BOW WAVE 113

Logistics Ships and Slip-Ups Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2001 WavyLine.com	Issue No 113 21 Jan 01
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Open Registry Costs
3. Michigan Cybercourt
4. West African Update
5. Thoughts on Enron
6. And Finally...

1. Welcome

From the January 1st edition of Logistics Magazine we read:

\"Ocean shipping is a real bargain, when you look at how much it costs to ship an individual item. Bow Wave, a lively e-mail newsletter about the esoteric side of the maritime world, recently asked subscribers for examples of shipping on the cheap. Examples submitted included fertiliser shipped via bulk vessel from the Baltic to Venezuela for just 2 cents a kilo, and a containerload of scotch whiskey travelling from the United Kingdom to Japan for the princely sum of 4 cents a bottle. Running shoes typically cost just 18 cents a pair for transportation from Asia to Northern Europe. It\'s almost enough to make a shipper stop and reconsider before asking a carrier for a lower rate ...\"

http://www.manufacturing.net/lm/index.asp?layout=issueTOC&pubdate=1/1/2002

New Readers this week include:

Tracy J. Hayes of The O\'Neil Group in New Orleans Robert Johnston, now CEO of British Marine
Carl Salyer of Sealy in North Carolina
Capt Suri in Florida
Tom Henderson of Ashland
Marty Lembach of Bioproducts Inc
Brian Dougherty of Franklin Electronic Publishers Anita Leonard, Manager of International Products, Ferguson Enterprises Dave Park of Heinz Pet Products
Jim Burnett of Allied Systems, makers of handling equipment Jan Monson of Melaleuca, Inc

Honourable Mentions this Week

Our old friend Christine Williams, who left the TT Club and went off to study law and other pastures new, has written in to say she has joined the newish law firm of Curtis Davies and Gerrard. It reminds her of earlier times and she describes it as unstuffy young and ambitious to succeed with a mixture of nationalities employed in the firm. We hope her marketing skills as well as her specialist knowledge of the Spanish and Latin American markets will be of use there.

Following the trenchant criticisms of Tony Markel made to an industry gathering recently in London, Lloyd\'s of London has in recent days issued for consultation proposals for the future which involve a feathering away from the old three year accounting and annual venture rules in the market and proceeding towards the methods favoured by the larger providers of corporate capital, who more and more provide the money in the historic market.

We have no doubt that the need for innovation also includes the way the marketplace and its underwriters present themselves to the world outside. Reforms in process and in what is usually called the back office are also inevitable. The syndicates which once were numbered in hundreds are down to eighty seven. But they are much larger and more able to fight a corner in the international market place. The latest release is via the link below.:

http://www.lloydsoflondon.co.uk/entrypoints/pr_index_pm.htm

Insurance and Shipping this week are the main events

Enjoy.

2. Open Registry Costs

How much does it cost, do you suppose, to incorporate a shipping company in one of the well known locations, and how much is there to pay in subsequent years? We recently ran across a table produced by the agent of the Republic of The Marshall Island which made us think we had no idea how low the prices are:

We have made a list. The first figure is the price of initial incorporation. The second is the annual cost each year thereafter.

Marshall Islands $650 $450
Anguilla $1500 $650
Bahamas $700 $500
British Virgin Islands $700 $550
Cayman Islands $1800 $1180
Isle of Man £2040 £1245
Jersey £1820 £1120
Liberia $1000 $450
Samoa $650 $550
Panama $750 $350
Turks & Caicos $850 $550
Vanuatu $1250 $550

If we estimate there are some 80000 ships plying the blue waters larger than 500 grt, you can see that the annual revenues from this source alone will not keep the governments concerned very flush with money.

3. Michigan Cybercourt

We understand the State Governor John Engler has signed the law which will bring the first cybercourt in being this October and which will allow technology companies to litigate over the internet.

Lawyers will file their briefs online, argue their cases by teleconference and present evidence through streaming video to judges who have been trained in the technical side of this work.

It cannot be long, we think, before parties to shipping and transport disputes come around to working this way as part of their long term need to save time and money. Not the best news for airlines and not always a very good alternative for face to face meeting.

But in our experience parties who know each other already find video conferencing an acceptable and even agreeable alternative to jet lag and the strength sapping quality of international travel these days.

http://www.michigancybercourt.net/

4. West Africa Shipping Update

We have received the latest monthly circular from Rachel Bennett over at OTAL the African container shipping specialists.

