The Maritime Advocate online–Issue 508

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1. London Arbitration
2. Melbourne Storms
3. The Meaning of Maritime
4. Shipping Confidence
5. Greece and the Financial Storm
6. People and Places

Broadly Boats News

Firetrench Directory

Update on FOB Network

The number of people joining FOB has risen to 2341.

You can see who is joining FOB by country and by occupation by using the search windows on the People page, the most popular page on the site, which does bear a passing resemblance to another well known and much more generalist networking site.

FOB offers a unmuddled approach to networking in the maritime, transport and risk areas, with small general subject groups. We moderate the site, but there have been very few cases where we have had to ask a member to give order. The FOB news page, together with the Maritime Advocate and its sister publication Bow Wave helps our members’ news to go viral.

You can comment on the news, join a group, initiate discussions and post items designed to inform, educate or amuse your peers in the industry.


Registration is gratis for individuals. Businesses can take out a page for a small supporting contribution and we welcome firms prepared to sponsor Group pages or advertise with us. This helps to keep FOB a going concern and puts a smile on the face of our programmers and accountants..

FOB is a project designed to adapt the new ways of using the internet for the sorts of people who read The Maritime Advocate.

You are welcome to join


This space is available to advertisers and those with job vacancies. The Maritime Advocate goes out to readers in over 120 countries in the world. It is the largest publication of its kind. Ask us for a reader breakdown and let us quote you terms. We will help your messages and news to go viral.


1. London Arbitration

Paul Bugden, writing the first of a three part essay in the current edition of forwarderlaw examines the case for London Arbitration:

Why arbitration

From at least the last quarter of the 19th century brokers on the Baltic Exchange (where a great many if not most of the world’s charterparties were at that time negotiated) began to increasingly negotiate charterparties providing for dispute to be resolved by arbitration in London according to English law.

The tendency towards London arbitration is exemplified more generally by the strong growth of Lloyd’s Open Form salvage arbitration after World War II and the marked growth at the same time of dedicated institutional commodity arbitration schemes run by the various well known London commodity associations. It also became a common feature of many large-scale construction and engineering contracts. Oddly it never took off in London insurance contracts; e.g. Lloyd’s hull or cargo cover, save for re-insurance where it has become almost universally accepted!

Baltic Exchange arbitrations were for many years often very informal indeed and conducted by the brokers themselves on behalf of their respective principals without involvement of lawyers. The arbitrator was a ship broker practising on the Baltic and selected by the parties as having the appropriate expertise to decide the case.

The award was often short and without reasons but the process was regarded as a great deal better than litigation, as it then was, before the High Court in London. Of course, as is the way of things, inevitably as time went, and certainly as the 1960’s were seen out, the references became more complex. Above all, as always tends to happen in this sort of situation, and for better and worse depending in your interest and point of view, lawyers came to be increasingly involved in the references and to a substantial extent dominate the approach to matters.

The Baltic Exchange lost its predominant influence in the 1980’s. All the same English law and London arbitration remained, and still remains, a popular choice of governing law and forum for those concluding charterparty contracts for whatever reason and whether by default and for want of anything better, or for one or more of its particular attributes, or rather perceived attributes.

read the full instalment at:-


2. Melbourne Storms

While underwriters sat down to their Christmas turkey smarting from the high accumulation of losses in 2011 by way of earthquakes, tsunami, storms and floods, mother nature had one last treat in the form of a huge storm on Christmas day in Melbourne, where residents were able to witness hailstones the size of tennis balls and local insurers are on track to receive claims in the region of $4.5 billion as a result. The year has been one of the worst for Acts of God. Leave us hope for quieter times in 2012.


3. The Meaning of Maritime

Not much has been made of the recent report by the City/UK organisation which has sought to place the maritime services business into a UK context. While the UK has struggled throughout the year with the sluggish economy, the crisis in banking and the diminutive size of the manufacturing sector, London and the UK remains a leading source of capital and expertise for marine insurance, ship-chartering, shipping finance, ship classification, legal and accounting services and dispute resolution.

