- Baltic Exchange and TradeWinds International Shipbroking Forum
On 11 September the Baltic Exchange, in partnership with TradeWinds, will be presenting the International Shipbroking Forum, London, at the Doubletree By Hilton, Tower of London Hotel. The event, which takes place during London International Shipping Week, will incorporate three sessions. These sessions are as follows:
Panel One 2-3pm
Relevant, reliable and tradable: Indices for today’s shipping markets
Panel members include Emanuel (Manu) Ravano, CEO, Ifchor; John Banaszkiewicz, Managing Director, FIS, Chris Reilly, Managing Director, BRS Futures and Ben Gibson, Head of LNG Derivatives, Affinity Shipping. Mark Jackson, CEO, Baltic Exchange, will moderate the discussion.
Panel Two 3.10-4.10pm
Shipbroking and Digitalisation – Disruption, Diversification and Differentiation
Julian Bray, Editor-in-Chief, TradeWinds, is joined by Mark O’Neil, President, Columbia Shipmanagement Ltd; Ami Daniel, CEO, Windward; Martin Hjelle, Head of Technology, Western Bulk; Viral Shah, Head of Freight Trading, RWE Supply and Trading; Nico Borkmann, Director and Executive Board Member, Braemar ACM Shipbroking.
Panel Three 4.30-5.30pm
Regulation & Shipping – what’s come/coming over the horizon?
Stefan Albertijn, Chairman, Baltic Index Council will be joined by Duncan Dunn, Senior Director, SSY Futures Ltd; Brian Nixon, Managing Director, Lavinia Bulk Ltd and Jonathan Herbst, Global Head of Financial Services Regulation, Norton Rose Fullbright LLP.
Registration for the event commences from 1pm, with opening remarks taking place at 1.30pm. Short breaks will be held between sessions, with a networking drinks reception on the Savage Garden rooftop immediately following the forum.
For more information and for registration enquiries, click here.
- Join Baltic reception at Gastech
Baltic Exchange members visting this September’s Gastech event in Houston are invited to attend a Baltic Exchange cocktail reception at Yellow Rose Distilling on 17 September. Cocktails and light bites will be served at 1630, followed by a distillery tour and whiskey tasting at 1730.
Yellow Rose Distilling
1224 North Post Oak Road #100
To confirm your attendance, please email firstname.lastname@example.org
- FFA training courses: London
There are still limited places available on the Baltic’s freight derivatives training courses in London (7-10 October).
Freight Derivatives & Shipping Risk Management
An overview of risk in the shipping business. Topics covered include freight rate risk management, derivative instruments, freight rate options, bunker and financial risk management, ship price risk management, Value at Risk and credit risk.
Advanced Freight Modelling & Trading
A focus on pricing freight options, modelling freight rate dynamics, constructing forward curves, modelling freight rate volatility as well as hedging and trading strategies.
For full details please visit www.balticexchange.com/other-services/training-2/
- A new advantage: Baltic Escrow special introductory rates
Trust and values underpin everything that the Baltic Exchange does. Dmitry notes that the 275-year old Baltic holds a unique position of independence and trust in the shipping industry. The Baltic’s escrow service looks to build on this reputation with an offering that provides a strong alternative to other service providers such as law firms and banks.
To provide Members with an opportunity to trial the service, the Baltic Exchange will be offering the first three transactions free of charge, with subsequent transactions at a discount of 20% on the standard fee until June 2020. Even after this period, Members will continue to benefit from favourable fees.
Going the extra mile
The Baltic Exchange is continually looking to add value for its Members. Dmitry shares that the service is underpinned by a high standard of compliance and controls. The Baltic Exchange follows a robust due diligence process in compliance with the Monetary Authority of Singapore (MAS) requirements. This is reinforced by the strict internal control of fund movements from the dedicated escrow account held with AA-rated Singapore bank OCBC. The Baltic Exchange is backed by its listed parent company, Singapore Exchange (SGX), which provides a further level of assurance to users.
“The Baltic is coming in as an independent, reputable and trustworthy institution that is known in the market. Due to its independence, there will be no conflict of interest, this, in addition to its competitive pricing, makes it a strong option for anyone in the industry looking to use an escrow service.”
Dmitry highlights that the Baltic Exchange’s independent and neutral position helps to differentiate it from other escrow providers in the market. Due to its independence, users of the Baltic’s escrow service can be sure that conflicts of interest will not arise and each transaction will be handled with the highest level of confidentiality, professionalism and security.
