BOW WAVE 193

Chile and China Edition

news and views on trade, insurance and risk

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(c)2003 WavyLine.com	Issue No 193 04 Jul 03
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Big One under Huang Pu
3. Chinese Shipbuilding; The Emerging Giant
4. Success for METL's First Year's Students
5. Chile Customs Case
6. And Finally...

1. Welcome

Greetings from a sunny Isle of Wight as we enter Cowes Week, one of the island's main claims upon the affections of maritime folk.

http://www.cowesweek2.co.uk/web/code/php/main.php?section=home

New Readers this week include:

Peter Foster and Dudley Taylor of Wilson Re in London Ron King of Australian Seastaff International on the Sunshine Coast

News of Readers

Felix Pak is shutting down the offices of CMS in Shanghai

his new e-mail address is:

fexpak@yahoo.com

Neil Mortimor now works for Lomar Shipping in London's Berkeley Square.

Serena Standing reports that her charity The Hanover Foundation now has a shopping site designed to generate some much needed funds - without costing buyers any extra money--the retailers donate commission.

the Hanover Foundation provides an innovative, professional Personal Development Coaching programmes to young people over a broad range of ability and backgrounds in secondary or higher education with the aim: to enable young people to empower themselves and take ownership of their future.
for more details go to:

http://www.hanoverfoundation.org.uk.

Readers Write:

From Capt. Andrew Cross, Inspector of Lloyd's Agencies:

Please note that following the lifting of UN sanctions in Iraq, Inchcape Shipping Services have been appointed Lloyd's Agents in Umm Qasr and Spinney's 1948 Ltd have been appointed Lloyd's Agents in Baghdad. These appointments came into effect from 1st July 2003. Full contact details are as follows:

Inchcape Shipping Services
JFLogC Enclave
Umm Qasr New Port
Umm Qasr
Iraq

Contact : Eric Laing
Telephone : +965 243 4752
Mobile : +965 670 7907
Facsimile : +965 240 3963
Emailshipping.com

AND

Spinney's 1948 Ltd
Al-Juwaideh
Near Amman Customs
(PO Box 40)
AMMAN 11118

Contact : Ms Rula Dababneh
Telephone : +962 6 4122672
Mobile : +962 79 5574079
After hours : +962 6 4120028
Facsimile : +962 6 4122671
Emailneys.com.jo

From Marine Painter Gordon Frickers

Thanks for running my request. Such is the power & influence of Bowwave, I have 2 very different but both helpful replies.
It now looks as if the painting will be based on the following:

The French dropped anchor the next morning, just as we had got under weigh to work out of the bay, so that for the present nothing more than salutations could pass between us.
I will spend some time at the Laperouse Museum in Albi when I'm working in the Tarn region next month & the painting time frame will depend on the other researching. I would hope to have the original created by end of November, hmmm...

Contact him at:

g.frickers@btopenworld.com

China and Chile dominate this edition.

Enjoy.

2. Big One under Huang Pu

It was in Insurance Day the sister paper to Lloyd's List that we read the first news of this casualty which may have taken the shine off a few summer holidays in the insurance industry these last weeks. This is said to be the largest claim to emerge from China so far this year. An extract of the item appears below:

CHINESE insurers may have to pay up to Yuan5.6bn ($680m) to cover losses resulting from an accident in an underwater railway tunnel in Shanghai earlier this month. Reports of the size of the potential claim have emerged from China in the past few days.

Brokers close to the potential claims say most of them will be ultimately paid by the international reinsurance market as each of the local companies involved in the claim is heavily reinsured overseas.

China Ping An Insurance Co, China Pacific Insurance Co, the People's Insurance Company of China and Da Zhong Insurance Co have started to evaluate payment issues in the past couple of weeks, according to local reports.

The four Chinese insurers are jointly responsible for construction liability and third-party liability, which total some Yuan5.6bn.

It is estimated that the third-party liability scheme involves compensation of Yuan50m. Water leaks appeared during the building of the Metro 4 tunnel running under Shanghai's Huangpu River on July 1 and caused significant damage to buildings above the subway line.

