Welcome back to SEA Watch with more updates and commentary on what’s happening in the world of shipping and marine insurance.
First we’ve got some news for you on the SEAsia team in Myanmar, a country where the lid is now off and billions of USD are being invested by both China and western countries. What’s happening now is a massive ‘jump start’ of what was - until recently - a moribund, state controlled economy run by some pretty unpleasant people. Things are already looking better and private ship owners and insurers are hot for a piece of the action, with SEAsia ready to assist.
Next on offer is an article on the serious need to stay abreast of IMO Convention updates by our Survey and Loss Prevention Manager, Capt Kunal Pathak. Kunal has just come back from Jakarta where he provided a presentation for well known insurance broker Willis customers on P&I loss prevention. His Power Point slide photos of ‘nasty ships’ (names deleted of course), were a bit of a shock for some of the audience as the ships depicted were all ‘in Class’ with valid flag state certificates on board. The indications are therefore that there’s still a market demand for ‘visually challenged’ surveyors who specialize in ‘selective photography’.
SEAsia’s Transport Liability claims specialist, Oliver Rentzow, has provided a short primer on the difference between the legal and contractual obligations of a Freight Forwarder when acting as either an agent or principal/NVOC in the transport chain. The impact is quite startling if a cargo loss or damage claim is then presented. Oliver has had to deal with claims where the insured Freight Forwarder really did not understand what his role was and then discovered, much to his horror, that his liability insurance was insufficient to provide cover. So have a read to make sure that both you and your insurance broker understand the difference and avoid an unpleasant and expensive surprise.
Our next article reports that our sister company, SeaProf Martime Executive Education, enjoyed another ‘sold out’ SeaProf/BI Key Elements of Shipping course last week with attendance of participants from many of Singapore’s top shipping and maritime service companies. We’re not quite sure what we’re doing right – along with the MCF/MPA 70% rebate and PIC 60% grant - but it must be good as people keep signing up for more. The next KES course is already ‘in planning’ for March 2014. Details will be announced in SEA Watch ASAP along with some new courses at intermediate/advanced level.
SEA Watch’s final offering for November is, by popular demand (as voiced to our GM, Colin Fordham, by SEA Watch readers attending a recent SSA dinner dance) the return of the Rubber Ducky Award. Some of you will remember that this was the award bestowed upon the Master responsible for the month’s most idiotic ship loss incident. Your editor has gone back to the “Costa Concordia” cruise ship loss for inspiration as its currently back in the news.
Read on and enjoy and we would like to hear from you as well. Is there a marine industry issue out there that’s puzzling or annoying you? Tell us about it by sending a note to firstname.lastname@example.org
SEAsia’s Network Partner in Myanmar:
SEAsia Myanmar/Myanmar Marine
SEAsia Myanmar’s parent company is Myanmar Marine, a long established marine services company headed by Chairman Tin Maung Lwin and now run by MD Capt Tin Gyi and General Manager La Min along with a competent team of marine surveyors and claims handlers. SEAsia has been working with Capt Tin Gyi and his crew for many years and they have always exceeded expectations, despite the difficult conditions which they faced in a country where even taking a photo of cargo damage was forbidden.
SEAsia Myanmar’s/ Myanmar Marine’s team in Yangon are shown in the accompanying group photo. From left to right (Front) Tin Tut, Capt Tin Gyi, La Min and (Back) Wah Wah Myat, Hnin Wai Lin, Tin Maung Myint and Su Myat Tin. CV’s and contact details can be viewed on the SEAsia website and include both Master Mariner and Marine Engineer qualifications together with details of formal survey and claims training and experience.
As we all know, the political and economic situation in Myanmar has changed dramatically in the past few years and billions of dollars are now being invested in gas field and port development along with hotels, manufacturing and education. This has resulted in a surge of imports along with the export of rice, logs and minerals together with inevitable damage claims and associated surveys as well as loss prevention work in the form of draft surveys and pre-load inspections.
The downside of the story is that there are still daily problems with archaic communications and internet systems so the daily challenges of prompt client reporting are far from over. It also seems that cargo lab analysis facilities are currently in short supply and shipper/consignee paper work is still suffering from slow processing by poorly equipped government offices (many still using manual typewriters from the 60’s) which are problems yet to be resolved.
