- Sulphur Cap 2020 – consultation paper reminder
Baltic members are reminded that following the November Working Group meetings and as a supplement to the feedback that the Baltic collected during 2018, that they may submit any further feedback through written responses to a consultation paper.
Details of how to respond are set out in the consultation paper, which is available to members from our website. The Baltic requests all comments by 22 February 2019.
The paper briefly summarises the feedback received by the Baltic through its consultation process to date (which remains ongoing). At the end of the consultation period, the Baltic will collate all feedback received during the consultation process and submit such feedback to the Baltic Index Council (BIC) for its consideration. The BIC is then responsible for determining whether any changes are required to the Baltic’s indices as a result of the proposed introduction on 1 January 2020 of the 2020 Sulphur Cap.
The BIC’s decision is currently expected to be announced within the first quarter of 2019.
- FFABA Tanker Freight Derivatives Forum: 25 February
Coinciding with IP Week, the Tanker Freight Derivatives Forum is the world’s largest FFA gathering for the tanker market.
Hosted annually by the Baltic Exchange and FFA Brokers Association, the Forum features freight market insight and discussions.
Agenda Time Activity 13.30 Registration coffee 14.00 Opening remarks – Angus Procter, FFABA Wet Chair (Braemar ACM-GFI) 14.05 Market services update – Mark Jackson, CEO, Baltic Exchange 14.25 Oil and bunker markets outlook – Mike Davis, Director, Head of Market Development – ICE Futures Europe 15.00 Coffee break 15.20 Tanker market outlook & Sulphur Cap 2020 – Henry Curra, Head of Research, Braemar ACM 15.55
Panel discussion: Sulphur Cap 2020, volumes vs cargo flows, new contracts & benchmark updates with:
Adrian Wooldridge, CCO, Navios Maritime
Angus Procter, Wet FFABA Chairman (Braemar ACM-GFI)
Chris Hudson, Senior Broker, FIS Fuel Oil
Simon Newman, Marine Strategy & Freight Trading, Phillips 66
James Pendered, Senior Freight Reporter, Baltic Exchange
Peter Jackson, Crude Freight Derivatives Trader, Shell
17.00 Drinks hosted by the FFABA at Punchbowl
The event is free to attend for freight and derivative traders and those interested in trading exposure to tanker rates.
- Six month internship – data analytics at the Baltic Exchange
Six Month Internship – Data Analytics – London Based
London Living Wage
Through the Baltic Briefing, we hope our membership network will help unearth a talented young student who would benefit from a six month internship and an opportunity to develop their skills and experience in the world of maritime data. The ideal candidate would have studied finance or computer/data science or equally well suited to the role would be a financially astute humanities student comfortable with handling and understanding financial data.
The Baltic Exchange lies at the heart of the maritime industry and is on an exciting journey to develop new markets and leverage its data. It is therefore is a great place to gain experience at the start of a career in Data/Financial analysis. Working closely with our Data Leader, the successful applicant will have the opportunity to develop and support interesting projects in data analytics and data reporting and tasks will include;
- Daily monitoring and updating of clearing house transaction histories
- Transforming excel datasets for further analysis
- Assisting with member and mailing database management
- Creating visualisations and graphs to support others in the Baltic team.
Applications would be welcome from candidates who meet the following essential requirements:
- Studying or recently completed their studies in data, finance or a related field.
- Have an aptitude for working with Office 365, with a high level of proficiency in Excel and confident in problem solving and conducting quantitative online research.
- Able to demonstrate an intellectual curiosity and a passion for all things data including data processing, analysis, visualisation and descriptive statistics.
- Enthusiastic to learn about shipping markets and derivatives, comfortable with financial market data and have basic understanding of the futures market.
- Methodical in their approach with an eye for detail and pride in the accuracy of their work.
- Have a good academic standing, proficient in English, and hold the appropriate right to work in the UK for the duration of the internship.
- Have a professional attitude, adaptable and the ability to relate well to others.