The Baltic Escrow process
The Baltic Exchange receives a request to act as the independent escrow agent for a ship sale and purchase transaction. The Baltic Escrow agreement and terms are sent to the buyer and seller for review while the necessary compliance checks are undertaken. Upon completion of compliance checks, the buyer and seller sign the escrow agreement. The deposit and related funds are transferred by the buyer to the Baltic Exchange escrow account and held securely while the deal formalities are completed. Once the deal is ready to be concluded and all contract terms are met, the buyer and seller instruct the Baltic Exchange to release the funds to the seller. At this point, the transaction is executed swiftly and professionally and with the highest attention to detail.
From Singapore to the world
Dmitry is keen to assure Members that while the servicing is handled out of Singapore, it is available to users globally. The choice to set-up the service in Singapore he says was a business one, with Singapore being both a major shipping hub and the centre for a large number of ship closings. This, in addition to its strong regulatory framework and international banking expertise, made the location a sensible choice.
Dmitry closes our conversation by discussing the future. While in the short term he expects the primary use of the Baltic escrow service to be for ship sale and purchase, Baltic is looking into expanding the service offering to other asset purchases, disputes and situations where an independent party is required to hold funds pending completion of a transaction. Baltic is also offering its escrow services to both existing Members and other users.
If you would like to take advantage of the Baltic Escrow Service’s introductory offer, or find out more about how the Baltic Escrow Service can support your business or learn more about becoming a Baltic Member, contact:
Dmitry Pismenny for the Baltic Exchange Escrow service on +65 9435 6650 / +65 3163 4913 email@example.com.
Crispin Eccleston for membership details on +44 (0)20 7369 1654 / firstname.lastname@example.org
- Changing perceptions: The Suez Canal at 150
A new image
Four years have passed since the new, expanded, Suez Canal was opened. The US$8.6 billion project, funded entirely by public subscription, widened and deepened the existing waterway and created a parallel 34-kilometre channel to allow two-way transit along part of the route from kilometre 51 to 122 of the 161-kilometre waterway. The Canal Authority says the expansion has reduced navigation times from 18 to 11 hours and aimed to increase the number of ships transiting the Canal by the year 2023 to 97 per day.
Historically, some of the realities of moving through the Canal have been questioned. Providing ‘gifts’ to local Pilots to ensure safe passage being one such example that splits the opinion of operators, with reports of those Masters unwilling to do so subsequently facing challenges in persuading Pilots to navigate them through the Canal. However, the Port Authority makes clear that it is working hard to ensure such instances are not a part of its future, assuring those in attendance that should there be misunderstandings moving forward that the Master of any ship transiting the Canal should feel comfortable contacting the Authority directly to ensure this, or any other type of situation, is swiftly resolved.
Tolls and pricing advantages
The Canal Authority makes clear that the expansion in 2015 has not impacted the calculating of its tolls. Fees for transiting the Canal are based on Suez Canal Net Tonnage (SCNT), which take into account vessel particulars, trade route, economies of scale, market conditions and the cost of moving cargo via Suez compared to alternative routes.
The SCA has adopted what it calls flexible marketing policies to encourage vessels to use the Suez Canal route. These policies include rebate systems including the longstanding policy in place for long haul vessels, which looks to ensure tolls don’t exceed the value of using the Canal. Another rebate structure is in place for LNG vessels with 5%, 7% and 10% rebates offered on vessels carrying 1-3, 3-10, and 10+ million tonnes of cargo respectively.
In addition to these, permanent toll reductions of 25% for LNG carriers and 50% for cruise vessels calling at ports in Egypt, the Red Sea or the Mediterranean are in place, with a full exemption for ships transiting the Suez Canal for repair or maintenance in SCA shipyards or its affiliated companies. Temporary toll reductions are also in place for dry bulk, tanker, container and LNG vessels through a system of circulars, more details of which can be found on the SCA website.
In terms of tolls for passing through the Canal, officials were keen to make clear that technically vessels of all sizes can pass through Suez, albeit with the very largest carriers needing to be partially laden. The SCA at this stage highlighted the Sumed pipeline, stating that supertankers can pass through the Canal should they choose to lighter part of their cargo through this pipeline. Tolls of US$0.63 are levied on each metric tonne of crude oil cargo via this option, with the toll for the remaining crude oil cargo carried by the tanker calculated by deducting the volume discharged at Sumed from the total cargo indicated in the cargo manifest and the bill of lading.
