- Copenhagen Forum report
Over 300 guests joined the Baltic in Copenhagen last week for a series of events and meetings in conjunction with the Freight and Commodities Forum.
Offering the chance for members to come together and voice their opinions on topical market issues such as the IMO Sulphur Cap legislation, the Forum also carried expert analysis, presentations and discussion covering bulk commodities as well as both dry and wet freight markets, giving attendees valuable insight into these issues and a range of trends.
Chaired by Baltic Exchange CEO, Mark Jackson, the Forum closed following a lively open discussion between members on the market trends in the run-up to Sulphur Cap 2020 implementation and how these changes can be reflected in the Baltic’s benchmarks. With a strawman position on changes having been laid out prior to the Forum to encourage feedback from market participants, dozens of views were given from those among the 200 plus attendees, who used this opportunity to make suggestions on any changes that the Baltic should make.
In addition to the Forum, the Young Baltic Association (YBA) held an event on the evening of 26 September at The Ruby cocktail bar. The evening was attended by shipping professionals under 35 years old from across Denmark.
The event closed with a dinner hosted by the Dry FFA Brokers Association which was attended by 120 guests.
A selection of photos from the various events in Copenhagen can be found on the Baltic’s Flickr account here.
For copies of available presentations from the Forum, please email firstname.lastname@example.org
- Big attendance for Baltic ICS Lunchtime Lecture
Over 70 delegates turned out in London on 26 September to attend the first in the new series of lunchtime lectures jointly hosted by the Baltic Exchange and the Institute of Chartered Shipbrokers.
Guy Platten, the newly appointed chairman of the International Chamber of Shipping, opened the session after the welcome remarks from the Institute of Chartered Shipbrokers’ director, Julie Lithgow. The conference hall was packed with young brokers and their experienced colleagues looking for valuable insight into this hot topic.
As the industry draws ever nearer to the 2020 deadline, the event provided the perfect forum to assess the change required, industry progress and explore the possible impacts on the shipping markets. John Bradshaw, technical director, International Chamber of Shipping, carefully led the audience through the incoming changes already affecting the shipping industry.
Annex VI of the IMO MARPOL Convention (2008) specifies the sulphur content of marine fuel is reducing from 3.5% to a maximum of 0.5% starting on 01/01/2020 on a worldwide basis. The current transition period is intended to provide the shipping industry with time to implement solutions and be ready for the beginning of a new era.
In view of the global Sulphur Cap, ship operators, bunker suppliers, oil refiners and all parties involved in shipping need to find effective solutions to address these fast and pressing challenges resulting in a prohibition on the carriage for non-compliant fuel.
Mr Bradshaw confirmed that shipowners represented by the International Chamber of Shipping are committed to a successful implementation of the regulation, but also noted – they do not control the fuel supply chain.
He suggested that only new refineries are geared up to provide compliant fuels. Furthermore, the availability of compliant fuels as well as compatible fuels will be one of the main challenges for shipowners preparing for new blends.
The speaker then addressed the other options available such as retrofitting as well as alternative powering options. Sulphur cleaners (scrubbers) offer an effective solution for reducing sulphur emissions as they allow ships to meet IMO regulations while still consuming high sulphur fuels. Although retrofitting is a complicated technical procedure and requires expensive investment with equipment and installation in the order of several millions of US$ depending on the vessel – it could prove an advantageous option since it increases the resale value of the ship. Additionally, scrubbers may strengthen an owners’ position against high fuel oil prices in the future.
Another solution is the use of liquefied natural gas (LNG) as fuel. LNG is an alternative and less expensive fuel with zero sulphur content and excellent combustion properties. Again, substantial investment is required both for ships and transport and storage facilities. Furthermore, there are relatively few LNG terminals in the global supply chain which provide the necessary storage and supply facilities. As a result, few shipowners have chosen this option.
Fuel blends, compliant with the 0.5% sulphur cap may provide a less expensive solution, though this can lead to huge problems both for vessel and crew. Apart from the cost, blending fuels from different sources and with different sulphur content levels can cause destabilisation of the final combustion, mechanical problems and serious effects on the safety of the ship.
Overall, as the transition period comes to its end in 18 months, it seems that the involved parties are not well prepared to face the upcoming changes and strict regulations. New legislation, technical issues, fuel switchover problems, fuel availability and increased cost of bunkers are some of the main issues that ship operators and bunker suppliers will face in the near future.
A lively Q&A followed the lecture, with questions and discussion on LNG demand forecasts and the influence on prices; whether the cost of scrubbers will decrease due to larger scale take-up; the penalties for non-compliance; the likelihood of another delay/deferment to the implementation deadline; the potential impact on the scrappage market.
- Baltic Wine Society: Who is telling the truth?
Sommelier, David Hughes, returns to the Baltic on 31 October with two fellow wine buffs for the latest Baltic Wine Society tasting.
This time, however, attendees will have to work out which expert is truthfully describing each wine and who is bluffing!
In addition, paintings from the finalists and winners of the Royal Society of Marine Arts Exhibition will be on display for guests to enjoy.
To register, please email email@example.com
£15 for members, £20 for non-members (prices exclude VAT).
- Final tickets remain for Chairman’s Curry Night
There are already over 100 confirmed attendees this Thursday 4 October for the Chairman’s Curry Night, with the final few tickets remaining available here.
Hosted by current Baltic Exchange Chairman, Duncan Dunn, the event will be held at The English Restaurant, Spitalfields, which is housed in a historic building dating back to the 1670s.
- Master’s negligence: no recourse for charterers
In Clearlake Shipping Pte Ltd v Privocean Shipping Ltd, the English High Court found that charterers had no recourse against owners for the master’s negligent decision to require additional cargo strapping in one of the ship’s cargo holds — a decision that cost the charterers in excess of US$400,000.
