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News and essential information for

TT Club Members and their brokers
December 2006                                                          House to House


                                     Capital strength, growth and competitiveness      02

                                     Electronic transfer of funds                      04

                                     Nuclear and bio-chemical terrorism pool           05

                                     Club helps to rebuild Cozumel                     09


                                                           Capital strength
                                                           Since regaining our rating in May this year, the TT
                                                           Board and management have been considering our
                                                           options in order to ensure that we have sufficient
                                                           capital to underwrite the increasing volumes of
                                                           business presented by our membership over the
                                                           insurance market cycle – a period which lasts typically
                                                           for about seven years – while maintaining a prudent
                                                           margin of solvency above both current and possible
                                                           future regulatory requirements.

                                                           In order to provide excellent security to our Members
                                                           over that cycle, we have put in place an innovative,
                                                           low–cost, tax–efficient financing package to boost our
                                                           capital strength, by issuing subordinated debt. Whilst
                                                           this transaction has been reported quite accurately
                                                           in the media I would like to use this opportunity to
                                                           address the subject in more detail so that we can all

Capital strength,                                          be clear about the impact of this new form of financing
                                                           on the Club’s long term plans.

growth and                                                 On 10 October 2006 the Club’s parent company, TT
                                                           Bermuda, issued US$30m of unsecured floating rate
                                                           subordinated loan notes to institutional investors who

competitiveness:                                           have paid US$30m in cash in exchange for the notes.
                                                           The Club is investing the cash in low–risk bonds and
                                                           deposits with first–class institutions. The loan notes

solving the puzzle                                         have a duration of 30 years (i.e they are due for
                                                           repayment in 2036), but can be repaid at any time,
                                                           either in whole or in part, after five years at our option,
Most of our readers will be familiar with Rubik’s Cube,    subject to regulatory approval. In practice it is likely
a three–dimensional puzzle invented by a Hungarian         that the notes will be repaid well before 2036, as the
Professor Ernö Rubik which became a craze in the 80’s.     value of the loan for AM Best rating purposes
To solve the puzzle, you had to manipulate the cube,       diminishes over the final ten years, and for regulatory
itself made up of smaller multi–coloured cubes, so that    purposes over the final four years. The notes carry an
each of the six sides consisted solely of one colour.      interest rate of 2.95% over three months LIBOR, the
I was reminded of it recently when the management          rate at which London banks borrow from one another.
team and board were putting together our new               On an annualised basis the interest currently amounts
Business Plan for the period up to 2009 – there are        to approx US$2.50m. If you deduct from that figure
many important objectives to be achieved and which         the investment return earned by the Club on the
must be reconciled with each other, but only one           proceeds of the loan plus a small amount of tax saving,
optimal solution to be found.                              and then add back the set–up costs (commission and
                                                           professional fees), the net cost of the transaction to
Following the completion of our financial recovery and     the Club over five years is approx. US$1.1m per annum.
the regaining of the all important A- (Excellent) rating
from AM Best, as reported in the August issue of H2h,      The loan will allow us to continue to expand the
we now embark on a new phase of the TT Club’s              business without using more expensive quota share
development. Utilising our core strategic approach of      reinsurance which involves ceding a percentage of
providing outstanding claims service, understanding        premiums to reinsurers. While the loan does not have
the changing nature of risk and being at the heart of      a material effect on our free reserves it does qualify
the transport industry, our 2009 plan is focused upon      as lower tier–two capital in the eyes of the FSA and is
growing the business and improving our competitive-        recognised by AM Best in terms of enhanced solvency.
ness, both to a significant degree. Whilst these targets   The loan notes have been placed with Cincinnati based
are firmly in our sights, we must also ensure that we      Trapeza Capital Management, a 50:50 joint venture
maintain our capital strength, our rating and our strong   between Financial Stocks Inc. and Resource Financial
market position that is founded upon excellent service     Fund Management Inc. and will be pooled with other
provision, value for money and financial stability.        collateralised debt obligations and then securitised.
                                                                                                       December 06 Page 3

