- Baltic Index Council decision on Baltic dry timecharter indices
Today (27 March 2019) the Baltic Index Council (BIC) announced its decision on the implications of the IMO 2020 Sulphur Cap for the Baltic Exchange’s timecharter indices. As formally announced to the Baltic Exchange members, the Baltic will be adding clarificatory wording to its Capesize, Panamax, Supramax and Handysize vessel descriptions to confirm that the index vessels are not scrubber-fitted.
Explaining the consultative decision-making process, BIC Chairman Stefan Albertijn said:
“The Baltic Index Council was presented with extensive submissions and views from across the market. Our unanimous decision to clarify the vessel descriptions as a response to the IMO 2020 change in sulphur limits, involved careful examination of all the data and feedback received from the consultation process. We are confident that it is the right decision and one which best meets the needs of the shipping markets we serve.”
The clarified vessel descriptions will be applied from 1 April 2019.
The process to consider the possibility of amending the Baltic Exchange indices ahead of the IMO 2020 Sulphur Cap began in late 2017 and took in feedback from five open forum events in London, Singapore, Athens and Copenhagen; two working group sessions for Baltic Exchange members; meetings with the Baltic Advisory Councils and meetings with panellists. The Baltic Exchange also approached a wide segment of shipowners, operators and brokers for information on the anticipated extent of scrubber installation, fuel specifications and vessel performance with low sulphur fuels and scrubbers. The impact of any decision on derivatives open interest was also carefully considered and the Baltic engaged with the FFA Brokers Association (FFABA) as well as the relevant clearing houses.
A detailed consultation paper was issued to all members, the CCPs and FFABA in January 2019 summarising the feedback obtained in 2018, and providing a further opportunity to provide written feedback.
Commenting on the consultation process, Baltic Exchange Chief Executive Mark Jackson noted:
“This was a lengthy and rigorous process that underscored the robustness of the Baltic’s IOSCO-based index administrative practices. It was essential for us to take the time to gather the necessary evidence and collective feedback, ensuring that our diverse membership and the wider market was properly consulted and provided with an opportunity to be heard. I am pleased that we are able to give the market the clarity it needs.”
A summary of the feedback received from the consultation process is available to Baltic Exchange members here.
- Freight and Commodities Forum, Singapore: 12 April
The Baltic Exchange will be holding its annual Freight and Commodities Forum in Singapore on 12 April at the SGX Centre.
Aimed at the physical, dry bulk, freight, and FFA sectors, the forum will include insights from analysts and industry leaders on how they expect markets to react to shifting cargo flows and the changing regulatory environment. The forum showcases freight options, hedging rates in FFAs and how the Baltic is supporting market participants with new services and benchmarks.
The programme for the forum is as follows:
11:15 Registration coffee
11:30 FFABA Options Workshop
12:30 Forum Registration & Lunch
13:30 Baltic Exchange Update, Mark Jackson – CEO, Baltic Exchange
13:50 The Macro Outlook On Global Trade; Chinese growth, iron ore and coal – Rahul Kapoor – Senior Analyst, Asia Transportation, Bloomberg Intelligence
14:30 FFAs and Options Panel, Chaired by Andy James – Swire Bulk / China Navigation Company
15:20 Dry Bulk Freight Markets; The supply demand outlook – Daejin Lee, Principal Consultant | Maritime & Trade, IHS Markit
16:00 Freight Market Panel: Market cycles and events;
Covering; cargo flows and new markets, benchmark changes, iron ore market outlook, LNG benchmarks, IMO 2020 Sulphur Cap
For more information, or to register, click here.
- Singapore Maritime Week: British High Commissioner drinks reception
The British High Commissioner, Scott Wightham, and Baltic Exchange CEO, Mark Jackson, invite guests to a drinks reception at the British High Commissioner’s Residence.
The event will be held on 11 April from 6pm. Attendance requires completion of a pre-registration form which can be completed here.
Those attending are reminded that the British High Commission operates a strict security policy. Please bring your invitation and a valid photo identity with you. The British High Commissions reserves the right to search guests & belongings. Please restrict the size of bags, as there are no facilities for storing personal items. Haversacks and / or shoulder bags (except small bags measuring less than 30 cm by 40 cm) & laptops will not be permitted.
- Member meeting and ASBA Baltic reception: CMA
The Association of Ship Brokers and Agents (USA) (ASBA) and the Baltic Exchange will be holding a drinks reception on the sidelines of CMA 2019 at the Dinosaur Bar-B-Que.
The event commences at 6.30pm on Tuesday 2 April. Those interested in attending are invited to RSVP by 25 March here.
Ahead of the drinks reception, the Baltic Exchange will be holding a meeting for members at Serendipity Labs, 700 Canal Street, Stamford, CT 06902.
The meeting starts at 4pm, with all members welcome to attend. Those attending will have the opportunity to hear about recent and proposed developments on the benchmark indices and to also discuss other relevant matters including data policy and the IMO 2020 Sulphur Cap.