The report’s authors say the important role of maritime services in the UK economy is demonstrated by its direct contribution: generating GDP of £1.5bn; providing employment for nearly 12,000 people; raising tax revenue of £483m; and producing overseas earnings of £2.2bn (Chart 1). This contribution is enhanced by the multiplier
impact both from business procured through the supply chain and also from spending of those employed in maritime services and the supply chain. Taking this impact into account, it is estimated that the broad
contribution to GDP and tax revenue is more than doubled to £3.9bn and £1.4bn respectively, while employment dependent on maritime services is increased more than fivefold to over 63,000.

All this while the business of operating ships has gone elsewhere and where the society as a whole has grown rather oblivious to the importance of shipping and transport to the country. The report contains many interesting charts and statistics. There are lists even of who in the country provides training to some 10,000 students a year. It would be very interesting to see a comparable report for say China, Korea or India–perhaps one of our readers might take up the challenge?

See the report at:


4. Shipping Confidence

There has been such a lot of reportage on the outlook for shipping in the coming 12 months. Chris Hewer writes that despite the eurozone crisis, confidence has ticked up a little:-

Overall confidence levels and the likelihood of major new investments in the shipping industry in the next 12 months picked up marginally in the quarter ended November 2011, according to the latest Shipping Confidence Survey from leading accountant and shipping adviser Moore Stephens. This was tempered by an expectation of a rise in finance costs. Respondents also continued to exhibit a high level of concern about the negative impact of overtonnaging on the market amid continuing fears about the global economic climate, and the eurozone crisis in particular.

In November 2011, the average confidence level was 5.4 on a scale of 1 (low) to 10 (high), up on the 5.3 recorded in August 2011. But, together with the February 2009 figure, it remains the second lowest confidence rating since the survey was launched in May 2008 with a rating of 6.8. Confidence among owners was up from 5.1 to 5.3, but down on the part of charterers, from 5.0 to 4.9. There was a small increase in confidence in the broking sector, from 5.1 to 5.2. Confidence was highest among managers, unchanged at 5.6. Europe, up from 5.0 to 5.1, was the least confident region. In May 2008, European confidence stood at a high of 6.6, and as recently as August 2010 was running at 6.1. Confidence in Asia rose from 5.7 to 5.8 and in North America from 5.1 to 5.8.

The eurozone crisis featured prominently in comments from respondents. “Above everything,” said one, “it is the European financial crisis which will decide how things turn out for shipping in general and for shipowners in particular.” Another remarked: “Volatility remains high, with prospects for a solution to the European debt crisis a long way away. A comparison with the Lehman Brothers collapse does not seem that far-fetched at the moment.” Lehman was also on the mind of another respondent who noted: “What is still unknown is how the eurozone crisis will unfold and what sort of knock-on impact this will have, not only on global demand but also on the availability of finance for trade and asset acquisition. When this is coupled with the increasingly strident demands from governments and regulators for banks to build up more and more capital to avoid further state bail-outs, what you have is a toxic financial brew that makes 2008/9 and the collapse of Lehman Brothers look like a vicar’s tea party. These are deeply uncertain times.”

State intervention was also foreseen by another respondent who noted: “The supply overhang in almost all sectors remains a serious challenge despite slippage and cancellations. Cancelled newbuildings will still be built, especially in China, where they will simply be owned by state-supported yards and operators and will therefore continue to add to the level of over-supply. Ship finance will be available to only a few, financially strong companies.”

One respondent said: “The US and Europe need to take some drastic recovery measures sooner rather than later.” Another observed: “The tonnage oversupply situation, plus the eurozone crisis and a depressed world economy, equals misery.”

A number of respondents took a pessimistic view of how long it might take for shipping to turn the corner: “It is now more likely than ever that shipping will remain depressed for the next three years, with only marginal improvements thereafter over the next five years.” Admitting that some of its ships were only breaking even while others were operating at a loss, leading to vessel sales and redundancies, one respondent said: “We do not expect the market to recover for at least another three or four years.”

The threat posed by overtonnaging was very much on the minds of respondents. “After 30 years in shipping, I believe the summer of 2012 will be the worst I have experienced,” said one respondent. “The oversupply of tonnage bought at inflated prices, combined with turmoil in north European manufacturing, will mean that shipping companies, brokers and owners not involved in the transport of food products are going to be the hardest hit.” Another emphasised “more discipline and restraint is called for” while other comments included “owners should re-enter negotiations to further delay deliveries” and “the market is doomed.”