The Club was advised on the transaction by Fox–Pitt,          have joined us with specific sales responsibilities within
Kelton (FPK), an investment bank specialising in the          the EMEA region. They join an evolving TT management
insurance sector, Ryan Brown, Senior Vice–President           structure which is reshaping in order to focus effort on
of FPK, commenting on the transaction, says ‘The Club         sales in all three regions. This dual focus on technical
has timed its first deal with capital markets very well,      underwriting and sales comes partly in response to
with institutions currently being keen to invest in the       feedback from our customer satisfaction survey work,
insurance sector. The terms of the deal are excellent –       which highlights the need to enhance response times
indeed more advantageous than similar issues made             in the quotation process and partly in recognition of the
by larger companies reported recently – and reflect           increasing number of opportunities that are presented
the Club’s restored financial strength and strong             to us.
market position.’
The Club benefits from this transaction, principally,         When I took over as Chief Executive of the Club in
in four ways: first, it protects our AM Best rating           1999, we were carrying an expense ratio in excess of
because the loan is considered as an asset in Best's          30%, which was clearly unsustainable in an increasingly
capital model; secondly, it increases our solvency            competitive insurance market. My first priority was to
because the US$30m is fully admissible under FSA              reduce that ratio to below 20% by holding down costs
regulations; thirdly, it reduces our dependence on            whilst growing the business, a target that was
reinsurance in the event of adverse developments              surpassed in 2004 and 2005, assisted by a relatively
regarding the cost or availability of cover; and finally,     strong dollar. Since the end of 2005, however, we have
it increases our underwriting capacity to handle              seen cost pressures beginning to rise, accompanied by
targeted business growth.                                     a weaker dollar/sterling exchange rate, pressures that
                                                              are likely to stay with us in 2007 and beyond due to
Organic and new business growth                               expected demographic and environmental changes.
Growth, both organic and new business, is critical            At the same time we have seen further consolidation
to the Club’s future success as it holds the key to           and increasing competition in the insurance market,
competitiveness in an insurance market which                  to which we must respond if the Club is to remain
continues to consolidate and to invest in lower-cost          competitive by reducing operating costs per unit of
‘back office’ operations in an increasingly regulated         premium.
business environment.
                                                              We have already invested heavily in improving our
As we approach 2007 we will be turning our attention          claims handling processes, which are now in
to building our presence in the logistics industry.           electronic format in virtually all our offices and those
Currently this sector makes up about 20% of the global        of our network partners around the globe. We are now
portfolio it is therefore under represented compared to       well advanced in the development of our new global
the port and terminal and ship operator sectors, in both      underwriting system, TT GUS, which is due for
of which the Club enjoys a high market share. The             implementation worldwide towards the latter part of
logistics industry is predicted to grow by 14% annually       next year. TT GUS will incorporate our CRM software
in the next five years and we need to be positioned to        while replacing all legacy applications and paper–
capitalise on this growth. This statistic is well supported   based business processes. It is being designed
by the macro economic predictions for international           specifically to help us respond to Member and
trade flows that are described in the article on page 10.     regulatory requirements more efficiently, and to handle
This article explores the likely growth in container trade,   new business opportunities more effectively so that
increases in box ship size and the concomitant                we can both improve service quality and maximise
requirement for handling capacity in terms of port and        our targeted sales efforts whilst controlling our costs.
hinterland infrastructure as the relative power of the
world’s trading blocs shifts towards the Asia Pacific         The insurance cycle is clearly now entering a softer
region.                                                       phase after three years of strong underwriting results,
                                                              having briefly stabilised in late 2005 and early 2006
Our 2009 business plan is designed to position the            following the Gulf of Mexico hurricanes last year. I
Club to cope with changes in regulation, legislation,         am confident however that we have successfully
trade development, product enhancements (eg new               manipulated the TT Club version of Rubik’s Cube to
nuclear and bio-chemical terrorism cover, see page            produce a financially stable and sustainable business
five), service delivery (eg increased use of the internet     model that is well adapted to capitalise on growth
for policy administration), and of course the increasing      opportunities whilst coping with changes in the
need for enhanced and specialist cover in the global          competitive environment that will undoubtedly
transport and logistics industry.                             confront us in the future.

The Club is now well positioned for sensible and              Paul Neagle CEO
sustained growth, and you will see from the new faces
on page eight that Andrew Huxley and Richard Ellis
Page 4 House to House

Electronic transfer of funds: essential information
The Club prides itself not just on its ability to handle         Essential information for effecting electronic bank transfers:
claims but also on paying as quickly as possible! As you                 Bank name
might anticipate, increasing risk–based controls makes
what sounds like a simple process more complex and                       Bank address (full postal address, preferably of the local branch)
prone to delays. With constantly moving goalposts in the                 Account name (only simple numbers or letters)
financial services world, this article seeks to provide                  Account number (no spaces)
some understanding of how the Club approaches the
process and ways that Members and suppliers can help                     SWIFT, Sort or Fedwire Code (see below)
improve the process.                                                     Routing details (where a payment needs to be processed via an intermediary bank)

