SHORTAGES

CONTAMINATION

Provisos to P&I cargo risks covered:

Contract of carriage should be subject to Hague /Hague-Visby Rules

Cargo should only be delivered at the port named in the B/L

Cargo should only be delivered upon production of the original Bs/L

Bs/L should not be antedated or post-dated

Bs/L should contain a correct description of the cargo, quantity and condition

Loss, shortage, or damage to cargo for which the shipowner is legally liable

Additional costs / expenses incurred discharging or disposing of damaged cargo for which the shipowner is legally liable

Additional costs and expenses incurred in order to minimise a potential claim for which the shipowner is legally liable

SHORTAGE CLAIM FOR 700 MT BASED SHORE TANK FIGURES – 500,000 USD /-

ROB – INNAGE REPORT ISSUED JOINTLY BY CCIC / P&I SURVEYOR 200MT – SIGNED BY SHIP’S CHIEF OFFICER –

REMARK – UNPUMPABLE/ UNREACHABLE / NON LIQUID

SOUNDINGS TAKEN ONLY FROM AFT MMC POINT

50% LOADED IN ODESSA / UKRAINE

50% ALLOCATED LOADING AT KERCH / UKRAINE – VIA TRANSHIPMENT VESSEL – STORAGE TANKER

STORAGE TANKER TAKES UNJUSTIFIABLY PROLONGED PERIOD TO LOAD THE CARGO AND DELIVERS ONLY 20% , RESULTING IN DEADFREIGHT CLAIM

CARGO IS COMINGLED – LOI ISSUED BY CHARTERERS

1ST FOOT SAMPLE TAKEN AT COMMENCEMENT OF LOADING ( JOINTLY WITH CHARTERER’S & P&I SURVEYORS ) AT ODESSA

COMPOSITE SAMPLE TAKEN OF 50% CARGO LOADED AT ODESSA - SAMPLE LIST SIGNED OFF BY ALL PARTIES

THEN- COMPOSITE SAMPLE OF COMINGLED CARGO TAKEN AFTER 2ND LOADING AT KERCH

LIABILITES TO CHINESE RECEIVERS AND THEIR CARGO INSURERS UNDER THE MASTER’S / OWNER’S B/L

TRY AND MITIGATE / MINIMIZE LOSSES

REVIEW JURISDCITION / LAW LIMITATIONS ARISING ( LONGKOU / CHINA )

POTENTIAL RECOVERY FROM CHARTERERS UNDER LOI OR CHARTER PARTY (?)

IN CHINA – DELIVERY FIGURES ASSESSED ON THE VESSEL ‘S CALCULATIONS (I.E. ALL RISK ENDS AT THE VESSEL’S MANIFOLD ) –

COMPARE WHAT WAS LOADED IN ODESSA / KERCH WITH WHAT WAS RECORDED LONGKOU- ( ULLAGE REPORTS / TEMPERATURES / DENSITIES/ ETC ) -

SHIP/SHORE DIFFERENCE AT LOADING SHORTLOADING ? LESS THAN 0.2% WITH VEF -

CLAIMANTS CONCEDE THAT 500MT OF TH E SHORTAGE FIGURE WAS POSSIBLY DEFENSIBLE WAIVING 325,000 USD OF THEIR CLAIM

BUT – IN EXCHANGE MAINTAIN THEIR CLAIM ON THE 200MT “ UNPUMPABLE SLUDGE “ I.E ( 130,000 USD )

LEGAL POSITION IN CHINA – IF “UNPUMPABLE SLUDGE RECORDED “ THEN SHIP MUST TAKE EXTRAORDINARY EFFORTS TO DELIVER THE CARGO , FAILING THAT COMPENSATE THE CLAIMANT

WAS THE CARGO REALLY LIQUID OR NON LIQUID WHEN GAUGED IN LONGKU / CHINA ?

WAS THE CARGO ADEQUATELY HEATED THROUGH OUT THE VOYAGE ?

WAS THE VESSSEL ADEQUATELY TRIMMED DURING FINAL STRIPPING ?

MASTER BELIEVED THAT THE STORAGE TANKER LOADED “ SLUDGE DRAININGS “ AT 2ND LOAD PORT

HAD THE LONGKU SURVEYORS GAUGED ALL MARPOL GAUGE POINTS OF EACH TANK ( PARTICUALRLY FORWARD ) – THEY MIGHT HAVE DISCOVERED A NIL INNAGE THROUGH OUT THE TANK ? ( VESSEL BEING TRIMMED 4 M X STERN DURING THE FINAL STRIPPING PROCESS ) HAVING GAUGED ONLY THE AFT MMC - LONGKOU SURVEYORS ASSUMED THAT “ UNPUMPABLE SLUDGE “ WAS SPREAD THROUGHOUT THE TANK – RESULTING IN SIGNIFICANTLY HIGHER ROB – ( WEDGE FORMULA)?

