significant enterprise risk by using

your organisation:

to be able to analyse potential profit or loss

inaccurate information to determine their fleets’

• Robust freight risk management: It is key

before making an agreement to transport

value and make important business decisions.

that the chosen solution provides a real-time

cargo. You should also be able to easily view

These companies risk lost profits that

view of your position including time charter

all upcoming cargo commitments or open

could ultimately cause their entire business


Protecting the bottom line


tonnage positions, as well as view all vessels

to go into an irreversible decline. In order to

contracts of affreightment, cargo bookings,

and when they are coming open within a

maintain profit margins and remain competitive,

and financial options. The system should

given date range or specific zone.

commercial owners, charterers, and operators




must embrace technology solutions that ensure

with just a few mouse clicks and allow you

management: Operators should ensure

accurate MTM valuations and provide complete

to save “non-standard” routes in the system

the solution they select enables them

transparency across the enterprise.

that can be used to drive your calculations.

to keep track of day-to-day operations:

Companies that invest in scalable technology

It should also manage bunker exposure from

arrival, departure, loading, discharging,

solutions with the flexibility to address current

physical contracts and bunker swaps.

enable you to compute accurate freight rates

• Comprehensive



bunkering and disbursement accounting.

and future requirements can expect to reap

• Multiple valuation methods: It’s imperative

The solution should also maintain a technical

immeasurable returns by maximising profits,

that the system selected is able to perform

and commercial description of vessels for

minimising risks and, ultimately, achieving a

an accurate MTM valuation within seconds.

improved control and efficiency.

bigger bottom line.


It should also allow you to apply multiple

• Flexibility In addition, because constant

valuation methods in- and out-of the money

change is the norm in the shipping industry,

Javier Navarro is Freight Risk Solutions Manager

calculations; physical option intrinsic value

make sure you select a solution that is flexible

at Triple Point Technology

theBaltic Autumn 2012

Green shipping

Examining efficiency Are we overzealous in seeking to improve our industry and imitate others? Is the Ship Energy Efficiency Management Plan a new way to throw money away? Dimitris Lyras considers the questions


o reduce fuel consumption is, of course

wastage of money, especially when it comes to

people from the most global of sales forces need

of great value, and any product or

collecting data and analysing it.

to build relationships. They just build them faster,

service that can reduce fuel consump-

In a similar way, we have needed to be

based on mutual need between client and sales

tion is also. Furthermore, the effect of

careful about how people outside our industry

person. But once a relationship is built, it has

have advised us about risk management.

tremendous value for reselling to the same client.

consumption on the environment is one of the most fortunate alignments of commercial, social

So if PWC or Accenture or Tata or any one

and environmental responsibility with which we

of the world-famous consulting groups has a

Risk management

relationship with your company, the door is half

But the Ship Energy Efficiency Management

This covers every decision that humans make

open for them to sell you anything they can.

Plan (SEEMP) compliance issues are currently

from crossing the road to planning a career

Almost every consultant, from a tiny one man

quite simple and certainly are not by any means

move. But in recent years especially in the

show to a team of consultants from IBM, has

a reason to rush out and buy something.

tanker industry, it has been introduced as a new

been trained in some large company at some

There is, however, some complexity. This is

science. There has been a great deal of bullying

time in their career.

more commercial than anything else. SEEMP, as

of ship operators to adopt risk management

with most issues to do with fuel consumption, is

methods that are derived outside our industry.

have ever been confronted.

As we know, these companies sell to more than one industry. So even the people who leave

a Pandora’s box of complexity from a commercial

Risk management is an intuitive exercise

these large consultant groups and start their

standpoint. The answer to this complexity is the

that we do subconsciously. Decisions are taken

own businesses are accustomed to selling to

same as it has been for many years in shipping:

subconsciously while churning the experience

more than one industry. This is the real reason

we have to be really careful.

and relevant knowledge we can muster at that

why risk management root cause analysis,

Dealing with the oil record book, the oil

crucial time of decision making – not much

corporate social responsibility, health, safety and

transfer log, daily consumption, the ballast

different for most animals by the looks of it.

environmental concerns and even accounting

transfer log, the earnings related speed

Certainly domestic animals learn about danger

are often so incomprehensible and seemingly

adjustments, virtual arrival, the measurement

and about opportunity during their lives, not

ill-adapted to shipping.

error at sea (if there is no flow meter), the power

through classroom work or statistics.

The consultant has a methodology that he or she learned with a lot of hard work and

consumed in the main engine, the tedious

So why are we so fixated with statistics and

reporting, and keeping charterers happy requires

numbers in risk management? Why are we

some co-ordinated practicality.

introducing mind-numbing depictions of risk

But the generic part of reducing fuel

People outside our industry, such as

rather than more impressive depictions. And

consumption or the generic part of risk

manufacturers of sensing instruments, software,

why is SEEMP likely to be as awkwardly adapted

management is only a small part of the

such as data collecting and processing systems,

to shipping as risk management has been?

solution to either problem. Certainly recording

understandably wants to use to its fullest.

and, of course, hardware such as propeller

The answer may not be simple, just like

measurements is generic for fuel consumption

shrouds and scrubbers, can in due course

the answer to why measuring everything to do

and so is a basic understanding of mechanical

provide valuable products and services to

with fuel consumption every second or every

engineering and fluid mechanics. But how far

satisfy the quest to protect the environment and

day may not be much use for reducing fuel

can this take the practical application of SEEMP?

consume less fuel or less expensive fuel.

consumption or complying with SEEMP.

How far can statistics help in reducing risk

However, their understanding of how our

The answer has to do how sales are made.

when the data is sparse and the context of each

industry works commercially will not be obvious

A sales executive is a relationship builder and

experience or data point could be significantly

and there can be a lot of misunderstandings and

always will be. Even the most experienced sales

different? How statistical is this decision?

theBaltic Autumn 2012


Oxford Analytica

Organised crime entwines with state in West Africa Criminal groups are often closely connected with the political elite


he dynamics of transnational organ-


(based on UNODC-reported seizures). Illicit

ised crime have shifted over the past

Since 2008, organised criminal activity in West

trade in other drugs (including counterfeit

five years, with a decline in coastal

Africa has benefited from a variety of factors.

pharmaceuticals) has increased, notably in

cocaine trafficking, an expansion of oil

They include:

Nigeria. UNODC has reported significant

• Regime change in Guinea, Guinea-Bissau

seizures of methamphetamine destined for

theft and piracy in the Gulf of Guinea and the rise of kidnapping in the Sahara. Transnational organised criminality exists parallel to and, at times, entwined with legal commercial activity in the region. Rather than being confronted by the political and security elite, criminal groups are often closely connected with or covertly sanctioned by them.

East Asia in several coastal states (see West

and Ivory Coast • The rise of insurgent (and especially Islamist) • The collapse of the Gaddafi regime in Libya

• Oil theft and associated piracy in Nigeria are increasing and dwarf any other regional criminal enterprises. • Security forces’ incentive to confront criminal groups will be small as long as they benefit

Most established crime groups are likely to

Liberia and the Ivory Coast, and the adoption

South America

of Kimberley Process certification standards



by most producer states (see International: Kimberley Process unity remains fragile – November 16, 2011). Surges in gold prices

“Crime groups are likely to deem countries with armed conflict less attractive”

and artisanal production in these countries and Guinea, Mali, Niger and Burkina Faso mean that gold has probably taken over from diamonds (see West Africa: informal mining challenges gold firms – May 21, 2012). • Small arms trade. Evidence of surges in arms trading after conflicts in Guinea-

However, such criminal activity has also had to

Ivory Coast is limited. However, the conflict

contend with:

in Libya released new stocks of arms into

• Reinforced European coastal surveillance

Mali, Niger and probably Nigeria (see Libya/

and interdiction

deem “ungoverned spaces” and countries

• The work of international partners, notably

with armed conflict less attractive as markets,

the UN Office on Drugs and Crime (UNODC),


in bolstering security and justice capacities.



Bissau, Sierra Leone, Liberia, Nigeria and

What next?



imposition of UN sanctions on Sierra Leone,


from the groups’ revenues.





• Corruption rather than chaos or intimidation of criminal penetration.


diaspora presence in South-east Asia and

• The

labour in recessionary Europe.

appears to be the primary determinant factor

• Illegal

Diamond trading has been curtailed by the

and associated conflict

• Declining demand for some illicit goods and


Africa: drug funds will further distort politics – September 27, 2011).

activity in the western Sahara


Africa: revolution triggers fallout across Sahel –September 22, 2011). • Human trafficking. Human trafficking across the Sahara, for long a major issue, has been impeded by the conflict in Libya;

are disrupted. The most prevalent criminal activities in the

the extended Islamist insurgency in Mali and

the form of job creation – despite recent impres-

region include:

Algeria; the decline in demand for casual

sive GDP growth across the region, means

• Drug trafficking. Cocaine trafficking to

labour around the Mediterranean; and the

than many young people will seek alternative

Europe, the most widely reported criminal

earlier (2005-06) reinforcement of border

livelihoods by engaging with these groups.

activity in the region, peaked in 2007

defences around Spain and the Canary

The lack of qualitative growth – principally in


theBaltic Autumn 2012

Oxford Analytica Islands (see International: economic crisis



powerful armed forces have several times vetoed

fuels human trafficking – June 18, 2010).

demands (see International: ransoms grow




politicians’ attempts to curtail their impunity and

• Oil theft. Nigerian oil theft (also known as

despite improved response – February 11,

economic interests, notably in the April 2012

“bunkering”) is now by far the highest value

2011), fuelling the Saharan arms market and

coup (see Guinea-Bissau: military seeks a proxy

criminal enterprise in the region. Its rise

the militants’ ability to control territory and

civilian front – April 18, 2012). A construction

correlates with the 2009 amnesty granted to

trade routes.