It goes without saying that the accuracy              Furthermore, the accurate use                                While many invoices will include
of information regarding 'payee’ or            of codes is critical to the smooth                           clear details of how payments should
‘beneficiary’ records is critical to           operation of the automated banking                           be made, not all payment requests
ensuring that a payment reaches                process. Although often displayed                            have such details. In order to process
destination in a timely fashion. In the        differently, no spaces are allowed within                    payments as efficiently as possible
header above, we summarise the                 account numbers and codes. Best                              please confirm the details (as above)
information that is essential for              practice indicates that SWIFT codes are                      at the time you request the payment.
effecting electronic bank transfers:           the safest and preferred bank identifier.                    Please also tell the Club via the office
the most secure methodology for                Despite this, in the UK it is still common                   that you use most regularly about any
transferring funds between any parties.        to use ‘sort codes’ and in the USA the                       changes to banking details as and
      If there are gaps in the                 use of ‘Fedwire’ or ABA routing                              when they occur – eg company name,
information, the Club has no choice            numbers is prevalent. In addition,                           location, address, codes etc – so that
but to contact the beneficiary in order        certain countries have additional                            records can be maintained in readiness.
to avoid a payment instruction being           requirements – such as Australia where                              For completeness, set out in the
delayed or rejected within the banking         it is mandatory to include ‘BSB’ branch                      chart below is an explanation of the
system. While electronic transfer is           numbers in the banking instruction.                          differing transaction costing rules for
clearly the safest and most secure                    The Club has set up certain                           electronic transfers. Any bank client
method of funds transfer, the rules are        system ‘rules’ in relation to customer                       originating a cross–border transfer
more complex, and failure to comply            data, including payees, to ensure that                       specifies one of these options for the
will always result in failed payments          appropriate updates are sought and                           distribution of fees and charges relating
and unnecessary bank charges. For              data is validated with some regularity.                      to the transaction. The Club has
example, it is not permissible to use          For payees, this means that where a                          adopted the ‘OUR’ option, meaning
punctuation or symbols of any kind             certain record has not been used to                          that it absorbs all the fees arising from
(such as ‘&’ or ‘–‘) within a payment          make a payment or amended for a                              the transfer. The result of this is that
instruction. In addition, the full address     period of twelve months, its status is                       the beneficiary will usually receive the
of a bank including the branch or head         automatically reset so that the detail                       full amount initiated. It is, however,
office must now appear on the first            has to be validated before another                           impossible to prevent correspondent
bank address line. 95% of all payment          payment can be effected. This simple                         or beneficiary banks imposing charges
transfers are sent to the head office and      rule has been devised because                                and the Club is aware that this happens
then passed on to the relevant branch;         experience has shown that it is highly                       in some countries. These additional
where a local branch name is                   likely that the information has become                       costs remain for the beneficiary’s
unavailable the head office name can           ‘stale’ (out of date) – banking codes or                     account and may be negotiable (with
be used instead. Similarly, it is              stipulations change, and offices                             the recipient bank) – but in most
mandatory to use IBAN (International           relocate. In the current environment of                      instances it should be remembered
Bank Account Number) numbers                   increasing regulatory compliance the                         that such charges may be modest
throughout the European Union. IBAN            Club believes that this control is an                        compared to the overhead and risk
is a unique account number identifying         appropriate balance of operational                           involved in not using an electronic
the country, branch, account number            process and best practice compliance                         transfer environment.
and other bank codes. If an IBAN is not        even if it does place an extra burden on
quoted on payments to EU countries,            workflow.
additional bank charges will be incurred
along with probable delays in payment.                          Sender          Sender         Sender bank          Receiver bank      Receiver bank    Receiver
                                                                                bank           correspondent        correspondent
Each EU or implementing country has             OUR             USD1,000        USD1,000       USD1,000 Charge      USD1,000 Charge    USD1,000         USD1,000
defined its own structure; general              (Originator)                                   USD5-10 back         USD5-10 back
information can be found on the                 BEN             USD1,000        USD1,000       USD980               USD975             USD975            USD1,000
                                                (Beneficiary)                                  Deduct USD20         Deduct USD5-10     Might deduct USD5
internet at:                                                                                   from transfer        from transfer      from transfer
                                                                                               amount               amount             amount and
validation of IBAN numbers is possible          SHA             USD1,000        USD1,000       USD980               USD975             USD975            USD1,000
                                                (Shared)                                       Deduct USD20 from    Deduct USD5-10     Might deduct USD5
from:                                                            transfer amount or   from transfer      from transfer
                                                                                               charge back to       amount             amount
iban/Iban_check.html                                                                           sender account as
                                                                                               per bilateral
                                                                                                                      December 06 Page 5

Nuclear and bio-chemical terrorism pool

“   ...offering valuable protection against
the possibility of a ‘dirty bomb’ being
secreted in a container or discovered
in a port or terminal...
A unique facility offering cover up to a targeted aggregate
                                                  MARIE QUILTER
pool limit of US$100m for 2007 has been set up by the
                                                                    FEATURES OF THE NEW COVER

Club. It offers Club Members protection for liabilities, loss       This cover is available to all Members of the Club for an
and damage to assets and business interruption claims               additional premium.
arising out of the discovery of or emission from a nuclear,
bio-chemical and/or radiological terrorist attack – a so-called     No additional underwriting information is required from
‘dirty bomb’. The cover is in two sections: (A) Cover up to         Members.
US$25m each incident for liability, physical damage and/or
business interruption arising out of the discovery of or            Cover will be offered as a single comprehensive package.
emission from a device directly affecting a Member’s insured
facility, and: (B) Cover of up to a maximum of US$5m each           Options for different limits of cover will be available.
year for contingent business interruption losses suffered by
a Member as a direct consequence of an incident in another
                                                                    A standard deductible will be applied to each entry.
location anywhere in the world. This new facility for Club
Members (which guarantees a minimum of US$50m
                                                                    The period of insurance will be 01 January to 31 December
aggregate pool limit) provides cover for a risk that is
generally excluded from all commercial insurance policies.          2007. Members who are unable to join on 01 January 2007
It offers valuable protection against the possibility of a ‘dirty   will have the opportunity to join the pool at the beginning of
bomb’ being secreted in a container or discovered in a port         each quarter on a pro–rata basis for 2007; however, the
or terminal, or for a Member’s financial loss suffered as a         Directors will limit the exposure to the pool based on the
result of significant trade disruption. Cover will be offered       aggregate limit available, and, therefore joining the pool after
as a separate 12 month entry for each Member commencing             1 January 2007 cannot be guaranteed.
on 01 January 2007.
                                                                    If the annual aggregate limit of cover for the pool is exceeded,
Full terms are now available, so please contact your                claims payments will be reduced pro–rata (with claims under
broker or your local TT Club office for a quotation.                section (A) taking priority).

