- New Lord Mayor visits the Baltic
The new Lord Mayor of London, William Russell, joined the Baltic Exchange for lunch on Thursday 14 November.
Mr Russell, who is the 692nd Lord Mayor to fulfil the role, will act as a global ambassador for the City, and the UK-based financial and professional services industry, for a term of one year.
Before lunch, Denis Petropoulos, Chairman of the Baltic Exchange, raised a toast to the new Lord Mayor, stating:
“The tradition of the Lord Mayor’s first week in office to attend the Baltic Exchange is indeed an honour, we all here do hope that tradition with the Baltic Exchange is maintained.
“Whilst I said in my earlier welcome, we have no hard sell, we do have our motto – Our Word Our Bond – that is a hard message – a message that resonates throughout our industry. A message that describes the integrity and trust required to do business. Business with differing nations, in differing continents with differing cultures and differing values. We therefore endorse your endeavours in your mission.”
Pictures from the Lord Mayor’s visit can be viewed here.
- Baltic Exchange App
The Baltic Exchange has launched a new mobile App for Members and subscribers to its data.
Designed for Android and iOS operating systems, the app provides instant access to a wide range of Baltic information including rates, fixtures, Member contacts, news and much more.
Key features include:
- Live market data, including all historical Baltic indices & assessments and charts
- Live and historical FFA data, including forward assessments and volumes
- Push notifications for all Baltic spot data upon publication
- Member search facility. All company and individual contact details easily accessible
- Market intelligence including daily & historical fixtures, market reports, circulars and news
- Listings of all Baltic Exchange meetings, social and educational activities
Users can customise data notifications to receive the information they need as it’s published.
To sign up, you will need to register using your existing Baltic account here. Fill in the details using your personal corporate business email address.
The App is available only to members and subscribers to balticexchange.com – access is available to individuals who are registered with the Baltic Exchange as part of their corporate membership. If you have any questions, please do not hesitate to contact firstname.lastname@example.org
- The Baltic in Australia
Earlier this month, Baltic Exchange chief executive, Mark Jackson, and Baltic Exchange head of Asia, Lu Su Ling, visited Melbourne for a lunch in partnership with Maritime Industry Australia.
Speaking on the purpose of the visit, Mark Jackson said:
“The Baltic has been positioning itself as, and I think achieving, a global membership organisation.
“We have an office in Singapore… but the fact is, there is still quite an active shipping community here on the bulk side of things in Australia and we want to see if we can capture some of that interest and provide services from the Baltic.”
The Baltic Exchange Chief Executive also spoke of the impact of the acquisition by the Singapore Exchange.
“What has changed is that the Baltic is now owned by a regulated entity that is also a regulator of its own marketplace. We have put in place stricter audit controls which also led into us now having an application to our own regulator (the Financial Conduct Authority in the UK) and I think that having SGX and their knowledge of marketplaces process procedure has helped us ‘up our game’.”
- Baltic Carol Service
The Baltic Exchange is delighted to invite members to join us at the Baltic Exchange on 17 December for the annual Baltic Christmas Carol Service. Mince pies and mulled wine will be served from 3.30pm with carols from the City Singers Aldgate starting at 4pm.
- New Baltic training courses: IMO 2020 bunker hedging and FFAs for LNG
The Baltic Exchange is launching two new half-day training courses in Singapore this February as part of its Baltic Academy programme. Bunker Hedging Post IMO 2020 (4 Feb) and Managing LNG Freight Risk (5 Feb) will be led by risk management specialist Mikal Boe.
Bunker Hedging Post IMO 2020 is for bunker buyers, traders and suppliers wishing to understand how IMO 2020 may affect the hedging of bunker fuel prices as the ‘old’ contracts disappear and ‘new’ ones emerge. Attendees will learn best practices in bunker fuel price risk management, using new low sulphur fuel oil contracts and gasoil contracts as well as basis risk between ports and how to manage regional discrepancies.
