BOW WAVE 568

Bow Wave Issue 568--Cloud Computing Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2010 WavyLine.com	Issue No 568 11 Oct 10
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Lloyd's List Opinion
3. More Women the Answer
4. Actuaries Ponder the Costs of Piracy
5. International City-Port Congress
6. And Finally...

1. Welcome

Poem of the Week

Derry Derry Down

i

The lush
Sunset blush
On a big ripe

Gooseberry:
I scratched my hand
Reaching in

To gather it
Off the bush,
Unforbidden,

In Annie Devlin's
Overgrown
Back garden.

ii

In the storybook
Back kitchen
Of The Lodge

The full of a white
Enamel bucket
Of little pears:

Still life
On the red tiles
Of that floor.

Sleeping beauty
I came on
By the scullion's door.

Seamus Heaney

News of Readers

Sharon Duffy from Beazley Marine is planning to climb Mount Kilimanjaro. She is flying to Africa on 05NOV10 to begin her ascent. Sharon will be raising money for St Saviour, Warwick Avenue inLondon which is a charity that is undertaking essential building work to provide much needed space for local children, who will be able to use the church for local community projects.

As well as raising the required £1,750 for St Saviour, Warwick Avenue, Sharon will be raising money for one of Beazley's chosen charities, Rwanda Aid.

If you would like to support Sharon and make a donation to help her raise as much money as possible go to:-

http://www.justgiving.com/SharonDuffy

FOB Network

Generally after a measured start following our launch in late summer, the network, aimed at Readers of Bow Wave and stocked with items, serious and humourous, calculated to be of interest to you is growing.

There is a lessening it seems of the tendency of people to sign up in a wary, cagey sort of way. We like to encourage readers to post up a photograph of themselves and a few words introducing themselves. We certainly discourage the bad internet habit of signing up anonymously.

As might be expected of a networking site, the most popular page is the People page. People who are new to posting can visit group pages like Pickled Gherkins, Books, Video Show to get the hang of it.

Many interesting people are joining. To name but a

John L David, noted surveyor and consultant
Hilda Krause, based in San Francisco and transport insurance Marc Caramondanis, engineer and surveyor based in Cyprus Alex Tolmachev, Russian marine insurer
Brian Gedalla, stats man
Stuart Dench, maritime lawyer
Adam Dupre, bunker credit analyst
Ulf Teske, salvage specialist
Capt Jeff Carlisle-Dodd, master mariner
Sandra Attersley, maritime lawyer in Halifax NS
Clifford Parfett, surveyor and consultant in eastern Canada John Gibbons, crane trouble shooter
Andrew Coish, lawyer in Hull
Austin Dooley, weather consultant
Andrew Tullooch, lawyer in Melbourne
Didier Jouin, insurance broker in Paris
Simon Barnes, master mariner
Dawn Gorman, editor of tug and salvage publication Tajbar Rawat, consulting master mariner in Singapore

Many companies are supporting us by taking out a business page on FOB. We are much obliged to them. To name but a few, these include

AKD--Dutch Maritime Lawyers
FIPRA--European public affairs specialist
Marine Professionals--surveyors and consultants
LSLC--London Shipping Law Center
Institute of Risk Management
Ince & Co--Maritime Lawyers
CSL--International Surveyors
C-MAR--Maritime Consultants and Experts
WK Websters--Claims Management Company
Tecklenburg & Jenkins, Lawyers in Charleston, South Carolina

Our Sponsors, who have helped us to get FOB going in a major way occupy the banners on the home page:-

Colemont Insurance Brokers (Launch Sponsors and P&I Group Page Sponsors) OAMPS (Sponsors of the Marine Liability Group Page) ESS (Sponsors of the Electronic Shipping Documents Group Page George Chalos (Sponsors of the Rule B and Criminalisation Group Pages) Unit One (Sponsors of the Art Logistics Group Page) Real Corporate (Sponsors of the World Travel Group Page) You are welcome to join
http://www.fobnetworking.com

Note from the Editor

This week finds your editor in Norfolk on a fraternal visit and this issue comes to readers courtesy of the Dell Laptop of nephew George Ignarski and cloud computing.

Enjoy!

2. Lloyd's List Opinion

Your editor's recent opinion piece reviewed a new book on bunker credit reports:-

Companies stay afloat with one eye on credit risk

Credit and cash flow might keep business leaders awake at night, but the word on the street is as influential as any balance sheet

WHICH of us this autumn in 2010 can say hand on heart that the issues of credit and cash flow are of marginal concern? Those with ample reserves of cash and capital may be of heart than the rest of us, but most people one way or another saw how the flow of funds changed viscosity since the demise of Lehman Brothers and the times that have followed.

