Wordings that specify only International Group cover to be
raised with ship financiers and others
campaign to get the Korea Shipowners’ Mutual Protection & Indemnity
Association (KPIC) made as acceptable security in ship finance and chartering
contracts has been backed by the country’s owners.
Korea Shipowners’ Association (KSA) is recommending that member companies press
for KPIC to be named as an acceptable club alongside the International Group
mutuals in contract wordings.
reported in June that KPIC was seeking to change wordings that specify that
only cover from International Group clubs is allowed in loan and other
ship-finance agreements, time and voyage charterparties, contracts of
affreightment and commodity-sales contracts.
KSA, which represents nearly all of South Korea’s major shipping groups, says
the exclusion of KPIC from wordings is leading to an annual outflow of $150m to
KSA, chaired by Youn-Jae Lee of Heung-A Shipping, says Korea’s state-owned
banks are already aware of the need to support KPIC’s development and this
backing should be widened.
share of KPIC is put at 17% by the KSA, which says the club covers a fleet of
about 1,100 vessels paying an annual premium of $31m.
KSA says KPIC has grown at a similar rate to the International Group clubs but
the contract-wordings issue is holding back further development.
reminds Korean companies that KPIC was founded in 2000 with investment from the
country’s shipowners and government support, and is part of an effort to create
a virtuous circle that will strengthen national maritime competitiveness.
KSA initiative has been welcomed by KPIC’s top manager, Bay Moon, who views
shipowner support as part of wider moves to strengthen Korea’s maritime
year on from the failure of Hanjin Shipping, the Korean government and the KSA
are in active discussions about rebuilding the nation’s shipping industry.
alliance — the Korea Shipping Partnership — between the 14 Korean
container carriers was signed on Tuesday this week, while, earlier in August,
the Federation of Korean Seafarers’ Union and the Korean Merchant Seafarers’
Union agreed to merge.
says mergers and integration have become a key feature of Korea’s shipping
industry, with the development of KPIC seen as part of the moves to rebuild the
is at an advanced stage in drafting a development plan to chart the future
strategy of the club, which covers a fleet of 22 million gross tons.
KSA is raising unfair contract-wording discrimination against the KPIC in
consultative groups that it is involved with and is hopeful that changes can be
was confirmed in the several meetings so far hosted by the KSA that there are
no ship financiers, nor major consignees, who doubt the club’s stability and
professionalism,” Moon said.
club chief says Korea’s Ministry of Oceans and Fisheries is also keeping a
close eye on developments and is looking for a prompt resolution of the wording
is time to amend the standard contracts to add KPIC to the ‘International Group
clubs-only’ clauses,” Moon said.
notes that KPIC has been in business for 17 years and has an “A-” or excellent
financial strength rating from AM Best.