Asia Pacific Drives the Global Economy and Fuels P&I Growth

As seen in Insurance Day, 5th September 2011 and Lloyd's List, 13th September 2011

The economy of the Asia Pacific region, is providing business expansion potential that is lacking elsewhere in the world. Yet the economic environment is creating challenges as well as opportunities for the P&I sector. Steven Randall, General Manager of The Shipowners' Club Singapore branch, examines the dilemma.

Most economists agree that Asia will be the primary engine of global growth in the current decade, with the Asian consumer market in particular driving it. This trend has a direct impact on infrastructure needs, energy requirements, demand for raw materials, tourism and of course, consumer goods. Increased shipping activity in support of these developments is a direct result. As well as benefitting international trade from Europe, North America and other regions, supported by large vessels, there is significant development in the smaller vessel sector within Asia itself.

Owners operating coastal vessels and those employed in regional trades have not experienced the same recession-driven difficulties as some owners elsewhere in the world. Offshore craft supporting the oil and gas sector and the energy industry in general, have seen an increase in employment and will continue to be in demand as energy needs in the region grow further. Tug and barge operations are primarily used to transport coal throughout Asia and a similar outlook applies to this sector.

Interestingly also, as consumer wealth increases and disposable income is expended on leisure pursuits, then the tourism industry is beginning to take off, particularly in parts of Asia previously considered off-limits. This in turn has led to a noticeable increase in sightseeing and passenger craft. In the future, growth will be both organic in nature as trade continues to rise in volume and via the development of new markets; Indonesia, Vietnam and Malaysia in particular.

The growth in Asian infrastructure, energy demands, consumer spending and tourism all have a direct relevance to the various vessel operating niches of the Shipowners' Club due to our unique focus on smaller vessel activity, and regional trading. These vessel types include: coastal tankers, including LPG and chemical, as well as bunkering vessels; offshore support craft such as AHTS, PSV, crew boats and seismic survey vessels; fishing boats ranging from inshore craft, to purse seiners and large factory vessels; harbour craft and dredgers; coastal cargo ships and container feeder vessels; ferries, comprising conventional, high speed and day trip excursion boats; tugs and barges and even super yachts, increasingly appearing as the accessories of the Asian super-rich.

As business grows in the region however, a critical challenge for us is to ensure the maintenance of high levels of service. There is little purpose in expanding business and venturing into new markets unless the service offered to existing and new Members continues to match their expectations in accordance with our reputation. Equally, and of particular importance to our strategy, is the continuing quality of business based on sound and prudent underwriting practices, as this ensures the ongoing underwriting strength of the Club.

A major challenge faced by all owners continues to be the shortage of good quality crew. Indeed, as an example, in the offshore industry vessels are continually getting bigger and more sophisticated, yet there remains a general shortage of good quality, experienced crew to be trained in the safe and efficient operation of such vessels.

In an attempt to assist vessel owners and operators in addressing this sort of challenge, to maintain professional levels of training, safety and security, the Loss Prevention team at the Singapore branch of Shipowners invests a lot of time and effort in risk management advice and loss prevention guidance. Operational best practice and awareness of safety regulations are paramount within the Club's communication programmes aimed at Members and the brokers who represent them.

So, quality of service in terms of underwriting and the provision of relevant insurance cover, rapid and efficient response to claims and the judicious provision of loss prevention advice are the three key components of our offering to our Members. At Shipowners, we see the chief challenge in the near future is to maintain this quality of service within an expanding market place. Not only that, but as competition in all forms increases, so a closer relationship between the Club, broker and Member is required. The geographical proximity of Shipowners' Singapore branch is a great help in nurturing these relationships. In this way we can gain a better understanding of the regional needs of our Members and can better explain the value of a comprehensive P&I cover provided by a mutual club, as opposed to the alternative provided by commercial insurers.

Within this expansionary economic environment, with its variety of specialised tonnage and with the determination to maintain a top-quality service in a competitive market, we have decided to increase our staff at the Singapore branch which services the Asia Pacific region. By the end of 2011 there will be in excess of 20 staff in total in our this office, our expansion having added more underwriters, claims handlers, and an additional loss prevention executive to the complement.

We are determined to staff the branch with the relevant skillset to improve our service to our Members and their brokers in the Asia Pacific region. The region and its growing trade are producing challenges which we want to ensure that we can meet. The traditional values of a mutual P&I club will be maintained, but we must adapt to the demands peculiar to the region and appropriate to a fast-changing economic environment.