Shipping world in disarray : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

September 24, 2001


Shipping world in disarray THE possibility of war in the aftermath of the Sept 11 terrorist attacks in the United States is causing havoc in the commercial shipping world which is seeing extra insurance costs, war risk surcharges being imposed, bunker fuel prices shooting up and seamen from over 22 countries, including Malay-sia, being barred from disembarking at US ports.

Shipping lines have started introducing war contingencies on routes serving the Indian sub-continent owing to the anticipated turmoil in trans-Pacific trade if war occurs.

This is because military cargo will be moved from America through Asia to the area near Pakistan through vessels chartered by the US government, and original cargo meant for countries in the region might be rejected.

Several shipowners and managers were devising guidelines for vessels serving high-risk areas.

The Middle East Indian Subcontinent Discussion Agreement (Meida) levied a war surcharge of US$100 (RM380) per TEU from Sept 18.

The announcement follows London insurers’ decision to substantially increase war-risk premiums for vessels calling at ports in the Middle East and West Asia in anticipation of conflict in the region.

A shipping official said that every container bound for Dubai, Jebel Ali, Sharjah, Karachi, Iraq, Iran, Dammam and Abu Dhabi will bear the additional surcharge.

This levy will be a major burden on Indian shippers considering that freight rates to the Middle East are between US$250 (RM950) and US$275 (RM1,045) per TEU.

Meida lines include Maersk, United Arab Shipping Company, CMA CGM, APL and P&O Nedlloyd, among others.

International Shipowners Association of Malaysia chairman Abdul Latif Abdullah said the risk of war would have far-reaching ramifications on the shipping industry and world trade.

“It will affect the movement of goods and a lot of other things will have a negative bearing on the economy.

“For example, during the Gulf War, many shipping lines refused to carry cargo into high-risk areas. As shipowners, we are more concerned about safety of vessels and crew,” he said.

Dramatic rises in war-risk cover were also reported for cruise ships with rates shooting up ten-fold for most ships and cruise companies are expected to pass on some of the increases to passenger tariffs.

Bunker fuel was reported to have surged US$20-US$25 (RM76-RM95) last week.

On the home front, one of the most disturbing news was that Malaysian seafarers were barred from leaving ships calling at US ports. Malaysia has about 60,000 seamen.

Among other countries affected by the ruling which was confirmed by London-based International Shipping Federation (ISF) were Comoros, Cuba, Egypt, Iran, Jordan, Kuwait, Libya, Maldives, North Korea, Pakistan, Palestinian people, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tajikistan, Tunisia, Turkey, Turkmenistan, United Arab Emirates, Uzbekistan, Yemen and Yugoslavia.

Malaysian Maritime Institute vice president Captain Jaffar Lamri said the United States should react based on facts and logical reasoning.

“It is unfair for them to impose the restriction but we hope it is only temporary,” he said.

He said the restriction would pose problems to crewmen signing off at US ports and affect shore leave of crew calling at such ports regularly.

ISF has advised members that US Captains of Ports were instructed to seek crew lists from all vessels entering US waters irrespective of flag.

Failure to submit the lists would result in ships being barred from entry.

-- Martin Thompson (, September 24, 2001


Why is bunker fuel going up when oil futures are drastically down?

-- Guy Daley (, September 24, 2001.

The question rather is, why are petroleum-complex futures down, in the face of higher retail gasoline and bunker fuel prices?

Yes, the melting down world economy is decreasing demand by roughly 3 - 4 percent. But the risk of supply disruption on the order of 30 - 40 percent is FAR higher now than before Operation Desert Storm. Then, oil futures spiked to a peak of $41.15, without any actual disruption at all. What will oil futures do, even with diminished civilian demand, when major supply disruptions actually do occur?

-- Robert Riggs (, September 24, 2001.

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