boom in Bissau and the anecdotal support of

militants in the Delta, which allowed relative

some youth for the traffickers suggest that there

stability to return to the oil-producing region

is some trickle-down from the drugs trade within

(see Nigeria: oil theft threatens amnesty

Organised crime and the state

gains – June 20, 2012). The government

Regional organised criminal activity is weakly

has been slow to respond to the challenge,

correlated with the activity of armed or insur-

increasingly diverting security resources to

gent groups. To some extent, the threat posed

Mali and Niger

the north, where attacks on state institutions

by criminal actors is proportionate to the size

Successive revolts by Tuareg in the Sahara have

by militant Islamist group Boko Haram are

of their revenues relative to state resources.

been labelled criminal. For example, the parallel

on the rise (see Nigeria: insurgency feeds on

However, this rests on the assumption that the

insurgencies in Mali and Niger of 2007-09 were

incoherent security aims – May 14, 2012).

interests of organised criminals are antithetical

blamed on “bandits” and traffickers seeking to

• Piracy. There has been a dramatic rise

to state-building, or more pernicious than the

control trans-Saharan frontiers. Nevertheless, it

since 2010 in pirate attacks, principally

interests of other powerful economic actors,

is more difficult to trace a criminal causality for

targeting oil tankers, in the Gulf of Guinea

and that political and security leaders want

the early 2012 take-over of northern Mali by

(see International: Nigerian pirates pose

to combat criminal activity. The assumption is

ostensibly separatist and Islamist groups (see

increased threat – August 15, 2012). UN

false, as is clear in several countries.

Mali: momentum for intervention will steadily

Security Council resolutions specifically

an otherwise moribund economy.

grow – July 12, 2012).

called for international support to counter this

While ransoming hostages has certainly


funded some factions, isolation of the north is


In-fighting between security elites since 2008

likely to have undermined its viability for much

international aid workers are prime targets

appears to have had some impact on the

trafficking. Rather, it is the perceived failure of the

for kidnappers, notably in Algeria, northern

country’s attractiveness to drug traffickers,

state in the northern regions that seems to have

Mali, Mauritania and Niger. Several countries

particularly those with links to Latin America. The

driven many to revolt.

in October 2011 and February 2012. • Kidnapping.



Nigeria Failure to seriously disrupt a criminal enterprise that requires heavy infrastructure to capture, refine and/or export crude in massive quantities has led many to question the commitment of national and local government and the security forces. $7bn is estimated to be lost annually through diversion by politicians of funds allocated to subsidise domestic fuel sales. At least 6-9% of GDP is being diverted through criminal theft of oil production and subsidies (see Nigeria: scandal dents credibility, but may fuel reform – May 3, 2012).

© Oxford Analytica 2012. All rights reserved. No duplication or transmission of this document is permitted without the written consent of Oxford Analytica. Contact us at: contacts/ or tel +44 1865 261 600 or in North America 1-800 952 7666 West Africa

theBaltic Autumn 2012


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only field in which we are experts. You can also count on us when it comes to I UAE +971 4 4357577

United Arab Emirates

Terminal velocity There have been a number of initiatives in recent months, including a new pipeline that will reduce UAE dependence on shipments of oil through the Straits of Hormuz. Plus: DP World; Port Rashid; Al Hamriya; Court of Cassation


ne of the key strategic projects in the

DP World upbeat

Port Rashid

United Arab Emirates (UAE) recently

DP World announced a profit before tax

DP World-operated Port Rashid Passenger

has been the development of a new

of $310m for the first half of 2012 at the end

Terminal has recently been upgraded, leading

export oil terminal at Fujairah, which


to the resumption of passenger connections

recently began shipments offsetting reliance on Arabian Gulf oil terminals while reducing congestion through the Straits of Hormuz.








economic challenges. Commenting on the results, DP chairman

between Dubai and port cities across the Gulf region.

Sultan Ahmed Bin Sulayem said that in spite

Mohammed Al Muallem, senior vice president

Oil is delivered by pipeline from Habshan

of the challenges to the global economy in the

and managing director, DP World, UAE region,

in Abu Dhabi – the current collection point for

past six months, “It is very encouraging that

said: “For 40 years, Port Rashid has played a

Abu Dhabi’s onshore crude oil production –

DP World has been able to show good profit

central role in connecting Dubai to the region

terminating in Fujairah. The 48-inch-diameter

growth across its global portfolio, led by its

and the rest of the world. Since the transfer of all

pipeline has been designed to transport some

key markets of Africa, the Middle East and

container vessel operations to Jebel Ali Port four

1.5 MBPD of crude oil from Abu Dhabi Company

South America.”

years ago, we have focused on developing Port

for Onshore Oil Operations (ADCO) facilities at Habshan over a distance of 380 km to the export oil terminal in Fujairah.

The group’s investment in the first six months totalled $260 million.

Rashid as a centre for passengers visiting Dubai. We have developed the largest cruise terminal

“Looking across our regional portfolio,

in the region there and now we are delighted to

The scale of the project was immense and

the Middle East, Europe and Africa region

once more welcome regional ferry passengers to

encompassed the construction of pumping

delivered an excellent performance with an

the Port Rashid Passenger Terminal in the very

stations, a main oil terminal (storage capacity

18% improvement in EBITDA to $477 million

heart of Dubai.”

of eight million barrels) and offshore loading

and further improvement in EBITDA margin to

In the first six months of the year, DP World

facilities at Fujairah, in addition to the installation

46.3%. This reflects the strategic positioning of

handled 28.2 million TEU across its global

of the main pipeline.

our terminals towards the faster growing and

portfolio of over 60 terminals, 7.5% ahead of the

stronger economies in this region, mitigating

same period last year. Like for like gross volume

weaker trade across continental Europe.”

growth was 5.4%.The Asia Pacific and Indian

It is understood that the new arrangement will mean that as much as three quarters of crude shipped from the UAE will eventually go

Group chief executive officer, Mohammed

Subcontinent region was the main driver of this

Sharaf commented: “I am particularly pleased

growth, reporting a 12.1% increase in volumes

The first ships came as Iran threatened to

to see our terminals handle an increasing

to 13.3 million TEU. This strong performance

close the Straits of Hormuz in retaliation for

number of the largest vessels in response to the

was driven by growth across terminals in Asia

EU sanctions against Iranian oil imports. P&I

industry trend.

Pacific as well as new capacity across the region

by that route.

Club cover is no longer available for ships

“The quality of our assets is reflected in

carrying Iranian petroleum products. The new

our underlying revenue growth, which again

The Europe, Middle East and Africa region

export terminal means the UAE will no longer

exceeds volume growth. These robust results

grew 3.2% to 11.6 million TEU. Weaker trade

be dependent on shipping oil through the

show our portfolio is well diversified in today’s

across Europe masked the stronger performance

Straits, through which about 35% of the world’s

more challenging markets and well placed to

across the rest of the region, including in Jebel

seabourne oil trade passes.

continue to outperform in the future.

Ali, which handled 6.6 million TEU in the first six

theBaltic Autumn 2012

as a whole.


United Arab Emirates

months of the year, 7.3% ahead of the same

long wharf with a capacity to accommodate 190

bill of lading. Mere reference in a bill of lading

period last year.

fishing boats.

to the conditions of a charterparty, without

“The number of containers handled across

The changes will strengthen Al Hamriya Port’s

express reference to the arbitration clause, is not

our portfolio of global ports has increased again,

traditional capability and leverage the strategic

sufficient to incorporate the arbitration provisions

with 28.2 million containers handled in the first six

location of the port in the centre of Dubai.

into the bill of lading, as was noted by the Dubai Court of Cassation.

months of the year. The global macroeconomic

“It should also be noted that if a party wishes

uncertainty seen in the first quarter of the year has continued, and if anything, has increased

Court of Cassation judgment

to object to the jurisdiction of the UAE court on

through the second quarter. Despite this more

The Dubai Court of Cassation has recently ruled

the grounds of an arbitration clause, this must be

challenging environment, the majority of our

on the incorporation of charterparty terms in a

done at the very first hearing, otherwise the right

global portfolio continues to show resilience

bill of lading under UAE law. The judgment in the

to object will be lost and it will be assumed that

and we remain committed to delivering an

case of Al Buhaira National Insurance Co v The

the parties have submitted to the jurisdiction of

improved operational and financial performance

Shipping Corporation of India Limited particularly

the UAE court.

over 2011,” Mohammed Al Muallem concluded.

considered the incorporation of an arbitration clause from the charterparty.

“The UAE is a civil law jurisdiction and there is, therefore, no system of binding precedent.

According to Ince & Co, whose Dubai office

However, the decisions of the Dubai Cassation

Al Hamriya port development

handled the case for the successful owners

Court can be persuasive when used as

June saw the completion of the first phase of

Shipping Corporation of India, “This is an

the basis for legal argument in subsequent

the Al Hamriya port development plans aimed

important case because it determines that

cases. Only in rare cases will the judges of

at modernising and upgrading the port to meet

the UAE court will recognise and uphold the

lower courts contradict the findings of the

customers and the fishing community.

incorporation of a charterparty/foreign arbitration

Cassation Court.