Bunker risk management essentials
– The economics of a bunker hedge in a COA and for bunkers on redelivery
– Classic signs of when to hedge and when to float on the spot market
– Tried and tested hedging strategies – practical examples
– How IMO 2020 changes bunker hedging,and why
Hedging bunker price exposure with new contracts
– Term structure and oil market dynamics
– The new low sulphur fuel oil contracts, market mechanics post 2020
– Low sulphur marine gasoil contracts
– Basis risk and regional price differentials, best practice hedging
– New hedging strategies – practical examples
– Execution, clearing, collateral and cash management
Cost: USD 600/SGD 800
Managing LNG Freight Risk Using Futures teaches participants how to trade and use FFAs effectively to manage pricing risk from volatility in LNG freight rates. This half day course is designed to help build confidence in using new indices from the Baltic Exchange in managing risk for shipping and is suitable for both LNG and shipping company executives.
The Baltic BLNG Index
– Comprehensive understanding of the BLNG Baltic Index and Index methodology
– The role of panels and integrity of the market
– Pricing of the Index on time charter and voyage charter
– Calculating ‘Basis Risk’ between the LNG Index and main LNG trading routes
– Index Settlement mechanisms and correlations
– Term structure of the LNG forward curve
– Contango, backwardation, inversions and seasonality
Putting it all together with FFAs
– Composition, construction and use of an LNG FFA derivatives contract
– Practical application of LNG FFAs to freight contracts and time charters
– Calculating pricing risk, calendar risk and cash flow
– Settlement mechanisms
– Leverage and Margining and mark-to-market
– Stress testing
– Examples and practical uses of an LNG FFA contract
Cost: USD 600/SGD 800
For further details and booking, please contact Bill Lines. Email: email@example.com or call +44 (0)20 3326 8450
- Christmas in Athens
Members are invited by the Chairman of the Baltic Exchange, Denis Petropoulos, to join him at the Baltic’s annual Athens Christmas Reception at the Hilton Galaxy Rooftop Bar from 6 pm on 5 December.
We look forward to welcoming members and invited guests from across the Greek market for cocktails and canapés to celebrate the start of the Christmas Season.
Those interested in attending are invited to register on our event page here.
- FFA basics: Baltic/ICS Lunchtime Lecture, Singapore
Kenneth Ng, Director of Digital Services at the Singapore Exchange (SGX), will look at the basics of FFAs and how they can be used to manage shipping market volatility and risk in the Baltic/Institute of Chartered Shipbrokers Lunchtime Lecture, Singapore, 27 November.
Kenneth has held various portfolios in commodities and derivatives units covering product development, management and sales.
12:15 – 13:00 Light food and drinks, networking and mingling
13:00 – 14:00 Kenneth will cover the basics of FFA, followed by short Q&A
This event is complimentary for all Baltic and ICS members to attend on a first-come, first-serve basis. All others will need to pay a fee of SGD 100 to attend.
Please send the RSVPs via: https://forms.gle/ucLi22aWLhEsh6cNA
- General Average wording under scrutiny
In Navalmar UK Limited v. (1) Ergo Versicherung AG & (2) Chubb European SE (BSLE Sunrise)  EWHC 2860 (Comm), the Court rejected a shipowner’s arguments that the wording of a standard form General Average (GA) guarantee, customarily issued by cargo insurers to secure the release of cargo in a GA situation, precluded the cargo insurers from pleading actionable fault as a defence to a GA contribution claim.
The background to this case was that on a laden voyage from Jebel Ali to Antwerp, the vessel ran aground off the coast of Valencia and GA was declared. The owner carried out a number of repairs before the vessel resumed its voyage, later arriving in Antwerp and discharging all its cargo.
The cargo interests provided the owner with GA security in the form of GA bonds on the Lloyd’s Average Form as per the usual practice. The cargo insurers then issued GA guarantees in the ordinary way under the terms approved by the Association of Average Adjusters and Institute of London Underwriters.
As per their wording, the GA bonds responded to: “The proper proportion of any […] general average […] which may hereafter be ascertained to be properly and legally due from the goods or the shippers or owners thereof.”
The GA guarantees were drafted so as to be responsive to: “Any contributions to General Average […] which may hereafter be ascertained to be properly due in respect of the said goods.”
