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Exporters warned of likely high war risk insurance

KARACHI (February 17 2003) : Shipping lines have cautioned exporters of a sudden and high war risk insurance for vessels calling at ports in the Arabian/Persian Gulf (APG) in the event of breakout of hostilities against Iraq.

Maersk Sealand, a leading shipping company, responding to queries from exporters said that the underwriters can change actual insurance premium providing only 48 hours' notice and such additional war risk premium therefore tends to come without any pre-notice.

Based on past experience, it is highly likely that war risk premium for vessels calling in the APG region will go up dramatically, should an engagement take place against Iraq.

Responding to a query about which ports would be affected by escalating tension against Iraq, the shipping line said that it would very much depend on the level of escalation.

“We have, therefore, put a contingency plan in place, based on which we have the option of holding back cargo before entering potentially difficult area without risking significant extra cost to the shippers,” the company said, adding that the Line operates with two regional transhipment hubs in the Middle East, improving its flexibility.

In case certain ports become difficult, to call at Salalah Port located outside the Gulf in Oman will be a likely option.

It further said that if cargo needs to be deviated the Line will contact the cargo owners to agree on the best solution for the particular cargo.

The shipping line has advised its customers to place the cargo in the hands of a trusted line like Maersk, which has offices in all major cities of the Gulf and Middle East and is able to ensure a swift and efficient co-ordination even if the situation escalates.

The notice has been issued after the shipping line received questions daily from its customers who wanted to know how further tension in Iraq will influence shipping activities to and from the Middle East region and to what extent the an escalation of tension will affect ships' traffic in the region.

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