The first phase included the upgrading of one

clause into a bill of lading even where the

“Cassation Court decisions are, therefore, a

million square feet of yard space, which has been

details of the charterparty in the bill of lading are

form of guidance as to the courts’ likely attitude

paved, metal fenced, and gated.

left blank.

in similar matters. This judgment will form part

The second phase includes a modern facility

“In this case, the UAE court held that, where

of such guidance and is likely to be relied upon

for the exclusive use of the fishing industry at the

the words of incorporation in a bill of lading

in any cases where either party is seeking to

port. Construction work has already begun on

include a clear reference to the arbitration clause

object to court proceedings on the basis that

the facility and is due to be completed this year.

of a charterparty, then that arbitration clause

arbitration provisions from a charterparty have

The development will create a new 1,650-metre

will be deemed to be incorporated into the

been incorporated into a bill of lading.”


theBaltic Autumn 2012


Natural selection International oil majors are planning exports of natural gas. Plus: Fednav; new world economies; container study; Sydport


NG Canada has applied to the National

Fednav inks deal

New world economies

Energy Board for a license authorising

Fednav Limited, the largest international maritime

As Warren Jestin, SVP and Chief Economist

the export of up to 24 million tonnes of

bulk carrier in Canada, has announced a deal for

of Scotiabank, told the recent Canadian

liquefied natural gas (LNG) per year, for a

six new vessels in partnership with Sumitomo

Shipowners Association International Joint

term of 25 years, from its proposed LNG export

Corporation and Oshima Shipyard, the green

Conference, the ongoing out-performance of

terminal near Kitimat.

ships will be built in Oshima Shipyard, based

new world economies has big implications


near Nagasaki. The 35,000-ton bulk carriers,

for Canadians.

Corporation (KOGAS), Mitsubishi Corporation,

which are especially equipped for navigating

“These nations have driven demand for a

and PetroChina Company Limited announced in

in ice, are highly flexible vessels well suited to

broad array of commodities, giving our resource

May that they are jointly developing a proposed

international trade, their size is adapted to the

exporters essential support at a time of

liquefied natural gas export facility near

dimensions of the St Lawrence Seaway.

generalised weakness in traditional markets.





Kitimat, British Columbia, naming the project

Even with the recent deceleration in new world

Environmental benefits

growth – and declining natural gas earnings

Shell holds a 40% working interest, with

The new vessels represent a major step forward

associated with depressed prices and volume

KOGAS, Mitsubishi and PetroChina each

in terms of environmental improvements, Fednav

sales to the US – commodity exports revenues

holding a 20% working interest. “Our combined

said. They will consume 20% less fuel and

are up 8% in the past year and almost 70%

expertise and our focus on technological

produce 20% less emissions than vessels built

during the past decade,” he said.

innovation in delivering safe and environmentally

by Oshima Shipyard for Fednav 10 years ago,

“As long as these nations continue to

sound LNG projects around the globe, ensures

ships that the company said were already

outperform, Canadian growth is likely to remain

that our LNG Canada project would be well-

among the most efficient of their time. This will

strongest in our resource-intensive Western

suited to deliver long-term value for British

contribute significantly to Fednav’s objectives

provinces and in Newfoundland and Labrador.”

Columbia and increase access to new export

of reducing GHG emissions in its fleet on

markets for Canada,” Jose-Alberto Lima,

a continuous basis. The fuel-efficient engines

Shell’s Vice President LNG Americas for Shell

will also reduce nitrogen oxide emissions by

Container study

Energy Resources said at the time the project

approximately 20%.

The US Federal Maritime Commission released

LNG Canada.

was announced.

All of the vessels will receive the CLEAN-

a study on US Inland containerised cargo

The proposed LNG Canada project would

DESIGN notation class society DNV. “The

through Canadian and Mexican ports in July

include the design, construction and operation

environment is one of our top priorities when we

after concerns had been raised about the extent

of a gas liquefaction plant, and facilities for

consider the design of a new vessel,” explained

to which the US harbour maintenance tax might

the storage and export of LNG, including

Paul Pathy, Fednav president and co-CEO, upon

encourage US-bound container cargo to move

marine off-loading facilities and shipping. LNG

signing of the contract. “It is very important to

to Canadian and Mexican seaports.

Canada would create significant economic

us and also to our customers that our vessels

Commenting on the study, Robin Silvester,

benefit for the province and local communities,

not only respect but exceed environmental

chairman of the Association of Canadian Port

creating thousands of jobs during construction

regulations in Canada and worldwide.”

Authorities said: “Canadian port authorities







operate as financially independent entities

Fleet delivery

that compete effectively with ports across

Shell Canada confirmed last month that it

The vessels will be delivered between 2015 and

North America. While US ports fund harbour

would be going ahead with its involvement with

2016, as part of a series of 21 new ships added

maintenance through a nationally imposed fee,

the Kitimat LNG project – which is targeted at

to Fednav’s fleet since January 1, 2012. Fednav

Canadian ports fund harbour maintenance, like

the Chinese market – alongside its substantial

has the world’s largest fleet of ice-class vessels.

dredging, through harbour dues set by each port

partners said.

investment in shale gas exploration in China.

authority and dependent on cost.

theBaltic Autumn 2012


Corporate viewpoint Canfornav

Innovative approach Canfornav discovered the ideal system to guide it through the forthcoming ECA zone requirements


he efficient running of a vessel has taken

having to keep track of the many variables

cheaper. Our Chartering department liaise

on a new dimension with the escalation of

when planning a voyage. Fuel requirements, a

closely with Operations, prior to fixing to avoid

fuel prices and recent environmental regulations

relatively simple calculation process, now has

any confusion on cargo carrying capacity,

such as the North America ECA zone that have

to be further analyzed to take into account

which could lead to disastrous consequences

resulted in new challenges for both on board

purchase of regular fuel, low sulphur fuel, diesel

and legal implications.

and shore personnel.

oil, low sulphur gas oil. Even if the vessel is

Canfornav is using technology to assist in

To say that the work load has more than

not proceeding to an ECA zone, the possibility

keeping track of bunkers on board and being

doubled for the operator of a ship, would

of the ship trading there on her next voyage

consumed on their ships. The operator is

be putting it mildly. For those working in

has to be considered. Are low sulphur fuels

aware of the fuel in each tank and from which

companies, whose ships are not on a dedicated

available at the next port or do you have to

tank fuel is being consumed, on a daily basis.

run, the difficulties and problems are even more

bunker when and where available, sometimes

A bunker management plan is also in place to

complex and time consuming. Multiply these

at the expense of cargo and the bottom line?

ensure optimum utilization of the vessel’s fuel

problems if the ships handled by each operator

Not an easy decision, as many factors have to

capacity. Ship and shore are now on the same

vary in size and type and you have a good

be considered, such as fuel tank capacity and

page and communications in this area are now

idea of the dedication, diligence and training

remaining on board bunkers at various stages

much clearer and consequently, decisions in

required to operate and navigate a vessel

of the voyage, all have to be monitored regularly

this respect are somewhat easier to make.

through the minefield of patchwork regulations

to ensure that empty tanks are available at

Our Officers on board, our Chartering and

that exist today from the E.U. to California to

the scheduled bunker port to avoid mixing of

Operations departments are all motivated to

the various States in the Great Lakes.

fuel from different areas, which could result

run our ships economically and efficiently;

This has made life for the individual operator

in missed opportunities to maximize bunker

giving them the tools to accomplish this and

sitting in the office a lot more challenging by

purchases at a port where fuel is relatively

improve overall performance is our goal.

Mandarin in the Welland Canal


theBaltic Autumn 2012

Canada Sydport

Route from Europe and the Mediterranean,

relentlessly and successfully pursued service

The Cape Breton Regional Municipality (CBRM),

offering considerable strategic advantages for

improvements through collaborative supply

located in Sydney, Nova Scotia, launched a

ocean carriers.

chain efficiency programmes and offered more

marketing campaign to promote the strategic

CBRM says the port also offers unrestricted

reliable service thanks to labour agreements.

advantages of developing a container shipping

double-stack rail access to major inland cargo

port terminal in Sydney harbour in July.

clusters in the US Midwest, along with the

“In recent years, Canadian ports have

“Further, the Canadian supply chain is in the midst of generational improvements to road and






potential for network feeder services along the US east coast.

rail infrastructure, like highways and overpasses,

approximately 500 acres of greenfield waterfront

thanks to strong strategic leadership from senior

land for the purpose of building a container

levels of government and collaboration with

terminal and says that it is looking at the

Lower costs

the private sector. Multiple security and cargo

possibility of linking up with a terminal operator

The authority believes that a container terminal

screening processes have also been effectively

on a long term basis.

at Sydney will be cheaper to build and have the

and efficiently integrated into Canadian supply chain and cargo handling activities, in many

lowest operating expenses per teu.

No restriction

All the necessary permits have been received

cases as a direct result of the long-standing

The greenfield site being acquired by CBRM sits

for construction and labour agreements are

close co-operation between US and Canadian

on the edge of a newly dredged channel into the


border and security agencies,” he continued.

Port of Sydney that can accommodate without

Longshoremen’s Association, AFL-CIO, (ILA)

any restriction the world’s largest container

to ensure Sydney’s competitive advantages


are realised.

“ACPA views the US FMC Report that found that carriers shipping cargo through Canadian





and Mexican ports violate no US law, treaty,

Dredging was completed in January this year

CBRM mayor John Morgan commented:

agreement, or FMC regulation as one step in the

with local and federal funding. Dredge spoils

“For the people and the economy of our region,

right direction, as it underscores the importance of

have been used to create a 150-acre expansion

we are launching this effort with the full support

ongoing free trade between Canada and the US.

of the greenfield site directly adjacent to the Port

of our community to develop the greenfield

of Sydney channel.

site as the future location of an international

“ACPA will move forward with cautious optimism that healthy competition, as well as

The Port of Sydney is North America’s

close co-operation, will continue to take place

easternmost harbour and it is the closest to

“The potential for job creation and long-

between Canada and the US, as it has for many

the Suez Canal. It sits just six miles from

term economic growth is critical to the future of

years,” he concluded.

the sea buoy marking the Great Circle

Cape Breton.”

theBaltic Autumn 2012

container terminal.


