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"Where in the world is NYMAR?" Contest! March's challenge to guess "Where in the World is NYMAR?" underscored our need to put time zone restrictions on entries!! NYMAR Gets the inside look at the insurance sector with Mike Mitchell. Economics, piracy and more... Dahlman Rose Indices Dahlman
Rose & Co has agreed to provide NYMAR
readers with its Dry Bulk Shipping and
Tanker Shipping Indices. Monthly
News NYMAR's AGM targets messaging
Arbitration at the Millenium: How much has changed in 10 years?
Financial
Performance Charts Taste of NYC | Events & Entertainment Upcoming
events & entertainment in the Big Apple. |
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NYMAR recently concluded its annual meeting and I think came away with the first sketches of a blue print to make the organization an even greater force on the maritime scene.
Our membership has embraced our approach and we will now look to broaden not only our reach but our perceived spheres of operation. The early roots of NYMAR were based on the legal profession's need to emphasize and promote the skills of New York over London, latterly we have shifted our emphasis to the capital markets but we do not want to stop there. NYMAR will seek to cut a much broader swath and we will endeavour to promote New York as a maritime center on several levels.
We will be strengthening our media and government relations and will be prepared to address any other tax issues that might come down the pike for Washington. We will continue to demonstrate the value of our arbitration system and the caliber of the professionals who are so actively engaged in that space. We will focus heavily on the financial sector that is so integral to New York. We will highlight the many other aspects of the New York cluster including the hardware of the port and the ancillary services, the value of the various associations and groups within the cluster.
In short there is nothing in the maritime space that New York does not provide and in the months and years ahead NYMAR will champion that cause.
Where (and who) in the world is NYMAR?
Email your responses to info@nymar.org. And also send your photo to Carleen at info@nymar.org and we will feature it in the next issue! |
We needed to make this month's identification a bit more challenging. The winner must identify not only the place, but the model as well!
|
Economics, piracy and more... | NYMAR: | How is the insurance market responding to the economic downturn? |
|---|---|
| Mike: | The marine insurance market is not insulated from the global economic downturn. Insurers have made the difficult decision to increase premium, raise capital from the capital markets and, in the case of several of the International Group P&I Clubs, to levy supplemental calls to make up for the reduction in investment earnings and the loss of surplus caused by the financial market meltdown. Hull and Machinery rates were hardening even before the financial crisis hit, as the premium levels were unsustainable for the losses incurred. The economic downturn has hastened the necessity for profitable technical underwriting across the marine insurance sector.
However, owners are less able and perhaps less willing to pay increased premium due to the reduction in earnings of their fleets and the idling of hundreds of dry bulkers and container ships. |
| NYMAR: | How did it impact P & I renewal season? |
| Mike: | The P&I Clubs had issued larger than usual general increases in part to address reductions in investment income and deteriorating surplus caused by the financial crisis but also to address technical underwriting performance. Clubs with a large surplus historically have used investment income to subsidize losses, thereby charging less premium than otherwise would be required to cover the anticipated losses. Clubs with a small surplus and comparatively less investment income rely upon unbudgeted supplemental calls to offset underwriting losses. The market meltdown has removed investment income from the underwriting equation and forced the clubs to take a hard look at the performance of individual fleets and rerate those fleets which had poor loss records. The end result is that the fleets that incur the larger amount of losses will pay the larger amount of premium.
The 2009 renewal was interesting because a number of IG clubs had issued supplemental calls, indicating the breadth of the financial meltdown and the reliance upon investment income. Additionally, clubs with significant foreign currency exposures suffered greater losses due to the strengthening of the US dollar. Underwriters are now unable to rely upon investment income to offset underwriting deficits. Unforecast supplemental calls as a means to cure deficits are particularly unwelcome in the difficult trading environment owners find themselves in. While the overall percentage of owners changing clubs was approximately the same as in renewals past, there was considerable emphasis by the clubs on retaining and recruiting quality members while owners with good loss records sought financially stable, highly rated clubs. The strong got stronger. The flight to quality will continue in the years to come. A recent development is the foray by H&M underwriters into liability insurance products that were traditionally offered by the IG Clubs. The Norwegian Hull Club, for example, has launched a successful charterer's liability program that has attracted interest from a number of well-regarded charterers. |
| NYMAR: | What clubs do you think are handling this climate better? |
| Mike: | The International Group as a whole is well-positioned to ride out the financial storm. The IG purchases the world's largest reinsurance contract, minimizing the individual losses of any club to that club's retention or deductible. Each of the clubs then reinsure their retention to further minimize their exposure to larger value claims.
