These are exciting times for the Baltic Exchange. Our acquisition by SGX last year was undertaken on the premise that it offered an opportunity to reinvigorate the Baltic Exchange and ensure that our best years were not behind us. The SGX investment allows us to grow our leadership profile and play a bigger role than ever before in setting standards, building consensus and leading change in the shipping markets. The SGX investment has come about at a time when seaborne trade has become more Asia-centric and at a time when technology is challenging the way in which we all work.
I am delighted to outline some ambitious plans for the coming months and years that will ensure that we can add value to every single member’s business. These are testing times for many of our members, and as your Exchange we are here to support you.
Freight market information
The Baltic Exchange’s independent freight market services have allowed a futures market to flourish and for floating rate contracts and indexation to exist. In 2017 we will be extending our reach beyond the dry bulk and tanker markets by providing more freight market benchmarks and also move into the LNG and container spaces. The next steps will be taken in close collaboration with panellists and end-users. We will continue to ensure that our indices remain relevant and up-to-date and, as previously announced, are embarking on a programme of change for the panamax, supramax and handysize assessments, with tanker market changes also underway.
This year will also see changes to our data policy to ensure that all companies with physical freight contracts which reference Baltic Exchange data are involving the panellists whose assessments allow us to publish these vital indices. In the coming weeks, we will be circulating full details about changes to our distribution policies. Essentially these changes will see a change to the Level.3 information distribution structure and requirement to appoint a Baltic Exchange Panellist to calculate the settlement price or prices. Panellists will be free to negotiate the terms for this service with their clients.
We believe that this move will ensure the integrity and quality of our data whilst at the same time enabling us to enhance the breadth and depth of our data for end-users.
A central tenet of the Baltic Exchange has always been the Baltic Code. It has evolved over many years and has successfully shaped the way in which we all do business together. Enforcing those rules has been essential to ensure that the Baltic marketplace is considered as trustworthy, fair and orderly by all. This year, the Baltic Exchange intends to update the Code to reflect the changing regulatory climate in which we operate. We want to increase the attractiveness of doing business with a Baltic Exchange member, be they an owner, charterer or broker. By updating the Baltic Code we hope that compliance departments and investors alike will expect companies to demonstrate their commitment to ethical commercial shipping practices by being members of the Baltic Exchange.
Digital maritime market infrastructure
The role of the shipbroker is changing and the Baltic Exchange can add real value to the post-trade space. This “post-trade space” is the period of activity between the time a trade is agreed to the time the trade is settled: the activity between “our word” and “our bond”. We have ambitious plans to work with the industry to develop tools which will provide real-time cargo and freight contract management, messaging workflows and data standards. We envisage a set of tools that will reduce information duplication and error and increase accuracy and productivity. To make this successful we will need to gather feedback and expertise from across our community and also be open to innovation from other marketplaces. In the coming months we will be expanding on these ideas in more detail.
We are investigating the possibilities of providing an escrow facility for Baltic members. This would initially be aimed at supporting sale & purchase transactions, but could develop to become a service for the placement of financial securities in cases of ship arrest or disputes. As an independent and reputable body, the Baltic Exchange could provide all parties with a useful and trustworthy service which simplifies arrangements for all.
Recovery of monies
The Baltic Exchange is able to assert its authority to support members facing problems recovering monies owed to them. This is a free service to Baltic members. Already this year we have recovered $83,000 on behalf of our members. We are now looking to enhance this service through closer co-operation with P&I Clubs as well as leveraging government contacts.
Enhancing our Asian voice
Singapore, Hong Kong and Shanghai are fast growing maritime service hubs and home to an increasing proportion of Baltic Exchange members and their clients. It is vital that the Baltic Exchange is able to understand their needs. To this end I’m pleased to announce the creation of the Baltic Asia Advisory Committee (BAAC).
BAAC’s inaugural meeting takes place on 28 April in Singapore and comprises 11 members including representatives from Glencore, Cargill, Zodiac Maritime, Louis Dreyfus, Fortescue Metals Group, Thurlestone Shipping, BHP Billiton, Howe Robinson Partners, Oldendorff Carriers, Freight Investor Services, BW LPG and Cosco Shipping.
This committee will greatly enhance our ability to provide relevant services to a wider range of members.
Full details of the new services and changes which I have briefly outlined will be circulated in greater detail over the coming months and are just the start of what will be an ambitious programme of change for the Baltic.
I hope to see and meet as many of our members as possible this year and look forward to seeing many of you on 17 May in London at the Chairman’s Cocktail Party.
Mark Jackson – Chief Executive