The intern will be based in our London office at St Mary Axe and will be required for a period of approximately six months, although there may be some flexibility around the length of the internship.
If you know someone who fits the bill, has recently graduated or is looking for some work experience as part of their development or studies, and is available to start in the next few weeks, then please get them to pop their CV and covering letter across to Sharon O’Ryan at firstname.lastname@example.org.
- Shipbroking & Chartering Practice: Baltic member discount
Now in its eighth edition, this classic text is a first point of reference for anyone looking to obtain an understanding of chartering and shipbroking practice. It provides hands-on, commercially-focused explanations of chartering business and invaluable advice on how the shipping market operates across a broad range of topics. The authors also deal expertly with the legal, financial, operational and managerial aspects of chartering, offering numerous case studies which clearly link theory to practice.
This new edition has been updated to reflect the current trends in chartering practice, legal developments and standard forms of charterparties.
ISBN: 978-1-138-82694-6 | Retail Price: £220
Order Now: http://bit.ly/Shipbroking8e
Baltic Exchange members can receive 20% off* this book by using discount S023 when ordering through www.Routledge.com.
* Offer cannot be combined with any other offer or discount, and only applies to print books purchased directly via www.Routledge.com. Offer expires 30 April 2019.
- Panamax – Working Group meeting
The Baltic will be holding a Panamax working group meeting at 15:00 pm on Tuesday 12 February 2019 at the Baltic Exchange, which is open to all members.
The meeting will debate
- A method to derive a value for the 74k 4TC Index from the 82k 5TC Index
- The date to switch from a panellist assessment to a derived value for the 74k 4TC
- Open interest, physical and derivatives
To register your interest, click here.
On 3 November 2015 the Baltic initiated a consultation which determined that the existing 74k 4TC Index would need to be updated and a new 82k 5TC was required as its successor.
The new 82k 5TC passed successfully through the various trial stages and went live on 2 January 2018. 12 months of dual reporting (74k 4TC and 82k 5TC) has completed.
The working group will discuss the next steps in the retirement of the 74k 4TC Index.
The findings of the working group will be circulated to members for their feedback and then presented to the BIC for their decision.
Any feedback or comments you would like to be brought to the working group’s attention is extremely welcome – please send this to email@example.com
- FFA training courses: London & New York
There are still places available on the Baltic’s upcoming FFA training courses in London and New York.
Freight Derivatives & Shipping Risk Management
– The practicalities of FFA trading
– Freight rate options
– Bunker risk management
– Interest rate risk management
– Ship price risk management and portfolio theory
– Value at Risk in shipping
– Measuring credit risk
London 11-12 March
New York 8-9 April
Advanced Freight Modelling & Trading
– Spot price dynamics
– Forward curve construction
– Technical analysis & freight trading
– Risk management using options
– Volatility models
– Pricing freight options
– Real options in shipping
– Risk management of options positions
London 13-14 March
New York 10-11 April
Click here for full details, including booking.
- Member update: 6 February
The following company has applied for Corporate Membership:
Company Individual Australia Shipping Pty Ltd Mr J Feng
The following individuals have applied for membership of an existing member company:
Company Individual IOS Gemi Kiralama ve dis Ticaret Limited Sirketi Miss S Akansu Norvic Shipping International Ltd
Mr M Hojsgaard Orient Marine Co Ltd
Mr R Singh Sanko Kisen (Europe) BV
Mr T Miyano Seoul Line Corporation
Mr C D Kim
The following individual has applied for Retired Membership:
Mr M J McDonagh
Any comments should be passed to Karen Karanicholas by 13 February 2019.
- Falling rates encourage consolidation
Like it or not, consolidation in the shipping sector remains necessary for survival, especially in light of declining freight rates for the dry bulk sector. With the Baltic Dry Index down almost 800 points in just three months, the prospect of consolidation, whether through mergers or acquisitions, is rearing its head again. In November, MTS Logistics president Sedat Saka, writing for American business magazine Forbes, predicted that consolidation in the shipping industry would continue this year — noting that it has become hard to survive as an independent shipper with a fleet of ships. His prediction may prove to be prophetic.