Renewals saw the highly rated clubs continue to add members and tonnage and the lower rated clubs stagnate or shrink. Owners want financial stability and quality service from their clubs. Those clubs which deliver expert claims service, charge appropriate premium according to risk and operate in a transparent manner will prosper despite the economic turmoil. The risk that any club would be forced to liquidate is quite small, as the clubs operate as mutual insurance associations and have the ability, as unwelcome as it is, to assess their respective memberships to cover deficits. The strength of any club is reflected in its surplus and the quality of its members. Consolidation among the clubs is a more likely scenario. |
| NYMAR: | Have you seen much attrition/consolidation amongst the owning community? How will that impact the Clubs? |
| Mike: | There are certainly many more bankruptcy filings than in years past, due to the end of the 'super cycle' of shipping. Trade finance became impossible to obtain, and many first-class charterers and commodities traders lost their credit lines this past fall. This led to a collapse in world trade and a dramatic downturn in demand for ships. Asset prices plummeted and many owners were in technical breach of their loan to value covenants. Older vessels were laid up and some were scrapped. New buildings were and are being cancelled at a record pace, due to the freezing of the credit markets. Private equity groups will take up some but not all of the slack. This means that fewer vessels are fully employed and collection of premium will be reduced proportionately, as owners are entitled to a refund of premium to reflect the reduced insurance risk of a ship in lay up. Collection rates will likely decline, and there will be many expensive claims between owners and shipyards caused by the cancellation of new building contracts. The silver lining for underwriters is that with fewer vessels operating, there should be a reduction in both P&I and H&M claims. |
| NYMAR: | What impact, if any, is the increase in piracy having on the insurance market? |
| Mike: | The marine insurance market is remarkably resilient and adaptable. The provision of kidnap and ransom insurance to vessels transiting the Gulf of Aden is one example. K&R policies cover the payment of ransom and the expenses attendant to a piracy incident, to a stated insured maximum. K&R policies have actually become less expensive as more underwriters enter the field, having seen the opportunity to earn a profit. Several underwriters now offer loss of hire coverage for piracy incidents, in response to a demand from owners whose ships have been hijacked. |
| NYMAR: | What trajectories do you see if this trend continues? |
| Mike: | Ships are easy targets for pirates. Piracy will likely spread from Somalia and Nigeria to other parts of the developing world, as the ease with which merchant vessels can be hijacked becomes more readily apparent to other groups so inclined. The average ransom payment has increased 300% in the past five years. Owners will be required to be proactive in preparing their ships and training their crews to repel pirates, as the world's navies simply cannot be everywhere at once. Private escort services, privately run convoy services and other methods will become increasingly important to ensure safe passage through hostile waters. |
| NYMAR: | You were involved in the TASMAN SPIRIT grounding and pollution incident in Pakistan a few years ago. In that case, seven crewmen and the salvage master were detained in Pakistan for nine months and faced criminal charges for a grounding which occurred while a local pilot was navigating the vessel. You led the efforts to release the men. Tell us about that incident. |
| Mike: | The Karachi Eight, as they became known, were charged with intentionally grounding the vessel and damaging the environment. They were required to appear in court every Saturday morning, alongside the common criminals of Karachi, to obtain an extension of their bail. Diplomats from the European Union and Greece, especially Ambassador Dimitris Tsikouris, met with their Pakistani colleagues on several occasions to demand the men's release. IMO Secretary General Efthimios Mitropoulos was heavily involved in the effort. THE EU threatened to withhold financial aid to Pakistan. A breakthrough occurred when the US State Department agreed to take up the issue. Secretary of State Colin Powell traveled to Pakistan to meet with President Musharraf and added to the agenda the detention of the TASMAN SPIRIT crew. I was subsequently advised by senior State Department personnel that President Musharraf had balked, claiming that the incident was a matter of domestic concern. Two days later, the men were released, due no doubt to the intense political, diplomatic and industry pressure put upon Pakistan. |
http://www.dahlmanrose.com/indices
Over 100 maritime professionals and graduate students gathered at the Weissman Center of Baruch College on May 8th to learn more about "Polishing the Big Apple: A Look at Today's Shipping Realities" hosted by the Weissman Center for International Business, Baruch College/CUNY, the Journal of Commerce and NYMAR.