Getting paid on time all of the time is something decent business aspire to but may not necessarily achieve. Yet the maritime industry has for many decades had a small, intellectually respectable credit rating industry serving it.

Many organisations that supply goods and services to the maritime industry do not go very far before they ask a credit rating agency to take a view on the robustness of their clients and how much credit they are good for. For companies that supply equipment on lease, or port services or bunkers where the margins can be thin, one bad debt may put an awful dent on the year’s
or worse. It is said that in the container world, even shipping companies that are in terrible shape will treat the invoices of their leasing companies as very high priority debts indeed, such is the downside to being found wanting by the credit agencies.

A recent book* on the subject of bunker credit risk by Adam Dupré is thus a timely newcomer to the scene. There were, so far as I can tell, no books around on the subject prior to this one and if you pick up a typical credit report on a shipping company (and one is included at the end of this short book), it will not tend to astound you with its depth and insight. The book is short and to the point. Although it is on a specialised subject, the author has a flair for brevity and summary. He has been in the industry for 25 years and is a product of the MRC academy of shipping analysis, which was originally based in Oxford and founded (partly by him) upon the insight that the shipping industry at the time was short on credit information sources.

MRC is nowadays part of the same group that brings you this daily newspaper and Adam Dupré has moved on to his own company in the bunker supply capital of the east in Singapore. In that part of the world, bunker business aside, he will have his work cut out for him. The western Pacific region is host to some of the most secretive and tight-lipped company cultures in the world. To use an abstract German noun, the informationspolitik of the East is to say as little as possible to anyone. Sharing information is often seen as a last resort. Here is a sample from the book of daily reality:

“No we don’t own any ships.”
“Well your principals do.”
“OK yes we do operate five.”
“But aren’t three of them laid up and wasn’t one declared CTL after a fire last week?”
“Yes. OK we operate one ship.”

The author says the basic objective of a marine credit report is to get readers to the point of knowing the subject company similar to the way they know their families, that is to they understand their drives, how they may react in different situations, what resources they really have and how they will act in adversity.

Is it anything to do with the scrutiny of analysts over the decades that the ever-growing container industry, which almost always grows bigger each year, has managed to avoid the sort of high-profile bankruptcies which attended on the greats of a different age? When US Lines went under in the late 1980s, the fallout was global and dramatic. Forty foot containers in depots around the world were seized as liens by unpaid yardsmen. Ships were stilled and container terminals owned by the line shut for a while.

At the small mutual where I worked at the time, the premium income paid by US Lines alone was something like one sixth of the total. It took many hundred new accounts to fill the void left by the demise of Maclean’s speedy lines, but given the growth of containerisation at the time it was done soon enough. Post-2008 container shipping, on the other hand, seems to have had enough agility to bring in slow steaming and container inventory management sufficient to avoid going down the cyclical gurgle. So far the worst insolvency story has been the fall of the Shantung Yantai line.

Since the bunker credit risk bears a strong comparison with maritime credit risk in general, one of the strengths of this book is to provide something of a primer on the shipping world in general. It does a good job on describing the different types of fuel, ships, markets and information sources which may be seen in our industry.

Just as importantly, the author admits that the word on the street may be as influential as last year’s balance sheet. You can get a reference on someone in this industry simply by listening to the way your referee inflects his words. By the time a company or an individual starts being called “dodgy” and after you have eliminated the possibility of mere malice or competitor’s Schadenfreude, there are few places for them to hide in the global shipping village.

*An Introduction to Bunker Credit Risk by Adam Dupré (2010) published by Petrospot Limited, Oxford, ISDN 978-0-9548097-5-1, £45/€50/$80 + p&p

3. More Women the Answer

Jenny Pournara from the WISTA Hellas Office writes:-

Shipping companies have been urged by the Secretary-General of the International Maritime Organization to pay more attention to recruiting female seafarers as part of the drive to solve widespread crewing shortages.

Mr Efthimios Mitropoulos told the annual Conference of WISTA International in Athens that women must be brought into the workforce on a much greater scale to help safeguard the future of the world merchant fleet.

Mr Mitropoulos was delivering the Conference keynote address, o n the theme of 2010, Year of the Seafarer, a designation which has helped to reinforce the need to come to grips with the long-predicted labour-supply shortage in the shipping industry. He insists that it is imperative for shipping to re-launch itself as a career of choice for the high calibre, high quality young people of today.

The IMO view is that there is no intrinsic reason why women should not participate in and benefit from employment in the shipping industry, but it is believed that a mere 1% or 2% of the global workforce of 1.5m seafarers are women.

The Secretary-General underlined his view that female seafarers are an under-utilised and underdeveloped resource that could provide part of the solution to the problem of crewing the world merchant fleet.

He reminded the WISTA assembly that substantial growth in trade was being predicted for 2010, which should be followed by considerable new job opportunities in the maritime sector, "and I hope that women will have their fair share in any such development."

