Swedish Club urges rivals to pool resources ahead of shipping’s next crisis

Rival protection and indemnity clubs should work more closely to try to forecast and adapt to the next major crisis after several years of geopolitical upheavals hit shipping markets, the head of the Swedish Club told TradeWinds.

Managing director Thomas Nordberg said a series of looming issues, including the impact of rapidly changing geopolitics, the development of artificial intelligence and cyber threats, would benefit from P&I clubs putting aside rivalries to pool resources and expertise.

Nordberg was speaking at the Swedish Club’s annual meeting where discussions focused on the impact of geopolitical events including attacks by Yemen’s Houthi group against shipping in the Red Sea and sanctions linked to the continuing war in Ukraine.

Nordberg said the insurer, like other clubs, spent time and money and used outside consultants to try to “see what’s around the corner”.

“Once we have collected the information, we do separate assessments of what that information means for us and then we try to sort of convert that understanding into something that goes back to the membership and to the market.

“And I think that’s one area where we could probably benefit from coordinating our efforts. We don’t really need to compete in all areas of our activities.”

He added: “Perhaps as a result we could have a more uniform approach to the market and a more uniform reading of the situation.”

Nordberg said he had favourable conversations with the heads of other P&I clubs about his proposals. He said the work could be carried out at the 12-strong International Group of P&I Clubs or by a standalone company set up by the clubs.

The challenges were highlighted at the meeting in Gothenburg, Sweden, by Clarksons data that highlighted the impact of the Houthi attacks, sanctions and the likely vast cost of renewing the global fleet with the drive to decarbonise.

The 70% cut in tonnage through the Suez Canal and Red Sea and diversion of maritime traffic around the Cape of Good Hope has added 2.9% to shipping demand, the equivalent of a typical year’s growth, Clarksons Research managing director Stephen Gordon said.

Unforeseen impacts have included the outsized impact on the container shipping sector. The extra miles travelled because of the diversions have flipped the anticipated oversupply of the market into one where demand has supported strong freight rates, he said.

Nordberg took over as managing director of one of the smaller members of the International Group at the start of 2023.

He has overseen a turnaround for the club, which reported an improvement to its free reserves in 2023 of $34m to $184m.

In his first year — which he describes as a “nice and interesting journey” — he has moved experienced staff to key regional offices including London and Hong Kong. More than 50% of the club’s portfolio is now in Asia.

Nordberg said he was also focused on getting back the club’s “A” rating with S&P, which was lost in October 2022 after two years of poor underwriting results. In March, the agency said the club’s financial position was likely to strengthen because of the management changes and its wide geographical footprint.

Strong reported results from members of the International Group have dampened speculation about further mergers following the NorthStandard tie-up last year, and Nordberg said he had no instruction from the board to look at other deals.

But he said another merger within the International Group could change the dynamic if it resulted in a third major player, alongside Gard and NorthStandard, which came to dominate the P&I scene.

“So that will force all the remaining clubs to think, well, what should we do now? Because the three big ones will then … act on their size.

“It’s also my job to protect the Swedish Club and its membership. And if we see that things are happening in the industry that could impact or threaten our existence, or the way that we can interact with our membership, then it’s my job to have a discussion with the board about that.”