Consolidation, as well as growth, was the topic of a panel discussion at the 10th Anniversary Marine Money London Forum, which took place in the UK capital in January. Moderated by Jovi Tenev, partner at law firm Holland & Knight, the panel included discussion of how public businesses grow when their share prices are trading below net asset value (NAV). Michael Kirk, managing director and co-founder of RMK Capital, which delivers advisory and capital-raising services to the maritime sector, said that consolidation for consolidation’s sake, and growth for growth’s sake, is not to be what firms should be doing.
“I think you’ve got to have a smart acquisition, a smart way to grow, and then you’ve got to try to grow in a way that’s not deluded to your shareholders,” he said. “If you’ve got to trade shares below NAV, if you’ve got to issue shares below NAV, that acquisition’s got to be accretive even with that. Alternatively, you can look at structures such as some kind of convertible security where maybe the security ultimately converts into equity at a higher level; you’re close to or above NAV but the investor has some protection. Ultimately, there’s a bitter pill to swallow to get there, but the idea is you’re growing for a good reason and so there’s a reason to take that pill.”
Paolo Almeida, portfolio manager for Asset Backed Investments at fund-management firm Tufton Oceanic, added that NAV-for-NAV merger is the other option for growing when trading below NAV. However, Euroseas chairman Aristidis Pittas said that consolidation is “by no means the solution to everything”.
To grow just to grow doesn’t really solve anything
“What investors want is profitability — to make profits — and this is the important thing,” he said. “To grow just to grow doesn’t really solve anything. It creates additional levels of management, more bureaucracy. It becomes more difficult to change course, to take decisions. There are quite a few drawbacks in a bigger company.”
Discussing the recent consolidation witnessed with dry bulk cargo shipping company Star Bulk, Mr Pittas said: “I don’t think that having an organisation which is that big offers any concrete advantages over the smaller, more nimble organisation. It offers one great advantage, which is easier access to big capital.”
Kathleen Haines, treasurer and chief financial officer at tanker operator Heidmar, said that previously, especially when shipping was going through a tough time, debt was being purchased by private equity.
“Now these guys have been in for a long time,” she continued. “They want to figure out some way to get out of their investment. I’m not actually sure that consolidating helps them other than, the theory is, bigger, better float … If you combine two or three companies that have big equity partners, you now have five or six big shareholders, so it could make it harder, in fact.”
“We want to be seeing growth in profits, not growth in size, and this is not exactly the same thing,” said Mr Pittas. “Growth in size doesn’t offer something substantial unless you are so big that you become an oligopoly or close to a monopoly or you can dictate terms, and we are very far from that in most of the shipping markets. The only area … where we’ve seen a few companies oligopolise the market … is the container sector — not the owners but the logistics companies, and there we have much fewer companies. Still they are not profitable, so what’s the benefit?”
During the panel on consolidation at the event, two polls were undertaken on the topic: the first on whether consolidation is helpful for shipping firms and the second on whether consolidation is helpful for the shipping sector. With regards to the former poll, the result was a 74.5% vote in favour of yes and a 25.5% vote in favour of no in response to the question: “Is consolidation beneficial for shipping companies?”. When it came to the latter (the question being “Is consolidation beneficial for the shipping industry?”), the result was a 71% vote for yes and a 29% vote for no. Clearly, in the eyes of most of those assembled for the panel, coming together has its advantages.
Key takeaways from the session were that consolidation is not the solution for everything; that investors desire profitability, not just size; and that drawbacks often exist to running a bigger firm. Additionally, growth in size does not provide that much advantage unless the party is so large it is able to dictate the market, as can be seen with the larger container shipping lines. Further, at least 20 to 25 vessels are needed to get the benefits of management and commercial advantage, though for a public company, a big fleet is necessary not so much for operational reasons but to get institutional investors’ attention.
The Baltic Exchange will hold its next Shipping Economics & Investment course on June 10 and 11 in London in the UK. More information can be found here.
