- YBA Night London
The Young Baltic Association (YBA) invite you to a night of drinks, 10 pin bowling and sliders at All Star Lanes, Brick Lane on 27 June.
Kicking off at 6pm, the event is free to attend to all member companies. Teams of five will be set on the night, with prizes for the top two companies. Spaces are limited to 120 so register early to book your place.
To register, click here.
- Collecting what’s due
The Baltic’s Dispute Resolution Service has seen a busy first half of the year with 15 cases for Mike Dunwell, who heads up the service, to consider. Designed to allow Baltic members to recover both small and large amounts, two-thirds of this year’s cases have already been concluded. That’s $375,000 collected for free on behalf of Baltic Exchange members for relatively small amounts of money that might otherwise remain outstanding.
Last year, the Baltic assisted in the recovery of US$3.5m, up from US$1.1m in 2017. While this increase is due in part to wider take-up in the number of cases being reported by P&I clubs and members looking to the Baltic for help, the increase in resources made available by the Baltic to resolve cases and help to manage the increasing demand is also a significant factor.
For those who haven’t used it or are unaware of its existence, the Dispute Resolution Service is a complimentary resource run by the Baltic Exchange for its members. It is designed to recoup money owed to members, mainly relating to commission in the case of brokers and hire/freight where owners are concerned. However, it can also be used to ensure that an arbitration award is honoured, or to highlight any form of malpractice according to the Baltic Code.
When a breach in the Baltic Code of Conduct has occurred, and appropriate reparations have not been made, the party is faced with the possibility of being posted by the Baltic Exchange. The threat of being published as an unfit counterparty in front of the global membership, represents a final, highly undesirable, penalty for those unwilling, or unable, to make good on the losses caused. This action is recognized both within the shipping community and by the wider financial and commodity markets, as well as due diligence agencies operating across other related sectors.
The Dispute Resolution Service is free of charge to members and in the past, we have extended this offering on the same basis to non-members via P&I clubs and legal firms acting for clients. To provide further resources for the service, non-member companies using the facility will be charged 15% of the total recovered, capped at a maximum of £15,000 per case. The Baltic’s goal is to increase the benefits of being a member, and this fee to non-members will enable the Baltic to pursue more cases and give better support to members seeking help, while still providing a much relied on service to the industry at large.
“It’s a great service because it means that if we are successful, the member doesn’t need to seek legal advice which can be costly and time consuming.” – Mike Dunwell, Head of Dispute Resolution Service.
We would like to express our appreciation for the Baltic’s hard work, patience and persistence in getting our commission settled which, in spite of all our efforts, remained outstanding for nearly one and a half years.
We realise that this was not an easy task but thanks to your efforts the matter was finally resolved.
It was the first time in our history that we had occasion to use this service which the Baltic provides to its members and it was a good reminder of the importance of being a Member of a historical institution such as the Baltic Exchange. – Prominent Greek Dry Cargo broker.
We highly recommend the Baltic Resolution Service. It is exceptionally user-friendly and responsive and, most importantly, it delivers results. Recently, it helped us resolve a long-standing dispute and recover a large sum of money. – Leading bulk and tanker operator.
As a major Futures broker, we requested the assistance of The Baltic Exchange Dispute service with five clients who had failed to pay for some time. Within 15 days of initial contact four out the five parties have paid very promptly and the fifth is still pending.
In our view having membership with the Baltic Exchange is very good value for money.
The Baltic Exchange and SGX contacts were also very influential as any Shipping company would not want to be posted on the Baltic Exchange or have this kind of publicity.
Mike Dunwell is very easy to talk to and we trust him and his team with his style and powers of persuasion chasing clients for payment. – Major worldwide Broker.
Globally, Baltic Exchange membership numbers over 600 companies, continuing to grow this number so that the Baltic remains truly representative of maritime markets is a key ambition. The Dispute Resolution Service offering will benefit the wider industry by encouraging non-members to join, saving them time and money individually as well as helping to reduce the number of outstanding debtors on the books across the industry.
If you are interested in finding out more about membership or the disputes service please contact:
Mike Dunwell for the Dispute Resolution Service on +44 (0) 20 7369 1631 / M +44 7860 902547 / firstname.lastname@example.org
Crispin Eccleston for membership details on +44 (0)20 7369 1654 / email@example.com
- FFA training in Singapore
There are still a few places available on the Baltic’s FFA training courses in Singapore this July. Freight Derivatives & Shipping Risk Management (1-2 July) is a great overview of risk in the shipping business. It covers freight risk management, options, bunker and financial risk management, ship price risk management as well as Value at Risk and credit risk.
Advanced Freight Modelling & Trading (3-4 July) is suitable for experienced traders. It focuses on pricing freight options, modelling freight rate dynamics and pricing options on freight. It also looks at constructing forward curves on freight, modelling freight rate volatility as well as hedging and trading strategies.
See www.balticexchange.com/other-services/training-2/ for full details.
- Testing times in the Gulf of Oman
Little over a month after four tankers were damaged by explosions in the Middle East’s Gulf of Oman, another two tankers have been rocked by blasts in the same area. Last week, on 13 June, the methanol-carrying, Panama-listed Kokuka Courageous and the naptha-carrying, Marshall Islands-flagged Front Altair were both travelling south-eastwards through international waters — having gone through the strategically-important Strait of Hormuz — when damaging explosions took place.
