Ports & Ships Maritime News

Feb 5, 2009
Author: Terry Hutson

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  • International cooperation needed for global financial system reform

  • Record amounts of food bought by WFP in South Africa

  • Less red tape for EC shipping

  • Giving new meaning to the term ‘Panamax’


    International cooperation needed for global financial system reform

    by Chen Wenxian (BuaNews)

    Davos - International cooperation, not protectionism, is the precondition for global financial system reform, world leaders and financial experts have agreed at this year’s World Economic Forum meeting in Davos, Switzerland.

    During the five-day forum, which ended on Sunday, participants sent a strong message to combat financial protectionism. British Prime Minister Gordon Brown warned that financial protectionism was a greater danger than trade protectionism in the current world economic scenario.

    Cooperation between major powers and global financial institutions is vital to ensure a continued flow of credit to developing and smaller countries, which are likely to be the biggest victims of the recession, he added.

    There is an implicit protectionism in what is happening now, said Mr Brown, referring to the moves of several countries to restrict government funding for bolstering endangered banks to national financial institutions and barring overseas operations from benefiting.

    This is leading to the withdrawal of capital from these institutions’ foreign operations. “If this continues, what you will see is a form of financial protectionism and financial isolationism,” he said.

    Developing countries, likely to suffer most in the global crisis due to their still weak domestic financial sector, have already seen a dramatic loss of capital, Mr Brown added.

    Meanwhile, German Chancellor Angela Merkel said the global financial crisis may lead to the formation of a UN Economic Council, like the UN Security Council, based on a global economic charter.

    Participants at the forum agreed that one of the important steps for reforming the global financial system would be to rebuild international financial institutions such as the International Monetary Fund (IMF) and World Bank.

    According to Mr Brown, new forms of international institutions are vital to tackling future problems.

    The IMF should take a greater role in heading off crises and preventing them rather than dealing with the after-effects, while the World Bank should tailor its operations to better deal with environmental issues, he suggested.

    However, it is not easy to strengthen international financial cooperation and reform the global financial system.

    Stephen Roach, Chairman of Morgan Stanley Asia, said that a multilateral financial entity needs teeth. “The problem is that there is no enforcement mechanism, no penalties for bad behaviour. Nobody wants to relinquish national authority.”

    In an era of globalisation, only international financial cooperation and financial supervision can help establish a new and effective global financial system, which has been agreed upon by both advanced and emerging economies.

    Last November's G20 Financial Summit in Washington hammered out a blueprint for the new global financial system. The London G20 Financial Summit in April is expected to work out details for realising that goal.

    Current financial rules must be “fundamentally revised” as they had deepened the global financial crisis, financial experts at the Davos forum said.

    Rules such as capital adequacy regulations and fair value accounting were “well intentioned,” but had proved to be inadequate, said Stephen Green, Chairman of the HSBC Group.

    “Fair value accounting has added considerable volatility to results, only part of which is economic, and the capital adequacy regime has hobbled many banks with spiralling capital requirements just when customers need them to be flexible with lending,” he said.

    These rules encourage banks to build up their capital instead of lending money to their customers, which is against the efforts taken by the governments.

    So far, the US and British governments have taken a series of fiscal and monetary policies to push banks to restore lending. Central banks in these countries have launched “quantitative easing” with an aim to increase money supply in the market.

    The financial system must also be less leveraged, the experts said.

    Improved risk management skills are required and there must be an end to the “go for broke” incentive systems, both for traders and for corporate chiefs, they said, adding that there should be limits on “wild” derivatives with better and safer capital requirements.

    In future, banks should clarify their business and be put under strict supervision.

    Alessandro Profumo, Chief Executive Officer of Italy's UniCredit Group, believes that banks in the future would specialise either in commercial activities such as deposit-taking and lending or in investment activities such as operating proprietary trading desks and underwriting derivatives, not both.

    Record amounts of food bought by WFP in South Africa

    Johannesburg - The United Nations World Food Programme (WFP) bought a record 552,000 metric tons of food in southern Africa in 2008 – the equivalent of providing nearly 2.75 million hungry people with a full food basket for an entire year.