Shipping cannot afford any longer to ignore the huge workforce potential provided by women, he said, in areas ranging from management, to seafarers "at the sharp end." Mr Mitropoulous admitted that with crew numbers on some ships having been reduced to levels as low as 12 to 15, the work demands were immense, and a ship could be a lonely place during duty hours; but the profession of seafarer was not only a satisfying career choice, it was a passport to a huge number of jobs ashore.

The concept of shipping as a man's world was being challenged, and barriers were falling. WISTA was attracting more women to the industry, and deserved all credit for doing that.

Mr Mitropoulos said that as a United Nations agency, IMO a long track record of fostering the advancement of women, and that gender equality should be considered a basic human right, "but there are still many battles to be fought and won in this regard."

[The conditions in the marine insurance world provide plenty of room for improvement. Some workplaces are full of dull dunderheads, glass ceilings and complacent managers who do not understand the long term direction their operations are heading. Any firm, organisation, school or college which consists only of males in 2001 is probably not half as accomplished as it might be--ed]

4. Actuaries Ponder the Costs of Piracy

Despite attacks by Somali pirates on international shipping in the Gulf of Aden making headlines across the world, the true cost of these attacks to the maritime insurance industry are still uncertain, according to a new report published by the Actuarial Profession.

Neil Hilary, a staff actuary with the profession and one of the authors of the report explained: "Piracy attacks have been on the increase in the last 15 years. But, since 2006, the level of attacks has increased by an average of 125%. And this is almost entirely due to the attacks by Somali pirates.

"However, the challenge to the actuaries involved in pricing maritime insurance products is considerable. Firstly, actuaries are used to working with statistics which number thousands and tens of thousands. Despite the increase in piracy attacks, the numbers are still relatively small. And secondly, the information about the attacks issued by shipping owners is often vague. Understandably, shipping owners don´t wish to encourage further acts of piracy, but without knowing the full details we cannot come up with the true cost."

He added: "The authors of the report have been able to come up with an estimated cost of around USD9m (GBP5,686,159) for each attack using publicly available data at the time and, with a success rate of 6 per mile, this produces a kidnap and ransom rate of around USD57,000 (GBP36,008) per vessel using the Suez canal. But this is based on judgement, not on strict modelling. So, without accurate figures, uncertainty will remain and future costs may be significantly different."

Full story:-

http://www.heavyliftpfi.com/content/NewsItem.aspx?id=2078

5. International City-Port Congress

The Colombian Association of Mechanical and Industrial Engineers is organizing an International City Port Congress in Cartagena, Colombia on April 27-29, 2011. The program will focus on the relationship between port cities and ports.

For more information go to:-

http://www.jornadasinternacionalesdepuertos.com

6. And Finally...

Many thanks to our European Competition Correspondent Peter-Carlo Lehrell for this one:-

The Wisdom of Socrates

In ancient Greece (469 - 399 BC), Socrates was widely for his wisdom.

One day an acquaintance ran up to him excitedly and said, "Socrates, do you know what I just heard about Diogenes?"

"Wait a moment," Socrates replied, "Before you tell me I'd like you to pass a little test. It's called the Triple Filter Test."

'Triple filter?" asked the acquaintance.

"That's right," Socrates continued, "Before you talk to me about Diogenes let's take a moment to filter what you're going to say. The first filter is Truth. Have you made absolutely sure that what you are about to tell me is true?"

"No," the man said, "Actually I just heard about it."

"All right," said Socrates, "So you don't really know if it's true or not. Now let's try the second filter, the filter of Goodness. Is what you are about to tell me about Diogenes something good?"

"No, on the contrary..."
"So," Socrates continued, "You want
to tell me something about Diogenes that may be bad, even though you're not certain it's true?"

The man shrugged, a little embarrassed. Socrates continued, "You may still pass the test though, because there is a third filter, filter of Usefulness. Is what you want to tell me about Diogenes going to be useful to me?"

"No, not really."

"Well," concluded Socrates, "If what you want to tell me is neither True nor Good nor even useful, why tell it to me or anyone at all?" The man was bewildered and ashamed. This is an example of why Socrates was a great philosopher and held in such high esteem.

It also explains why Socrates never found out that Diogenes was sleeping with his wife.

Pessimist's Guide To Next 10 Years

Your editor's weakness for futurological writings found the ideas and glossary of writer Douglas Coupland hard to resist. Some have the ring of truth about them, that's for sure:-

http://tinyurl.com/33cnxx8

BOW WAVE is published each week to over 15 000 Readers in the transport,insurance,shipping and finance industries. It is free to Readers but you can support it as a going concern by subscribing as a business member to:-

http://www.fobnetworking.com

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