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Breaking news There’s new activity in the breakbulk segment as Gasunie and Vopak sign an agreement with Shell as their first customer for LNG Break Bulk terminal at Rotterdam. Plus: Intermarine and Scan-Trans; Irish volumes; Metro Vancouver; Rickmers Group


Intermarine and Scan-Trans



Intermarine and Scan-Trans have merged

of Intermarine. “The industry will continue

distribution in the Netherlands and

to form a joint project and heavylift cargo

to consolidate and the company will have

Northwest Europe.

company. The companies will trade under the


Intermarine name.

our customers.

opak and Gasunie plan to build an




The LNG breakbulk terminal is to be











constructed at Maasvlakte near Rotterdam and

“We believe the company will set the

“With the strength and flexibility of the best

aims to make LNG available for distribution to

standard for customer service and value in

balance sheet in the business, we are well

marine bunkering and truck fuelling stations.

the industry,” said Al Stanley, chief executive

positioned to continue our growth as both

The plan is to build this independent, open

of Intermarine. “As the industry consolidates,

service and asset opportunities arise.”

access terminal for the small-scale distribution

global breadth and laser focus on customer

of LNG by both land and sea. The new

needs will define the winners.”

Irish traffic

terminal is planned adjacent to the Gate

“Consolidation is the key to success in

terminal and both terminals will be connected

our line of business and Scan-Trans has

Irish breakbulk volumes continued to decline

by pipeline. The new terminal will receive

been looking for the ideal partner for some

by 3%in the second quarter, with no rise

LNG by pipeline from the Gate terminal and

time,” noted Lars Juhl, CEO of Scan-Trans

in demand for construction-related materials,

break down the LNG into smaller quantities for

Worldwide. “We are therefore thrilled to merge

such as timber, steel or cement, according to

further distribution.

with Intermarine, a company we feel is the

the Irish Maritime Development Office. Looking

As yet, it consists of one jetty and two

perfect match in business, culture and values.”

at the traffic data to mid-year shows that, for

truck loading stations, but it is expected to be

By consolidating the Scan-Trans and

the first six months, breakbulk traffic declined

operational at the end of 2014, subject to the

Intermarine fleets, the merged company can

relevant approvals being obtained.

expand its customer coverage with more than

“The outlook for the remainder of the year is

50 multipurpose and heavylift vessels with

flat, with no significant uplift in volume demand

lifting capacities of up to 800 metric tons.

on the key trades expected,” said Irish Maritime

The LNG breakbulk terminal constitutes the start of a small-scale LNG chain in the

by 7%, IMDO said.

Netherlands and northwest Europe. It is

Annual turnover for the company will be in

Development Office director Glenn Murphy.

supported by the Dutch government and fits

excess of $500 million. The largest shareholder

“The continued economic uncertainty globally is

in the recently announced “Green Deal” for the

of the merged company is private equity firm

also having an adverse impact on international

Wadden and river Rhine area, a public-private

New Mountain Capital, with more than $9 billion

shipping markets, with several leading shipping

partnership aiming to introduce LNG as a clean

under management.

lines downgrading their volume forecasts

transport fuel for road trucks and shipping. Eelco Hoekstra, CEO of Vopak, said: “We are pleased to welcome Shell as our launching

Such financial backing ensures Intermarine the capability to grow both organically or through acquisitions in the future.

for 2012. “Manufacturing orders across Europe also show little signs of imminent improvement as

customer for our joint LNG Break Bulk terminal

“We believe that success during the next

near Rotterdam. This is a major step in

three years will be defined by providing all

facilitating LNG as an effective alternative for

of our customers with the best possible

“Going forward, two other caveats also need

traditional transport fuels.”

cargo solutions across their global networks,”

to be taken into account. First, the weakness of

theBaltic Autumn 2012

the euro zone’s debt crisis threatens some of Europe’s major economies.



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the euro against most major currencies could

Bulk volumes rose to 42.4 million tonnes,

provide some positive advantages for Irish

a 6% increase. Dry bulk cargoes like coal up


exporting companies over the coming months.

were 10% at 16.7 million tonnes, while potash


“However, oil prices remain at historically

posted a 9% decrease, to 3.4 million tonnes


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aboard up


ANTWERP MACS BENELUX BV Liquid bulk cargo ended the +32 second quarter our Phone: (0)3 201 56 00 E-mail:







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Vancouver traffic



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system setting

our time”,

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“With current fuel prices, the estimated Fax: +31-10-424 17 10 E-mail: rotterdam@macship.compayback of the system is less than a year,” said Mikko Lepistö, responsible for advisory

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theBaltic Autumn 2012


Commission closes International Group investigation The European Commission has ended its anti-trust investigation of the International Group of P&I Clubs claims sharing and reinsurance arrangements. Plus Eagle Ocean; North of England P&I Club; Standard Club; Iranian sanctions; Strike Club


he European Commission announced

International Group of P&I Clubs were previously

international liability conventions, under which

at the beginning of August that it has

exempted from the competition rules of the

compensation to claimants is generally paid

decided to close its anti-trust inves-

European Union by a Commission decision

regardless of fault and without legal wrangles.

tigation of the International Group

of 12 April 1999. The exemption expired on

of P&I Clubs claims sharing and reinsurance

20 February 2009.

“We are very pleased that the Commission officials involved now appear to understand the benefits of the current system,” said Khosla.

arrangements. The investigation focused on the

The International Group welcomed the

International Group Agreement (IGA) and the

news, but said that “even though the European

Pooling Agreement between the P&I Clubs that

Commission has decided to close its investigation,

contain rules on the sharing of insurance claims

the International Group plans to make some

Eagle Ocean results

and joint reinsurance as well as rules on the

amendments to the IGA. The International Group

Eagle Ocean Marine (EOM) – the specialist fixed-

contractual relationships between the P&I Clubs

is finalising these and details will be published in

premium P&I and FD&D facility underwritten by

and their members.

due course.”

the American Club – has reported a good first

The aim of the procedure, according

The International Chamber of Shipping also

year of operation and a strong start to its second

to the Commission was to examine whether

welcomed the move, which has been a source

year following the favourable renewal of its

certain provisions of the agreements lessened

of considerable concern in the insurance industry

quota-share reinsurances in the London market.

competition between P&I Clubs or restricted, to a

because of its potential to undermine the mutual

certain extent, the access of commercial insurers

insurance principle.

EOM’s first-year premium exceeded $5m, slightly outpacing original projections. Moreover,

ICS Director of Legal Affairs Kiran Khosla said:

increasing market interest in the facility, indicated

“ICS has always firmly stated that the current

by rapidly rising levels of enquiries and orders,


system of mutual third party liability insurance

suggests a very promising outlook for the second

2010, the Commission conducted a market

provided by the International Group continues

and subsequent years.

investigation with shipowners, brokers and

to serve the best interests of ship operators and

The company performed well during its first

commercial insurers. The market investigation

their customers extremely well, alongside serving

year. The incidence and severity of claims were

was not sufficiently conclusive to confirm the

the interests of claimants and the general public.

at encouragingly low levels, reflecting a prudent

Commission’s initial concerns,” the Commission

In particular, the mutual insurance arrangements

policy of risk selection and pricing. Results to date

said in a statement.

provided by the Clubs enable the provision of

show a healthy credit balance of premium over

the very high levels of insurance required under

claims, Eagle Ocean said.

or other mutual P&I insurers to the relevant markets. “After




The agreements concluded within the

theBaltic Autumn 2012


Insurance EOM provides P&I and FD&D cover for

liability cover. The K&R policy is designed

transport,” the Club said. However it added that

operators of smaller ships up to 12,500gt in local

especially for shipowners whose ships frequently

the comments should not be considered as legal

and regional trades. With P&I cover of up to $50m

transit high-risk piracy areas. It extends to all

advice, and this view may not be shared by other

per risk, it is aimed at owners who do not require

associated expenses including loss of hire, loss

EU member states.

the high limits of cover provided by the mutual

of ransom in transit, crew liabilities arising from

clubs and who prefer a fixed-premium approach

kidnap, legal expenses and the cost of crisis

to their insurance needs. About 55% of its current

responders. The club will handle claims resulting

Strike Club in demand

business is from Asia, the remainder coming

from the piracy cover, with the assistance

The Strike Club, which insures shipowners and

mostly from Europe, Latin America and Africa.

of Hiscox Syndicate 33 at Lloyd’s. Ransom

charterers against delays in the marine trades,

Commenting on the results, Joe Hughes,

negotiations will be managed by Control Risks.

reports continuing strong demand for its covers,

chairman and CEO of Eagle Ocean Agencies,

Ransom payments and associated expenses

whether for mutual entries or for its fixed-

said: “The results to date are very encouraging

cover will normally be limited to $5m per insured

premium insurance covers for war risks, loss of

and augur well for the future. We are determined

event and $2.5m for loss of hire, although higher

earnings and bespoke delay risks.

to make EOM a growing success for all its

limits can be arranged.

stakeholders – its clients, the club, its reinsurers

According to Bill Milligan, chief executive

The Transport Traders’ Liability policy covers

of SC Management: “There are many reasons

time charterer’s liability, including P&I and damage

why owners and charterers are increasingly

“EOM seeks to occupy a special place in the

to hull, FD+D (Defence) and liabilities arising

seeking financial protection or higher limits of

fixed-premium sector for those who desire a high-

from trading operations. Separate limits can

cover. First, there is great uncertainty about the

quality approach to their insurance needs. We are

be provided up to $500m each for chartering

impact on shipping and ports as the number of

confident that EOM’s business model will enjoy

liabilities and trading operations.

debtor countries in Europe grows. Second, the

and its many other business associates.


political, economic and financial maelstrom we

designed for shipowners who are responsible for

are currently facing is leading to a widening of

ship agents’ activities and for those who manage

industrial strife as worried workers protest about

Liquefaction move

third party ships. It provides cover for agents and

the threat to their jobs, wages and pensions.

