Alan Peat examines the impact of the US terror attack on insurance and freight rates
THERE ARE distinct signs that increased war risk insurance is likely to push up seafreight rates - particularly to the Middle East and SE Asia.
This as emergency surcharges introduced by a large number of shipping conferences give a clear indication that the results of the terrorist attacks in the US are spreading far beyond the field of aviation.
The five shipping line groups - the India Pakistan Bangladesh Ceylon Conference (IPBCC), Jeddah Service Group (JSG), Europe Middle East Rate Agreement (EMERA), Aqaba Rate Agreement (ARA) and Europe Mediterranean Rate Agreement (EMTA) - were the first to issue identically-worded statements saying that member lines had been advised that war risk insurance charges would be increased.
This added cost, the conferences added, would be incurred by vessels "calling or transiting certain specified ports/areas".
These would include the Pakistan coast where French and British warships have been sighted 150-miles off-shore, presumed to be part of the preparations for intended military action in Afghanistan.
The Middle East has also become a high risk area with troops being mobilised around the region. The UK has soldiers stationed in Oman, while the US has troops on a war footing in Bahrain, Kuwait, Qatar and Saudi Arabia.
The affected areas also included Sri Lanka - not a repercussion of the US crisis - but because of recent attacks on shipping by Tamil Tiger rebels.
The Far Eastern Freight Conference (FEFC) has also added its voice to the growing numbers looking for compensation for war risk insurance charge increases.
An additional emergency surcharge applies to all cargo moving in what the marine insurers describe
as nominated "exclusion zones". This was understood to include Lebanon, Libya, the Gulf of Aqaba, the Red Sea, Syria, Algeria and Egypt.
A further warning came from the conference that
a short-notice emergency BAF (bunker adjustment factor) surcharge would be raised if there was a serious increase in the price of ships' fuel oil.
The FEFC carriers are also planning to cut capacity on the high volume Asia to North Western Continent trade. This would be by a "temporary vessel scheduling and co-operation programme", said the conference, to be imposed between October 1 and March 31 next year.
Although the FEFC has not clarified what this will mean, industry observers suggest it could include both vessel and service withdrawals, and the merging of services.
The conference intends to notify the European Commission of the programme, it said.
This programme is expected to have a big impact on capacity in the Asia-NWC trade - which is 60% controlled by FEFC lines.