Paul Bingham, Managing Director of HIS Global Insight, got the ball rolling by pronouncing we are in the midst of "The Great Recession". In his view, a "Great Depression" or Japanese-style "lost" decade is unlikely, but will need fiscal and monetary stimuli to avoid such a trap. Paul does feel that there will be a permanent impact on location, without a return to the growth rates of the ‘80's.
"The greater linkages [globalization] create a global impact. Protectionism, though, is a risk…Stimulus and lower commodity prices equal recovery, which I anticipate will occur in late 2009."
He went on to say that GDP growth is expected to be above 0% in 3Q 2009, but seaborne trade is expected to be down 2.8% in 2009.
Drilling down to the port of New York, Paul cited the following metrics for port consideration:
Physical capacity, labor, Harbor Maintenance Fee and other port tolls
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Environmental regulations need to be on a national/international level for equitable consideration
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Environmental, energy, safety and security are important to decision makers
The Panama Canal expansion (estimated to be in place 2014/2015) is expected to bring more growth to the East Coast ports, particularly in the container sector. While this sector represented 34% of all traffic transiting the Canal in 2005, this number is expected to rise to 59% by 2025.
On the subject of Trade Credit, Stephanie Kasselakis of Poten Capital affirmed it has been an "inhibiting factor" but held out the benefits of the G20 stimulus plan. Omar Nokta, Managing Director of Equity Research for Dahlman Rose, told the audience that coal, iron ore, and oil majors were fine on credit, but that the trading houses didn't have credit.
When asked about Short Sea Shipping, Rick Larrabee who is the Director-Port Commerce for the Port Authority of NY & NJ stated it needs to find a way to compete, with no evidence that it will make it on a competitive sense. Hanjin Shipping's Bill Rooney added that it depended on service and cost. "Trucks are more flexible and are lower in cost. You are adding two lifts [on and off a barge]which removes any economic advantage."
Bill Rooney gave a boost of confidence to the gathering by sharing that his customers, the retailers, continue to source China. He observed that in that region, though, the work is heading south to Viet Nam, Indonesia and India in search of lower wage rates. Hanjin is opening a new terminal port in Ho Chi Min city.
Closer to home, Rick Larrabee said the Port Authority is investing $2billion to improve access to the port. The 45' channel deepening is completed, work is being done on 50' berths, and larger cranes are being brought in. One project, the need to increase the "airdraft' of the Bayonne Bridge is under study, but a solution will not be in place in time for the introduction of the megaships to the market.
Weissman Center Director Terry Martell ended the seminar with the following observation: "International business does not get the support or not it deserves. The port, and shipping, drives the business".
Stay tuned for more joint events.
By Keith Heard
Announcing that he was "gratified with the support we have received and pleased with where we are going," NYMAR chairman Peter Shaerf reviewed the organization's accomplishments and plans at the Annual General Meeting at the Harvard Club in Manhattan on May 6th. Pointing out that the organization now has more than sixty corporate and individual members, Mr. Shaerf set goals for increased membership and funding over the rest of the year, while announcing the additions of Kathleen Haines of OSG America and Brian Devine of Blank Rome to the board of directors. Ms. Haines will serve as NYMAR treasurer while Keith Heard of Burke & Parsons serves as secretary.
NYMAR is becoming increasingly well known, thanks to events it has organized or sponsored, a Newsletter that reaches 2,800 recipients every month and the spirited, pavement-pounding, pot-stirring promotional efforts of chairman Shaerf, executive director Carleen Lyden-Kluss, Clay Maitland and other NYMAR board members and participants.
