BOW WAVE 215

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Wavy Line	sam@wavyline.com
(c)2004 WavyLine.com	Issue No 215 05 Jan 04
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Will Marine Insurance get well in 2004?
3. CTC Acquisition of Bateman Chapman
4. New Baltic Exchange Shipping Index--Call for Comment
5. CSI and RFID News
6. And Finally...

1. Welcome

The End of the Holidays

We drop you at O'Hare with your young husband,
two slim figures under paradoxical signs:
United and Departures. The season's perfect oxymoron. Dawn is a rumor, the wind bites, but there are things fathers still can do for daughters.
Off you go looking tired and New Wave
under the airport's aquarium lights,
with your Coleman cooler and new, long coat,
something to wear to the office and to parties
where down jackets are not de rigeur.
Last week winter bared its teeth.
I think of summer and how the veins in a leaf
come together and divide
come together and divide.
That's how it is with us now
as you fly west toward your thirties
I set my new cap at a nautical angle, shift
baggage I know I'll carry with me always
to a nether hatch where it can do only small harm, haul up fresh sail and point my craft
toward the punctual sunrise.

Mark Perlberg, The Impossible Toystore,
Louisiana State University Press (2000).

New Readers this week include:

Lawyer Peter Skoufalos
Kate Hollis of Clyde & Co
Nigel Horsfall
Designer Clive Taylor

News of Readers

ACI, the dispute resolution people based in Gray's Inn received notification, just before Christmas, that they have been successful in the tender to manage the FSA mediation scheme as from February 04, in place of CEDR which has been running it in its pilot version until now.

E-mail:r.com
Website: http://www.aci-adr.com

This Issue appears at the end of a very quiet Christmas break.

Enjoy.

2. Will Marine Insurance get well in 2004?

Your editor's Quarterpoints column in Lloyd's List dwelled on whether the industry's ponds of red ink might change colour this year:-

It was in the sister publication of this paper, or rather the admirable e-zine published by the Australian Lloyd'sList DCN that I first read the comments made by Clarkson research chief Martin Stopford at a Fortis Bank Christmas Seminar. Stopford noted how record after record has been smashed in the shipping industry during 2003:-.

--An early 1990s built capesize was earning US$65,000 a day, against an average during the 1990s of US$15,837 a day and a previous all-time high of US$41,000 a day in October 1973.

--Spot market earnings in the dry bulk shipping industry for the year are likely to total US$25bn, the first time that they have ever passed US$20bn.

--Laid-up tonnage is now at its lowest level since January 1971, while newbuilding output has just pipped last year's record, at 22.5m compensated gross tonnes. This means that shipbuilders have trebled their output in the last 15 years.

--Not surprisingly, hedging has become very popular, with dry cargo futures contracts expected to have increased by 50% this year.

--The main driver was bulk imports into China, which grew briskly up until 2000, and then trebled in the years after.

Those who are responsible for publishing freight indices have had to foreshorten the vertical scale of their graphical presentations--freight levels have been comparatively mediocre for a long time. The joy is not confined to bulks but extends across to the Cinderella of shipping, the reefer trades and of course the all conquering container trade which is set fair to take an even greater proportionate share of all bulk goods--as previously uncontainerised goods find themselves part of the unit load industry.

There is no necessary correlation between the level of freight enjoyed by the shipping industry and the premium levels paid into the coffers of marine insurers. Certainly the hopes that a hardened market following September 11, 2001 would bring to an end the red ink lapping at the doors of marine insurers were somewhat over optimistic. This reminds us that hope may be defined as desire in conditions of reduced probability.

The auguries at the very end of 2003 are somewhat ambiguous. The bell weather mutual clubs who have as pressing a need to refresh their capital as do the fixed premium players in the marine market are levying calls in a range of 0 to 20 per cent. Although the capacity of Lloyds will expand in 2004 to an all time high of UKP15 billion, marine business is in long term relative decline at at Lloyd's, the traditional heartland of the marine insurance industry.. Ten years ago some 25 per cent of total Lloyd's income was derived from marine insurance, a quarter of which related to hull insurance.. Today these numbers are estimated at 17 and 4 per cent respectively. The biggest seven hull markets in $ millions are London (517), Japan (377), France(361), Norway (337), USA (299), Italy (266) and Spain (167).

There is a relatively simple reason for why this deeply marine minded market has been tending to row away from marine and transport exposures for a decade. With the exception of the early to mid 1990s, it became difficult to make an underwriting surplus from this line of business.

Is this rather dire situation due to change in 2004? Is the fortitude of marine insurers sufficient now to allow us to predict with a lighter heart that happy days are here again? There are straws in the wind which tend that way--one could cite the new determination of shipbuilding insurers to charge much higher rates to the booming shipyards of the world, who have managed to take many hundreds of millions of dollars out of the market during 2003. One can point to the tendency towards ever more consolidation within the marine insurance industry as the big well capitalised insurers and reinsurers hold more and more of the future in their hands. But with so much of the world’s tonnage on its way to the East to participate in the current upswing, is it wrong at this point to wonder why so little of the insurance industry’s infrastructure is well placed within the region to take advantage?