INHERENT QUALITY DEFECT IN EITHER ONE OR BOTH OF THE PARCELS

HOW DO WE PROVE IT ?

COMPARE SAMPLE OF WHAT WAS DELIVERED IN ODESSSA POUR POINT / CLOUD POINT / DENSITY / VISCOCITY ETC

COMPARE SAMPLE OF WHAT WAS DELIVERED IN KERCH

UNFORTUNATELY NO MANIFOLD SAMPLE AT KERCH !!

SHORTAGE OF 45 MT SOYA BEAN OIL IN ZHANJIANGANG CLAIMED BY CCIC SURVEYOR

60,000 USD CLAIM BASED ON DENSITY EVALUATED BY ANALYSIS BEING CONTRARY TO THE DENSITY TABLE USED BY ARGENTINIAN SHIPPERS AND CHINESE RECEIVER’S IN LANSHAN AT THE 1ST DISCHARGE PORT

FUTURE LOSS PREVENTION - ? CLAUSE B/L TO REFLECT DENSITIES USED AT SHIPMENT ?

SHIP/ SHORE QUANTITY DIFFERENCE SOYA BEAN OIL

0.2 % – 0.3 % OF MATES RECEIPTS / B/L QUANTITY PROPOSED BY SHIPPERS

AT 45,000 MT 0.3 % = 135 MT ( 1300 USD /MT)

175,500 USD POTENTIAL LOSS CLAIM AT DISCHARGE

MULTIPLE MATES RECEIPTS

MASTER’S LETTER OF AUTHORISATION TO THE AGENT

THREAT OF COURT ACTION BY SHIPPERS

COMMERCIAL PRESSURE

TIMELY ASSISTANCE FROM P&I SURVEYORS ?

REFUSE TO SIGN MATES RECEIPTS / B/LS TIME HIRE TO COUNT (ENGLISH LAW ) NO PARTY CAN FORCE A MASTER TO ISSUE DISCREPANT B/LS FOR AN INCORRECT QUANTITY IF THROUGH REASONABLY ACCURATE MEASUREMENTS ( ULLAGES / DRAUGHT SURVEY ) HE BELIEVES NOT TO HAVE BEEN SHIPPED PRESERVE A PAPER TRAIL OF EVIDENCE IN ALL COMMUNICATIONS WITH CHARTERERS OR SHIPPERS TO ASSIST RECOVERY FROM CHARTERERS

LOADED A310 AND A180 NAPHTA

SIGNIFICANT SHORTAGE 0.5% WITH VEF RECORDED ON A180 NAPHTA -

150 MT DISCREPANCY 150,000 USD POTENTIAL LOSS CLAIM

GENERATED BY USE OF PRE 1980 OUTDATED TABLE 6 / 54 ASTM TABLES

LOADED LS DIESEL ( FP 145 f) JET ( FP 110 f) SIGNIFICANT LOWERING OF FP ON PARCEL OF 2000MT OF JET IN 2 CARGO TANKS ESTIMATED LOSS VALUE 2 MILLION USD TANKS CLEANED IN ACCORDANCE WITH CHARTERER’S INSTRUCTIONS BUT RECORDED SW FOLLOWED BY FW WASH STRIPPED & DRAINED

PRESHIPMENT OR SHIPBOARD LIABILITY ? MANIFOLD SAMPLES ? FIRST FOOT SAMPLES ? HOW LONG BEFORE THE PROBLEM WAS DISCOVERED SAMPLING POINT ? REPRESENTATIVE SAMPLES ? PREVIOUS CARGO – MOGAS / GASOLINE LIGHT DISTILLATE LOW FP – VAPOUR MIGRATION? TANKS ADEQUATELY PURGED (IG) – GAS FREED ?

IF NO STORAGE AVAILABLE TO DISCHARGE BACK TO TERMINAL ?

LOSS OF TIME / HIRE ? ( 3 days ) 75,000 USD ?