Asia Logistics Awards – Singapore
                                                                                                               TT Club sponsored
                                                                                                               the fifth Asia Logistics
                                                                                                               Awards gala dinner
                                                                                                               which took place at
                                                                                                               the Sapphire Hall in
                                                                                                               Singapore on 05 October
                                                                                                               2006. Andrew Kemp
                                                                                                               presented the FTB Asia
                                                                                                               Hall of Fame award to
                                                                                                               Ram Menen, the
                                                                                                               Divisional Senior VP
                                                                                                               Cargo for Emirates.
Page 6 House to House

Planning and drafting of contract documentation

The commercial activities of a transport and logistics operator are by their very nature diverse and
subject to change. Commercial men regularly perceive legal rules and regulations as impediments
to their dealings, but prudent planning and drafting of contract documentation facilitates best possible
performance and helps minimise the risk of claims. Two aims are to improve the clarity of contracts
and make best possible use of contractual freedom under the relevant laws.

Clarity of structure and wording                                  31 CMR) under which courts would readily find him fully
Clarity in the structure and wording of contracts reduces         liable due to wilful misconduct.
the danger of protracted legal disputes. If contracts consist
of several documents or parts, it is critical to establish        Carriage documents for individual consignments
consistent wording and a clear order of precedence, which         Even when the transport and logistics operator has a
also takes into account carriage documents issued for             framework contract in place with his client, he is still likely to
individual consignments.                                          issue a carriage document for each individual consignment.
                                                                  He wants to choose carefully the type of document as well
Arguably, some legal systems lend themselves more readily         as any external conditions to which it refers. His choice will
than others to the drafting of complex transport and logistics    depend primarily on the modes of carriage agreed and any
contracts. English law, for instance, offers the parties a high   contractual arrangements already in place, but the carriage
degree of flexibility, and the TT Club 600 Series Logistics       document may also have to be suitable for documentary
Conditions can serve as a base document for a complex             credits (currently pursuant to UCP 500, from mid 2007 UCP
logistics contract. Under codified Continental European legal     600) and, depending on the underlying sales contract, will
systems, on the other hand, various parts of the domestic         have to serve as a document of title.
commercial code and of special legislation apply to the
different aspects of a transport and logistics contract, which    Ideally, the transport and logistics operator puts in place
can make it difficult to decide which specific legal provision    the most suitable documentary arrangement before the
determines matters such as burden of proof, liability limit or    actual commercial operation commences. He might use
limitation period.                                                the TT Club or FIATA bill of lading for combined carriage
                                                                  involving a sea leg, and the IATA (FIATA) air waybill form for
Best possible use of contractual freedom                          combined air/land carriage. Standard bills of lading are not
Naturally, the parties’ contractual freedom is curtailed to       suitable for combined sea/air carriage. Issuing two
the extent that mandatory law applies to their activities.        documents for the same goods and carriage (for instance
To international carriage of goods, a number of mandatory         a bill of lading merely for documentary credit requirements)
international conventions apply, but the parties can              is fraught with danger, as is the conversion of bill of lading
determine what the precise scope of this mandatory law is         forms into a sea waybill, because this conversion obscures
and then exploit their contractual freedom for the remainder      the legal status of that document.
of their dealings. This contractual freedom can give the
transport and logistics operator an excellent chance to           Conclusion
limit his liability as much as possible.                          Transport and logistics operators regularly face claims or
                                                                  increased exposure, not because of some erudite legal
Favourable rules can be incorporated into the contract,           argument, but simply owing to inconsistencies or oversights
for example, in case of air carriage the 1999 Montreal
                                                                  in their contract documentation. Prudent planning and drafting
Convention with its unbreakable liability limit of 17 SDR
                                                                  can be a potent loss prevention measure, to which the TT Club
(Article 22(3) Montreal Convention). As regards jurisdiction,
the transport and logistics operator will be reluctant to agree   contributes through its contract and carriage document review
to an additional forum (for instance pursuant to Article          process.

                             Yuvraj Narayan                        Jan Erlund                                      David Davies
                             Chief Financial Officer               Chairman of PSA                                 Former Group Marine
                             of DP World, Dubai                    Europe Pte Limited                              Manager Royal & Sun
                             was elected on                        Singapore was elected                           Alliance, was elected to
                             26 October 2006                       26 October 2006                                 the TT EurAsia Board on
                                                                                                                   05 September 2006.
                                                                                                                 December 06 Page 7

Is there anything we can do?