Focus on safety
Throughout the presentation, the importance placed on safe passage was a consistent theme. Officials from the Port Authority were keen to present the range of measures they have in place to ensure this.
The Suez Canal Maritime Training and Simulator Centre aims to educate Suez Canal Pilots on the safe handling of vessels during different navigational scenarios. Ships are further monitored during their passage through the Canal via an advanced radar network, with 16 pilotage stations (approximately one every 10 kilometres) along the waterway. The traffic system has two convoys, one from the North and one from the South. While navigational aids such as tugs, pilotage stations and buoys, for which there are 650 along the waterway of the Canal, help further support the passage of ships during transit.
According to the Suez Canal Authority, it is the implementation of these measures that ensures accidents in the Canal are uncommon and if they do occur, the interruption to navigation is now minimal.
Baltic Exchange Chairman, Denis Petropoulos, joined those in attendance. Catching up with him after the presentation his final assessment was simple, “Suez represents an essential seaway for the global movement of trade, where time is money and safety is paramount.” Through the developments at the Canal, the SCA is aiming to ensure these essential aspects of the movement of trade continue to be achieved with the highest levels of efficiency and safety, while ensuring that those passing through Suez know that should either of these aspects not be satisfactorily achieved, the communications channels are open and available to ensure this is corrected.
For more information, visit www.suezcanal.gov.eg
- Member update: 28 August
The following company has applied for Corporate Membership:
Company Individual EuroChem Group AG
Mrs N Krasnoshlykova Mr M Obert
The following individuals have applied for membership of an existing member company:
Company Individual The China Navigation Company Ltd
Mr R Aarvold Mr F W A Crouch Mr M Schrader Mr B D Swindoll
Any comments should be passed to Karen Karanicholas by 4 September 2019.
- Marine art exhibition at the Baltic
Mall Galleries will be holding an exhibition of pastel paintings by Matthew Draper at the Baltic Exchange between 4 September and 4 October. Matthew Draper is the 2019 winner of the Baltic Exchange Award at the Royal Society of Marine Artists’ Annual Exhibition. Paintings will be displayed in the Baltic Bar and around the building.
This exhibition draws together his winning painting alongside other works from recent series that approach the relationship between water and light. His atmospheric landscapes take us from the Scottish Islands of Skye and Raasay to the busy River Thames and down into the West Country to Falmouth Harbour, a site he has revisited over the course of 25 years.
Draper won the Baltic Exchange Award for the pastel painting Nocturne with A Polluted Light, a depiction of Falmouth Harbour at night, the dockyard lights blurred through the fog and cranes, the hull of a ship, floating buoys just discernible in the glow.
“I became interested in how to combine the two types of reflections; whether it be the lit-up dockland, and parts of the town or the remaining evening light, with the movement seen on the surface of the water,” said Matthew Draper.
The artist identifies himself principally as a draughtsman and uses soft pastel as a medium, crushing it in his hands and manipulating the material to build up a thick layered surface using the ball of his thumb or the heel of his hand, and even his forearms.
Known for his atmospheric and beautiful depictions of landscape he is interested in and influenced by the dramatic imagery of 18th and 19th century painting.
Draper is an Edinburgh-based artist who has exhibited widely throughout the UK and whose work can be found in numerous private, corporate and public collections including that of The Bank of Scotland, Huawei, Falmouth Art Gallery, Kelvin Grove Gallery and The City of Edinburgh.
All paintings exhibited are for sale through www.mallgalleries.org.uk/buy-art
- How and when to offset claims against freight
In 2014, the Chinese energy giant Sinopec was engaged for the modernisation of the oil refinery at Atyrau in Kazakhstan, near where the Ural river drains into the Caspian Sea. Sinopec engaged DHL to arrange the transport of refinery units from China.
DHL sub-contracted Globalink for the sea and road leg from the Black Sea port of Novorossiyk through the Ural-Caspian canal to the refinery. Their agreement was entitled “Freight-Forwarding Services Contract”, Globalink was referred to as the “Forwarding Agent”, and they were to be liable for any delay in delivery.
In October 2014, two barges carrying the units launched from Novorossiysk. One barge failed to arrive at the destination because the water level in the Ural-Caspian canal was too low for its draft. To make matters worse, on November 23, 2014, the Ural-Caspian canal closed for winter, so some of the cargo had to be put into storage. Globalink were only able to complete the carriage to the destination when the canal re-opened the following spring.
