Brexit, diversification, freight recession, concern P&I Club chiefs

Broker JLT asked all the P&I Clubs a number of questions for part of their annual review. Here is the response of the first five groups to the question In the longer term, what are the major potential new challenges facing the club?. The responses of the other eight groups will be posted over the next couple of days.

1) Joe Hughes, CEO of American Club, said that the Club did not perceive any entirely new challenges beyond those not already evident in the present business environment. “An unending freight market recession, prolonging itself beyond current expectations, would be a challenge for all clubs, as would a new global economic slump, which would damage the capital markets and world trade generally”, he said.

2) Britannia Club CEO Andrew Cutler said that working through the implications of Brexit, dealing with competition from new P&I providers – particularly in Asia – and applying enhanced IT for our members’ benefit, were challenges. “In addition, freight rates continue to be poor, with owners being forced to make deeper savings in all areas of their business.” Cutler said that for all P&I clubs the challenge — given that they are a cost to their members’ business – “is to add increasing value while ensuring rates are fair and sustainable”.

3) Gard CEO Rolf Thore Roppestad said, without elaborating, that the major challenges were liability regimes, increased levels of regulatory pressure and growing protectionism.

4) Japan Club said that diversification into new correlated business areas were a challenge for the Club. “Diversification may spread risk and provide alternative income sources, but there is a risk that mutual membership may be exposed to the financial failure of diversified activities”, the Club said.

5) London Steam-ship CEO Ian Gooch said that the newest issue was the potential uncertainty arising from the vote in the UK to leave the EU. “It looks like it will be some time before the implications are clarified, and it’s something which receives close attention”, Gooch said.