Our office arranged for the
importation of several containers
                                           is one of many countries that have
                                           adopted the international standards.
                                           During this phase, APHIS and
                                           Customs are requiring that all
                                           commodity imports, either entering
                                                                                        the packaging material, as the mark
                                                                                        must be visible to the Customs

                                                                                        In this case, the pallets were found not
of roof tiles from Spain to Miami.         into or transiting through the United        to have an appropriate mark. A paper
                                           States, that contain wood packaging          certificate had been stapled onto
The pallets used for the shipment
                                           material consisting of pallets, crates       them. Because a paper document can
contained paper documents                  and other dunnage, either be heat            be removed and transferred to another
stapled to them certifying that            treated or fumigated with methyl             pallet, this was deemed not to be a
they had been treated to ward              bromide. The shipments must also be          ‘permanent’ mark as required by the
off insects and other vermin. The          marked with an approved international        regulation.
shipment has arrived at the port           logo, certifying that the materials have
of destination, but Customs has            been appropriately treated.                  Given the significant amount of
informed us that the documents                                                          dunnage material that is currently in
                                           Shipments that violate the rule may still    use around the world, it is not difficult
are not acceptable proof of
                                           be allowed entry into the United States      to envision the possibility of a
treat–ment. They are threatening           if the CBP port director determines          shipment arriving at a port of origin
to have the shipment returned.             that it is possible to separate any          or at a consolidator’s facility containing
Is there anything we can do?               approved materials from the non-             non-compliant packaging material.
                                           compliant portion of the shipment.           This may have been the case here,
                                           Arrangements to have the                     and the stapled certification may
ANSWER                                     noncompliant materials exported from         have been a well-intended corrective
This was the substance of an urgent        the United States would be required          measure aimed at avoiding a delay
call that we received recently in our      before the approved cargo could be           in the shipment.
office from a logistics service provider   released to the consignee. All costs
in the United States. Unfortunately        associated with this segregation             Whatever the reason for the actions
for the caller, nothing could be done      process are the responsibility of the        in this case, the fact is that it may
to prevent the re-exportation of the       importer.                                    be some time before all packaging
shipment, and it was, in fact, returned                                                 material in the world is properly
to its port of origin.                     This phase of enforcement applied            treated and documented. For this
                                           until 04 July 2006, after which time         reason, shippers and their service
On 01 February 2006, the U.S.              full enforcement of the regulation           providers need to ensure that their
Department of Agriculture’s Animal         came into effect. At that time, all          compliance program includes the
and Plant Health Inspection Service        wooden packaging materials must              receipt and inspection of properly
(APHIS), in cooperation with the           meet the import requirements and             documented packing material for use
U.S. Department of Homeland                be free of timber pests before entering      in shipments destined for the US.
Security’s Customs and Border              or transiting through the United States.     Packing material failing to comply with
Protection Agency, began enforcing                                                      this requirement should be rejected or
what it referred to as ‘phase two’         Turning to our specific shipment, it         treated as required.
of the new wood packaging material         appears that the pallets used to hold
regulation. The first phase of this        the roof tiles had, in fact, been treated.   Undoubtedly, there will be additional
regulation became effective in 2005.       At least, this is what the certification     costs and procedures incurred in
                                           stated. However, the regulation’s            complying with this new measure.
The regulation is based on the             phytosanitary measures specifically          But the costs associated with the
standards set out in the International     require that the wooden packaging            segregation and possible return of
Plant Protection Convention for wood       materials carry a ‘legible and               goods containing non–compliant
packaging materials, which prescribe       permanent’ mark certifying that they         materials can be significant, both in
globally accepted measures to reduce       have been treated in accordance with         terms of expense and possible lost
the risk of pest introductions through     the regulation. It is also preferable that   business.
packing materials. The United States       the mark be placed on both sides of
Page 8 House to House

Back to the future                                                                        New staff

                                                                                          Four new
                In 1955, Malcom McLean, a North Carolina road haulier, diversified         ANDREW HUXLEY
                   into shipping with the purchase of the Pan Atlantic Steamship                           Andrew Huxley has joined
                                                                                                           TT Club as Regional Sales
                     Corporation. A year later, on 26 April, a converted tanker called                     Director (Europe) after 24
                      the Ideal X carried the first load of 58, 35–foot containers from                    years as a broker in London,
                      the Port of Newark, New Jersey to the Port of Houston, Texas                         Middle East, Far East and
                                                                                                           Australia. In recent years
                      and marked the beginning of containerisation as we know it.                          he has worked for the
                                                                                                           international property
                                                                                                           departments of Heath
                 Since this introduction to containers, international trade has grown                      Lambert and Aon as Business
              more than twice as fast as the global economy, and whilst many of                            Development Director.
          us do not have daily contact with an actual container, it is unlikely that
any of us have not come into contact with something that has been shipped in
one. As much as 60% of world trade travels in a container.
                                                                                           RICHARD ELLIS
In 1996, as part of its celebrations to mark the 40th anniversary of this remarkable                       Richard Ellis joined the
                                                                                                           Underwriting Department
innovation, the TT Club published its own anthology, appropriately named ‘The                              on 18 September as the
Box’. The Box comprises an assortment of accounts gathered from the container                              Regional Sales Executive
industry, using contributions from a number of different sources and perspectives.                         having come from Markel
                                                                                                           International where he held
These accounts span from 1967 to 1996 and paint a colourful picture of the lively                          the post of P&I underwriter for
and often eventful container industry.                                                                     over two years.