Following the issue of the GA adjustment, the cargo interests and their underwriters declined to pay their GA contribution.
They relied on the actionable fault defence under Rule D of the York Antwerp Rules 1974, alleging that the owner was in breach of Article III rule 1 of the Hague/Hague-Visby Rules in that the vessel was unseaworthy.
While the owner accepted that the cargo interests could plead a Rule D defence under the bonds, they alleged that the cargo insurers could not do so under the GA guarantee wording, which was wider and which imposed a primary obligation on the insurers to pay that which was properly due as between cargo interests and owner. Reliance was placed among other things on the decision in the Maersk Neuchatel .
In that case, the Court held that the wording of a letter of undertaking (LoU) issued by the charterer on behalf of cargo interests as security for a GA claim precluded the charterer from challenging the adjustment. The wording in question stated that the charterer: “…would pay the proper proportion of any General Average and/or Special Charges which may hereafter be ascertained to be due from the cargo or the shippers or owner thereof under an Adjustment prepared by the appointed Average Adjusters.”
Dealing with the matter as a preliminary issue, the Court found in favour of the cargo insurers. The Court’s reasoning was as follows:
- While the GA guarantees created primary obligations on the part of the cargo insurers to pay amounts “properly due”, it did not follow that this primary obligation was broader in scope than the obligation under the GA bonds. Construing the GA guarantees independently of the GA bonds would be to ignore the commercial purpose of a GA guarantee, which was to secure the bond such that a cash deposit was not necessary.
- There would be no practical purpose in owners collecting GA bonds from cargo interests if the intended effect of the GA guarantees was to create an obligation on the part of their cargo insurers to pay the owner without regard to the ultimate underlying liability of the cargo interests. It was also difficult to see why cargo insurers would have any commercial interest in undertaking a more onerous obligation than cargo interests in circumstances where the owners were only entitled to demand reasonable security.
- In terms of the guarantee wording, the word “due” was synonymous with the word “payable”, and payable meant legally payable. Therefore, the addition of the word “legally” to the bond wording did not mean that there was any practical difference between the wording of the GA bonds and the GA guarantees. In the Court’s view, a sum would not be legally payable until any Rule D defence had been determined, and the use of the word “properly” only fortified that conclusion.
- The Maersk Neuchatel decision could be distinguished from this case. In particular, the wording of the GA guarantees was materially different from the wording of the LoU in the Maersk Neuchatel. Furthermore, that LOU was issued in a different factual and commercial context.
The decision is consistent with the commonly held understanding of how standard form GA bonds and guarantees operate. While it is possible for a party providing GA security to contract out of its right to plead a Rule D defence, this would have to be clearly and expressly stated in the relevant documentation. Otherwise, the Court is unlikely to conclude that a party has voluntarily given up its rights in this way.
Christian Dwyer is global head of Admiralty and Joe Crompton is an associate with Ince, www.incegb.com.
- Panel seminar: charting maritime careers – inspiring future professionals
Join the Nautical Institute onboard HQS Wellington from 5.30pm on 2 December for a panel seminar to explore the career options available in the maritime industry.
Speakers will include: David Tubb, Recruitment Director at Spinnaker and Fena Boyle, Policy Manager at the UK Chamber of Shipping, as well as Andrew Bell – Marine Manager, Stephenson Harwood and Gordon Lowe – Dry Cargo Fleet Manager, Zodiac Maritime.
The session will be followed by a networking drinks reception.
For more information, click here.
To register your attendance, please contact Gordon Lowe:
Tel: 0786 084 9968
- St Andrew’s Day lunch
The Baltic Caledonia Society would like to invite members and guests to its St Andrew’s Day (29 November) lunch at the London Scottish Regiment HQ.
Starting at 12.15pm, the lunch will run all afternoon with guest speaker Will Allen in attendance in addition to the customary piper.
Tickets are £95 per person which includes one bottle of wine and large quantities of smoked salmon, haggis, neeps and tatties as well as a selection of Scottish cheeses.
A charity draw will take place before proceedings come to a close at around 6pm.
For more information and to book, contact Mike Robson.