On the upside, Capt Tin Gyi reports that the port authorities are now less restrictive in relation to vessel access and the use of camera’s and other equipment ,such as ultra sonic hatch testing equipment, which has recently been purchased by SEAsia Myanmar to meet growing demand. This significant change in official attitudes bodes well for a new and more efficient future along with a well deserved increase in prosperity and civil freedoms for the people of Myanmar.
As to SEAsia Myanmar’s geographic capabilities, prompt attendance can be accomplished at a wide range of Myanmar ports including Yangon, Thanlyin, Pathein, Sittway, Kyaut Phyu and Myeik. Survey and investigation experience extends to a wide range of activities including bagged rice tallying, sampling and load superintendence as well as cargo damage, collision investigation, hull damage repair and crew injury investigation and claims settlement in relation to Myanmar and other crew.
Vessel ownership by private companies in Myanmar is now permitted and this is a ship owning and operating market which is developing quickly along with the demand for associated services and insurance. SEAsia will be there and intends to grow along with Myanmar Marine and Capt Tin Gyi’s team as an integral part of Myanmar’s new economy.
‘Trim your sails’ to meet recent and upcoming IMO convention updates
The maritime industry is one of the most regulated industries in the world. One important reason is because of the sensitive marine environment which vessels operate in and associated political pressures. In the past, some IMO Conventions have come into force as a direct and reactive result of a maritime disaster (e.g. the “Titanic”) and more changes are already underway due to the “Costa Concordia” incident. Others have come into force, on a pro-active basis, to enhance operational safety such as the ISM Code. One thing for sure is that new conventions, protocols and resolutions in the form of Maritime Safety Committee circulars (MSC’s) will continue to be created and issued by the IMO. It is therefore essential for ship owners and managers to keep up to date or suffer Port State Control detention and worse.
This article provides an alert to the major IMO convention updates that have just come into force or can be expected to come into force in the very near future. For ease of understanding, the convention updates are set out below in accordance with the dates on which they have already or will later become effective. We have also included hyperlinks to take you to more information about these important changes.
From 1st January 2013, all new vessels over 400 GT, for which the building contract is placed on or after the 1st January 2013, or keel laid on or after 1st July 2013, or the delivery of which is on or after 1st July 2015, are required to comply with the MARPOL Energy Efficiency Design Index requirements (EEDI). So if you have new ship currently under build, then you must ensure full compliance with EEDI. The guidelines for survey and certification of the Energy Efficiency Design Index can be found in MEPC.214(63)
From 1st January 2013, all existing vessels over 400 GT are required to have a ship specific/tailor made MARPOL Ship Energy Efficiency Management Plan (SEEMP). Guidelines for preparing a SEEMP are contained in IMO Resolution MEPC.213(63). Further, vessel owners must ensure that the SEEMP is audited by the vessel’s Class surveyor during the 1st intermediate / renewal survey, which takes place after the 1st January 2013. Upon completion of the audit, Class will issue an International Energy Efficiency Certificate (IEEC), which must be kept on board, as it has now become a mandatory requirement by Port State Control.
From 1st January 2013, amendments to SOLAS/ LSA Code regarding the design criteria of lifeboat release and retrieval systems are applicable to both existing vessels and new builds. The amendments include hook stability, locking devices and hydrostatic interlock, if provided. For full details please see MSC.320(89) and other related circulars on Life Saving Appliances.
From 1st January 2013, amendments to SOLAS regulation II -1/3 - II relating to alternative means of corrosion protection of the cargo tanks of crude oil tankers came into force. Applicability is to all new crude oil tankers of 5000 deadweight and above, building contracts for which are dated 1 January 2013, or keel laying 1st July 2013 or delivery after 1st January 2016. The SOLAS requirements for performance standards for alternative protective coatings for cargo oil tanks for crude oil tankers are adopted by resolution MSC.289(87), which complements MSC.288(87) and details may be found at the IMO web page.