Ten years on and to commemorate 50 years of containerisation, TT Club has
decided to re–publish The Box. Whilst much of the material remains as it was
in the first version, there are many carefully chosen additions reflecting the
development of the container industry during the last decade. We are grateful
to John Fossey, editor of CI who opened his archive to supplement this update              JULIEN HORN
and to Peter Owen of ISIS Communications who, once again, has been                                         Julien Horn joined the TT Club
                                                                                                           in September as an Assistant
instrumental in drawing the publication together.                                                          Underwriter working with UK,
                                                                                                           Middle East and African
The last chapter of the original version becomes a great starting point                                    accounts having previously
                                                                                                           spent three years with the
for the new edition. This chapter originally took the reader into 2021                                     UK P&I Club .
to look back at how the container industry had changed over
the past 25 years and some of these predictions have been
compared to actual events. It is only fitting then, that the new
final chapter, goes ‘back to the future’ to consider what we
might expect to see over the next 25 years of this world
shaping industry.
                                                                                           EMILY COX
                                                                                                           Emily Cox joined the TT Club
                                                                                                           on 04 September 2006 as an
                                                                                                           Administration Assistant
                                                                                                           to Pauline McAloone, Ian
                        Poppy fund collection                                                              Rosenthal and Mike Foster.
                                                                                                           Emily has spent the last four
                                                                                                           years working as a Marketing
                                                                                                           Assistant for Budweiser
                        Thomas Miller were delighted to have raised the                                    Budvar.
                        sum of £210.87 with the Poppy Fund collection
                        boxes. This was sent to the Royal British Legion
                        and was a record amount for International House.
                        A big thank you to everyone for their contributions
                        to this important cause.
                                                                                                             December 06 Page 9

Club helps to rebuild Cozumel cruise terminal

The date was 21 October 2005. On that day, Hurricane Wilma,
the most powerful storm to strike Mexico’s Yucatan Peninsula
in years, battered the coast with winds and rains befitting its
status as a Category Four hurricane. Over a period of 48 hours,                                                  Cozumel
the eye of the storm passed almost directly over the island of
Cozumel, bringing with it heavy waves that pounded the
coastline. The storm knocked out communications and
paralysed the island.

In her wake, Wilma left a trail of         insured facilities in the region once    considered various alternatives for
devastation along the Mexican coast        the storm had passed. As early as        the repair of the facility. They ultimately
before turning northward to the US         two days later, the adjusters made an    agreed to make immediate permanent
mainland. Among the terminal facilities    arduous day–long journey through the     repairs to the facility, rather than
that suffered significant damage was       Yucatan Peninsula to the Caribbean       engaging in the more time consuming
the cruise terminal at Punta Langosta,     coast. Using a convoy of vehicles        and costly process of making
Cozumel. Before the storm, this            traveling over flooded roads strewn      temporary repairs and thereafter
passenger facility regularly received      with debris, they made their way to      making permanent repairs. The work
third and fourth generation cruise ships   Cancun, where they ferried across        was expected to be completed in
carrying up to 2,500 passengers.           to Cozumel to inspect the damage         about eight months.
                                           at this and a nearby installation.
The principal component of that                                                     During the reconstruction process,
terminal was a reinforced concrete pier    When they arrived, they found a pier     the facility was visited by Colin
on which the cruise ships docked, and      that had suffered extensive damage.      Fordham, the Club’s coordinator for
which gave the passengers access to        Many of the reinforced concrete slabs    disaster claims. Before the reopening,
the centre of town. On the land side,      forming the access way along the         Dan Negron, the Senior Underwriter in
there was a reinforced concrete            dock were completely destroyed by        the Americas region, was given a tour
building that housed washrooms and         the action of the sea. The electrical    of the work in progress at the facility.
offices. On the waterside, there was       installation, potable water network,     On 27 September 2006, nearly eight
an arched metal canopy that provided       fire fighting installations and canopy   months after construction began, and
shade to the passengers as they            structure were badly demaged. The        less than one year after the event, the
exited the pier. Both the pier and the     dock was rendered inoperable, and        pier was officially reopened. The work
canopy were insured with the Club for      immediate repairs would be required      was completed on time, and below
physical damage. The cover included        to permit the dock to resume its         the initial loss estimates. The ‘Disney
wind and flood. When it became             normal operations. Initial estimates     Magic’ was the first vessel to call
evident that the storm would make          placed the losses at approximately       at the newly rebuilt facility. Congrat-
landfall, the Club mobilised a team of     US$10m. The Club, in consultation        ulations Cozumel.
adjusters to assess damages to all         with the Member and their advisers,
Page 10 House to House