Those interested in attending are invited to register here.
- Baltic training courses: New York, April 2019
The Baltic Exchange will be holding its Freight Derivatives & Shipping Risk and Advanced Freight Modelling and Trading training course in New York during April. More details below:
Freight Derivatives & Shipping Risk Management (New York: 8-9 April)
Delivered over two days by experts in the areas of shipping and commodity risk management, the Shipping Risk Management course aims to raise market awareness of risks involved in shipping businesses and how various physical and derivatives instruments can be used to control such risks efficiently and effectively. Participants will learn how to analyse and measure the impact of financial risks involved in shipping investment and operations, and how to select and execute effective strategies to minimise or eliminate such risks, stabilise their cash flow and maximise the return on investment more efficiently.
Advanced Freight Modelling and Trading (New York: 10-11 April)
This advanced two day module focuses on modelling freight rate dynamics and pricing options on freight. It discusses issues which are relevant to shipping market practitioners such as constructing forward curves on freight, modelling freight rate volatility as well as hedging and trading strategies using freight options. The course aims to provide delegates with both a theoretical foundation as well as practical hands-on experience.
The courses will be led by Professor Nikos Nomikos and Professor Amir Alizadeh, both lecturers at the renowned Centre for Shipping, Trade & Finance at London’s Cass Business School.
- The Chairman’s Cocktail Party
One of the standout events of the Baltic calendar, the Chairman’s Cocktail Party, will take place this year on Wednesday 15 May.
Attended by 600 guests, this historic event originally celebrated the end of a Baltic chairman’s two year tenure, held on the floor of the old Baltic Exchange. Now held at Christ Church Spitalfields in London, it brings Baltic members from across the globe together for a unique annual networking and social event, which is also attended by politicians, industry leaders and journalists amongst others.
Baltic Exchange Chairman, Duncan Dunn, will undertake the customary speech, presenting the David Bradley Cup to the 2018 winners, The Baltic Exchange, as well as reviewing another eventful year.
For those interested in attending, we suggest securing your tickets early by following this link to ensure you don’t miss this great occasion.
For pictures from last years event, click here.
- Member update: 27 March
The following individuals have applied for membership of an existing member company:
Company Individual Arrow Group of Companies Mr H Chen BACA – The Baltic Air Charter Association
Mr C Cittadini
Mr T Lawrence Mr R Pereira Ms A Rispoli Mr G Thompson Berge Shipbrokers SA
Mr D Alberdi Braemar ACM Shipbroking Ltd Mr S Rathore Kassian Maritime Navigation Agency Ltd
Mrs E Theodosiou
Any comments should be passed to Karen Karanicholas by 3 April 2019.
- Force majeure success not a sea change
It is difficult to successfully argue that contractual performance has been prevented or delayed by force majeure. This is in part because English courts or arbitration tribunals will interpret these clauses strictly and narrowly against the party seeking to rely on them.
Recent decisions, including Triple Point Technology v PTT (2017) and Seadrill Ghana v Tullow Ghana (2018), are evidence of this approach. However, Sucden Middle-East, represented by Nick Fisher of HFW, has recently relied successfully on such a clause in the Commercial Court, on appeal from arbitration.
The case, Sucden Middle-East v Yagci Denizcilik Ve Ticaret Limited Sirketi, “The Mv Muammer Yagci”, involved a shipment of sugar to Algeria on the Sugar Charter Party 1999 form. The facts found by the arbitral tribunal were that when the cargo arrived in Algeria, the cargo-receivers submitted false import documents to local customs authorities. The local customs responded by seizing the cargo, using powers under customs laws and regulations.
A delay to discharging the cargo of four and a half months ensued. Sucden, as charterers, claimed this delay fell within the exceptions to laytime running under clause 28. Owners disagreed. At first instance, the arbitral tribunal agreed with owners.
In allowing the appeal, the Court still maintained the strict and narrow approach to FM
Charterers appealed to the Commercial Court. Permission to bring the appeal was given on the basis that the question of law was one of general public importance, as it related to a standard form contract in wide commercial usage.
The question before the Commercial Court was: “Where a cargo is seized by the local customs authorities at the discharge port causing a delay to discharge, is the time so lost caused by ‘government interferences’ within the meaning of clause 28 of the Sugar Charter Party 1999 form?” Clause 28 reads:
“Strikes and Force Majeure
In the event that whilst at or off the loading place or discharging place the loading and/or discharging of the vessel is prevented or delayed by any of the following occurrences: strikes, riots, civil commotions, lockouts of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost, mechanical breakdowns at mechanical loading plants, government interferences, vessel being inoperative or rendered inoperative due to terms and conditions of employment of the Officers and Crew, time so lost shall not count as laytime on demurrage or detention…”
In deciding whether a force majeure event had occurred, the Court focused on the construction of “government interferences”. It was fairly straightforward to establish that a government entity acting in a sovereign capacity was involved, but owners argued that the government being involved was not enough and that there had to be “interferences”. In reaching its decision that there had been no interference, the tribunal had considered it a key point that seizure was an “ordinary” action. The Court rejected this conclusion. It held that the seizure of the cargo was not routine and did fall within the meaning of “interferences”. Seizure is a significant exercise of executive power and therefore could not be regarded as “ordinary”. Suspected or predictable consequences are not the same as ordinary actions (such as the inspection of the cargo by a government surveyor): “In the usual course of things, cargo is not seized and property rights are not invaded in that way.” The very fact that false documents were involved showed that the circumstances were not routine.
