January 2017

Change likely in Turkey as Vitmar four move to Omni / Tradewinds

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

  • One tonne of carbon dioxide (CO2), or;
  • The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
  • The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
  • ~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
  • ~~9.000 * EUR 75 = EUR 675.000
  • ~~7.000 * EUR 75 = EUR 525.000
  • ~~4.000 * EUR 75 * 50% = EUR 150.000
  • ~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
  • For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
  • Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
  • The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
  • Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:

Shipowner insurance accounts are expected to be on the move as consolidation hits the Turkish market

January 26th, 2017 18:00 GMT  by Jim Mulrenan London
Published in WEEKLY

The insurance business of some prominent Turkish shipowners is likely to be on the move following a deal that sees the Vitmar team joining the Omni broking group.

The deal involves just four Vitmar brokers joining Istanbul-based Omni but amounts to a significant consolidation in Turkey’s close-knit marine-insurance broking market.

Vitmar numbers containership operator Turkon Line and capesize bulker owner Eregli Denizcilik among its clients, so these accounts are set to move to Omni.

The team heading to Omni is led by Bahri Mete and Tansel Tokgoz, founders and co-owners of Vitmar, which will now be wound down.

Omni is already the biggest of the Turkish marine-insurance brokers and has a number of overseas operations.

The GTG, Kuzey and Vitmar broking companies are smaller competitors to Omni but domestically focused. International brokers such as Marsh, Jardine Lloyd Thompson, Cambiaso Risso and PL Ferrari are also active in Turkey.

Omni chairman Aret Tasciyan said the Vitmar deal was a consolidation move, pointing to the Turkish marine-insurance market being on a similar path to larger competitors in London and other major centres, where mergers and acquisitions (M&As) have become a part of daily life.

Vitmar started in 2011 as a spin-off from the Vitsan Lloyd’s agency and protection and correspondents business.

Mete and Tokgoz are both former colleagues of Tasciyan, with the trio working together at Vitsan in the 1980s.

The Vitmar founders approached Omni some months ago to see if it was possible to join forces.

“It is becoming difficult for small brokers to survive, premiums are going down, freight rates are going down, everything is going down,” Tasciyan said.

Tasciyan adds that joining forces makes sense as Omni has strong relationships with hull underwriters in London and elsewhere as well as with the protection-and-indemnity (P&I) clubs.

“Getting clients is not the only challenge; you have to be able to place business on competitive terms,” Tasciyan said.

“For this reason, you need to establish close relationships with underwriters. That was the main reason they wanted to join us.”

Vitmar previously had a wholesaling relationship with the Edge broking group but this will now end.

The Vitmar four will be moving in with Omni’s existing team at its new headquarters within a matter of days.

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