Cargo liquefaction has long been of concern

managers in relation to a wide range of liabilities

“Outside Europe, we are seeing volatility

to insurers and North of England P&I club has

including professional negligence, cargo, property

in major shipping trades as China’s economic

launched a new poster in July to help seafarers

damage and personal injury up to $10 million.

bubble shows signs of deflating, restrictions on

increasing success over the years ahead.”





identify ore types as part of its campaign to cut

“In offering these new policies, we’re building

the risk of further losses of ships and crews

on the strong relations we have with the club’s

power blackouts across India, blacklisting of

carrying ore cargoes that may liquefy at sea.

members to provide cover which is in many

British-related flagged ships by Argentinian dock

nickel-ore and bauxite exports from Indonesia,

North’s loss-prevention manager Andrew

ways a natural extension of P&I. Many members

workers and growing instability across much of

Glen, who has been involved in recent international

have told us they would prefer to buy this type

the Middle East, including Iran’s threats to close

efforts to improve safety with nickel ore cargoes

of insurance through their club because they

or blockade the Strait of Hormuz.”

in particular, said: “A common problem faced by

like the club’s high level of service and hands-on

This worrying instability, together with the

seafarers is trying to work out whether an ore

approach and appreciate the value of seamless

lack of clear distinctions between war, civil war,

cargo about to be loaded on board matches

cover,” said Standard Club chief operating officer

revolution, insurrection, riot or political protest,

that described by the shipper. The new poster

Jeremy Grose.

is the main reason the Club widened the scope of mutual cover for 2012/13 to offer owner and

campaign aims to help them with identification.”

charterer members optional cover for additional

Entitled ‘Ore Cargo Types’, the poster provides a quick visual reference for seafarers on the

Iranian sanctions

war, civil war and piracy perils to enhance the long

typical particle size and appearance of the main

A Standard Club alert to members has outlined a

list of insured perils.

types of ore cargo – fines, concentrates, pellets,

view from the UK government on the interpretation

Owner-operators and charterers take out

lump ore and lateritic ore. The latter includes

of EU Regulation 267/2012 in relation to bunker

Class I & II cover because many shore-based

nickel ore cargoes, liquefaction of which has led

stems of Iranian origin and Iranian cargo residues

delays, such as strikes, war, civil war, riots, fire,

to the loss of five ships in the past 18 months

or slops.

earthquake, port closures, obstruction, imposition

along with the lives of 66 seafarers.

The International Group has been liasing

of export controls, can destroy any margin for owner-operators or for charterers.

Longer term, North intends to use the

with the UK government on the issue and has

notifications to identify organisations that are

reported that the UK Department for Business,

During a delay caused by a ship-related event,

not following the requirements of the IMSBC

Innovation and Skills (BIS) has recently offered

a time-charterer can often stop the payment of

Code, thus helping to focus future loss-prevention

a view that differs from that previously stated by

charter hire, so the Class III cover is better suited

efforts of industry and regulators. Similar circulars

the UK Treasury and the European Commission.

for owners or bareboat charterers.

have been issued by all other clubs in the International Group of P&I Clubs.

“BIS, upon further review, has concluded that

In effect, mutual delay insurance provides

as a matter of policy it considers bunker fuel and

cost-effective protection for losses caused by

engine and lube oils of Iranian origin used in the

delays, with very low deductibles.

propulsion and operation of the ship (as distinct

For the 2011/12 policy year, the Strike Club

Standard Club’s new products

from being carried as cargo) fall outside the

annual report said mutual delay claims were

The Standard Club is adding to the coverage

scope of the prohibitions on purchase, import and

topped by closure of port or sea lane (19.3%),

available to members by offering three additional

transport in articles 12 and 14 of the Regulation

followed by collision (15.2%), port workers’ strikes

insurance products – kidnap and ransom (K&R),

and therefore outside the scope of the prohibition

(14.5%), machinery damage (12.6%), stevedores’

traders’ transport liability cover and professional

on insurance for such purchase, import and

strikes (9.7%) and general strikes (7.1%).


theBaltic Autumn 2012


Brokers beware Charlotte Kirk, Director, International Transport Intermediaries Club (ITIC), gives examples of where brokers should have watched out for their exposure to liability


rofessional service providers in the

money. Lawyers mounted a strong defence and

“otherwise as per as the head charter party”.

shipping industry are under continual

the liquidator eventually dropped the case. The

The sub-charterer asked for a copy of the head

pressure to defend claims for liabil-

broker, having first sued for the commission and

charter party for review. The head charter had

ity. Furthermore, those pressures have

then sued again for its return, was finally able to

been sent to the broker together with a separate

keep the money.

addendum. Unfortunately, while the broker

only increased during the current global

In another case, shipbrokers fixed a bulk

passed the charter party to the sub-charterers,

Shipbrokers are under pressure from their

carrier for a time charter of 90 days. The first

it failed to forward the addendum. The fixture

principals. Witness the case of a Norwegian

voyage was via a port in Thailand where cargo

was concluded, but without the sub-charterer

broker that made a claim against its principal

was loaded for discharge at an African port.

being aware of the addendum.

for the commission on two newbuildings.

Unfortunately, during the outward passage, the

The principal had appointed the member as

ship collided with a tanker. There was no serious

its exclusive broker. The broker introduced

damage other than that, as a result of the

the principal to a shipyard, but the principal

collision, the tanker hit a dolphin (part of the port

completed the contract directly. The principal

structure), which was damaged.

economic downturn.

Cleaning costs The addendum contained provisions in relation to the costs of hold cleaning in the

refused to pay commission and the broker sued.

However, the bulk carrier was arrested by the

event that the vessel carried cement. This

The broker’s claim was rejected by the trial court,

local authorities and was not released until two

cargo had originally been excluded under the

but the claim was successful on appeal.

months later.

head charter party, but had subsequently been

The broker obtained nearly $690,000 from

In the charter party, there was a clause

permitted on the terms agreed in the addendum.

the principal. The payment appeared to be just in

giving the charterers the option to cancel if

The addendum provided that the sum of

time as shortly afterwards the principal went into

the ship had been off-hire for 30 consecutive

$7,500 could be paid by the charterer in lieu of

liquidation. Some time later, the broker received

days, and it decided to exercise this option

hold cleaning.

an approach from the liquidators demanding

and cancelled the remainder of the charter. The

The carriage of cement under the sublet had

repayment of the money.

shipbrokers had purchased ITIC’s optional loss

been agreed in the main terms, but the terms

of commission cover and made a claim for its

relating to the costs of hold cleaning had not

lost commission.

been passed to the sub-charterer.

Norwegian law

The duration of the voyage until the collision

The charterer was left with an obligation

The relevant provisions of Norwegian law are

and arrest was 43 days, leaving 47 days

to pay the head owner for hold cleaning, but

contained in Section 5 -5 of the Satisfaction of

remaining of the minimum period. In addition, at

was unable to reclaim the money from the

Claims Act. This provides that a payment made

the time of the arrest, the ship was nominated

sub–charterer. The broker had to reimburse its

by an insolvent company may be voided if made

to perform a further voyage with another cargo.

principal the sum of $7,500.

within a three-month period of the company

The commission was fully reimbursed by ITIC.

Finally, there was the case of a London tanker broker who verbally informed a New York broker

going into liquidation.

that the tanks of the ship had been “washed

The rule is not absolute, however, because the payments will only be reclaimable if

Huge consequences

but not fresh water-rinsed”. The New York



Shipbroking is a profession where relatively small

broker passed on this message as “fresh water

payment capacity and were not ordinary

mistakes can have enormous consequences.

washed”. The salt in the tanks contaminated a

commercial transactions.

Witness the case of the broker who arranged

cargo of vegoil to the tune of $900,000.




The broker rejected the demand and the

a sub-charter, the main terms of which – as

liquidators issued proceedings to recover the

is often the case – were fixed with the details

theBaltic Autumn 2012





certainly help to ease the financial pain.


Legal news

Prestige problem The long-running and extremely expensive dispute between ABS and the Spanish Government takes another turn, while the Dutch Supreme court overturns the CMR limitation ruling. Plus: Maritime Labour Convention; Australian arbitration


held that Maat was fully liable pursuant to

tion society ABS in the latest round of

Dutch Supreme Court overturns CMR limitation ruling

litigation relating to the Prestige oil spill.

