Shipping experts identify realities of risk in ITIC panel debate

The need for proper training, sound risk management, and contractual expertise were among the issues identified as essential to commercial success in a panel debate following the annual board meeting of the International Transport Intermediaries Club (ITIC) in Athens on 24 September.

The panel, moderated by ITIC’s underwriter for Greece, Robert Hodge, and comprising Tim Jones of Barry Rogliano Salles (BRS), Bob Bishop of V Ships, Bjorn Tonsberg of Wilhelmsen Ships Service and Paul Herring of Ince & Co, was asked to debate The Realities of Risk, and what kept them awake at night.

Tim Jones referred to a case where a junior broker reportedly concluded a fixture using social media. A dispute arose post-fixture on the terms of the agreement but, since the broker had left the company by the time the dispute arose, it was not possible to obtain the necessary information from the social media site. Jones emphasised that BRS’s policy is to only use company emails when negotiating fixtures.

Bob Bishop observed that it was relatively easy to monitor the performance of machinery and that problems could be predicted and fixed. Monitoring the performance of staff was harder, but an essential task in managing a service company. He added that training is essential within any company, to ensure that the younger generation has the knowledge to avoid the mistakes of the past.

Bjorn Tonsberg emphasised that risk management is a key factor, an important part of which is to carry out due diligence, in order to establish exactly who one is dealing with. Commenting that he was aware of ship agents offering to act for agency fees far lower than commercial rates, Tonsberg stressed that it was essential for owners to carry out due diligence on the agent, including whether or not that agent had professional indemnity insurance in the event of a loss.

Paul Herring noted that good contractual management, including the use of standard trading conditions, enabled businesses to sleep better at night, a sentiment with which all the panel were in agreement.

Following questions from the audience, attendees retired to a drinks reception on the balcony of the Hilton Athens as the sun set over the Acropolis.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com



For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Moore Stephens says offshore maritime sector must watch costs and risk exposure

International accountant and shipping adviser Moore Stephens says companies in the offshore maritime sector need to keep a close watch on costs and manage their exposure to risk in the wake of the dramatic fall in oil prices.

Cassie Forman, a director with the Moore Stephens Shipping & Offshore Maritime group, says: “It is remarkable how quickly the dramatic fall in oil prices has fed through to increasing levels of financial stress in the oil and gas services industry, where the sudden drop to around $50 a barrel is triggering cost-cutting across much of the sector. Oil and gas majors are already cutting costs, and several have recently announced cuts to investment in a number of major projects. Smaller players are also reconsidering their capital deployment.

“There was a significant increase in the number of insolvencies of UK oil and gas services companies last year. Although this increase is from a relatively low base, it is significant because insolvencies in the sector have been rare over the last five years.”

Referring to the recent bankruptcy of market-leading bunker supplier OW Bunker, Forman says: “This really set alarm bells ringing in the offshore maritime and shipping industries. Although the underlying reasons for the failure are still being analysed, the fall in oil prices is certain to have played a significant part.
Meanwhile, references to major risk management and fraud losses, and to unrecoverable credit, have been common throughout all reports to date involving the company’s collapse.

“Any industry which suffers what is effectively a 50 percent reduction in income over a three-month period is going to suffer. But any sector where the revenue is predicated on the price of oil, such as the offshore maritime industry, is particularly susceptible because of its exposure to counter-party risk and potential credit line difficulties.

“With oil prices now at their lowest level for five years or more, the offshore maritime sector needs to look at costs in light of its current reduced revenue stream. This is not a time for speculative or non-essential spending. Rather, it is a time for strategic financial planning with experienced advisers who understand the risks peculiar to the industry.

“The offshore maritime sector also needs to make sure that it has proper contingency planning in place, and effective risk management procedures embedded into the everyday activities of the company. Sound corporate governance and a proper management structure and technical support systems are central to the ability to identify, control and ultimately mitigate risk.”

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and insurance adviser. Moore Stephens’ unique ship operating costs benchmarking tool, OpCost, now includes vessel data and future operating costs forecasting data on offshore support vessels, which could be invaluable for budget planning and transfer pricing studies. www.moorestephens.co.uk

Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 626 offices of independent member firms in 103 countries, employing 26,290 people and generating revenues in 2014 of $2.7 billion.

For more information:
Cassie Forman
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
cassie.forman@moorestephens.com