Growing pains

When ‘Emma Maersk’, the largest containership currently in service, arrived in
Felixstowe on her maiden westbound call in early November, she delivered
allegedly the largest ever single shipload of Christmas goods to the UK market –
some 3,000 containers.
According to UNCTAD trade statistics, total world seaborne        The introduction of such tonnage has naturally increased
trade, including dry and liquid bulk commodities, has increased   average containership sizes both on the world’s main trade
from less than 20,000 billion tonne miles in 1994 to more than    routes and on the secondary routes into which previous
27,500 billion tonne miles in 2004, a rise of over 37%. The       generation, smaller vessels are being displaced, or
growth in containerised trade is even more remarkable. In just    ‘cascaded’ as the industry terms it. This implies continuing
five years since 2001, total container traffic has increased      and significant change for the ports and landside sectors if
by almost 55% to around 120 million TEU.                          world trade is not to become constricted by port congestion
                                                                  and inland transport capacity issues.
Growth rates
Predicting the future is, of course, an uncertain art, with       The bigger ships are longer, wider and deeper drafted than
forward–looking projections notoriously prone to ‘forecasting     their forbears, requiring longer quays, deeper entrance
error’. However, there appears to be a consensus among            channels and berths and extended–outreach cranes. With
shipowners, port operators and analysts that annual growth        bigger ships the average number of containers handled per
rates for containerised trade, while probably dipping from        port call is increasing substantially, and although this may
recent highs, should remain fairly close to historical levels –   be partially offset by the ability to work a bigger ship with
in other words somewhere in the range of 8 –10% for the           more cranes, port operators can expect to see ships
next few years. Individual trade lanes will, as usual, see        occupying their berths for longer. Hence investment in
different rates of growth with the main routes serving Asia       additional container port capacity is not really an option
enjoying the strongest rises. These demand expectations           but rather a necessity.
dictate that the major global players increase the scale of
their businesses significantly to win, they hope, an increasing   One of the most ambitious and significant maritime
share of a growth market. Our leading article in this issue       infrastructure projects that is being driven by the relentless
acknowledges that TT Club, too, must expand its capacity          increase in ship sizes is the proposed widening of the
as a leading insurance provider to the transport and logistics    Panama Canal. At the end of October voters in Panama
industry in order to keep pace with its Members’ needs.           overwhelmingly endorsed the US$5.2 billion plan in a
                                                                  referendum, holding out the prospect of a capacity uplift
So how are the key players responding?                            from about 4,000 TEU ships at present to perhaps 11,000
Firstly, we are witnessing continued consolidation across         or 12,000 TEU vessels on completion in 2014.
most sectors, notably container operators, terminal
operators and logistics providers. The disappearance of P&O       Investment required
Nedlloyd, CP Ships and Delmas has been well documented,           Our many Members with busy inland transport activities
and leaves the top container lines with an ever stronger grip     will know that governments and other authorities need to
on capacity. In the ports sector the acquisition of P&O Ports     continue to invest in their landside transport infrastructure.
by DP World has reshaped the competitive landscape, while         With some 80% of European freight moving inland by
logistics service providers, led by giants such as Deutsche       road, the congestion and delays that already affect the
Post, Deutsche Bahn and Kühne & Nagel continue to grow            industrialised regions such as north Germany, the routes
both organically and through acquisitions.                        linking Rotterdam and Antwerp with the Ruhr, as well as
                                                                  the southern UK are in danger of steadily worsening
Container operators are positioning themselves for growth         unless the rise in demand is properly anticipated.
not just through consolidation but also by the addition of
substantial new carrying capacity. The profile of the world’s     Conclusion
containership fleet is changing rapidly with most major           The relentless expansion in the trade of manufactured
carriers now having ordered or taken delivery of ships that       goods is causing and will cause capacity problems all
would have been unthinkably large even a few years ago.
                                                                  along the supply chain that will require a major
For example on the benchmark Asia–Europe route, in 2001
                                                                  collaborative effort by all involved parties if the rate
major operators were phasing in 5,500 TEU capacity ships
as their workhorses for the trade. Today, 8,000 to 10,000         of growth is to be sustained.
TEU vessels are entering service – and then there is ‘Emma
Maersk’ and her soon to be delivered sister ships with
capacities ‘above 10,000 TEU’ – how far above is open to
                                                                                                               December 06 Page 11

In memoriam                                   Four compete for YIFFYA award
Andrew Trasler                                The regional winners were
                                              Region Europe: Marlena Goldberger
1941–2006                                     Region Africa / Middle East: Vishal Joshi
                                              Region Asia / Pacific: Lin Yisong
The full TT Talk archive, much of which is
directly attributable to Andy, is available   Region Americas: Pamela Rooney
from the TT website at:

As many of you will be aware, the
editor of TT Talk, Andrew (Andy)
Trasler passed away suddenly on
the 28 September. Andy joined the
Managers of the TT Club, Thomas
Miller, in 1986 after a successful and
varied career in the freight forwarding
industry. His second career with the
TT Club lasted almost two decades:
he retired in June 2004. Andy proved
himself to be TT's most prolific and
illustrious writer and raconteur. He
cherished his role as editor of first
House to House and then of TT Talk,
the latter of which he assumed on
his retirement. His contribution and          TT Club is proud to support the Young International Freight Forwarder of the
friendship will be sorely missed.             Year Award. The 2006 award was won by a young lady from the UK, Marlena
                                              Goldberger, an employee of Eagle Global Logistics in Birmingham.
Paul Neagle CEO, TT Club                      Photo: Andreas Mueller (TT’s European Regional Director) presenting Marlena
                                              with her award.