The Dutch Supreme Court has overturned the

of a lack of safety measures, which the court

The court upheld the findings of the district

decision of a Netherlands appeal court in ruling

qualified as “default considered equivalent

court, saying that while the Spanish government

that claimants cannot rely on Article 29 of the

to wilful misconduct” (“gross negligence”). In

had argued that ABS had a duty in tort in relation

CMR Convention to prove gross negligence on

2011, the Den Bosch Court of Appeal upheld

to its inspection of the Prestige, even if the

the part of defendants writes Annemieke Spijker,

this judgment.

duty was owed the “Plaintiff did not introduce

a lawyer with the Transport and Trade team at

evidence sufficient to create a genuine dispute of

AKD, Rotterdam.

he US Court of Appeals for the Second Circuit has found in favour of classifica-

In Dutch court proceedings in 2008, it was Article 29 of the CMR Convention because

Now the Supreme Court has held that it did not follow from the circumstances that the

The dispute had its origins in instructions

driver had acted in a grossly negligent manner,

issued by metals and minerals group Traxys

and that, absent any proven consciousness

In summing up the case, the judges hearing

Europe SA to transport – and for logistics

on the part of the carrier/driver that the risk of

it said: “We appreciate the gravity of the injuries

specialist Euro-Rijn International BV to carry

theft was significantly greater than the possibility

that Spain alleges it has suffered here and do

– 20 large bags of roasted molybdenum

that no theft would occur, the claimants could

not, by our opinion, mean either to diminish

concentrates, valued at $974,385, from the

not rely on Article 29. Thus, Maat could rely on

those injuries or speak more broadly to the role

Netherlands to Belgium.

the limitation provisions of Article 23.3 of CMR.

material fact as to whether defendants recklessly breached that duty”.

of classification societies in maritime commerce

Euro-Rijn subcontracted the transport to

and the potential duties of classification societies

Transportbedrijf A Maat BV (Maat). Maat was

to third parties.








approximately $250,000.

instructed not to leave the vehicle unguarded. It

The Supreme Court ruling confirms that it is

“We hold only that, on this evidentiary

subsequently subcontracted the transportation

still almost impossible to break CMR limitation

record, Spain has not satisfied its burden of

to Van Houwelingen Transport BV, whose driver

on the basis of gross negligence in Dutch

establishing a genuine dispute of material

picked up the trailer and parked it, together with

court proceedings

fact as to whether ABS and its subsidiaries

the truck, in a parking area at an industrial zone

recklessly breached any duty that they might

in Alblasserdam, near Rotterdam.

owe to Spain. “As such, and for the foregoing reasons, the

This area was lit by street lamps and was

Maritime Labour Convention

locked, although 31 keys to the gate were in

The Maritime Labour Convention (MLC) has

circulation. Unlike the nearby premises of Maat,

finally got the ratifications necessary to bring

The court case arose from the 2002 Prestige

the parking site was not watched over by the

the treaty into force in 12 months’ time. with

oil spill of the Spanish coast which resulted in

company that patrolled part of the industrial

all that entails in terms of setting out minimum

extensive pollution to the coastline.

zone. On the morning following the night on

requirements for seafarers’ working conditions.

judgment of the district court is affirmed.”

The fact that ABS has been the target of a

which the truck and trailer were parked, the

law suit has been of considerable concern to

driver discovered that both truck and trailer had


classification societies and the question remains

been stolen. The entrance gate to the parking

Organization (ILO)’s Maritime Labour Convention.

as to whether Spain will seek to take the case to

area had been damaged, and all 20 bags of

the Supreme Court.

cargo stolen.


theBaltic Autumn 2012

The IMO has welcomed the landmark of




More than 1.2 million seafarers stand to benefit





Legal news

according to Rosalie Balkin, assistant secretary

Ship management association InterManager

under COGSA,” it said.

says it expects the new convention will encourage

In the case of Dampskibsselskabet Norden

The MLC Convention covers conditions

recruitment into the maritime industry and one

A/S v Beach Building & Civil Group Pty

of employment, hours of work and rest,

has to hope that better working conditions will

Ltd [2012] FCA 696), the Federal Court of

accommodation, recreational facilities, food

offset the fear that criminalisation of seafarers

Australia determined that London arbitration

and catering, health protection, medical care,

would drive people out of the business.

awards obtained by vessel owners against an

general and director of legal affairs at the IMO.

welfare and social security protection. Parties to

“Establishing minimum standards for the

Australian charterer under a voyage charter

the treaty must ensure that ships flying their

working conditions of the world’s seafarers is

are unenforceable in Australia by reason of the

flag meet the “decent work” requirements

essential in ensuring best practice across our

operation of section 11 of the Carriage of Goods

set out in the convention and certify that those

industry, especially at a time when recruitment

by Sea Act 1991 (Cth) (COGSA).

ships comply with the requirements relating to

is at a low level and the industry is struggling

“The recent Federal Court decision should

labour conditions.

to attract young people,” says Alastair Evitt,

make owners and charterers of voyage

president of InterManager.

charterparties or contracts of affreightment

With the convention set to come into effect in August 2013, it is now essential that the


necessary good-quality training is in place

already involved in international charterparty





Australian arbitration


in the new convention. The convention may

Two recent conflicting cases show that the

cargo movement to or from Australia may

have been many years in the planning stage,

position in Australia is far from settled on

find that ultimately they hold an award that is

but the shipping industry is not necessarily

whether foreign court or arbitration awards

unenforceable in Australia.

quick to respond to change and this has to

obtained under voyage charters (or contracts

“Parties entering into new charters with

happen swiftly.

of affreightment) relating to cargo movements

an Australian entity or when shipping to or

to/from Australia can be enforced, according to

from Australia should be aware that currently

Holman Fenwick Willan (HFW).

Australian law and jurisdiction will override

to ensure compliance with the rules outlined

Videotel former







Dearsley, at


International Shipping Federation, as its “tutor”

“It remains to be seen whether the recent case

helping companies get to grips with the

will be appealed or whether the Commonwealth

convention requirements.

Parliament will take steps to clarify the position

theBaltic Autumn 2012





any attempt to choose foreign law or foreign arbitration,” said HFW.



LIBOR vs BDI Why the Baltic Exchange’s indices and assessments are so very different from LIBOR


n the wake of the scandal over the alleged

Neither shipowners nor charterers are allowed

into consideration a professional’s view of

fixing of LIBOR rates by banks, the European

to make assessments and all the brokers

the market given the cargoes and tonnage

Commission announced this September that it

providing assessments are audited to ensure

currently available as well as recent fixtures.

is taking an in-depth look at the production of

that they are fully active on the trades which

Whilst the Baltic indices are very different

indices in use across the financial and commod-

they are assessing. The assessment is not

to the LIBOR which relies on submissions by

ity markets. The Commission, which drafts laws

reporting the “last done” fixture, but takes

banks who are asked how much it would cost

for the European Union’s 27 member states, has issued a questionnaire looking at all aspects of the production of indices including the calculation processes and the purpose and use of benchmarks. The Baltic Exchange has been providing the bulk shipping markets with a trusted set of benchmark indices based on independent shipbroker assessments since 1985, but there are countless indices used in almost every type of market imaginable. From macro-economic indicators produced by public bodies covering consumer





produced by news agencies which use the underlying prices of traded products, indices come in all sorts of shapes and sizes. Bulk freight rates for seaborne trade are a particularly niche “commodity” to assess, given the specialist knowledge required to assess the variations in vessel types, speed and consumption, ports and numerous other factors. The index model used by the Baltic Exchange is one which was established in 1985 with the launch of the Baltic Freight Index and used to settle trades on the world’s first freight futures exchange, BIFFEX. Although there have been a few minor modifications along the way, the model has essentially remained unchanged since its launch and relies on panels of independent shipbrokers around the world giving their professional judgement as to the prevailing level of the open market within the parameters of the route which they have been asked to assess.


European Commissions is taking a close look at indices

theBaltic Autumn 2012

Finance them to borrow from each other, any index

the quality of the returns made by the individual

have thought carefully about their submissions

which relies on the elements of discretion,

panellists. Whilst the 54 firms which make

and are properly reflecting the current supply,

judgement and subjectivity are coming under

up the various panels are publicly identified,

demand and sentiment in the market.”

the European Commission’s gaze.

the specifics of which brokers report which

The Baltic Exchange, as a member owned

However, according to Baltic Exchange

routes is kept confidential, as are the actual

organisation, has always taken great pains

chief executive Jeremy Penn, the Baltic

daily returns from each panellist. This ensures

to ensure that its entire reporting process is

Exchange feels extremely confident that its

that undue pressure cannot be exerted by the

entirely transparent. Full details of the routes

model is robust and can bear full scrutiny from

brokers’ clients.

reported and reporting criteria can be found in

any regulatory authority.

The Baltic Exchange’s indices are widely

the much referenced Manual for Panellists.

“Our products have won the seal of approval

used and completely trusted by shipowners,

Willy Lyth highlights that part of his role is

from the shipping and financial markets and

charterers and freight derivative traders as

to illuminate the more obscure aspects of the

are accepted as an utterly independent view

an honest, independent assessment of the

market in order to be confident of the accuracy

of vessel earnings, sale & purchase prices,

market. They are not only used to settle multi-

of panellist reports.

demolition rates and forward pricing. We do not

million dollar FFA trades, but also the basis

“We need to know about the many private

pretend that reporting prevailing freight rates

for index linked contracts of affreightment and

and confidential fixtures which are taking place.

is an exact science, but our panellists do not

period charters. The numbers produced by the

In the current poor market, this is getting

directly invest in the market and our compiling

Baltic Exchange are based on an underlying

more and more difficult, with many companies

team comprises experienced shipbrokers. We

understanding of what’s actually happening in

increasingly guarded about their fixtures. We

know our market.”

the freight markets.

encourage all companies to report their fixtures

He notes that the process is entirely

Baltic Exchange senior freight market

to us, even if private, simply to ensure that we

transparent with oversight by external audit by

reporter Willy Lyth explains: “We produce

have as full a picture of the market as possible.

the accountants Moore Stephens as well as

a daily fixture list for the dry cargo market

Numerous companies do report private fixtures

monthly meetings of the Baltic’s Freight Indices

which reflects the information we share among

to us, secure in the knowledge that we can be

& Futures Committee (FIFC) which is made up

panellists and other contacts. It helps us to be


of Exchange directors to ensure that not only

confident in reviewing panellist rates and where

Full details of the Baltic Exchange’s freight

the routes and vessels assessed reflect the

necessary discussing them with contributors.