Despite these gloomy predictions, respondents overall were more optimistic of making a major investment or significant development over the next 12 months. On a scale of 1 to 10, the likelihood of such a development rose to 5.2 from 5.1 in the last survey. Owners (up from 5.3 to 5.5), managers (5.2 to 5.4) and charterers (5.7 to 5.8) were all more confident than last time. When the survey was launched in May 2008, the likelihood of major investments was rated at 5.9 overall.

Charterers are the only category whose expectations are higher now than they were in May 2008. Over the life of the survey, charterers have moved from being significantly less likely than owners and managers to make a major investment, to being the most likely of these three categories. One respondent noted: “By next year, it is hoped that there will be a significant increase of confidence in the shipping industry as various players get set to make big investments.”

Demand trends, competition and finance costs continued to dominate the top three factors cited by respondents overall as those likely to influence performance most significantly over the coming twelve months. 24% of respondents (up from 22% last time) cited demand trends as the most significant performance-affecting factor, with 17% opting for competition (unchanged from last time) and for finance costs (up from 16% last time).

For owners, demand trends continued to dominate, with an increase from 24% to 26%, ahead of finance costs and tonnage supply. Operating costs (up from 15% to 18%) emerged as the number one performance-influencing factor for managers, followed by competition and demand trends, both unchanged at 17%. For charterers, meanwhile, fuel costs moved into the number one spot, with a ten percentage point increase on last time, from 16% to 26%. Demand trends (up from 23% to 24%) and competition (down from 18% to 15%) made up the remainder of charterers’ top three.

Geographically, demand trends remained the most significant factor for respondents in Asia and Europe (18% and 26%, respectively). In Europe, finance costs (up from 16% to 19%) assumed increased importance compared with last time, moving into second place. Competition, meanwhile, was less significant this time for European respondents (in third place, down from 19% to 16%). Conversely, it assumed increasing importance (up from 19% to 26%) in North America, where tonnage supply also moved into the top three at the expense of finance costs.

Having fallen significantly in the last survey, there was a five percentage point increase this time (from 52% to 57%) in overall expectations of an increase in finance costs. Owners (up from 53% to 57%) and managers (up four percentage points to 56%) joined in thinking that finance costs would rise. But charterers (down from 48% to 46%) thought differently. Moreover, the number of charterers expecting finance costs to fall was down to its lowest figure since May 2010. There was an increase this time in the numbers of respondents in both Asia and Europe who thought finance costs would rise (up from 50% to 54%, and from 53% to 61%, respectively). The same was true of North America, where the increase was from 40% to 47%. One respondent noted: “Shipping cycles are nothing new, but there has never been a cycle which coincides with an acute liquidity crisis in the banking sector that will not be resolved in the short (two-to-three year) term.”

So far as expectations of rate increases in the markets were concerned, it was a case of down, down, down in all three main tonnage categories from owners and managers in all geographic areas covered by the survey. In the tanker sector, the number of respondents expecting rates to increase over the coming year was down from 34% to 30%. But while the numbers of owners and managers expecting increases were down (from 30% to 28% and from 36% to 33%, respectively), there was a 19 percentage point increase (from 21% to 40%) in the number of charterers who thought rates would go up. There was also a corresponding 19 percentage point fall (from 26% to 7%) in the number of charterers expecting tanker rates to fall over the next 12 months. Not for the first time, the chartering sector seems to know something which other parts of the market do not. One respondent emphasised: “The oversupply of crude tankers will be prolonged due to national governments intervening to prop up domestic owners and shipyards.”

It was the same story in the dry bulk sector where, for the first time in three years, the number of respondents overall predicting a decline in rates over the next 12 months exceeded the total of those who thought they would increase. The number expecting rates to increase was down this time from 27% to 23%, a new all-time low in the life of the survey. The number of owners who thought rates would go up also hit an all-time low (down from 22% to 20%), while for managers (down from 34% to 31%) it was the second-lowest figure ever recorded, just one percentage point up on the 30% for November 2010. Again, though, charterers bucked the trend, with 33% expecting dry bulk to rise over the next 12 months, compared to just 8% last time. In August 2011, 42% of charterers thought that rates would come down; this time, just 29% were of that view. One respondent admitted to “massive fears” about the dry bulk sector, noting: “Unless there are some major building contracts scheduled for next year, the bottom will fall out of the market.”

