FOREWORD

Founded at the depth of the Tanker crisis in 1975 the work of the International Maritime Industries Forum is as vital now as it was then - perhaps in many ways even more so. IMIF is unique in that it is the only body which affords Shipowners, Shipbuilders, Cargo owners, Bankers, Classification Societies, Insurers - indeed all components of the Maritime Industries - the opportunity to meet regularly at the highest level for discussions on the many problems of their separate industries whose prosperity is inextricably linked. It is IMIF's international and 'cross modal' membership that sets it apart.

This Page will, I hope, serve to show how a purely voluntary and essentially informal organisation has, in just over twenty - five years, become one of the most effective meetings of minds and opinions that the combined industries have seen. The Forum is recognised today in government and commercial circles across the world as representing the voice of realism and commonsense and as not being engaged in special pleading.

What has changed in the intervening years ?

In some respects a lot, in others nothing,

One thing that has remained irresistibly in place is the oversupply position. We still have too many ships chasing too few cargoes and the consequent result of low freight rates. There have been the occasional 'blips' of improved rates - occasioned often by the shipowners' unattractive friend, War - but in general over all those 25 years rates have remained stubbornly low, generally far below the level needed for a modern, well-maintained, well-managed and crewed vessel. The extra ingredients that have been added to this complex situation are the increasing demands placed on shipowners by environmentalists.

IMIF has throughout maintained a consistent basic line of argument. Oversupply of any commodity results in low prices. How can we correct the general oversupply in the shipping industries ?

1.

Ships. By a consistent attack on sub-standard (not synonymous with "old') vessels by encouraging Port State Control and the previous watchdogs of Government Inspectorates and Classification Societies. Much amused and oft-time cynical comment has been aimed at our various scrapping scheme proposals, 'Scrap and Build' etc. I do not think we ever believed that they would necessarily come to pass, but they were designed to make people think. (A 'spiritual mobilisation' as Takeshi Ogawa of Daiichi-Chuo once described it.)

It is a hard task in the 21st Century to convince anyone to take a long-term view of anything. We live in an age of short-termism of grabbing whatever opportunity is available for instant profit and self-gratification.

How hard then to convince an owner, even more his lending bank, to grasp the nettle and scrap an old ship which is sailing along, snatching up even a tiny contribution over and above minimal operating costs.

It is even harder to convince a shipper to pay one cent more in freight over the lowest rate available from a tired, ill-kept ship. Why pay any premium for excellence when the cargo usually gets there and even if it doesn't there are insurers who will pay up for what is lost.

2.

Shipyards. The oversupply of ships particularly of Tankers, persists and yet there are signs that an increase in shipbuilding capacity together with a reversion to subsidies and special credit schemes is starting. IMIF is concerned at the serious possibility that the actions that created the crisis in the tanker industry in the 1970's are in the process of being repeated again. If so, the industry, being in danger of not learning from the past, will repeat the over-supply situation, leading to low freight rates, poor quality and lack of safety.

That circle will only be squared by removal of surplus tonnage with the consequent rise in freight rates, justifying investment in new ships.

3.

The financial institutions. On top of the usual sources of fmance there is now the seemingly inexhaustible supply of money from High Yield Bonds. These are not by definition dangerous and they are particularly suited to shipping's need for long-term money. It is however vital that loans of whatever nature are given to ventures that meet a specified need and not to speculative ventures.

So the twin aims of all in the maritime industries surely are clear:

1.

Remove the overhang of surplus tonnage.

2.

Conduct a soberly argued campaign towards increasing freight rates. Shipowners must receive a fair reward for the service (value added) that they are providing. Once they have that they will be in a position to order new ships and give an even better service.

Only this way can we achieve IMIF's ultimate objective which has always been and remains a healthy and profitable international maritime environment to the advantage of shipowners, shipbuilders, shippers and those who serve, finance and invest in these fundamental industries.

JIM DAVIS

MAY 2001