The Court emphasised that it was of “real importance” that its conclusion on the language was not difficult to apply, nor did it in any way offend commercial common sense.
The owners’ causation argument was also dismissed, as it was held that the seizure caused the delay, even if the submission of false documents caused the seizure.
In allowing the appeal, the Court still maintained the strict and narrow approach to force majeure, stressing that “the answer given to the question is only a narrow ‘yes’. It is ‘yes’ where the circumstances are as in the present case. The answer does not address all of the circumstances that may come within or fall outside clause 28. The answer is concerned only with the seizure of a cargo and with that seizure by a customs authority that is a State revenue authority acting in a sovereign capacity”.
This judgment gives some welcome publicly-available guidance on the interpretation of a force majeure clause in a standard form widely used in sugar trading. While the charterers were successfully able to rely on the force majeure clause in this case, it does not signal a change in the strict and narrow approach typically adopted by the English courts.
Nicholas Fisher, Judith Prior, Henry Clack and Amanda Rathbone work at HFW, a law firm delivering services to companies in shipping, commodities, aerospace, construction, energy and resources and insurance and reinsurance. Contact the organisation here.
The Baltic Exchange will hold its next Advanced Freight Modelling & Trading course on 10 and 11 April in New York in the US. More information can be found here.
- Fehr Cup: 26 June
This year’s Fehr Cup will be held on Wednesday 26 June at Surbiton Rackets and Fitness Club.
Tennis, Pimms, summer lunch with strawberries and cream, this fantastic networking opportunity for tennis players of all levels is a must in the shipping social calendar. Taking place on the grass courts of Surbiton and including lunch and tea in the clubhouse. The tournament is split into two parts, after an initial stage, more social players can enjoy an afternoon of relaxed open competition in the American Tournament, while the pros peel off to dual for the ‘Fehr Cup’ prize.
Any firm represented on the Baltic Exchange is eligible to enter one or more pairs. However, both players must be from the same member company, but the people do not have to be Baltic members themselves. Any player may be substituted but still needs to work for the same company.
Both male and female players are welcome, and the pairs can be in any combination. The matches will be the best of three sets in the main draw with a tie break at six-all in each set.
The games will be on grass (weather permitting) with play commencing at 10am sharp. The Club asks that players do not wear trainers or running shoes in order to protect the grass for the season.
The entry fee is £75 per pair, payable in advance. This fee includes the courts, coffee, lunch and afternoon tea for all players, as well as prizes for the placed teams in both tournaments. Catering for non-players is priced at £15 per head, but this also needs to be booked in advance.
The Tournament will be refereed by Perry Perera, with the American format arranged by Costas Mamarides, who will umpire the main final.
The points gained in this Tournament will go towards the David Bradley Cup. Pictures from last year’s event can be found here.
Useful information for those taking part
Address: Berrylands, Surbiton KT5 8JT tel 020 8399 1594
If you are coming by car, the parking is only on the Club side of the road in Berrylands or on the adjacent roads.
If you are coming by train, Surbiton Station has a faster, more frequent, service from Waterloo and is slightly nearer than Berrylands. It is a five-minute taxi ride or a 10-minute walk.
Further contact details
Tel: 07563 790273 or 020 8399 0398
Tel: 020 8391 0351
- BESA: Warwick Cup
This year’s Baltic Exchange Sailing Association (BESA) Warwick Cup will take place on the 18-19 May at Seaview, Isle of Wight.
There are no stipulations on who may helm each boat and after every race there will be a chance to rotate crews. So teams/squads can be as large as you like, giving everyone a chance to have a go on the water. There will also be opportunities for those not racing to witness the action close up and take photos from one of the Yacht Club’s fast tenders or just to go for a spin.
The tentative schedule is as follows:
- Friday PM: Arrive Seaview
- Saturday: Racing Seaview Mermaids http://www.seaviewmermaids.co.uk
- Saturday Evening: Three course dinner at the Sea View Yacht Club with late bar/tombola/prize giving
- Sunday AM: Racing Seaview Mermaids before lunch/prize-giving. Should be away by 1400 ish
This event counts towards the David Bradley Memorial Trophy
Entrance forms can be found here, these forms and fees, which includes the three course dinner, as well as Baltic Exchange membership must be submitted by 28 April 2019. Full rules can be viewed here.
For any further information, contact on the details below.
Eggar Forrester Shipbrokers – CW Kellock & Co Ltd
Fifth Floor, 2 London Wall Buildings, London Wall, London, EC2M 5PP