market information services can be found at

realities of trading patterns, but also to examine

We are always aiming to ensure that panellists

theBaltic Autumn 2012


Marine technology

Information at the edge of the world The limitations of standard communication technologies have never been clearer. Lawrence Poynter, product director at iOra, explores the sophisticated connectivity solutions that keep the fleet afloat


or armchair sports fans, 2012 has been

the regulations of the governing flag state or

take place at any time. As always, being able

a bumper summer of wall-to-wall media

a given port state control. Masters need to be

to demonstrate a compliance process is as

coverage. For naval crews, getting the

kept up to date with international regulations

important as actually being compliant.

latest NASCAR results, football scores

regarding specified Emission Control Areas or

Then there are various elements of a ship’s

or Olympic record times is more difficult – but

changing legal requirements on transport and

operation that in themselves are immensely

not impossible. Many shipping firms recognise

trade in general. In turn they have to provide

data intensive tasks. Interconnected, computer-

that making sports reports available to their

headquarters with accurate, consistent records

controlled onboard equipment requires a core

crews is an important way to remove the sense

that will survive close inspection, which can

logging function to record detailed performance

of isolation often felt onboard. The savings to be gained from higher crew loyalty and retention rates, reduced training time, more days at sea and improved operation of onboard equipment, have made crew welfare a critical consideration. Delivering online news and sports coverage to the crew is just one example of the constant 24x7 information exchange that characterizes modern shipping. The maritime industry is becoming hugely data intensive and highly dependent on information systems that can help generate new and competitive operating efficiencies in an environment where margins are under constant pressure. As a result, modern fleets form a complex IT network, with individual vessels hosting servers, multiple terminal access points and an extensive range of computer-based applications. In effect, they are floating extensions of the office.

Data dependency Sports results aside, the information flow between headquarters and the ship’s master can have critical operation impact. Compliance with increasingly onerous regulations is but one example. Shipping firms have to guarantee that all vessels have the latest health, safety and quality management data in accordance with


theBaltic Autumn 2012

Marine technology and operational telemetry. This data can be

even more problematic, as is the high-latency

have already experienced compression rates

monitored on board, but more forensic analysis

connectivity typical of access over satellite.

of up to 90% on their updates to safety

is required onshore for effective maintenance,

As ships sail in and out of internet range,

management systems, and have enabled

preventative repairs and ship longevity. And,

bandwidth degenerates and download speeds

uninterrupted access to regulatory, safety and

like any other computer network, shipping

decrease. Satellite networks provide a unique

technical information at sea as a result.

fleets also have to share network administration

opportunity for linking globally distributed

Third, content distribution allows both

data to ensure optimal performance. Ongoing

assets, but again their limited bandwidth, high

onboard and onshore users to avoid calling over

operation depends on continual updates,

latency and intermittent availability make them

the satellite connection to access data. Content

software upgrades and service packs. If the

a highly restrictive and often costly information

distribution enables firms to proactively deploy

internal Local Area Network (LAN) on which the

channel. At the same time, the sheer volume of

key data closer to the end user and thus reduce

ship’s operation depends is to keep functional,

application data that needs to be replicated over

reliance on external network connections. In

then virus update files are needed to prevent

available networks can easily consume all the

this way an operator can, for example, replicate

devastating damage.

available satellite bandwidth.

updates to the corporate health and safety data

In an era of increasingly de-skilled crew,

The result is that frustrated users give in to

on a schedule to the vessel. When the vessel’s

the provision of required training materials has

temptation and once they have accessed information

master needs to access that information, it is

also become an essential function. Improving

from the central source, store it as a local copy.

available in a local store that does not require

onboard skill sets, reducing the risk of accidents

Any changes to the centrally held master are

reaching back to shore over a fragile or costly

and maintaining a vessel’s operational efficiency

missed and the single point of truth is broken.

satellite connection.

all contribute to an improved overall business

The challenge for shipping operators then is

Finally, least-cost routing enables operators to

performance. In the case of the US Navy, which

to reconcile the need for universally available,

actively switch between providers of bandwidth,

has some of the most well-trained sailors in the

globally consistent information with the fact that

and is a smart way to reduce bandwidth costs.

world, network connectivity enables its world-

many of the users of that information operate at

In a typical scenario, vessel communications

class engineering experts to remain onshore while

the edge of a network of fluctuating consistency.

will switch from satellite-based delivery when operating offshore, to more cost-effective

being consulted by crews of multiple vessels.

Networking super solutions

VHF delivery when in range – typically 50 to

and planned before a ship leaves port, benefits

There are four broad options available to ship

70 miles – of shore.

from effective data exchange. Up-to-date maps

operators facing this conundrum.

Even route planning, exhaustively researched

In reality, the most common option is to

or charts, often in digital form, may cause

The first is network acceleration. Most

adopt a hybrid of all four solutions, where

unforeseen diversion, as can changing weather

accelerator devices can be installed in the form of

essential content is automatically distributed

conditions, updated port data and incidents of

hardware appliances at each end of the network

over an accelerated network, giving end users

piracy. Masters need this kind of information

and, as the name suggests, have the effect of

guaranteed LAN speed access to data that

as a matter of course. But fleet operators also

speeding up communication between any two

originated over the corporate WAN.

need masters to feed information back to shore

points on that network. Generally speaking,

Commercial shipping is under intense

for dissemination with the wider fleet, and in

these devices will store repeated network calls

commercial pressure, while national navies are

order to improve routing, rationalise bunker

issued by the computer in an intelligent fashion

being asked to get smarter and maximise limited

fuel consumption and leverage cargo-to-vessel

and effectively reduce the amount of data to be

national resources. All are looking for ways to

planning across the company as a whole.

sent over the network, speeding up network

reduce costs, maximise the use of available

traffic by a factor of between six and ten.

resources and deliver greater returns from

Nothing but the truth

The second option is compression. By

existing investments. Sophisticated connectivity

These examples alone demonstrate that the

reducing the quantity of data that needs to be sent

solutions that make the most of data assets

distributed deployment of consistent, accurate

over the network, compression techniques will

deliver on all three counts.

information is critical to the effective and efficient

reduce the amount of

operation of navies and commercial shipping

bandwidth required

operations alike. It is predicated on the principle


of maintaining a single point of truth or golden

the cost of delivery.

copy of the relevant data. This single consistent

Various compression

view of data removes discrepancies and

tools are available

contradictions in organisational requirements


and ensures that record keeping and audits are


in line with those demands.







For the single point of truth to be effective,



the for

information has to be centrally stored and made

updates sent over

accessible from a single common platform,

the network so that

normally a global web portal. This can prove

better use can be

challenging even for fixed, land-based networks,

made of the available

since portals are typically designed to operate


over a LAN and often struggle when deployed

Specialist providers

over the extended wide area network. The global

of digital information

area networks deployed by shipping fleets are





theBaltic Autumn 2012

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Søren Christian Meyer, Global Sales Director, OW Bunker

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Commercial profiles

Rosneft Marine The company is increasing its presence in the Baltic and in China


osneft Marine has continued to expand rapidly since it was established in

London in 2010. A subsidiary of Rosneft Oil Company, Rosneft Marine has now set up a new office in Beijing while expanding the number of ports that it services in Russia.

The company officially opened its second office this May in Beijing, China to service its growing Asian client base. Staffed with a multilingual team, the new office aims to support its regional customers with ease of communication and greater access to premium-quality marine fuel in the Far East. In addition to expanding Rosneft’s presence in Asia, this move allows the company to provide specialised services to regional clients without any compromise on its existing offering to the global and European markets. The formation of this second office in Asia also comes at a time when environmental concerns are changing the landscape of international shipping.

Increasing demand Demand for low-sulphur fuel oils is expected to increase following the introduction of Emission Control Areas in North America, particularly for vessels travelling from Asia to the West Coast of the US. The company intends to work closely with regional ship operators who have US-bound vessels to supply them with ECA- compliant low sulphur fuels of the highest quality at attractive prices. An integral part of its strategy for the China office will be to establish long-term partnerships with customers. The company hopes to collaborate with customers particularly on the basis of long-term formula contracts, as it is one of the few suppliers able to guarantee a reliable and consistent supply of high-quality fuel in the region. As part of a plan to strengthen its presence in the Baltic and the Black Sea, Rosneft Marine extended its bunker supply network to include the western ports of Ust-Luga, Kaliningrad and Novorossiysk in April this year. The servicing of additional ports brings greater ease of access to Rosneft’s high-quality marine fuel in a wider range of bunkering locations to customers. Rosneft Marine’s sister company

RN Bunker is the logistics and domestic marketing arm of Rosneft’s bunkering business. It has just taken delivery of a new bunker tanker in the port of St. Petersburg under the terms of a 10-year time-charter agreement. The RN Polaris is a 6,800 metric tonnecapacity tanker that is also registered as an ice-class vessel. It will be operating in St Petersburg, Ust-Luga and other parts of the Russian end of the Gulf of Finland.

Raising standards

port of Nakhodka (NQMBS). Standardising Rosneft’s bunker supply process ensures a reliable, consistent supply of premium marine fuel that is second to none in the market. Rosneft Marine aims to have a similar implementation of standards across its entire bunker supply network in the future and will continue to seek expansion in other parts of the world, with the aim of providing global clients with superior, localised service while still delivering premium quality fuel in Russian ports..

In order to further the company’s commitment to unparalleled assurance of quantity and quality, Rosneft Marine, together with RN Bunker, is currently in the process of establishing Rosneft’s first full-quality management standard for its bunker supply chain in the

theBaltic Autumn 2012


Commercial profiles

About DP World D

P World operates more than 60 terminals

the Middle East” for 17 consecutive years.

across six continents as of March 2012.

In 2011, DP World handled nearly 55 million

Includes non-container terminals., with con-

TEU (twenty-foot equivalent container units)

tainer handling generating around 80% of its

across its portfolio from the Americas to Asia.