Defendants to claims for money due under commercial contracts often resist payment on the basis that they have a counterclaim
As a result of this delay, DHL refused to pay the final two instalments of the contract price due to Globalink. Globalink brought a claim for those sums plus the winter storage charges, amounting to $1,647,780. DHL contended that they had a counterclaim of $2,364,976.05, being the costs they incurred in excess of what they would have paid to Globalink if the original agreement been fulfilled.
Globalink applied for summary judgment, relying inter alia on the rule precluding the set-off of counterclaims against the payment of freight under voyage charterparties.
The legal issues
Defendants to claims for money due under commercial contracts often resist payment on the basis that they have a counterclaim, which they wish to set-off against the sums due. English law generally permits this where a claim and cross-claim are so closely connected that it would be unjust to enforce one without taking the other into account.
One notable exception is the long-established principle that a defendant is not entitled to raise any counterclaims it may have in order to reduce the freight payable under a contract of carriage.
The Courts have taken a strict approach in only applying this rule to claims for freight payable under a contract of carriage. It does not, for example, extend to claims for hire under a time charterparty. However, while the rule is most widely known for its application to freight payable under voyage charterparties, it is not limited to the carriage of goods by sea and has been held to apply to the carriage of goods by road and by air.
It has also been held, in Britannia Distribution v Factor Pace  2 Lloyds Rep 420, that if a freight forwarder has acted as agent in entering a contract of carriage with a carrier and that carrier charges freight, then the forwarder is entitled to claim the sums due for that freight from his principal and the rule against set-off applies.
In this case, Globalink argued that the sum charged by Globalink to DHL was charged in consideration for transporting the equipment from one place to another. It is therefore properly described as freight, such that the rule in The Aries should apply.
DHL argued that the rule in The Aries only applies to contracts of carriage and that this was not such a contract. It was instead a contract to arrange carriage and was not subject to the rule against set-off.
The Commercial Court’s decision
The Judge’s starting point was to consider the nature of the contract between the parties. He noted that the contract described itself as a freight forwarding agreement, not a contract of carriage.
He stated that “the essential nature of [Globalink’s] obligation is not an obligation to carry, but an obligation to procure that carriage is achieved by others”. The fact that Globalink could incur liability for delayed delivery of the cargo did not mean that Globalink was a carrier, nor that Globalink accepted an obligation to deliver on a particular date, it just meant that if Globalink did not arrange for others to deliver the cargo by that date it would incur a penalty to DHL.
The Judge considered that applying the no set-off rule in this case would represent an extension of the existing law, extending the ambit of the rule beyond contracts of carriage and beyond freight in the narrow sense established by the authorities.
He concluded that it was not open to him to extend the rule to cover the services provided by a freight forwarding agent, when those services are simply to arrange the carriage of goods.
This decision confirms that the rule preventing set-off against freight only applies in cases of payment of freight under a contract of carriage. It will not assist freight forwarders who merely contract to arrange the carriage of goods by another.
It is advisable for freight forwarders who wish to avoid deductions being made from payment due to them to insert clear wording in their contracts, requiring the payment of all sums due in full and prohibiting their counterparty from making any deductions or set-offs against the sums that are payable.
- BEGS Company Cup 2019
This year’s Baltic Exchange Golfing Society Company Cup will be held on Friday 11 October at West Herts Golf Club.
The event is open to teams of two shipbroking golfers. The best combined Stableford score will be the winner.
The Company Cup format is pretty simple, but has a few minor rules:
- Teams of two, competing in four-balls over one round.
- Stableford scoring system, with the combined score counting to each two-person team.
- Each team does NOT have to consist of employees from the same company, clients/visitors are very welcome.
- Teams can be two principals from the same company or different offices, or a principal and a broker or two brokers.
- There is no limit on the number of teams any one company wishes to enter, the more the merrier.
- Baltic Exchange is sponsoring the hole in one on the Par 3’s, with a main prize of a car and other prizes on the rest
- There will be additional prizes for nearest the pin, longest drive in the rough and longest drive on the fairway.
- Official handicap certificates are not required, but anyone playing off 24 or higher that does not have an official club handicap cannot score more than 30 points.
- This event can contribute as one of the sports for the overall David Bradley Cup winner.
Anyone interested in registering for the Company Cup, please contact James Pendered, it will be on a first-come-first-served basis.
Format (all times are approximate & subject to change)
Noon – Arrival time, bacon roll & coffee
13:15 – Tee off for 18 holes from the first tee
18:30 – Drinks/prize giving during dinner
The cost will be £80/player
Herts WD3 3GG
Telephone: 01923 236484 / Pro Shop: 01923 236866