#Shipping is a risky business. Be aware

Tom Cruise knows what’s risky, what about our Owners? and Charterers?

Today’s jan 24th 2017 London is holding the 2017 Maritime Risk Forum 2017. Where people will talk about insurance in shipping. Who knows, maybe the speakers at this event read my market report sent to you on 5th jan post, the one talking about Lloyds who bet (and lost) $50million on Carrie Fisher’s presence for the next Star war episod. I doubt they did.

Despite this forum being surely full of very interesting guys, with lot of very good insight, really, I think none of us shall read and follow what’s reported being said during this event on twitter under the #mrf2017.

Insurers remain insurers and their job is to try to anticipate every kind of risks on which they could put an insurance policy against some $ for the coverage. Is their job about warning the shipping community about the risks which are likely to happen or scare all of us so nothing being done without getting covered with the belt and the braces ?

Every single business and company need to be well covered. I’m afraid then you’ll have no other choice than, at some stage, understand what’s said during this forum and to be fair, from what I have seen, some interesting information can be found

To start with something, on cover page, the organizer of this forum make the following statement :

« Minimizing risk and reaping the financial benefits requires the attention and focus of senior management. But when Moore Stephens reported recently that 20% of survey respondents report that managers only get involved if risks materialise, that 10% show only passing interest in risk management, and 1% have no involvement at all[…] ».

You then out of a sudden realize when your risks has become an incident or accident or a reality, you can count on insurers assistants/ junior teams to help you find out the solution at your issue. During that time, the managers are probably doing wonderful power point/ key notes to the attention of the shareholders of the Company.

About autonomous ships :

On one side, some stating the emergence of « Autonomous ships » will be driven by economics, when on the other side same guy stating that safety should come first in the drive for autonomous ships, not economics, (said by Mark Dickinson from Nautilus). After autonomous ships, without being sarcastic, in the same agenda, the theme « risk mitigation in crewing » is proposed. The solution is obvious : launch 100% autonomous ships at sea and you’re done with the crewing issues.

About Cyber risks :

You can read « It is not an exaggeration to say that cyber crime has the potential to destroy maritime companies » That’s scary !! and that is probably true (we can ask Hillary Clinton what she thinks about this). And to face it, Cyber crime is not anymore a concept on which only dumbs/unaware people replying to the email sent by Mr Cresus Widow proposing to share her fortune.

Finally, still on the agenda page of this forum, we can read our « insurers also facing both internal and external risk » and « underwriters have to justify their performance at a time when their clients are struggling in a flat maritime market » see here … Clients of the insurers are Owners right ? So who’s a volunteer to disclose to insurance companies the shipping market has not been flat in the last couple of years but to the contrary let’s call it a declining environment. Trust some owners would be more than pleased to face a market declining by only 10.5% as mentionned still by insurers « With global marine premiums falling by 10.5% in 2015 »

 Talking about risks still

Bmti is mentionning about the Piracy (Containers market review section) and noticeable facts :

  • 2015 : 246 piracy incidents reported
  • 2016 : 191 piracy incidents reported
  • 2016 : lowest piracy incidents reported year since 1998

2016 5 hot spots for piracy in 2016 :

  • Indonesia (49)
  • Nigeria (36)
  • India (14)
  • Peru (11)
  • Philippines (10)
  • These 5 areas counting for close to 50% of the worldwide piracy incidents.

And this section is concluded with the following « As the IMB (International Maritime Bureau) depends on information from shipmasters and owners it can’t be sure that all of the incidents that happened were reported as some owners probably prefer to hide the incidents for the risk of higher insurance costs being demanded thereafter. »

Piracy seems not to be on the agenda of the Maritime Risk Forum… is it because now Owners aware of the higher costs to get covered ?

What about chartering market ?

The time to make money to pay underwriters is not yet arrived. Again all BDI indexes (yesterday and today) are in the red (except today panamaxes +2pts… the pre Chinese new year expected surge !)

On the handies, to convert the BMTI mentionned« USG 30’000mt wheat to algeria in the high US$20s/mt » into Tct and bss 1sp Miss River 7000x to 1sp algeria 32’with 2500x out. According to our abacus equivalent made on a 34kdwt modern able to load something like 31’500mt:

  • 28 usdpmt = tce @ usd 9’600/ day aps
  • 29 usdpmt = tce @ usd 10’325,22/day (sometime important to be precise) aps
  • 30 usdpmt = tce @ usd 10’987/day aps

Same but bss a ship able to load 33’000mt

  • 28 usdpmt = tce @ usd 10’220/ day aps
  • 29 usdpmt = tce @ usd 10’900/day
  • 30 usdpmt = tce @ usd 11’560/day aps

When for your perusal, today’s index is at $11’286 on index type lady for the HS4.

And the mentionned of « same cargo ex plate to algeria being fixable at similar level » bss 31’500mt 1sp upr 7000x to algeria 2500x equivalent made on a 34kdwt modern able to load something like 31’500mt:

  • 28 usdpmt = tce @ usd 8400/ day aps recalada
  • 29 usdpmt = tce @ usd 9’000/day aps recalada
  • 30 usdpmt = tce @ usd 9’650/day aps recalada

Same but bss a ship able to load 33’000mt

  • 28 usdpmt = tce @ usd 9’000/ day aps recalada
  • 29 usdpmt = tce @ usd 9’600/day aps recalada
  • 30 usdpmt = tce @ usd 10’200/day aps recalada

When for your perusal, today’s index is at $9’519 on index type lady for the HS3.

When also please note these estimates are based on APS bss and are pretty unlikely to be exact owners final revenue, being understood the local candidates shall have to swallow at least 3-4 days on average of ballast.

4 days being a minimum, today’s panamax fixture reported in the BDI, mv’Georgios S’ 2001 74249 dwt dely ECSouth America 10 /12 Feb trip redel Mediterranean $12,400 daily – Nidera  this ship is according to our Marinetraffic research ballasting from Mundra, she’s then doing a 28days ballast for a $12’400 deal. Which calculated bss DOP is giving to owners a poor sub US$ 6’000 daily. Out of this $6’000 daily, how much is going to the various underwriters ?

Have a nice fixing day and be safe

Rgds

Jerome

 

 

 

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