In addition, the company currently

With a pipeline of expansion and development

has 11 new developments and major expan-

projects in key growth markets, including

sions underway in 10 countries.

India, China and the Middle East, capacity is

DP World aims to enhance customers’ supply chain efficiency by effectively managing

expected to rise to around 103 million TEU by 2020, in line with market demand.

container, bulk and other terminal cargo. Its dedicated, experienced and professional team

of more than 30,000 people serves customers in some of the most dynamic economies in the world. The company constantly invests in terminal infrastructure, facilities and people, working closely with customers and business partners to provide quality services today and tomorrow, when and where customers need them. In taking this customer-centric approach, DP World is building on the established relationships and superior level of service demonstrated at its flagship Jebel Ali facility in Dubai, which has been voted “Best Seaport in

A first for Gibraltar C

ommencing operations on 1 March 2010,

good lawyers to choose from to guide and assist

When it comes to sale and purchase and

Astralship provides a comprehensive range

any owner/manager looking to Gibraltar as a

dry/tanker chartering, we are able to provide

base for operations.

our clientele with specialised services. With our

of services to our international and local clients: sale and purchase, dry cargo and tanker char-

Astralship is the first shipbroker to set up base

contacts with shipowners and cargo owners, we

tering brokerage services. In July 2010, the

in Gibraltar. Our management has a combined

can support our clientele within specific areas

company further complemented these services

experience of more than 110 years within the

thereby focusing on projects. The company is

by providing our clientele port agency services in

maritime industry and we bring the ability to

proud to announce that it has been placed on

Gibraltar, with Algeciras to come shortly.

maintain our independence, commitment and

the BPC list of brokers to assist them in their

Gibraltar has been a hub of maritime activity

the development of long-term relationships,

specific re-export requirements of potash from

for centuries and today it offers a wealth of

which are crucial elements in what we do and

China to various destinations in the Far East and

advantages for individuals and companies alike

what we strive for.

South East Asia

to set up operations in a tax-efficient jurisdiction.

With our port agency services, we specialise

Astralship firmly believes in our own “Gibraltar

It offers managers and owners the opportunity

in providing husbandry services to shipowners/

PLC” concept and we also believe that owners

to set up an office in a location that can only be

managers, which include the arrangement of

and managers will understand and appreciate

rivalled by places such as Singapore.

fast and efficient crew changes, such as the

the benefits that Gibraltar has to offer - and we’ll

There is a pool of well qualified young

collection of crew from either Malaga, Jerez or

be the first ones here to assist them.

individuals capable of operating as a back office

Gibraltar airports. We execute our own customs

staff. Gibraltar currently enjoys good air links

clearance of spares that are delivered to the

For more information, contact:

with various airports in the UK. However, with

vessel with minimum fuss, along with the supply

Richard W De La Rosa (FICS)

the recent opening of the new Gibraltar Airport

of stores and provisions, and so on.

Astralship Corp – Gibraltar

Terminus, there is expected to be an increase in

Our personalised attention, flexibility and

air connections with other major European cities.

attention to detail within our team of highly

Fax: +350 200 62446

Gibraltar law operates under the same system

experienced and efficient professionals further


as the UK common law. There is a plethora of

guarantees our reliability.



theBaltic Autumn 2012

Tel: +350 200 62444

Commercial profiles

Middle East experience W

ith a dedicated commercial practice and

the Middle East and Indian Subcontinent, and

bodies such as ICC, DIFC-LCIA, DIAC, LMAA,

a wealth of experience in contractual

Corporate Intl Global Awards 2012 Shipping


and advisory work across a broad spectrum of

Law Firm of the Year in the UAE, stand testimony

We are the first law firm having enforced an

industry sectors, Fichte & Co is a highly spe-

to Fichte & Co’s quality of service, articulate

International Arbitration Award in UAE Courts

cialised international law firm with headquarters

legal acumen and invaluable experience in the

under the NY Convention.

in Dubai, UAE. We aim for expedient and com-

maritime areas of practice.

Our clients

prehensive legal services to the maritime and

Corporate and commercial

Fichte & Co has represented major industry

Our corporate and commercial practice offers

players including Abu Dhabi Marine Operating

an extensive range of legal services relating

Company, Abu Dhabi National Oil Company,


to banking and finance transactions, real

Abu Dhabi Petroleum Ports Operating Company,

With arguably the largest maritime team in the

estate acquisitions, construction, company

Raets Marine, Smit-Lamnalco, Société Générale

region, we advise on all areas of maritime law

establishments in the UAE and the UAE Free

and DVB Bank to name a few.

and our coherent and comprehensive legal

Zones, as well as debt recovery services. Our

services cover topics ranging from ship sale and

pioneering and strategic solutions extend ensure

For more information, contact:

purchase, ship finance and shipping litigation,

the best for your business.

Jasamin Fichte, Managing partner

corporate sectors in the Middle East. We provide expertise in the following areas:

to charterparty and bill of lading disputes,

Fichte & Co Legal Consultancy

representing various P&I Clubs and review of

Litigation and arbitration

Sheikh Zayed Road, Business Bay,

marine insurance contracts, not to mention

We have the practice and knowledge to effi-

Prism Tower, 19th Floor

advice on freight forwarding and logistics,

ciently resolve legal, regulatory and commercial

PO Box 116637, Dubai, UAE

multimodal transport documents and drafting of

conflicts wherever they arise on your behalf. Our

Tel: +971 5 02 10 1003; +971 4 43 57 577

company terms.

wealth of experience in litigation covers UK, UAE


Our awards, including Seatrade’s Best

and DIFC jurisdictions and work on international

Maritime Law Firm 2007, 2010 and 2011 in

and local arbitration cases, most notably with


International Registries, Inc. International Registries, Inc. and its affiliates (IRI)

Republic of the Marshall Islands is not only white

of engagement, and work closely with military

provide administrative and technical support to

listed with the Paris and Tokyo Memorandums of

forces operating in the area.

the Republic of the Marshall Islands maritime and

Understanding (MoUs) but also has maintained

IRI has a network of 25 worldwide offices

corporate registries. IRI has been administering

Qualship 21 status with the United States Coast

located in Baltimore, Dalian, Dubai, Fort

maritime and corporate registries since 1948.

Guard (USCG) for seven consecutive years. The

Lauderdale, Geneva, Hamburg, Hong Kong,

The Republic of the Marshall Islands registry (the

Registry supports increased PSC schemes such

Houston, Imabari, Istanbul, London, Long Beach,

“Registry”) is the world’s third largest registry,

as the Paris MoU’s New Inspection Regime (NIR)

Mumbai, New York (mid-town and downtown),

reaching nearly 78 million gross tons and 2,560

and is among the few flag States to be included

Piraeus, Rio de Janeiro, Roosendaal, Seoul,

vessels by the end of 2011 and consisting of

on the NIR’s Low Risk Ships list.

Shanghai, Singapore, Taipei, Tokyo, Washington

owners and operators primarily from Greece,

The Republic of the Marshall Islands is active

DC/Reston and Zurich that have the ability to

the United States, Germany, Norway, Japan and

in the United Nations (UN) Contact Group on

register a vessel or yacht, record a mortgage,

the Middle East, among others. In this sense, it

Piracy off the Coast of Somalia (CGPCS) and

process seafarer documentation and service

is truly an international registry.

its various working groups. It also works closely

clientele. The Registry is committed to the safety

with governmental, military, intelligence and

and security of personnel ashore and afloat, the


industry interests to combat piracy. The Registry

Registry’s vessels, and the marine environment.

philosophy and the quality of the fleet. It maintains

is working with international partners, both in

The most important asset to the Registry is its

a continuing commitment toward working

government and in the industry, to foster better

customers. IRI strives to provide them with full

through the International Maritime Organisation

programmes to protect vessels that transit high

service from any office, 24 hours a day.

(IMO) to develop sound international regulatory

risk areas. With the increase in the use of

instruments and seeks to develop a close

armed guards aboard ships, the Republic of the

working relationship with shipowners, operators

Marshall Islands seeks to ensure that guards

and other industry stakeholders.

working aboard ships and those aboard any

The Registry is highly regarded for its decentralised


Port State Control (PSC) is the key indicator

escort vessels are properly vetted and trained,

with respect to the quality of a registry. The

use agreed-upon codes of conduct and rules

theBaltic Summer 2012



What’s on where A round-up of conferences, exhibitions and events in the shipping world

8-10 October

15 November

India Shipping Summit Mumbai

Baltic/FFABA Tanker Derivatives Forum, Geneva

15-19 October Freight Derivatives & Shipping Risk Management Advanced Freight Modelling & Trading, London Baltic Exchange training courses covering all areas of freight, bunker and financial risk management.

23-25 October Combating Piracy Week London Leading stakeholders in combating piracy will be speaking at this important event.

An opportunity for the tanker FFA market to discuss the latest issues. For more details please contact ceccleston@

14-15 November Transport Security Expo London Transport Security Expo brings together the world’s leading experts from government, military, law enforcement and security services face to face with the aviation, maritime and public transport industries, to assess the threat level, examine the countermeasures in place and, where necessary, recommend alternate strategies to deal with these threats.

27 November Seatrade Middle East Maritime 2012 Dubai

13 November

The region’s foremost shipping event.

Turkish Shipping Summit Istanbul

Turkey is defined as an emerging market economy but a largely developed one, with economists noting that in many ways it has weathered the credit crunch better than others. Turkish shipping has changed enormously over the past two decades, the recent changes may be seen as for the worse considering the current shipping markets, but in the long run they have brought the country into the frontline of the industry.



theBaltic Autumn 2012

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The Baltic - Autumn 2012  

The Baltic is the quarterly journal of the Baltic Exchange in London, the world's leading shipbroking representative body. The Baltic Exchan...