Lay and Wheeler
The TT Club held a broker drinks
and buffet reception at Lay and
Wheeler in Leadenhall Market
on the 08 November. It was
arranged for the week of the
international underwriting
conference so that many of
TT's overseas colleagues were
able to attend. The evening was
enjoyed by all.
             Page 12 House to House

                                      JANUARY 2007
                            11 - 13   Wuhan Yangtze Shipping Forum
                            15 - 16   Kingston Jamaica: The Next World Maritime Centre
                            15 - 18   Dearborn Automotive News World Congress
                                18    London BIFA Freight Services Awards                                                                  As we approach another year
                            21 - 23   Scottsdale The Leadership Conference
                                                                                                                                                        we extend to you all our warm
                            22 - 24   Savannah The 4th International Conference on Remediation of Contaminated Sediments
                            22 - 25   London Marine Cargo Claims: Understanding & Managing
                                                                                                                                                        greetings and friendship in the
                            29 - 30   London The Global RFID-ROI Summit 2007                                                           wish that 2007 will be happy
                                      New Orleans International Transportation Management Conference & Exhibition
                            29 - 30
                                                                                                                                                        and successful.
                            29 - 31   Houston SecurePort - 3rd Western Hemispheric Port Security Conference & Trade Exposition
                            30 - 31   Limassol Digitial Ship Cyprus 2007
                            31 - 02   Ho Chi Minh City, Vietnam IAPH Asia/Oceania Regional Meeting                               The Club will not be sending
                                                                                                                                                        corporate greeting cards this year.
                            07 - 08   Manila Philippine Ports & Shipping 2007                                            We have made instead a charitable
                            08 - 10   Berlin Fruit Logistica                                                                        donation to the United Nations
                            08 - 09   Reunion Third Indian Ocean Ports, Logistics & Shipping
                            11 - 14   San Diego Logistics 2007
                                                                                                                                                        Children's Fund (UNICEF).
                            09 - 11   Chennai MarineIndia
                            13 - 14   Lisbon Greenport
                                14    Dubai Third Annual Gulf Ship Finance Forum
                                22    Hamburg Sixth Annual German Ship Finance Forum
                            26 - 27   Dubai World Air Cargo Conference & Exhibition
                            27 - 01   Long Beach Faster Freight Cleaner Air (FFCA) 2007
                                                                                                                                                        House to House is published
                                      MARCH                                                                                                             on behalf of the TT Club by Through
                            05 - 06   Long Beach Seventh Annual Tran-Pacific Maritime Conference
                            06 - 08   Montreux Automotive Logistics - Europe
                                                                                                                                                        Transport Mutual Services (UK) Ltd.
                            06 - 07   Rotterdam Betuwe Route: Europe's Rail Gateway for Freight
                            13 - 15   Hong Kong TOC Asia
                                                                                                                                                        International House
                            19 - 20   Washington AAPA Spring Conference                                                     26 Creechurch Lane
                            19 - 21   Stamford Shipping 2007                                                                London EC3A 5BA
                            20 - 21   Oslo Digital Ship Scandinavia 2007
                                                                                                                                                        Tel: +44 (0)20 7204 2626
                            22 - 23   Malta MedTrade 2007
                                                                                                                                                        Fax: +44 (0)20 7204 2727
                            25 - 28   San Diego American Society of Civil Engineers (ASCE) Ports 2007
                            26 - 27   London Extended Supply Chain 2007                                                  e–mail:
                            27 - 29   Moscow TransRussia 2007                                                        Website:
                            27 - 29   Paris SITL
                            28 - 29   Birmingham IT & Logistics inc Softworld Supply Chain                                      Regional Centres
                                28    London Lloyd's List Awards
                            29 - 30   Durban Intermodal Africa                                                              Europe
                                                                                                                                                        London: +44 (0)20 7204 2626
                            02 - 04   Singapore Sea Asia
                            11 - 13   Memphis IRPT Annual Convention
                                                                                                                                                        Jersey City: +1 201 557 7300
                                12    Instanbul Instanbul Ship Finance Forum
                            16 - 18   Orlando Fourth Annual Short Sea Shipping Conference
                            16 - 19   Dallas Retail Industry Leaders Association
                                                                                                                                                        Asia Pacific
                            22 - 25   Nashville WERC Annual Conference                                                              Hong Kong: +852 28 32 93 01
                            24 - 26   Jacksonville AAPA Port Ops, Safety & IT Seminar                                         Singapore: +65 6323 6577
                            24 - 26   Sao Paulo Intermodal South America
                            25 - 29   Istanbul Europort EuroAsia                                                            Back issues of House to House are
                            27 - 04   Houston IAPH Biennial World Ports Conference
                                                                                                                                                        available from TTMS (UK) Ltd, London
                            29 - 05   New Orleans RIMS
                                                                                                                                                        or the Regional Centres. Please address
                                      MAY                                                                                                               all correspondence to The Editor, House
                            09 - 11   Paris CSCMP Europe                                                                            to House.
                            09 - 10   Rotterdam Transport & Logistiek
                            10 - 11   Bermuda Marine Risk Forum                                                                             The Managers of the TT
                            13 - 15   Moscow Annual International Conference on the Russian Automotive Industry                                  Club hold ISO 9001:2000
                            15 - 16   Paris Container Owners Association Meeting                                             certification.
                            16 - 17   Beirut Trans Middle East 2007
                            19 - 23   Singapore International Tug & Salvage Convention & Exhibition
                            22 - 24   Antwerp Second Annual Breakbulk Europe Conference & Exhibition

                            04 - 05   Savannah Third Annual China Trade & Logistics Conference
                            05 - 06   London AIRMIC Conference 2007
                            12 - 15   Oslo Norshipping
                            12 - 15   Munich Transport Logistic
                                12    Johor Bahru ASEAN Ports & Shipping 2007 
                                                                                                                                                        transport insurance plus

                            13 - 15   Canaveral AAPA Public Relations Seminar
                            19 - 21   Istanbul TOC Europe

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