    “These record purchases played a huge part in ensuring that WFP was able to provide timely and sufficient food assistance to millions of hungry people across Africa,” said Mustapha Darboe, WFP Regional Director for Southern, Eastern and Central Africa.

    The food agency announced last week that it spent US $ 190 million last year buying cereals, pulses, vegetable oil, corn-soya blend, salt and sugar in seven countries across the region.

    The bulk of the food was bought in South Africa, where WFP purchased 430,000 metric tons at a cost of US $ 141 million. WFP also bought over 30,000 metric tons each in Mozambique, Malawi and Zambia.

    Large surpluses in South Africa helped to make the southern Africa region a cost effective market for the purchase of food commodities for use in humanitarian operations across the continent. While most of the food was distributed to vulnerable people in southern Africa, WFP used substantial quantities to assist hungry people in emergency situations, including Somalia, Kenya, Democratic Republic of Congo, Chad and Senegal.

    The record purchases in southern Africa amounted to one fifth of WFP's total food purchases in 2008. The previous record was set in 2005, when WFP bought just over 500,000 metric tons in southern Africa for US $ 100 million, which when compared with the US $ 190 million bought in 2008, illustrates the massive increase in the price of staple foods.

    “At a time of high food prices, buying in southern Africa has still proven to be both cost efficient as well as extremely effective in supporting small farmers and traders and stimulating local agricultural economies,” said Darboe, adding that WFP was hoping to buy even more food directly from small-scale farmers in the coming years.

    In 2008, WFP bought food in South Africa (430,000 metric tons; US $ 141 million), Mozambique (35,000 metric tons; US $ 13.9 million), Malawi (32,200 metric tons; US $ 15.6 million), Zambia (31,700 metric tons; US $ 10.8 million), Lesotho (12,100 metric tons; US $ 3.8 million), Zimbabwe (6,200 metric tons; US $ 3.7 million) and Namibia (4,700 metric tons; US $ 1.1 million).

    Less red tape for EC shipping

    Transport without borders in Europe is the action plan adopted by the European Commission. The plan includes a number of legislative measures aimed at simplifying the movement of transport across Europe by tackling administrative issues and regulatory burdens imposed on shipping companies.
    “By making maritime transport more attractive and creating new openings for it, the proposed measures will lead to a more balanced use of transport modes, based on their own merits rather than on historically different administrative formalities; this will be beneficial for the environment and for the economy. The Commission considers that the necessary conditions for setting up a barrier-free maritime transport area are now in place and that relevant measures may be introduced in a staggered fashion between 2010 and 2013.” said European Commission Vice-President Antonio Tajani.

    According to the EC the creation of a barrier-free maritime transport area in Europe will help reduce the demand for road haulage, reduce freight forwarding costs and while preserving and promoting employment in marine transport across Europe. – source Maritime Global Net

    Giving new meaning to the term ‘Panamax’

    With the construction of new locks for the Panama Canal due to begin this year – the contract should be awarded by May – a whole new meaning will have to come into shipping terms with regards the expression ‘Panamax’.

    How these will be referred to specifically remains to be seen – ‘New Panamax’ sounds clumsy for the next era of Panamax and post-Panamax ships but in the meantime the Panama Canal Authority (ACP) has distributed a circular giving the exact dimensions that will come into effect once the locks are complete. Once this is achieved the canal’s tonnage capacity will have almost doubled.

    According to the ACP each new lock will consist of three chambers with dimensions of 427m long by 55m wide and a draught of 15,2m in tropical freshwater.

    “The corresponding maximum dimensions for vessels that will transit these locks are 366m LOA [length overall], 49m in beam and 15.2m in tropical freshwater draught. These dimensions define the new Panamax-size vessel,” said the ACP.

    On completion in 2014 ships currently described as post-Panamax containerships, Suezmax liquid-bulk tankers, Capesize drybulk carriers, and larger sizes of LNG carriers, passenger ships and other vessel types within the established dimensional limits, will be able to navigate the canal, says the ACP.

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