The meeting concluded with a wide-ranging discussion of the challenges facing all maritime clusters and the unique opportunities for further growth and development presented by the array of maritime talent and expertise in the New York metropolitan area.
Arbitration at the Millenium: How much has changed in 10 years?
In the recent NYMAR AGM, the discussion of arbitration in New York prompted John Stratakis to go back into his files for an article published 10 years ago on the subject click here.
NYMAR would welcome comments on what has changed, improved, or stayed the same. Are there any takers out there? Please contact info@nymar.org
Shipping
Company Performance Chart (NYSE)
(source: NYSE)
| Symbol | Company Name | Price 4/9 USD | Price 5/12 USD | % Chg | Current Mkt Cap ($mm) | Exchange |
| BOL-FR | Bollore (Financiere de L'Odet) | $83.11 | $98.30 | 18% | $3,282 | EN Paris |
| VPK-NL | Koninklijke Vopak NV | $31.43 | $34.22 | 9% | $2,961 | EN Amsterdam |
| TDW-US | Tidewater Inc | $41.74 | $46.26 | 11% | $2,348 | NYSE |
| FRO-US | Frontline Ltd. | $18.07 | $22.50 | 25% | $1,780 | NYSE |
| KEX-US | Kirby Corporation | $29.70 | $32.59 | 10% | $1,780 | NYSE |
| NAT-US | Nordic American Tanker | $29.95 | $36.08 | 20% | $1,383 | NYSE |
| DSX-US | Diana Shipping, Inc. | $13.19 | $15.20 | 15% | $1,268 | NYSE |
| TK-US | Teekay Corporation | $13.67 | $15.68 | 15% | $1,134 | NYSE |
| ALEX | Alexander & Baldwin, Inc. | $23.03 | $23.02 | 0% | $1,000 | NYSE |
| SMIT-NL | Smit Internationale NV | $43.63 | $40.05 | -8% | $998 | EN Amsterdam |
| CMB-BE | Compagnie Maritime Belge | $16.80 | $20.66 | 23% | $959 | EN Brussels |
| OSG-US | Overseas Shipholding Group Inc. | $26.46 | $34.02 | 29% | $920 | NYSE |
| SFL-US | Ship Finance International Limited | $7.80 | $11.27 | 44% | $842 | NYSE |
| EURN-BE | Euronav NV | $11.90 | $12.05 | 1% | $840 | EN Brussels |
| GLF-US | Gulfmark Offshore Inc. | $29.29 | $28.58 | -2% | $739 | NYSE |
| TNP-US | Tsakos Energy Navigation Ltd. | $17.54 | $20.00 | 14% | $729 | NYSE |
| ANW-US | Aegean Marine Petroleum Network, Inc. | $16.97 | $15.75 | -7% | $679 | NYSE |
| TGP-US | Teekay Lng Partners L.P. | $16.66 | $17.74 | 6% | $655 | NYSE |
| GNK-US | Genco Shipping & Trading Limited | $14.20 | $19.00 | 34% | $603 | NYSE |
| GMR-US | General Maritime Corp. | $9.17 | $10.24 | 12% | $599 | NYSE |
| EXM-BE | Exmar NV | $7.05 | $10.00 | 42% | $484 | EN Brussels |
| NM-US | Navios Maritime Holdings Inc.(Marshall Islands) | $2.35 | $4.15 | 77% | $426 | NYSE |
| SSW-US | Seaspan Corporation | $9.63 | $5.99 | -38% | $424 | NYSE |
| EXM-US | Excel Maritime Carriers | $6.77 | $8.74 | 29% | $412 | NYSE |
| SAGA-FR | Saga S.A. | $45.91 | $45.90 | 0% | $370 | EN Paris |
| SB-US | Safe Bulkers, Inc. | $3.60 | $5.58 | 55% | $319 | NYSE |
| NNA-US | Navios Maritime Acquisition Corporation | $9.07 | $9.17 | 1% | $290 | NYSE |
| TOO-US | Teekay Offshore Partners L.P. | $12.92 | $13.57 | 5% | $274 | NYSE |
| KSP-US | K-Sea Transportation Partners L.P. | $19.50 | $17.99 | -8% | $249 | NYSE |
| DAC-US | Danaos Corporation | $3.75 | $4.15 | 11% | $240 | NYSE |