For the first time since February 2009, the number of respondents overall expecting a decline in container ship rates was higher than the number anticipating rate increases. Overall, just 23% of respondents (compared to 28% last time) expected rates to go up, the second-lowest figure since the survey began, behind only the 20% recorded in October 2008. Meanwhile, 31% thought that rates would go down, the highest figure since the 36% recorded in February 2009. The number of charterers expecting rates to increase fell from 30% in August this year to just 13% this time, while the figures for owners and managers were also down, from 25% to 23%, and from 31% to 23%, respectively.

Moore Stephens shipping partner, Richard Greiner, says: “It says a great deal for the resilience of the shipping industry that, despite the problems facing the sector, and notwithstanding the acute difficulties bedevilling the world economy, our survey showed a small increase in confidence. Like a boxer who refuses to lie down, shipping is fighting to ride the punches and to bounce back off the ropes. There was even an increased expectation that respondents would be making a major investment over the coming 12 months. This is encouraging, and supports the belief that now is a good time to buy for those who have access to funding.

“Nevertheless, it is undeniable that shipping is struggling on a number of fronts. Seldom, if ever, can classic problems within the industry have coincided with such a severe economic downturn and acute debt crisis. Overtonnaging is the issue dominating responses to our survey and, even when other concerns are raised, overtonnaging is still the elephant in the room. It will doubtless remain so for some time, but the situation could be eased in the shorter-term by sensible renegotiation and resourceful financing.

“Meanwhile, operating costs are set to rise, with a recent Moore Stephens survey predicting a 3.7% increase in 2012. Shipping is an expensive business in which to operate, and the returns currently available through the freight markets are generally not sufficient to offset operating costs and leave any prospect of a return on investment.

“These are challenging times. The shipping industry which emerges intact from the current downturn will be stronger than the one which entered it. The loss of some good, well-run companies is the sad but inevitable result of the singular economic conditions currently prevailing throughout the world. But the loss of short-termist, inadequately funded companies will leave the industry in much better shape than it was before the indicators started to point in the wrong direction.”


5. Greece and the Financial Storm

As the unease in Europe has swirled around the Greek economy during the year elapsed, John Faraclas has issued a sort of polemic on what it all means for the Hellenic maritime world. Our e-zine normally carries the close reasoning of specialised and often very technical legal and claims people, but at the end of a trying year, this blast of indignation may blow out the soot.


6. People and Places

The publishers of the Maritime Advocate (aka the Avo), Humphrey Hill and Sam Ignarski, thank the contributors,advertisers, sponsors and supporters of the e-zine most kindly and wish all good things to them for the coming year


Hackneyed Phrases and Tired Repetitions

We’ve hanged them from a flagpole to see who salutes.

As a customer-facing content-provider, modern columnists must provide at least 300 buzzwords per word-tranche. But, as Iain Murray says, that’s just a ballpark figure.

The City of London’s Old Ropemaker Hall was packed for Amalgamated Clichés and Saws’ recent annual general meeting – a designation reluctantly accepted by many of those present, who would have preferred the gathering to have been called a symposium or, failing that, a brainstorming session.

Unassuaged, however, were the impassioned feelings of a ginger group gathered outside. The angry chants could be heard from within:

“What do we want?” “A step-change!” “When do we want it?” “As soon as a window of opportunity presents itself!”

Airily dismissing the protest as “insufficiently overarching”, the chairman, John Smith, called the meeting to order.

“As those of you in the loop will be aware,” he began, “your board has been in meaningful negotiations with a view to acquiring a majority shareholding in Hackneyed Phrases and Tired Repetitions Incorporated of Philadelphia, the endgame being to restructure our group.”

“On a point of clarification,” said a voice from the floor, “shouldn’t that be to restructure our group going forward?”

“I am obliged to you for that,” said Smith. “Yes indeed, our mission is to go forward at this moment in time in the pursuit of excellence. Even so, it is my sad duty to report that our efforts have fallen upon stony ground and that, not to put too fine a point on it, the project has gone pear-shaped.”

A rumble of discontent rolled across the hall like distant thunder. An awkward silence was broken by a voice from the back. “You’ve lost the plot!” it cried, to shouts of “Get your act together!” “This is a worst-case scenario.” “You’re dead in the water. Big time.”

