BOW WAVE 194

Hot Summer Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2003 WavyLine.com	Issue No 194 11 Aug 03
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Lorry Driver's Boots Only Trek
3. Where's the Partnership in Container Shipping?
4. Shanghai Trailer
5. From Our Picture is Worth a Thousand Words Department
6. And Finally...

1. Welcome

Three years before he died, Alfred, Lord Tennyson wrote one of his best-known poems in just a few minutes as he sailed to the Isle of Wight. He asked that it always be placed at the end of his books. Here it is:

Crossing the Bar

Sunset and evening star,
And one clear call for me.
And may there be no moaning of the bar,
When I put out to sea,

But such a tide as moving seems asleep,
Too full for sound and foam,
When that which drew from out the boundless deep
Turns again home.

Twilight and evening bell,
And after that the dark:
And may there be no sadness of farewell,
When I embark;

For tho' from out our bourne of Time and Place
The flood may bear me far,
I hope to see my Pilot face to face,
When I have crost the bar

New Readers this week include:

Eamon Baird of Matching Systems in Hampshire
Mark Hoyle of Tanfield Chambers in the Temple
Louise Hall of Club Managers Thomas Miller
Greg Vassilious of Phoenix Aviation Managers in Kennesaw, Georgia Ravi Sishta
Tony Proctor

Readers Write:

From Dave Letteney

Re Release of cargo in Chile (Bow Wave Issue 193)

This is a fairly common situation in South and Central American countries. Early on in my secondary career as an arbitrator I had to sort out several similar situations between receivers and ocean carriers, both victimized by the peculiarities of Customs' bureaucracies.

contact him at:

dletteney@mindspring.com

Readers Sites:

Photographer Jiri Rezac who is based in London has a set of expressive pictures taken at the Chittagong shipbreakers:

http://www.jirirezac.com/menu.htm

Greetings from the hottest English summer your editor can remember since 1976. Our Issue has appropriate items as well as some interesting perspectives on containers. Next week's Bow Wave will be under the aegis of Mike Wall, the editor of the Flashlight E-zine which is read by marine surveyors all over the world.

Enjoy.

2. Lorry Driver's Boots Only Trek

A perfect August story has been appearing in the newspapers concerning the progress of a nudist hiker who has been attempting to walk from Land's End to John O' Groats wearing only a floppy hat and a rucksack. The story began to appear all over the world and the eccentric individual has been identified as a lorry driving father of two named Steve Gough, from Eastleigh, Hampshire, aged 44.
This story appeared earlier in the Siffy website operated in India:

UK police hunt for naked rambler

Tuesday, 05 August , 2003, 12:32

London: Worried police are searching for a naked rambler who has been enjoying the sights along a famous British walking trail wearing only a floppy hat and a pair of hiking boots, the Times newspaper reported on Tuesday. The man has startled other ramblers on several occasions in the past fortnight during his walks in the Yorkshire Dales in northern England, where he has been seen at several points on the 435 km Pennine Way.

During one sighting, the rambler, described as in his late 30s, of athletic build and sporting an all-over tan, was reported to have said a cheerful "good afternoon" to a woman.

On another occasion he obligingly covered up, temporarily, after a male passer-by told him to put some clothes on.

Acting Chief Inspector Tadeusz Nowakowski, who is leading the hunt, said the mystery rambler could face charges of outraging public decency.

"These incidents might be quite tame, but the police are taking them seriously due to the distress they have clearly caused to the public," the Times quoted Nowakowksi as saying.

"Imagine if your wife was stuck up on her own in the Dales, having her sandwiches and a bit of a nap when suddenly this man comes bumbling around the corner," Nowakowski said.

Here is an update on the Summer's unlikeliest individualist:

http://news.bbc.co.uk/1/hi/england/3064233.stm

3. Where's the Partnership in Container Shipping?

Matt Flynn whose Monday Briefing for Lloyd's Maritime Asia is providing one of the industry's best reads these days has been thinking about container trends:

It's time to take stock and define the relationship between shippers and ocean carriers.

Is there indeed a partnership?

