P & I Clubs

What is P&I Insurance?

P&I stands for Protection and Indemnity. P&I is insurance in respect of third party liabilities and expenses arising from owning ships or operating ships as principals.

What is a Mutual or Club?

An insurance mutual, a Club, provides collective self insurance to its Members. The membership is comprised of a common interest group who wish to pool their risks together in order to obtain "at cost" insurance cover.The UK P&I Club, as a "not for profit" mutual, is therefore owned by its insureds. As it has no shares to issue, it does not need to make a profit or pay dividends.

The UK P&I Club

The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited - generally known as the UK P&I Club - is one of the oldest P&I Clubs. It is also the largest mutual marine protection and indemnity organisation in the world. The UK P&I Club insures nearly one fifth of the world’s total ships .

As a mutual association, the UK P&I Club has no outside shareholders and no financial links with other organisations. It exists solely for the benefit of its Members. As a mutual insurance association, the UK P&I Club is able to offer superior service, attention and coverage to its assureds.

The UK P&I Club is directed by the members themselves. Overall control of the Club lies with the Directors, who are elected by the Clubs' Members from amongst themselves. The Directors normally meet four times a year to formulate policy on calls, the scope of cover, finance and current industry issues affecting the P&I world. They resolve specific claims which may not fall clearly within the cover.

In almost all ports of the world, on-the-spot help and local expertise is always available to Members, and to the masters of their ships, from the Club's correspondents.

The Advantages of Mutuals over Fixed Premium Insurers

The P&I Clubs provide at cost insurance without profit. Fixed premium insurers aim to make a profit for their shareholders.

P&I Clubs have existed continuously for more than 140 years. Fixed premium insurers have no convincing track record of commitment to P&I insurance.

P&I Clubs provide the most comprehensive cover available including the right of the board to cover "omnibus" claims.

Importance of Marine Container Logistics strategies

Since the beginning of containerization , the shipping industry has shown enviable developments in increased productivity, vessel capacity, speed ,safety , reduction in service time and cost. Despite these achieved efficiencies, marine container logistics has been suffering from severe trade imbalances between the major trading regions..

Projections indicate that the container fleet size as well as the vessel size will continue to increase as the order book of all major carriers are quite big , though the present economy slow down will delay the release of new builds further. This is a clear indication that the volume of empty container need to be handled in future will increase considerably.

The problem of trade imbalances and repositioning of empty container will continue to be a serious transportation logistics issue. As per the available stats regarding strong trade imbalance between Trans pacific , Trans Atlantic and Asia Europe trades , the exports from Asia , the world’s factory, to America and Europe are 15 % and 9% respectively. Whereas the imports from the respective regions to Asia is 5% and 3.5% only.

India’s container handling capacity for international and domestic traffic is expected to reach 21 million in 2014, up from 9.1 million in 2008 according to Frost & Sullivan analyst’s report “ Strategic Assessment of Containerization Trends in India”. Our container trade registered an impressive double digit growth of 23% during the year 2007-08. With Indian trade growing 11-12% per annum, the insufficient port and other related infrastructures, will result in increased port congestions at major ports and will adversely affect container shipping industry.

Similar to the international container shipping industry, Indian ports too face serious trade imbalances and equipment storage, repositioning issues. The problem of import , export imbalance is very high in southern ports of Cochin , Mangalore and Tuticorin due to seasonal cashew imports from Africa. The east coast ports, Chennai and Kolkata too have similar issues.

To minimize the port / depot congestion and the equipment dwell time , carriers are forced to make logistic vessel calls to evacuate the excess equipments. Due to insufficient port / depot infrastructure and poor logistics management strategies of the carriers, the whole process of evacuation used to be cumbersome , time consuming and expensive. This situation demands for an empty container management strategy which rationalizes the repositioning, storage and maintenance of empty containers in major importing regions.

India’s productivity growth is very strong and this is surely an indication of the robust growth of container shipping industry as well. In the present economic scenario, India is emerging into the spot light due to the stable economy and steady growth rate. Also the upcoming Vallarpadam International Transhipment Terminal and the proposed Vizhinjam terminal is expected to position India as a transshipment hub .To maintain the present momentum and ensure the future growth, the container shipping industry must take measures to strengthen the overall logistics chain.