“And drinking in the last chance saloon,” shouted another angry shareholder to cries of approval.

“Hold up!” bellowed the chairman. “You’re totally out of order. At the end of the day we thought we wanted a level playing field, but no way. They moved the goalposts and it was a whole new ball game.

“Your board worked 24/7 at the coal face, pushing the envelope and singing from the same hymn sheet…”

“That is so not true,” interrupted a man in the front row with face like a belligerent tomato. “You’ve scored an own-goal and kicked the issue into the long grass.”

“All we ask,” said the finance director, a small man with pince-nez glasses and a ring in his ear, “is that you give us the time and the space to get up and running. I have positive vibes about this issue. A solution is up for grabs provided we allow common sense to prevail and win hearts and minds.”

“Don’t give up the day job,” shouted the tomato. “Get real!” yelled another voice. “Get a life!” screamed a third. The mood was turning ugly.

“All right, all right,” shouted the chairman above the hubbub, palms raised in a deprecatory gesture. “I hear where you’re coming from. Maybe we’ve been a little laid-back. Maybe we thought we had a done deal while the jury was still out. Maybe we took our eyes off the ball. Okay, I admit that. But this is a wake-up call. You’ve seen the downside, now hear the upside.

“From now on, your board will not talk the talk, we’ll walk the walk. This is, after all, a gateway issue and we have reached a defining moment. Believe me, we are on a roll. Not only that, we’re up to speed and hard-wired. Can’t you sense the pride and the passion?”

“So where’s the road map?” shouted a pensioner, waving his stick.

“Wouldn’t you know it, a loose cannon,” murmured the finance director behind his hand.

“I heard that,” said the pensioner. “This isn’t rocket science. We have every right to expect our directors to be proactive in a multi-dimensional takeover situation.”

Waving a shaking, bony finger, he added: “Call yourselves big hitters?”

There was another attempt at emollience.

“Wake up and smell the coffee,” smiled a lady non-executive director, sunglasses glinting atop her head. “The possibilities are absolutely fantastic. Amalgamated Cliché is already iconic and we are minded to make it fabulous.

“And let me tell you something,” she added, artfully allowing her shoulder strap to slip enough to reveal a tantric tattoo. “Your board has been bonding like mad and is looking to be proactive. Never let it be said we are on the back foot.”

“You’re living on another planet,” bellowed a fat man at the back. “A parallel universe,” he added for good measure, nodding in approval at his own verbal felicity.

“How true is that?” said a mousy woman, probably from Islington. “This meeting is fast becoming the peasants’ revolt de nos jours.”

“Don’t even go there,” said a hand-flapping bystander of indeterminate sex. “I’m like, what is going on here?”

“I’ll tell you what,” said the tomato, turning a deeper shade of red. “It’s payback time.”

“Puh-lease,” pleaded the mousy woman. “No violence. Not in my name.”

“Let me run this past you,” interjected an American institutional investor in rimless glasses. “What say we lynch the dame with tattoo – pour encourager les autres?”

“Yup,” agreed the fat man, his eyes lighting up. “That way we get our due.”

“Shock and awe?” said the tomato, hopefully.

“No,” said the fat man. “Closure.”

{But is this kind of thing sustainable asks the editor)

[Source: Frazer Hunt]


New Year’s Resolutions — Over Time

2008: I will get my weight down below 170.
2009: I will watch my calories until my weight is below 200.
2010: I will follow my new diet until I get below 220.
2011: I will work out once a week.
2012: I will drive past a gym at least once a week.

2008: I will read at least 20 good books a year.
2009: I will read at least 10 books a year.
2010: I will read 5 books a year.
2011: I will read some articles in the newspaper this year.
2012: I will subscribe to a good humor e-mail list this year.

2008: I will pay off my bank loan promptly.
2009: I will pay off my bank loans promptly.
2010: I will be totally out of debt by next year.
2011: I will try to pay off the debt interest by next year.
2012: I will try to be out of the country by next year.

2008: I will sponsor a disadvantaged foreign child this year.
2009: I will sponsor a disadvantaged domestic child this year.
2010: I will sponsor one kid for lunch at McDonald’s this year.
2011: I will sponsor one of my kids for lunch at McDonald’s this year.
2012: I will endeavor to remember my children’s names this year.


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