It acts as an important reminder of the exceptions available to shipowners when the Hague/Hague Visby Rules are incorporated into charterparties.
A dispute arose between shipowners and time charterers in relation to the stowage of cargo of soybeans shipped from New Orleans to China.
The charter was on the NYPE 1946 form. The master rejected a stowage plan which leftcargo holds partly loaded, on the basis that strapping was required to ensure the stability of the vessel. The master rejected a different solution involving ballasting.
The charterers argued that cargo strapping was unnecessary. They presented expert evidence to demonstrate that the vessel’s stability could have been ensured either by ballasting or distributing the cargo differently.
Shipowners claimed the sum of approximately US $400,000 in balance hire. The charterers claimed the costs of circa US$410,000, which they said had been spent unnecessarily on strapping the cargo.
The NYPE form:
- Clause 2 provided that “Charterers are to provide necessary dunnage and shifting boards, also any extra fittings requisite for a special trade or unusual cargo…”; and
- Clause 8 imposed responsibility for loading and stowage on the charterers.
The United States Carriage of Goods by Sea Act (“US COGSA”) was incorporated in the charterparty.
Section 4(2) of US COGSA, which is the same as Article IV, rule 2(a) of the Hague/Hague Visby Rules, excludes shipowners’ liability for any “act, neglect or default of the master … in the management of the ship”.
The decisions made
The arbitrators found that adequate stability could have been achieved without cargo strapping, and that the master was negligent in requiring strapping.
However, the Charterers were unable to recover their unnecessary expenses from the shipowners for the following reasons:
- Clause 8 imposed the responsibility on loading and stowage on the Charterers;
- Clause 2 concerned what the charterers had to provide by way of dunnage & fittings, etc, but was silent on the position where the charterers had paid for a fitting that was unnecessary; and
- While the master was negligent, the shipowners were entitled to rely on the exemption in s. 4(2) of US COGSA pertaining to negligence of the master “in the management of the ship”.
Charterers unsuccessfully attempted to appeal the decision to the English High Court.
Cockerill J examined the existing authorities on the scope of a shipowner’s exemption of liability for the master’s negligence “in the management of the ship”.
While it is well established that an act done primarily in connection with the cargo does not constitute “the management of the ship”, in this case the exemption of liability was available.
This was on the basis that cargo strapping was directed at the ship’s stability (rather than care for the cargo), notwithstanding that the same result could have been achieved by ballasting.
The charterers will, understandably, be disappointed with this result. They incurred significant unnecessary costs resulting from negligence of the master.
Clause 8 of the NYPE form allocates responsibility to charterers for loading and stowage and, where the Hague/Hague Visby Rules or US COGSA apply, clear wording will be required to shift responsibility to the shipowners, even when unnecessary expenditure has been caused by the negligence of servants of the shipowners, or a breach of the charterparty.
This case is an important reminder for charterers of the exceptions available to shipowners when the Hague/Hague Visby Rules or US COGSA are incorporated into charterparties – often by way of a Clause Paramount.
It also establishes that the exception pertaining to negligent acts of the shipowners’ servants in the “management of the ship” can indirectly extend to acts involving cargo, where the wrongful act concerns the safety of the vessel.William Pyle is an Associate at HFW in Singapore. Contact him on +65 6411 5323 or at firstname.lastname@example.org.
- Baltic Exchange online shop goes live
The Baltic Exchange is now taking online orders for merchandise, including personalised 2019 Baltic Exchange diaries.
The redesigned 2019 diaries are sporting covers hand-bound with exclusively sourced top grain calfskin and with a distinctive feel that combines the softness of prime leather with the sturdiness of a proper datebook.
- Hamburg Maritime Management Symposium
The Baltic Exchange is supporting the Hamburg Maritime Management Symposium, an evening event organised by the University of Hamburg on 8 November.
This year’s line-up features an interesting range of speakers and topics. Covering everything from FFAs, big data, liner shipping mergers to the implications for Europe of China’s One Belt and One Road, the event is set to be a thought-provoking evening for shipping professionals.
Prof. Nikos Nomikos, Cass Business School
Prof. Qing Liu, Hamburg University
Anthony Humberston, Senior Freight Analyst, Oldendorff Carriers
Dr. Jan-Hendrik Hübner, Global Head of Shipping Advisory, DNV GL
Thomas Mazur, Partner Restructuring Services, Deloitte
Dr. Arnt Vespermann, CEO, Hamburg Süd
Click here for further details.
- Member update: 03 October
The following company has applied for Corporate Membership:
Company Individual Waterfront Chartering International Ltd Mr O D Keane
Mr John M Olsen
Mr Jan Olsen
Mr M J Stoker
The following individuals have applied for Membership under an existing member company:
Individual Company Mr D Anderson Howe Robinson & Co Ltd Ms A Jaspers Mr L Kerstens HOFOR A/S Miss C Lyes Roy Hill Iron Ore Pty Ltd Ms Y Tang
The following have applied for Retired membership:
Mr C J M Sargeant
Any comments should be passed to Karen Karanicholas by 10 October 2018.
- YBA Shanghai photos now available
Photos from the Young Baltic Association (YBA) Shanghai event on 20 September are now available to view here.
- Baltic goes dragon boat racing for GOSH
The 5th OSCAR Dragon Boat Race raised over £110,000 for specialist children’s hospital, Great Ormond Street (GOSH), for what turned out to be a truly inspiring day with a healthy dose of competition!
It was a frantic sprint to the end with the Baltic Exchange crew coming in 4th, pipped to the line by Union Maritime followed by Oldendorff and C Solutions.
Pictures of the event are now available via the Baltic Flickr account and can be viewed here.