| DHT-US | Double Hull Tankers, Inc. | $3.94 | $4.59 | 16% | $226 | NYSE |
| OKN-US | Oceanaut Inc. | $8.24 | $8.27 | 0% | $203 | NYSE |
| HRZ-US | Horizon Lines, Inc. | $3.48 | $5.45 | 57% | $172 | NYSE |
| ISH-US | Intl Shipholding Corp. | $20.08 | $22.52 | 12% | $169 | NYSE |
| TNK-US | Teekay Tankers Ltd | $10.70 | $12.79 | 20% | $169 | NYSE |
| NMM-US | Navios Maritime Partners L.P. | $8.68 | $9.63 | 11% | $165 | NYSE |
| OSP-US | OSG America L.P. | $8.14 | $7.00 | -14% | $106 | NYSE |
| CAP-US | CAI International Inc. | $3.41 | $4.45 | 30% | $81 | NYSE |
| GSL-US | Global Ship Lease, Inc | $2.14 | $1.84 | -14% | $64 | NYSE |
| ORE-PT | Sociedade Comercial Orey Antunes Sa | $2.50 | $2.85 | 14% | $53 | EN Lisbon |
| BHO-US | B&H Ocean Carriers Ltd | $1.87 | $3.95 | 111% | $25 | NYSE |
| HZV1-BE | Hanzevast CS 1 | $990.00 | $990.00 | 0% | $9 | EN Belgium |
Taste
of NYC | Upcoming Events and Entertainment
- newyork.timeout.com/
- www.nycvisit.com
- www.zagats.com
- http://www.ny.com/nightlife/
- http://www.ny.com/museums/
- http://www.allny.com/antiques/auctioneers.htm
- http://www.nytix.com
- http://www.majorleagueevents.com
- http://goingcoastal.wordpress.com
- A cultural highlight: New Greek and Roman Galleries at the Metropolitan Museum of Art - After more than five years of construction, this "museum within a museum" (displaying an impressive collection of Hellenistic, Etruscan, Southern Italian and Roman artworks) is open to the public, concluding a 15-year redesign of the Met's outstanding collection of classical art. Ongoing. (http://www.metmuseum.org)
- NYMAR Restaurant of the Month: JoeDoe - Inside this antiques-filled dining room, chef Joe Dobias (Savor NY) gives life to his wildest, and most successful, impulses: An appetizer of griddled challah smeared with chicken liver takes on a subversive (and delicious) edge when sandwiched with smoky bacon and caramelized onions. An inventive entrée features tender slices of beef served with sesame spaetzle and a gorgeous curl of bok choy, petrified in a translucent batter. The dining masses have yet to catch on—get in before they do.
45 E 1st St (between First and Second Aves),
East Village. Subway: F, V to Lower East Side–Second Ave. Average main course: $26. AmEx, MC, Visa. (http://www.chefjoedoe.com)
New York State Travel & Tourism
To speak with a travel counselor, call during regular business hours (Eastern Standard Time) at 800/CALL-NYS (U.S., territories, possessions and Canada) or 518/474-4116 (all other areas). http://www.iloveny.com/home.aspx
New
York City Travel & Tourism (NY City & Company)
212-484-1222
NYC 311 - City of New York directory assistance covering events, attractions and other citywide information
- Dial 311 in Manhattan (NYC), Staten Island, Bronx, Queens and Long Island.
- Dial 212-639-9675 outside of Manhattan (NYC), Staten Island, Bronx, Queens and Long Island. This is a toll call.
| Designer: Gayle Erickson Web Master: Christine Olick |
New
York Maritime Inc./NYMAR P. O. Box 218, 132 East 43rd Street New York, New York 10017 Tel: +718 841-74NY (69) Email: info@nymar.org |
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