When the United States introduced the Ocean Shipping Reform Act everyone said it was a new era of customised contracts, the shippers would get (and pay for) value-added rather than just chasing the cheapest contract.By this logic, the industry should be moving closer to tailor made solutions for shippers. Our biggest question is whether year-to-year freight volatility prevented the industry from achieving a more mutually beneficial arrangement?

This is one of the constant discussions we are having with our service providers. Is there such as thing as a long-term relationship or partnership? "Sometimes I think there must be, but other times it is not so clear", said an Asian logistics chief for a footwear maker.

This obviously a tricky issue for shippers and carriers. Last year was a disaster for carriers and shippers stood by shaking their heads, pointing out that the pain was self inflicted by over-ordering. This year, shippers are naturally thinking about the extra costs and the tables are turned. Have they considered that the tonnage, derided as surplus last year, is in desperate demand this year?

As a matter of fact, the tonnage was actually in demand last year as well. It was just that no one knew it. The post-mortem of the 2002 container line bloodbath, had shipping line executives such as Maersk Sealand's president making formal presentations laying the blame on analysts. Knud E Stubkjaer, said the woeful performance of the industry in 2002 was the fault of third party consultants. "In a word, the analysts and the industry misread the 2002 supply/demand dynamics," said the man running the world's largest container concern.

Analysts have crude tools at their disposal. Extrapolations of port volumes, declared ship capacity, and containerisation rates. The container lines do not get any prizes for sharing data. They have, however, stacked up some impressive cost cutting measures though particularly in terminal, feeder and inland haulage.

"Further cost rationalisation will be helped by computer systems with better yield management," Osamu Suzuki, head of MOL Asia said, explaining that with better yield management, a salesman would be able to choose between an eastbound cargo at $1000 contribution per FEU to Chicago, and $1200 to Atlanta. It might better sense to take the Chicago business when we look at the round-basis 'yield'. Salesmen do not know this unless you tell them," said Mr Suzuki.

The other problem is that freight cycles swing dramatically. "A ten percent swing in either supply or demand tends to cause a magnified 30% change in rates," said MOL's Mr Suzuki.

"Carriers need to be more sensible to not excessively react to changes in supply and demand and use the yield management system on a round-trip basis for long-term trade stabilisation which will benefit both carriers and shippers," he concluded. While such calls for a more predictable partnership or even several year contract have been seen as wishful thinking, there are signs of a more appreciative attitude by shippers since the U.S. West Coast port lockout highlighted the importance of their supply chains.

One carrier executive said he thought the shipper profiles were fairly segregated with 10% of carriers looking for true partnership commitments in a monogamous relationship. Another 30% of the shippers were looking for a more symbiotic relationship. That means that these shippers work off a select list of preferred carriers, which enjoy a first right of refusal for contracts. This symbiotic bunching is a demonstration of some loyalty, and in turn carriers will protect space in tight periods. Of course, in times of scarcity, carriers demand and get higher rates knowing full well that supply-driven pricing is a double-edged sword that cuts both ways.

This theory suggests that at least 60% of the shippers are driven by price alone without regard to the relationship. The more a shipper's products are very time dependent though, the more likely they will establish and maintain a partnership attitude.

Another important area to take stock of is the involvement of container lines in supply chain management. Some carriers developed their own consolidation services in the 1970s, but others joined the game later. A compelling article in Lloyds Shipping Economist has argued that the diversion into supply chain management has not been a happy experience in general for the container shipping industry."The truth is probably that container shipping and end-to-end logistics services are probably two distinct businesses required a different focus as well as different knowledge and experience", was the conclusion.

In the same issue, an article on tonnage supply issues presented a strong argument that capacity would be tight at least until the wave of ships in the 8000 teu class would comes into play.

"Containership capacity supply may struggle to keep up with the demand rate of growth until the new generation of 7500 teu plus containerships are delivered in significant numbers, but this will not happen until 2005", noted LSE. It is hard to find carriers that have not made the leap of investment and operational faith to join the 8000 teu club.

Yang Ming and K Line are the most recent. Germany's Erck Rickmers has even gone to China for a trio of 5500 teu ships, which will be delivered in 2006 and 2007.