From 20th August 2013, the Maritime Labour Convention MLC 2006 came into force and applies to all commercially operated vessels over 500 GT operating in international trade. The MLC is a consolidating convention created by the International Labour Organization (ILO) as a replacement for a large number of earlier ILO conventions, which were found difficult to enforce. The MLC 2006 sets out a seafarer’s right to decent working conditions and is designed to cover every aspect of a crew-member’s life on board a vessel. Owners are required to submit a Declaration of Maritime Labour Compliance (DMLC) to their flag state authority who will then issue a Maritime Labour Certificate (MLC). Every vessel subject to the MLC 2006 is therefore required to have on board an MLC for production to PSC inspectors to evidence the fact that the vessel and her owners are in compliance with the MLC 2006. Owners should note that about 8 vessels have already been detained by PSC for failure to comply. For more information and a concise review of the MLC 2006 and owner’s obligations, please see the extract from the ILO’s website, alternatively readers are encouraged to read some basic facts on the MLC 2006 on the ILO website.
From 1st August 2013, the STCW Convention 1995 requires that all officers that are in charge of navigational watch on board vessels of 500 GT and over must be in possession of a valid Bridge Resource Management certificate and be able to demonstrate knowledge, understanding and proficiency in;
Allocating, assignment and prioritization of bridge resources.
Assertiveness and leadership.
Obtaining and maintaining situational awareness and
Consideration of team experience.
Full details are set out in STCW 2011 edition, Section A-II-1 and compliance is now mandatory. Additional information can also be obtained from the ITF document that provides guidelines for Seafarers on the STCW convention.
During 2014, the following new IMO requirements will come into force:
From 1st January 2014, Stability computers on board all passenger vessels over 120 meters to be provided with a shore interphase to provide support to the Master in case of flooding. Needless to say, this is an outcome of the “Costa Concordia” disaster. Details on the requirements can be found in MSC.325(90) and guidelines on operational information of the stability computers are mentioned here.
From 1st July 2014, plans and procedures for recovery of man over board will be required for all vessels. Guidelines for the development of plans are included in MSC.338(91).
From 1st July 2014, regulations for Protection Against Noise will come into force. Applicable to all vessel 1600 GT or more for which the building contract was placed on or after 1st July 2014. See MSC.338(91).
From 1st July 2014, regulations come into force allowing simulated operational testing during a renewal survey for free fall life boats as well as tests for the life boat on load release mechanisms on all vessels. See MSC.325(90).
In conclusion, it can be seen that there a number of regulatory changes ahead which will impact on the operation of vessels owned, managed or insured by many SEA Watch readers. Our advice is to keep a close eye on the IMO’s website and to sign up for their on-going notifications service as well as connecting to RSS feeds from the websites of the Flag States under which your vessels are registered. As noted above, the alternative is to suffer potential delay and loss of revenue if one of your vessels is detained by PSC. Even worse would be to suffer an unhappy scenario where an insurer might elect to decline a claim due to a breach of policy warranty in respect of maintaining a vessel to Class and Flag State standards.
The Role of the Freight Forwarder: agent or principal and what’s the difference?
Manufacturing companies routinely rely on the specialized services of freight forwarders to manage their transportation needs. In this regard, a freight forwarder is traditionally considered a middleman in the transportation chain as his role is often confined to the organization and procurement of the various modes of transportation available for cargo. The notion, however, that a freight forwarder is merely a middleman is not entirely accurate. A freight forwarder may act either in the capacity of an agent for the shipper/owner of the goods or as the principal contracting carrier, more commonly known as an NVOC (Non Vessel Operating Carrier). This important distinction attracts very different consequences in terms of a claim presented for cargo loss or damage. In the following article, we highlight the differences between a freight forwarder’s role acting as either an agent or as principal and the associated legal implications.
Agent vs. Principal?
As agent, a freight forwarder arranges for the transportation of goods by carriers on behalf of the shipper or owner of the goods. In this situation, the freight forwarder is merely contracting to make transportation arrangements on behalf of the shipper. The freight forwarder does not issue his own bill of lading. Thus, in the event of loss of or damage to the goods, the shipper’s claim must usually be against the carrier directly and not the freight forwarder.
As an agent, the freight forwarder may only be liable to the shipper where it fails:
to act with reasonable dispatch;
to exercise due skill and care in selecting carriers;
to follow the shipper’s instructions;
to communicate the shipper’s instructions to the carrier(s); or
to preserve the shipper’s interests.