- Baltic ICS lectures January review
The third round of the second series of Baltic ICS lectures took place last week in London, Singapore, and Shanghai. with a special event in Athens.
Industry experts presented on freight market cycles, focusing on how trends in cargo flows have changed and what impact this has had on the vessel supply side. The lectures also examined the evolution of the shipowner, as well as the ever-changing ROI horizons for their investors.
The Greek lecture was held aboard the famous wartime vessel, ‘Hellas Liberty’, where attendees celebrated the start of the new year with a Vasilopita cutting. Speaking on the event, Baltic Exchange CEO, Mark Jackson, commented:
“Athens is a key hub for the Baltic Exchange and this event underlines our commitment to supporting the Greek shipping community. These lectures are becoming more and more popular and offer younger shipping professionals the chance to broaden their horizons and network. We will be running thought-provoking shipping industry lectures in and around Athens throughout the year.”
The next round of lectures take place on 27 March, where the focus will be on ‘Financial tools – Ship finance & FFAs’
About the Baltic ICS lectures
Intended to support and develop brokers and operations professionals, the Baltic ICS Lecture series examine topical issues facing those working in chartering and operations roles, offering advice on best practice in critical situations and insight into the changing patterns affecting the shipping sector
- CSAL meet at the Baltic
Ahead of the Chinese New Year, the Chinese Shipping Association of London (CSAL) met at the Baltic Exchange last Thursday (31 January).
The evening began with a dry bulk market overview by Troy Yu Lewis (Research Analyst, Howe Robinson), followed by food and drinks. CSAL committee members were in attendance to answer questions and discuss ideas about planning a larger event for London International Shipping Week in September.
- Baltic Exchange quiz night
The next Baltic Exchange quiz night takes place on 7 February at Balls Brothers Adams Court.
The event is capped at 80 people and regularly sells out so we recommend attendees book early.
Tickets are priced at £15 per person, 6 people per team.
For more information or to book your tickets, click here.
- DB Cup wide open ahead of final pub quiz round
Following sailing, golf and tennis stages, the David Bradley Cup is still wide open ahead of next Thursday’s final pub quiz stage. Out of the 16 teams entered into the competition, Howe Robinson, HFW, the Baltic Exchange and Clarksons are just behind the current leaders EA Gibson.
The winner will be awarded the trophy at the Chairman’s Cocktail Party in May.
- Book your tickets now for the annual BEGS dinner
Tickets can now be purchased for the annual Baltic Exchange Golf Society (BEGS) dinner on Thursday 7 March. This black-tie event is open to all and provides an informal and enjoyable opportunity to network with different brokers and principles.
As usual, the event will be held at the Honourable Artillery Company (HAC) in Moorgate, with tickets costing £85 per head.
To purchase tickets, contact Duncan Brown:
Tel 0207 337 7063 / Mob 07831 428 046
Or James Pendered:
Tel 0207 369 1672 / Mob 07802 965552
There will also be a wine list circulated in advance to will allow tables to reserve the bottles they want ahead of time.
Pictures from last years event can be viewed here.
- Baltic Irish Night: 14 March
The Baltic’s annual Irish Night will be held at The Brewery, Chiswell Street on Thursday 14 March.
The Baltic Irish Society, Irish night, is one of the most popular events of the Baltic’s social calendar. Held each March on the evening of the closest Thursday to St Patricks Day, it is regularly attended by over 500 people.
The format will be as in previous years, including the traditional sing-along.
Tickets are now available, costing £95 each and can be bought by contacting Colm Nolan by either the email or telephone details given below:
Please note that the Baltic have negotiated a new wine list with the Brewery, which includes alternative wines at a reduced rate from last year.
Ticket payment should be made to:
Sort code 50 00 00
Account number 15427080
Account: Baltic Exchange Irish Society
For those paying directly to the bank, please also email Simon O’Sullivan with payment details.
Baltic Irish Society needs you!
Members under 40 with Irish connections and an interest in having a more active role in the Baltic Irish Society are invited to contact Colm Nolan.