While China is making everything under the sun that goes into the boxes driving the container boom it has been less efficient in actually building ships. China has a long way to go in competing against South Korea and Japan over the big ships. Though it has built bigger ships for both Cosco and China Shipping, last year's record for the containership market was even less impressive as China only completed one of the 85 larger ships completed last year, according to a study by Poten & Partners.

To date, the largest export orders by China other than the Rickmers deals are the 3400 teu ships built in Shanghai Shipyard. It has been said often enough but mention of China will warm the heart of any container executive.

The linchpin of these demand numbers is the impact of China, which looks set to overtake the US position as the number one container market by 2011. According the United Nations study, container throughput at the mainland's ports will rise by 12% annually allowing Chinese terminals to handle 46.2m teu in 2011, up from 12m in 1999.

If you had any thought that the tide of containers washing across Chinese berths is slowing, forget it. Shrugging off SARS, Shanghai's total port volume climbed 36% to 4.25m teu in the first five months of 2003, putting it on a par with the world's third largest port of Pusan.

That situation is repeated all along the China coast. Nationwide container throughput for the first five months of 2003 reached 17.74m teu, again a 36% growth.
This is after full-year 2002 throughput totalled 33m.

4. Shanghai Trailer

Container Shipping Executive Summit 5

Partnerships will be the main theme of Container Shipping - Executive Summit V in Shanghai on December 4 and 5, 2003. As with previous events, this conference/roundtable will once again bring together shipping lines and their customers for an annual summit discussion on key issues facing the container industry. Confirmed shippers include Home Depot and Walgreens.

This year's lead focus will be on defining the nature of the carriers and shippers relationship. The shipper-carrier dialogue will be the first topic of the day, while the later afternoon of the first day will shift toward carrier-specific issues such as capacity and financing.

Other partnership themes are those between ports and carriers as well as the implications of new security requirements on all the participants in the supply chain.

The second day's events will be a regional focus on logistics/container developments in China, Taiwan, Asia, and U.S. West Coast.

For more information contact:

Lynn.Ng@ibcasia.com.sg

5. From Our Picture is Worth a Thousand Words Department

Many thanks to P&I man Richard Neames for bringing this helpful Advisory Message from Panama:

Quote from GAC auto news email service :

DATE: August 07, 2003
COUNTRY: Panama
PORT: Panama Canal
Display of Panamanian flag

The Authority offers the following information that governs the proper manner to display the Panamanian flag on transiting vessels:

- The Panamanian flag is divided into four rectangles of equal size. The top two quadrants are white with a five point blue star in the centre on the hoist side and plain red. The bottom two quadrants are plain blue on the hoist side and white with a five point red star in the centre.

- The flag must be displayed with the white quadrant with the blue star on top, adjacent to the flagpole, leaving the blue quadrant directly below and also adjacent to the flagpole.

Source: Panama Canal Authority Advisory to Shipping No.A-26-2003 dated August 6, 2003

Unquote

6. And Finally...

Many thanks to David Cheslin for this one.

In a city park stood two beautiful statues, one female and the other male, both nude.

These two statues faced each other for many, many years naked.
Early one morning an angel appeared before the statues and said, "The two of you have been truly exemplary statues and have brought enjoyment to many people that have visited the park over the years. I am hereby authorized by God to give you the greatest wish that can be bestowed on you..

I grant you the gift of life -- albeit as a limited offer. You have 30 minutes to do whatever your hearts desire."
And with that command, the two statues came to life. They smiled at each other, slowly moved their limbs about in wonderment, looked all around and then at their own bodies and finally back at each other. Still smiling they then ran to the nearby woods and dived behind a large bush.
The angel smiled to herself as she listened to the giggling, bushes rustling and twigs snapping. Even angels know of such things! After fifteen minutes, the two statues emerged from the bushes, looking extremely satisfied and wearing nothing but even bigger smiles than before.

Puzzled, the angel looked at her watch and said to them, "You still have fifteen minutes. Wouldn't you like to continue?"

The male statue looked at the female and asked, "Do you want to do it again?"

"OH, YES!", the female statue replied. "But this time YOU hold the pigeon down and I'll sh*t on its head!"

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

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