However, if the freight forwarder/agent performs the above tasks properly, he will normally be able to avoid liability in the event of loss or damage to cargo by simply directing the claimant to the carrier or subcarrier who had physical possession of the cargo at the time of the loss.
As principal, a freight forwarder/NVOC assumes responsibility for the carriage whether or not he actually takes possession of the goods while acting as a carrier himself. In this situation, the freight forwarder contracts as the actual carrier of the goods. Consequently, the shipper is in a direct contractual relationship for the carriage of goods with the freight forwarder/NVOC. This is evidenced by the bill of lading issued by the freight forwarder/NVOC which is generally known as a “house bill” and will normally include the name of the freight forwarding/NVOC company at the top.
In addition, a freight forwarder contracting as principal (NVOC), will have to meet the carrier obligations which will be set out in the house bill. In particular, where a carrier receives cargo in good order and condition, it is responsible to deliver that cargo in the same good order and condition. Where there is a loss, the NVOC carrier will be held liable directly under the terms of the house bill, subject always to the exemptions and limitations of liability contained in the house bill.
Importance of Identification of a Freight Forwarder as Agent or Principal
Generally speaking, if the freight forwarder acted as only as agent for the shipper, then the shipper’s claim must be directly against the carrier or sub-carrier since the shipper is in a direct contract of carriage relationship with the carrier. Accordingly, if the carrier or sub-carrier does not have insurance, has insufficient insurance or has no tangible assets, the shipper may be left without a remedy.
If the freight forwarder contracted as principal (NVOC), then the shipper may claim directly against the freight forwarder/NVOC for the loss irrespective of whether or not the freight forwarder/NVOC was in possession of the goods at the time of the loss. The freight forwarder/NVOC must then settle directly with the claimant under the terms contained in the house bill and may then seek recovery against the sub-carrier who was in physical possession at the time of the loss.
Awareness of the distinction between a freight forwarder’s role as agent or as principal (NVOC) becomes particularly important when cargo loss or damage occurs. Not only does this role define the legal relationship between parties, but it will also establish the liabilities and defences available to the parties. In summary, the identification of the role of the freight forwarder as an agent or principal may be accomplished as follows:
An NVOC acts as the contractual carrier while a freight forwarder/agent (as an ‘arranger’) does not.
An NVOC issues a bill of lading while a freight forwarder/agent does not.
An NVOC is responsible for loss or damage during transit while a freight/agent forwarder is not.
Equipped with this understanding, shippers, freight forwarders, NVOC’s, carriers and sub-carriers should always confer with their brokers to ensure that they have adequate insurance to cover their activities and liabilities if the cargo transport exercise goes wrong. The alternative is to be faced with a potentially unpleasant and expensive surprise.
Key Elements of Shipping – successful 7th run of a now iconic course
The BI/SeaProf Key Elements of Shipping course was run in Singapore from 22 – 24 October and was once again ‘sold out’. Attending participants from top shipping organisations and service providers in Singapore included Odjfell Asia, Nordea Bank, Konsberg Maritime, Western Bulk and many other name brand companies.
The course is intended as a fast track learning experience for those who are new to the marine industry as well as those who would benefit from an ‘industry refresher’ on the latest trends and developments in a currently difficult and highly competitive business. The participants on the October course certainly reflected a wide range of experience which always makes for some interesting group case work participation and networking.
The course director, Assoc Prof Cathrine Bjune from the BI Norwegian Business School, kicked off the programme with an introduction to the business of shipping and ownership along with the regulatory aspects of shipping. This was followed by a session from Capt Robert Gordon, MD of SeaProf, on ship tonnage and types along with the strategy of vessel flagging.
Other Key Elements course sessions included topical presentations and interactive case studies provided by Asst Prof Dr Jasmine Lam from NTU, Nicolai Frederiksen from ship brokers Fearnleys, Erlend Lous from lawyers Simonsen Vogt Wiig, Tom Zachariassen from shipping bank Nordea, Lewis Hart from insurance brokers Willis, Stein Kjolberg from high tech coatings supplier Jotun, Rune Steen from ship owners Masterbulk, Gunnar Haug from offshore ship builders Ulstein and Geir Fuglerudd from DNV Clean Tech.
