ASBA / BIMCO Conference Global Trends in International Commodity Movements October 23 -24, 2003 Miami Beach, Florida Prepared By: Professor Jeffrey A. Weiss S.U.N.Y. Maritime College – Graduate Program A Conference was held in Miami Beach, Florida on October 23 - October 24, 2003 entitled “Global Trends in International Commodity Movements”. The Association of Ship Brokers and Agents (USA) and the Baltic and Maritime Conference (BIMCO) organized the Conference.   Sponsors included ·        Chinsay ·        Cormac Maritime LLC ·        Global Communication Networks ·        Ocean Calm Technology, Inc. and ·        Strategic/ Dataworks Ltd. The Conference was held at the Wyndham Miami Beach Resort. Approximately 100 delegates from over 15 countries attended. October 23, 2003 Ms. Jeanne Cardonna, Executive Director of the Association of Shipbrokers and Agents (USA) -welcomed the delegates. ASBA is a premier shipbrokerage and agency association and is a full member of FONASBA. Its members maintain the highest standards of ethics in trading and services. ASBA continues to serve its members, the industry, and U.S. trade. Mr. Torbin Strand, Senior Manager Courses Division, BIMCO Publications- provided opening remarks and informed the delegates that BIMCO now has 937 shipowner members accounting for some 500 million DWT. In addition, its shipbrokerage, P and I, and associate membership continue to climb. BIMCO remains one of the foremost shipping and shipping related organizations in the world, providing information, documentary, educational, and related services worldwide. Conference Background: The global shipping market has undergone an upward trend not seen in years. Vessels are trading at rates double and triple that of a few years ago. What has driven the market? Will it continue?  What perils lie ahead? How have different sectors of the shipping market responded? ASBA and BIMCO invited renowned speakers from throughout the private and public sectors to discuss these and related topics. Enzo Gardin – Quebec Cartier Mining Company and Robert Small- Winnipauk Maritime- explained how dry bulk carrier rates are the highest in years, with Capesize vessels reaching $80,000 – $90,000 per day.  Iron ore will account for some 600 million tons for the year 2003. China has clearly influenced growth in the iron ore trade, with its economy growing at 7 to 8 percent per year. The speakers opined that the evolving economies of China and Brazil, among others, would be at the heart of many topics discussed during this Conference. Heiner Harmeyer – Vice President, Stemcor USA, Inc- described the status of the steel and steel carriage market. He explained how and why China’s growth has resulted in massive consumption of finished steel products such as reinforcing bar and wire rods. Although optimistic, Mr. Harmeyer remains cautious and warned that one cannot discount additional changes in China (in key areas such as banking) that will affect trade. In addition, further government meddling into free trade always needs to be considered. Howard Candelet – Chief Operating Officer of British Gas (BG) and Francois Khawam – Commercial Advisor - Poten and Partners, Inc.- discussed the nature, storage, and carriage of liquefied natural gas (LNG), a cryogenic cargo.  The speakers educated the delegates on the many challenges that lie ahead concerning LNG. These include increased demand, price volatility, and infrastructure requirements. In addition, plans to increase LNG terminal handling facilities may be somewhat frustrated by regulatory meddling and community fears. This may very well delay growth in this trade.   George Wilbanks –President, Drummond Coal Sales, Inc.- elaborated on the factors that affect the world sea borne thermal coal markets. The U.S. is now a net importer of coal. This has caused further bankruptcies within U.S. coal production. Mr. Wilbanks opined that U.S. imports will likely decrease in the short term. Further growth in imports will depend, in part, on the development of U.S. railroads (such as Norfolk Southern and CSX).   However, Mr. Drummond explained why the European market should remain attractive assuming freight rates stay high. Guy Campbell – Manager, Dry Cargo Chartering and Operations, Koch Carbon LLC –enlightened the delegates on the nature, use, and demand for petcoke and why coking became the best alternative for converting heavy products to gas oil, gasoline, and coke.  The U.S. and Venezuela remain major producers. However, huge economies of scale are required for this cargo to avoid freight rates becoming an overly large percentage of the cargoes’ C and F price. Daniel Maldonado - Strategic Planning and Freight Manager – Bunge Global Markets - discussed imminent challenges within the grain and grain carriage markets. These include increased population, Chinese and Indian self- sufficiency, hedging, multimodal transport of grain, Chinese exports, and horizontal and vertical integration and consolidations within the industry. Captain Carlos Sanchez-Caparros  – Commercial and Chartering Manager for Petroleum de Venezuela (PDVSA)  – explained how recent political events in Venezuela have affected PDVSA’s operations. He also outlined PDVSA’s new business orientation and plans for the future. Dr. Nancy D. Yamaguchi Ph.D.– President of Trans Energy Research Associates- provided details about the Middle East as an exporting link to both Asia and the USA.  She believes that there will be increased dependence on clean imports into the United States.  In addition, there will most likely be weak nearer term Asian markets – which may further shift exports to the United States and Europe. Captain James McNamara – President of the National Cargo Bureau - discussed the challenges pertaining to the export, import, storage, and carriage of genetically modified grain. He also recounted the saga of the M. V. Liberty Wave, a laden vessel that was rejected at her nominated discharge port because of the genetically modified cargo onboard.   Friday, October 24, 2003 Thomas S. Winowski – Director of Field Operations, Miami Florida, U.S. Customs and Border Protection impressed the delegates with U.S. efforts to provide  “one face at the border”.  U.S. Customs and Border Protection, which is part of the Department of Homeland Security, provides customs, immigration, and agricultural services and protection.  There was also a thorough discussion of cooperative efforts between industry and the government to improve supply chain security. Commander Cynthia Stowe-Chief of Port and Cargo Security Division, U.S.C. G.- advised the delegates that detailed rules were recently promulgated pursuant to the Maritime Security Transportation Act (MTSA) 2002.  The final rules were published on October 22, 2003 and relate to ports, facilities, vessels, offshore operations and AIS.  This was a swift and well received response to national security concerns. Marvin A. Nixon  - Democratic Professional Staff Member -discussed initiatives on Capitol Hill for funding the additional training, drills, security officer requirements and plans that now affect shipowners, managers, charterers, etc. and that have dramatically altered maritime operations throughout the world. Cliff Johnson – Director of TECO Ocean Shipping (TOS)- provided an overview of the current state of the U.S. “Jones Act” dry bulk fleet. TOS has 12 vessels and over 400 DWT capacity. The Jones Act fleet has recently experienced stable rates when compared with international charter fleet rates. Mr. Johnson further explained how upward pressures on rail rates might improve the Jones Act dry bulk market overall. Robert Flynn - President of Mallory Jones Lynch Flynn and Associates and Gerhard Kurz – President and CEO of Seabulk International -provided an overview of the current U.S. tanker market.  After reviewing the principle tenets of the U.S. Jones Act, the speakers discussed industry trends within the Jones Act “wet” market, which includes consolidation, competition from imports, increased emphasis on tanker vetting, tanker attrition pursuant to OPA 90, and security concerns. The state of the tanker market was also thoroughly examined. Robert Spilling – President of ASBA -concluded the Conference by insuring attendees that ASBA will continue to provide the highest level of services to its membership and to the maritime community overall. This includes future educational initiatives such as the current ASBA / BIMCO conference. Mr. Torbin Strand of BIMCO thanked the speakers, sponsors, delegates, and all others associated with the Conference and expressed the commonly held view that we all look forward to next year’s Conference. Delegates were subsequently awarded Certificates of Attendance.