At present, total losses caused by the accident have not been calculated and no compensation has been paid. The four Chinese insurers have reinsured most of the liabilities with foreign insurers and the huge compensation payout will not lead to large losses for the Chinese insurance companies, reports say.

(one can see that the Country's emergence into the global economy also now encompasses the ability to make huge claims for settlement upon the world's reinsurance industry--ed)

3. Chinese Shipbuilding; The Emerging Giant

We note that Asian maritime analyst Matthew Flynn has been exploring the frontiers of shipbuilding in a study entitled Chinese Shipbuilding; The Emerging Giant, which has been published in conjunction with New York shipbrokers Poten & Partners.

Chinese shipyards are posting victories at an increasing pace, but Matt’s research in the Poten study points out that mainland yards will have to fight hard to keep sight of market leaders South Korea and Japan.

Of note, in the past week, Chinese shipyards have just queued up their first export post panamax ship. Erick Rickmers has signed a letter of intent for three 5700 teu ships with Dalian New Shipbuilding at a price is believed to be about $55m with heavy tail payments and delivery in mid 2006, end 2006 and early 2007. The ships will follow the design from a series of orders for the rapidly expanding China Shipping.

This year, contracting in China has been fast and furious, allowing it to capture 2m gt in new orders for the first six months of 2002. While impressive, this is still a distant third to South Korea’s 17.1m gt and a fraction of the 9m gt won by Japan.

The research indicates that China is growing its absolute production, but struggling to match the productivity of South Korea and Japan. China is adding new gated dry docks and has been building good ships to the satisfaction of international owners, but these Chinese state owned enterprises are finding it tough to keep pace with their Asian rivals.

Matt believes the biggest obstacle for China is management, which is still largely conducted along the lines of state-owned enterprises. While it is fair to acknowledge China has only recently created corporations and the shipbuilding industry has only begun to "corporatise" itself, there is no escaping the reality that Chinese yards must make as many changes to their management as they must make to their facilities.

Corporate governance aside, the other management issue is system engineering. Design processes, scheduling, inventory management, and production controls are the defining elements of manufacturing prowess.

These management issues are covered by an extensive body of literature available in any university campus bookstore. Operations management will address issues such as total quality management, just-in-time practices, and supply-chain. Production/manufacturing systems engineering examines the technical side.

In addition to the openly available "how-to" literature, both the operations management and systems engineering have a strongly proprietary character in that they have to be fostered in house. China can only improve as it "learns by doing."

To obtain the report Chinese Shipbuilding; The Emerging Giant contact:

tankerresearch@poten.com

4. Success for METL's First Year's Students

As some readers will recall, Maritime Education & Training Ltd (METL) was started at very short notice last autumn by Jeffrey Blum, Kenneth Long and Rita Barnish in order to provide tuition for the students of the courses of the Institute of Chartered Shipbrokers. Eight classes were being held on four evenings every week from October until March at a college in the City and over 60 students were taught and prepared for the exams in April.

Last Friday, 1st August, the ICS worldwide examination results were announced and almost all of METL's students passed all their exams, many of them achieving Distinction and some winning prizes for the best answer papers in the world. A well attended celebratory drinks party was held on Friday evening for these successful students and for the new students who will join the classes which commence on 22nd September. There is also now a helpful website which assists the students with their choices in respect of the the 2003 - 2004 academic year. We wish them well in their endevours.

For more information go to:

http://www.metl.info

5. Chile Customs Case

Andrew Trasler over at the TT Club has added wise words in the TT Talk Newsletter to the debate which has met the decision in the Chilean Customs Case
(The Maersk Amsterdam--See Bow Wave Issue 189).

"Under Chilean law, all cargo arriving in the country has to be delivered into the control of the customs service. The customs service then delegates the physical custody of the goods to a customs warehouse operator; once the clearance process has finished the customs service orders the warehouse operator to release the goods to the consignee. Once the cargo has been handed to the customs, the carrier has no further control over it, and cannot, for instance, deny release because the consignee has not yet presented an original bill of lading.