Cathrine Bjune, who is also a Norwegian maritime lawyer, lectures on the NTU MSc in Shipping course in Singapore as well as at the University of Strathclyde. Robert Gordon is a former shipmaster and English maritime lawyer who is also the MD of SEAsia Claims Services, well known regional P&I correspondents. Cathrine and Robert have been working together for many years in the provision of maritime executive education, inclusive of university based programmes run in Vietnam and Indonesia. Their goal for 2014 is to expand the range of Key Elements learning available by offering intermediate and advanced courses as well as to take Key Elements to Jakarta.
On completion of the course, BI Certificates of Achievement were awarded to participants by Cathrine Bjune and her BI colleague, Prof Torger Reeve, former President of BI. Prof Reeve is a long standing consultant to the Singapore MPA on training and education issues and was in fact in Singapore to attend at an MPA committee meeting. As always, the course finished with a drinks reception at the Fabrika roof top lounge at the Klapson’s hotel which was also attended by a number of BI alumni to catch up and relax with other BI contacts. Photos are available on the SeaProf Maritime Education Facebook page.
Planning for the Key Elements of Shipping course for Spring 2014 is now underway and the dates will be announced very soon. As always, content is being reviewed to ensure that it responds to participant needs and suggestions. Not surprisingly, there is a significant demand for more about the offshore industry and there will be a greater focus on this important subject during future courses.
The Rubber Ducky Award: Capt Schettino, Master of the “Costa Concordia”
Yes, it’s an aged story now but recent developments have put the “Costa Concordia” cruise ship grounding and capsize back on the front page of the maritime media along with the idiot behavior of her Master, Capt Schettino (a.k.a. “Chicken of the sea”). As SEA Watch was dormant when it all happened, it now seems a great opportunity to re-visit one of the dumbest and most expensive ship casualties of all time.
As a quick recap, the “Costa Concordia” a 2006 built cruise vessel valued at about USD 500 million, was driven onto a charted reef off the small island of Giglio in Italy on 13 Jan 2012. The grounding was due to the negligence of her Master and bridge officers who were obviously all paying a lot more attention to the Master’s current hot blonde Moldovan dancer companion than the navigation of the vessel. A huge hole was torn in the ship’s side which quickly resulted in flooding and capsize with the loss of 32 lives. Capt Schettino then went on to secure himself a place in history by abandoning ship in a lifeboat, leaving his passengers behind to fend for themselves. Schettino’s incredulous explanation was that he had “fallen” into the lifeboat and was unable to get out.
The vessel was quickly assessed as being a CTL (Constructive Total Loss) and the wreck removal – due to marine park environmental restrictions requiring the wreck to first be up-righted, re-floated and towed away for scrapping – has become the most expensive wreck removal in the world with the liability bill now approaching USD 1 billion. As the wreck has just recently been up-righted, there’s still a lot more to come.
As for Schettino’s merry crew, four of them were charged with manslaughter along with one of the managing company’s executives (Schettino had performed his coast hugging ‘salute to the island’ stunt several times before and Costa Cruises knew about it). They all opted to plead guilty in exchange for relatively short ‘plea bargain sentences’ rather than face trial, l with Costa paying USD 1.3 million in fines.
Schettino’s criminal trial is running now as his application for a plea bargain deal and sentence was denied. However, it’s been delayed by a court order to further inspect the vessel as Schettino’s defence is that the sinking and capsize was not his fault but was instead due to faulty water tight doors. As your editor sees it, this is a bit like saying, “Well, I know that my reckless driving was the fault of the car crash and I know that I should not have run off afterwards but – technically - my passenger died due to what I think was a seatbelt fault”. So will the Italian court see through this arguably tenuous defence and find Schettino guilty of manslaughter as charged? We shall see and no doubt the IG Clubs and the Lloyd’s market will be watching closely.
Bearing in mind the immensity of Capt Schettino’s incompetence with respect to his navigational skills – including a complete disregard for mandatory Passage Planning and the ISM Code - as well as his truly cowardly aftermath behavior, he deserves formal recognition by way of the award of the SEA Watch ‘Rubber Ducky Award’. Indeed, it seems unlikely that Schettino’s stupidity will ever again be matched. Nonetheless, we shall stay always alert as part of SEA Watch’s on-going quest for the next deserving and truly stupid ‘Rubber Ducky’ candidate.