We really cannot speak too highly of the enthusiasm of the firm for the West African shipping scene, which cannot be described as the easiest market to serve. For example, a run down of events in each country describes the problems of the cocoa industry in Cameroon:

CAMEROON

Cameroonian exporters consider export levy

Cameroonian cocoa and coffee traders are considering a levy of up to 5% of the cif price on exports in order to inject revenue into the industry. The move has become necessary following a lack of funds to carry out required improvements to the sector, which was privatised in 1999.

The export levy is expected to be approved by the Interprofessional Cocoa and Coffee council. The private sector would administer the funds from the levy, while spending would be decided by a committee of members of the public and private sectors. Funds are needed to strengthen the industry, increase production, fight disease, improve marketing and reorganise the industry. Existing programmes sponsored by foreign donors will finish in 2002 forcing Cameroon to fend for themselves. Cameroon is the world\'s sixth largest cocoa producer, currently producing around 115,000 tonnes a year.

Rachelcom

OTAL\'s website has a very good review of the ports all around the region:

http://www.otal.com/port.htm/

5. Thoughts on Enron

Just before Christmas we read editor Ian Middleton\'s rather able retelling of the Enron, two cows and the meaning of life joke on the back page of Seatrends Web. It ran something like this:

Totalitarianism is when a person has two cows and the government con- fiscates both of them and denies they ever existed. Milk is banned.

Capitalism is when a person has two cows, he sells one and buys a bull. His herd grows amid general economic prosperity and he sells the herd, retires and lives on the proceeds

Enron Capitalism is when a corporate person has two cows. He sells three of
them to his publicly listed company, using letters of credit opened his your brother-in-law at the bank, then executes a debt/equity swap with an associated general offer so he gets all four cows back with tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a company in the Turks and Caicos islands owned, unbeknownst to all, by the majority shareholders which sell the rights to all seven cows back to the listed company. The annual report says the company owns eight cows with an option on one more.
Now spare a thought for Anderson, the well known accountancy firm, and consider the pickle they are in: An allegedly massive snafu on the Enron audit, professional negligence insurance via captives and other arrangements which reportedly is limited at around $300 million and the overspill goes back to the equity partners to fund on the basis of unlimited joint and several liability. Our guess is that $300 million will probably not even cover the legal bills in this case.

It seems only yesterday that the partners of the old place were fighting it out on which part of the dividing firm could keep the old name. The accountants kept the name and the consultants going their separate way became Accenture.

What price the good name of Anderson in 2002? Or living the goodish life of an equity partner in a professional services firm?

See the rather good front the firm is putting up on the web at:

http://www.andersen.com/

6. And Finally...

From Mrs Potts in Hong Kong come these salutary words:

This took the original sender 50 years to learn:

1. Never under any circumstances take a sleeping pill and a laxative on the same night.

2. If you had to identify, in one word, the reason why the human race has not achieved, and never will achieve, its full potential, that word would be \"meetings.\"

3. There is a very fine line between \"hobby\" and \"mental illness.\"

4. People who want to share their religious views with you almost never want you to share yours.

5. And when God, who created the entire universe with all of its glories, decides to deliver a message to humanity, he will not use, as his messenger, a person on cable TV with a bad hairstyle.
6. You should not confuse your career with your life.

7. No matter what happens, somebody will find a way to take it too seriously.

8. When trouble arises and things look bad, there is always one individual who perceives a solution and is willing to take command. Very often, that individual is crazy.
9. Nobody cares if you can\'t dance well. Just get up and dance.

10. Never lick a steak knife.

11. Take out the fortune before you eat the cookie.

12. The most powerful force in the universe is gossip.

13. You will never find anybody who can give you a clear and compelling reason why we observe daylight savings time.
14. You should never say anything to a woman that even remotely suggests that you think she\'s pregnant unless you can see an actual baby emerging from her at that moment.
15. There comes a time when you should stop expecting other people to make a big deal about your birthday. That time is age eleven.

16. The one thing that unites all human beings, regardless of age, gender, religion, economic status or ethnic background, is that, deep down inside, we all believe that we are above average drivers.

17. The main accomplishment of almost all organized protests is to annoy people who are not in them.

18. A person who is nice to you, but rude to the waiter, is not a nice person.

19. Your friends love you anyway.

And the thought for the day:

Never be afraid to try something new. Remember that amateurs built the ark. Professionals built the Titanic.

BOW WAVE is published each week to around 6725 readers in the transport,insurance, shipping and finance industries.

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