In theory the carrier's rights are protected because the consignee/importer has to attach an original bill of lading to the customs entry. However, the law allows "legal alternatives" which, in practice, are "legalised" non-negotiable copies of the bill. In other words, a consignee who has received a copy bill of lading from the shipper, as a confirmation that the goods have been shipped, can have that copy turned into an original for the purposes of customs clearance. Once that is done, and the duty is paid,there is nothing to stop the consignment being released, even though the shipper may still be holding the originals.

The consequences are quite clear: although the shipper is relying on the carrier to protect his interests by withholding delivery until the consignee produces an original bill as proof of his title, in practice the carrier has no control once the goods arrive in Chile. This leaves the carrier open to claims for misrelease and, because he has no original documents and very little chance of getting any, it is almost impossible for him to disprove the allegations. There are indeed many instances where carriers have received claims which they know to be fraudulent, but which have had to be paid because of the lack of evidence. Carriers are also directly at risk, because often the only means they have of ensuring payment of "freight collect" is by asking the court for an injunction to stop the release of the consignment.

The Chilean authorities, realising the potential for fraud and perhaps hurt by foreign criticism of the system, have now embarked on a major change. The project, code-named ISIDORA, is an ambitious plan to make the clearance process fully electronic. Under the latest version of the planned system,the consignee/importer must submit an original bill of lading to the carrier or his agent, who will retain it. The carrier then issues an "official copy" of the bill, valid for customs clearance purposes only.The agent will send an electronic message to the customs computer,confirming that he has received an original bill of lading. Cargo will not be released until this message has been received and all the other customs formalities are completed. Unfortunately, although ISIDORA was due to come on stream on 1st July 2003, its implementation has been delayed while technical problems are sorted out......"

Pending the dawning of ISIDORA the advice to carriers is clear, study documentary and release procedures in Chile with great care.

6. And Finally...

Here is something to think about when negative people are doing their best to rain on your parade. Thanks to Martin Watson of Berrymans Lace Mawer for sending it round the houses.

A New York woman was at her hairdresser's on Park Avenue getting her hair styled prior to a trip to Rome with her boyfriend. She mentioned the trip to the hairdresser, who responded, "Rome? Full of Italians. You're crazy to go to Rome. So, how are you getting there?"

"We're taking Continental," was the reply. "We got a great rate!"

"Continental?" exclaimed the hairdresser. "That's a terrible airline. Their planes are old, their flight attendants are ugly, and they're always late. So, where are you staying in Rome?"

"We'll be at this exclusive little place over on Rome's left bank called Teste..."

"Don't go any further. I know that place. Everybody thinks its gonna be something special and exclusive, but it's really a dump, the worst hotel in the city! The rooms are small, the service is surly and they're overpriced.

"So, whatcha doing when you get there?"

"We're going to go to see the Vatican and we hope to see the Pope."

"That's rich," laughed the hairdresser. "You and a million other people trying to see him. He'll look the size of an ant. Boy, good luck on this lousy trip of yours. You're going to need it."

A month later, the woman again came in for a hairdo. The hairdresser asked her about her trip to Rome. It was wonderful, explained the woman, "not only were we on time in one of Continental's brand new planes,but it was overbooked and they bumped us up to first class. The food and wine were wonderful, and I had a handsome 28-year-old steward who waited on me hand and foot. And the hotel -- it was great! They'd just finished a $5 million remodelling job and now it's a jewel, the finest hotel in the city.

They, too, were overbooked, so they apologized and gave us their owner's suite at no extra charge!"

"Well," muttered the hairdresser, "that's all well and good, but I know you didn't get to see the Pope."

"Actually, we were quite lucky, because as we toured the Vatican, a guard tapped me on the shoulder and explained that the Pope likes to meet some of the visitors and if I'd be so kind as to step into his private room and wait, the Pope would personally greet me. Sure enough, five minutes later, the Pope walked through the door and shook my hand! I knelt down and he spoke a few words to me."

"Oh, really...What'd he say?"

He said, "Where'd you get that awful hairdo?"

BOW WAVE is published each week to around 8600 Readers in the transport,insurance,shipping and finance industries.

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