Shipping in Rough Waters
By Aiswarya Lakshmi
Friday, July 17, 2015, 2:41 AM
‘Shipowners continue to operate in unpredictable shipping markets
and the economic climate shows little signs of improvement,’ he says.
‘Despite a modest recovery in certain sectors of the market, we do not
expect freight rates to return to breakeven or profitable levels for
another couple of years as the over-supply of tonnage remains an issue
for the shipping industry.’
He also notes that risk levels in the industry continue to be
volatile, with North’s members experiencing an unusually high level of
larger claims during the 2014/15 policy year. ‘The significant number of
large claims in excess of US$1 million was unexpected, however this
does of course happen from time to time and most International Group
clubs have experienced similar volatility in recent years,’ he says.
Shirke points out that new legislation is contributing to the
increasingly expensive claims environment. ‘Government intervention and
regulation has continued to have a significant impact on the shipping
industry and during 2015 we have seen two further important pieces of
maritime legislation come into effect.'
He added: 'In April 2015, the Nairobi International Convention on
the removal of wrecks 2007 entered into force, and in June the liability
limits under the amended 1996 protocol to the Convention on Limitation
of Liability for Maritime Claims (LLMC) were significantly increased.
Both of these conventions have the potential to lead to a major increase
in the cost of claims.’
He says the impact is most likely to be felt under the LLMC
protocol, which will cause the limit of a vessel of 150,000 GT to
increase from US$57.5 million under the old regime to approximately
US$85 million under the new. ‘It is important that the International
Group of P&I Clubs acting on behalf of their members, the world’s
shipowners, continue to engage with government and maritime authorities
wherever possible.’
In this regard Shirke is pleased to note the progress made this
year by the International Group’s large claims working group initiative
to conclude memorandums of understanding with coastal states,
establishing protocols for the proper handling of maritime claims. Three
major coastal states have now signed the document and more are expected
to follow.
North was disappointed however by the approach adopted by members
of the International Oil Pollution Compensation Funds towards the Nissos
Amorgos tanker spill case. ‘The decision to wind up the 1971 Fund,
without reimbursing the ship’s P&I club in respect of interim
payments made on behalf of the Fund, is likely to undermine the
cooperation between the International Group and IOPC Funds in future
pollution incidents,’ he says.