October 1, 2007	Monday	Ramazan 18, 1428

London remains the leading centre worldwide in the supply of a range of business services to the international maritime community. The new edition of International Financial Services London’s (IFSL) Maritime Services report released last week has highlighted London’s position in key sectors:

With 23 per cent of premiums in the international marine insurance market, London is the leading centre in the face of fierce competition from Japan, the USA and Germany. London is also the largest centre in the management of protection and indemnity insurance, with P&I clubs operating in the UK accounting for 65 per cent of the global market.

In ship finance, the loan book of $49 billion provided by commercial banks in London accounts for 18 per cent of the world book. The world loan book has grown by over a third from $200bn in 2005 to $275 billion in 2007, on the back of the surge in shipbuilding orders.

Lloyd’s Register is the second largest ship classification society in the world, accounting for 19 per cent of the world fleet.
London’s 400 shipbroking firms match ships and cargoes for 50 per cent of the tanker and 30-40 per cent of the dry bulk chartering business. They are also involved in the sale and purchase of over half the world’s new and second hand tonnage, a market worth more than $34 billion annually. The total value of freight contracts traded in the over-the-counter derivatives market reached a record $56 billion in 2006; nearly double that of 2004 and 2005.

London is the leading centre in legal services involving about 30 law firms. English law is widely applied to shipping disputes, usually involving foreign interests.

In recent years, strong growth in world seaborne trade and substantial demand for new ships has contributed to buoyant shipping markets. UK shipbrokers’ net exports have been lifted in recent years by rising freight rates. At £706 million in 2006, they were slightly down on £735 million in 2005 but much higher than previous years. These accounted for around half of UK maritime services’ overseas earnings. Maritime services also contribute to the UK economy through employment of 14,300 people.

IFSL raises awareness of the UK’s role in international financial markets and highlights the contribution of financial services to the UK economy. Maritime Services is one of 16 financial sector reports in IFSL’s City Business Series.

In addition to the international firms and organisations that supply maritime business services, many other international shipping organisations are based in London, including the International Maritime Organisation, the only United Nations specialised agency to be headquartered in the UK.

In summary, London and the UK are a leading source of capital and expertise for marine insurance, ship-chartering, shipping finance, ship classification, legal and accounting services and dispute resolution. In addition there are a wide range of other skills and facilities based there, including education and training, publishing, event organisation, research and technical and engineering consultancy.

London has a reputation as a centre for innovative ship finance structures and other options such as leasing. Lloyd’s Shipping Economist has noted that Hamburg can claim to be the leading centre for traditional ship lending and private equity, while New York has a strong position in public equity finance for shipping. Nevertheless, all of these services can also be accessed in London.

About 90 per cent of shipping finance based in the UK is extended to customers outside of the UK. Banks in the UK are mainly competing for the business of shipping companies controlled from Europe. Most shipping finance has traditionally been extended in the form of mortgage finance, but leasing, balance sheet financing and bond issues are also important. Many banks also offer ancillary services which include freight collection, foreign exchange dealings, remittances, sale and purchase completions and consultancy and advisory services. Some banks also generate income through derivatives trading.

The London market is the world’s leading market for international traded insurance and reinsurance. Marine insurance is typical of the high risks placed in the London market that cannot easily be placed in local markets. A variety of cover and range of expertise is offered. Lloyd’s and insurance and reinsurance companies provide cover for hull/machinery, cargo, energy and miscellaneous risks related to contingency and liability in marine operations. P & I Clubs provide protection and indemnity insurance taken out by ship owners against third party claims.

Direct marine premiums in the London market rose by 31 per cent from $3.5 billion in 2005 to $4.7 billion in 2006. The UK’s share of the global market for marine insurance premiums rose again to 23 in 2006 from 21 per cent the previous year. Its share has returned to the levels previously reached in the early 1990s, having recovered from a low point of around 15 per cent in the late 1990s. The UK has had the largest global share since 2001.

Shipbrokers have helped to establish a substantial market share for London in the chartering business estimated at 50 per cent of the global tanker and 30-40 per cent of the global dry bulk chartering business. London also ranks as the world’s foremost sale and purchase market. Baltic members are involved in the sale and purchase of over half the world’s new and second hand tonnage, a market worth over $34 billion annually. Buoyant freight markets have also bolstered the market for sale and purchase of ships where prices have also risen, although not as much as the freight indices.

London is also the world’s leading centre in the provision of legal services to the international maritime community. English law is applied to shipping disputes far more widely than the law of any other country. Legal services in the maritime sector are routinely required for contentious and non-contentious work relating to a wide range of matters including charter parties, shipbuilding, finance, commodities, energy, insurance, cargo, collision, salvage, general average and pollution. Many disputes are settled in the specialised Admiralty and Commercial Courts, or through various private forms of dispute resolution.