TRANSHIPMENT COSTS ( CHARTER IN TANK BARGE ) 100,000 USD

REPROCESSING COSTS 200 USD / MT ( 400,000 USD )

MORE THAN 3 TO 4 VESSELS INVOLVED

24,000MT OFF SPEC GAS OIL - OFF COLOUR / MICROBIOLOGICAL CONTAMINATION

CLAIM 4 MILLON USD SINCE DAMAGED CARGO WAS REDELIVERED TO ORIGINAL SHORE TERMINAL IN HOLLAND

OUR VESSEL RECEIVED THIS CARGO EX SHORE TERMINAL FROM 2 TANK BARGES AND A SEAGOING SHIP IN ADDITION TO SHORE TERMINAL ( DIRECT )

PARCELS WERE COMINGLED THROUGH OUT ( UNDER CHARTERER’S LOI)

CLAIMANTS FAILED TO PRESERVE THE SHORE TANK SAMPLES BUT MADE TRANSHIPMENT VESSEL SAMPLES AVAILABLE

CASE DEFENDED ON BASIS OF A SINGLE FT SAMPLE FROM OUR VESSEL ( PRESHIPMENT QUALITY )

Trading at 1200 USD / MT - parcel 2600 MT

Contaminated with 1 MT of MTBE –

CTL value 2600 MT = 3.12 million USD

Downgraded to crude coolant

Loss exposure approximately 1.5 million USD

Potential additional losses on freight , demurrage, lost hire , handling

Trading at 1200 USD / MT - parcel 3000 MT

Contaminated with 4 MT of PX –

CTL value 3000 MT = 3.6 million USD

Salvage – 900 USD / MT

Loss exposure approximately 900,000 USD

Further 600 MT contaminated in shore tanks during discharge

Independent tank and manifold lines were used to discharge PX at the previous terminal, and segregated blanked common lines used to discharge MEG.

MEG lines could not have retained 4 MT of PX in common lines or Tanks ( Volume Calculation )

MARPOL – MT ROB Certificate , Gas Chromatography Mapping certificate

2 Chinese ships discharging PX that day

A contamination may be defined as:

''the observed alteration of the quality of a particular product due to the ingress (and subsequent detection) of an alien substance”

Proper load and discharge plans

Ensure tank, valve & pipeline integrity

Ensure heating system integrity

Evidence – physical, documentary and testimonial

Claused Bs/L

Manning

Competent and trained crew

Safety management system

Maintenance

Ship

Equipment and machinery

Tanks

Tank openings

Pipeline & valve systems

Cargo pumps

Heating systems

Gauging systems

IG systems

Tank cleanliness , washing , purging , gas freeing , mopping – Verweys,Shell, BP, Miracle Guides ?

Integrity of nominated cargo tanks, pumps, lines, valves and fittings

Integrity of adjacent cargo, ballast and slop tanks

Key meeting

Loading plan / sequence

1st foot samples

Regular manifold samples

Appearance of the cargo

Heating systems

Co-mingling

Quantity – ullage, density, temperature

Weathertight tank openings

Daily ullaging

Heating systems

IG systems

Discharge plan / sequence

Trim

Heating systems

Samples

Quantity – ullage, density and temperature

Empty tank certificate

Samples

Type – first-foot, top, middle, bottom, dead-bottom, running, composite

Source – tank, manifold, pump

Method – compliance with industry practice

Representative

Sealed

Labelling

Storage

Statement of Facts

Ullage reports

Hold cleanliness and empty certificates

Sampling logs and certificates

Cargo rate books

Loading and discharging plans

Independent inspectors’ reports

Pumping and pressure logs

COW log

Statements

May be very important in determining who did what and when e.g., whether the ship or shore failed to follow the load or discharge plan

May provide additional information which will allow an expert surveyor to determine what has actually happened

Should be obtained as soon as possible after the incident

Request to co-mingle cargo onboard

Bill of lading

Description of cargo

Quantity

Quality

Charterparty terms

Shipper/charterers instructions

Risk assessment

Master should retrieve the Bs/L and re-issue

Shipper / charterer may offer LOIs

Reformate ? Condensate ? Naphta ? Mixed Aromatics?

Grants Whiskey with Grants Whiskey

Co- Mingling ?

Grants Whiskey with Bells Whiskey

Blending ?

Whiskey with Gin

Simple Mixing ?

Bill of lading

Description of cargo

Letters of Indemnity ( LOI) Owners are often asked to do things that may breach the

provisos of their P&I cover in return for a LOI: Variety of circumstances – some are legitimate, others are

not Commercial decision for Owners Only as good as the authority and / or creditworthiness of

its issuer Enforceability May replace, not supplement P&I cover Careful consideration / drafting required Risk analysis Alternative options