Back on 12 May, four oil tankers — the Saudi-flagged Amjad and Al Marzoqah, the Norwegian-flagged Andrea Victory and the Emirati-flagged A Michel — had been attacked near the strait while at anchor off the UAE’s Port of Fujairah, with the blasts blowing holes in the hulls of the vessels. While early findings concerning the May explosions demonstrated a great likelihood of four limpet mines having been used in the attacks, the US military has put out a video it claimed shows Iran’s Revolutionary Guard removing an unexploded mine of this sort from one of the June vessels hours following the initial explosions. There were no deaths as a result of all the explosions.
Location is key in all of these incidents. Both sets of explosions took place close to the Strait of Hormuz, a critical oil chokepoint. It might only have a width of 21 nautical miles at its most narrow, but the waterway sees 20% of global oil exports — nearly 19m barrels of oil daily — pass through it. Sufficiently deep and wide to cope with the biggest crude oil tankers in the world, the passage connects Middle Eastern crude oil producers to key markets across the globe. Additionally, the strait serves as the main route for Iran’s oil exports.
At the moment there is heightened tension around the waterway, with potential for Iran to block all oil leaving through the strait. Following the US’ withdrawal last year from an international nuclear deal with Iran, the two countries’ relations have been increasingly tense. Last November, US President Donald Trump made sanctions against the Middle Eastern nation tighter, and in April, he told countries that they could also face sanctions if they kept purchasing oil from Iran.
The waterway’s role as the primary route for oil exports from Iran is “a big deal” for the economy of the Western Asian nation — oil constitutes about two-thirds of Middle East exports. Iran has made it clear that it is unhappy about a ban on its oil sales, and claims that it can stop all oil exiting through the strait.
Brokers have claimed that the Strait of Hormuz now has a high-risk premium more than any other seaborne trade route
“If one day, [the US] tries to stop Iran’s oil exports, then no oil can be exported from the Persian Gulf,” Iran’s President, Hassan Rouhani, has stated.
A lack of oil route stability will lead to a rise in oil prices around the globe. “Any instability in oil routes means higher oil prices across the world, having huge effects on any industry dependent on oil,” the US military said in its video. “One tangible example could be your car’s petrol price, 70% of which is dependent on the price of crude oil.”
The shipping reaction
Following the second set of blasts, insurance rates have spiked and some captains have reportedly refused to sail in the region threatening one of the biggest disruptions to crude oil trading in the Strait of Hormuz for many years. News of the explosions triggered steep oil price hikes on the day of the incidents. Shipowners reported that after the first set of explosions, premiums had gone up by 5% to 15% depending on cargo and size.
Commenting on the attacks, BIMCO chief shipping analyst Peter Sand said: “This will likely cause shipowners and operators to ask for a premium on freight rates for trading in the area, as risk is now clear and present.”
International Maritime Organization (IMO) secretary general Kitack Lim expressed his concern over both sets of explosions during the 101st session of the body’s Maritime Safety Committee, held 5-14 June: “IMO has developed a comprehensive regime of regulation through the [International Ship and Port Facility Security] Code and the SUA Conventions and Protocols to prevent and respond to unprovoked, unlawful attacks on merchant shipping,” he noted. “The threat to ships and their crews, peaceably going about their business, is intolerable. I urge all member states to redouble their efforts to work together to find a lasting solution to ensure the safety and security of international shipping around the globe and protection of the marine environment. I will carefully review the results of the investigations, once they are completed, to consider if additional IMO action is warranted.”
The Strait of Hormuz now has a higher risk premium than any other seaborne trade route. Speaking to Wall Street Journal, Karatzas Marine Advisors chief executive Basil Karatzas said that there will be a significant rise in freight rates for crude oil tankers, adding that as insurance rates go up and vessel operating expenses grow to cover more compensation. “It could be a déjà vu of the Gulf War days in the early 1990s, when tankers in the Gulf were earning a multiple of the average market,” he said.
BIMCO is advising its members doing business in the area to exercise extreme caution and instruct their vessels to take precautions. Mr Sand advised considering telling vessels to avoid the area or to keep as far away as possible — to the extent operations permit and depending on a firm’s risk-acceptance levels.
The International Association of Independent Tanker Owners, together with the Oil Companies International Marine Forum, has published a advice for shipping companies in light of the attacks.
The Baltic Exchange will hold its next Ship Finance Executive training course on 11 and 12 November in London in the UK. More information can be found here.
- YBA Singapore night
Young members (under 35) are invited to join the Young Baltic Association’s Singapore night The Exchange Bar @ Asia Square on 27 June. Meet other brokers, charterers, traders and have two free drinks.
YBA nights are open to all Baltic Exchange members and employees of Baltic Exchange member companies who are under 35 years. No RSVP required. All members are entitled to 2 drink coupons at the reception. For other guests, a SGD 20 per guest will be charged at the reception.
Address: 8 Marina View, #01-05, Asia Square Central, Singapore 018960
- Member update: 19 June
The following company has applied for Corporate Membership:
Company Individual Marita Freight & Trade LLC
Mrs M I Perdomo
The following individuals have applied for membership of an existing member company:
Company Individual Grieg Shipbrokers KS Mr J Yan Simpson Spence Young Ltd
Mr G Rodrigues
The following individual has applied for Retired Membership:
Mr S J O’Sullivan
Any comments should be passed to Karen Karanicholas by 26 June 2019.