Certainly from the point of view of the shipping industry’s ability to pay, it must be now or never time for the insurers to agree terms on a paying basis. One rather feels that if not now, when?

3. CTC Acquisition of Bateman Chapman

Charles Taylor Consulting PLC has announced the plan to acquire this firm of adjusters best known in the industry for their expertise in the energy field.

See the announcement at:

http://www.charlestaylorconsulting.com/

4. New Baltic Exchange Shipping Index--Call for Comment

Bill Lines, who edits the Maritime London newsletter writes:-

The Baltic Exchange, which provides the shipping industry with a huge range of freight market data, has issued draft proposals for the construction and implementation of a "Supramax" index. This new index, based on a standard 52,454 mt dwt vessel, could either complement or replace the current Baltic Handymax Index which is made up of six routes based on a 45,496 mt dwt bulk carrier, max 15 years old.

Baltic members and other interested parties are requested to put any observations in writing to the Baltic Exchange, for the attention of Janet Sykes, no later than 9 January 2004.

Contact her at:

jsykes@balticexchange.com

5. CSI and RFID News

The slower flow of information during the holiday season certainly did not include the editors of CargoNews, a monthly e-zine published by Countryman and McDaniel, a firm of air cargo attornies based at LAX airport. The publication is very strong these days on the air cargo and transport security fronts. Here are two characteristic items:-

***CSI Durban ......... as U.S. Customs & Border Protection (CBP) Commissioner, Robert Bonner, & Pravin Gordhan, commissioner of the South Africa Revenue Service announced that the Container Security Initiative (CSI) signed in June, an anti-terrorism scheme to secure cargo, is in operation at the port of Durban. CBP will deploy a team of officers at the port of Durban to work with host government personnel to target high-risk cargo containers destined for the U.S.A.. Officials from the South Africa Revenue Service are responsible for screening any container identified as a potential terrorist risk. The port of Durban is the 17th CSI port to become operational since CSI was proposed in Jan. 2002. It is the first CSI port in Africa. In addition to Durban, CSI is operational in Rotterdam, LeHavre, Bremerhaven, Hamburg, Antwerp, Singapore, Yokohama, Hong Kong, Goteborg, Felixstowe, Genoa, La Spezia, Pusan, Vancouver, Montreal and Halifax.

***U.S. CBP Has A Big eGo ..........has selected TransCore's eGo wireless radio frequency identification (RFID) technology as the standard for its ongoing Free & Secure Trade (FAST) program. TransCore will deliver more than 170,000 eGo windshield sticker tags, driver identification cards, as well as install inspection booth reader equipment for more than 99 FAST lanes at 22 border crossings. After successful Phase I testing using eGo technology at 6 border crossings, Phase II began with deployment at El Paso, Texas. As a truck approaches a FAST lane at a crossing, a wireless RFID reader recognizes the unique identification number encoded into both the truck's windshield sticker tag & the driver's identity card and associates this information with import, carrier & driver information already submitted to the system electronically. The eGo windshield sticker tag is a paper-thin, RF-programmable, battery-free tag that operates in the 915 MHz range. The tag has a read range of 16.4 feet. The tag has a 1024 bit memory. TransCore achieved a series of innovations, using single-chip technology to produce a low profile (45 x 85 x 1 mm) and low cost tag designed to withstand extreme temperatures, sunlight, humidity & vibration. The tag can include a tamper-resistant option, and control numbers & markings may be custom color printed on the outside of each tag.

httP://www.transcore.com

You can request a subscription from the editors by contacting the address below:

CargoNews@aol.com

6. And Finally...

Many thanks to Theodore James for this one:

It was October and the Indians on a remote reservation asked their new Chief if the coming winter was going to be cold or mild. Since he was a Chief in a modern society he had never been taught the old secrets. When he looked at the sky he couldn't tell what the winter was going to be like.

Nevertheless, to be on the safe side he told his tribe that the winter was indeed going to be cold and that the members of the village should collect firewood to be prepared.

But being a practical leader, after several days he got an idea. He went to the phone booth, called the National Weather Service and asked, "Is the coming winter going to be cold?" "It looks like this winter is going to be quite cold" the meteorologist at the weather service responded.

So the Chief went back to his people and told them to collect even more firewood in order to be prepared. A week later he called the National Weather Service again. "Does it still look like it is going to be a very cold winter?" "Yes," the man at National Weather Service again replied, "it's going to be a very cold winter."

The Chief again went back to his people and ordered them to collect every scrap of firewood they could find.
Two weeks later the Chief called the National Weather Service again. "Are you absolutely sure that the winter is going to be very cold?"

"Absolutely," the man replied. "It's looking more and more like it is going to be one of the coldest winters ever."

"How can you be so sure?" the Chief asked.

The weatherman replied, "The Indians are collecting firewood like crazy."

BOW WAVE is published each week to around 9400 Readers in the transport,insurance,shipping and finance industries.

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