Welcome back to SEA Watch with more updates and commentary on what’s happening in the world of shipping and marine insurance.
We’ve got some interesting and thought provoking ideas for you on loss prevention as well as some black humour on the unexpected perils of drug smuggling.
Our first article reports on the on-going problem of dodgy crewing agents and fake Certificates of Competency, flag state endorsement failures, the costly consequences and what crew HR managers and P&I Clubs need to do to ensure they don’t get caught.
Next on offer is a novel but practical method of avoiding rain water damage to cargo and big claims while loading and discharging. It works and it doesn’t cost anything other than the exercise of some brain power and shipboard management.
Our third article provides an update on the SEA Asia Vietnam team based in Ho Chi Minh City, with branch offices in Hai Phong and Hanoi. Vietnam is not an easy place to work and Mr Hoang and his crew can smooth the way with pro-active loss prevention and innovative solutions if it goes wrong.
Our fourth article focuses on Nickel Ore, often described as “the World’s deadliest cargo”, with 6 vessels and 66 crew deaths on its loss score card. The IMO have just published some new amendments to the ISMBC Code. Will they help? We doubt it and we instead offer a pragmatic loss prevention strategy for saving ships, lives and massive claims.
Last month we reported on the arrest of the “STX Alpha” by bunker suppliers in Singapore to force payment by owners for a bill not paid by time charterers. Part 2, as now provided by our fifth article, sets out our tactical plan designed to help owners avoid the delays and heavy costs of these disruptive and arguably illegitimate arrests.
Our last article is a bit of entertainment by way of a report on an Italian Custom’s chase of an illegitimate Hashish cargo through the Mediterranean and its bizarre finale. It comes complete with a hyper link to You Tube so you can watch the action.
Finally, don’t forget the SEA Prof/BI Norwegian Business School “Key Elements of Shipping” course scheduled for 22-24 October in Singapore. Details and a hyperlink occupy the last slot of this month’s SEA Watch so click on and sign up for some uplifting fun and education.
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
Fake Ship’s Crew Certificates of Competency (COC’s) still pose a serious risk
Fake COC’s are still a major problem despite a warning issued by the IMO several years ago and the current downturn in shipping. Why? Well, financially strapped ship owners are always looking for ways to save money. Some are then tempted to turn a blind eye when dodgy crewing agents offer cheap rates for ‘qualified crew’ supply.
Based on our own casualty control experience, the results can be catastrophic with resulting ship collisions, capsizing, massive cargo losses and crew deaths just a part of the ensuing mayhem and huge liabilities. What’s the other part? Well, a Master and crew with fake COC’s are deemed legally incompetent and vessel manned by incompetents is not seaworthy. So her owner can probably kiss their insurance cover goodbye while contemplating their crew cost bargain and recalling that old adage, “If you pay peanuts, you get monkeys.”
The scope of the global fake COC problem was highlighted in an IMO circular published in Sept 2010 (Access here). The numerous fake COC detections reported by several open register flag states was quite shocking. Myanmar and Georgia (as source of fake COC’s) were at the top of the fake COC ‘awards’ list with Indonesia worthy of a ‘special mention’. And this was just the tip of the fake COC iceberg as the IMO review did not include the findings of the many other flag registers operating in the world today who evidently failed to respond to the IMO’s enquiries for data. Our bet is that in many cases (particularly FOC’s) they didn’t reply because they were not checking COC validity, as the STCW Convention (Para 3 Sec A-I/2) requires them to.
Has anything changed since 2010? Regrettably, not much, despite the recent SCTW Manila Amendments which included a requirement that COC’s endorsements (permitting foreign COC’s to be used on board another flag state’s ships) are now only to be issued by “Administrations”. But what does that mean anyway in terms of effective daily control over a distant consular office which ranks COC endorsement fees over safety? So are dodgy crewing agents still getting away with COC fraud, thereby endangering ships and seafarers and causing huge losses? Yes (from what we have seen), they are.
The underlying problem is that not all flag states are checking the validity of foreign COC’s before issuing endorsements for the applicant to serve as Master or Chief Engineer or in another officer or crew rank on board one of their own flag’s ships. We have experienced a number of situations in which it seems that a local Panamanian consul has failed to do so and we have also seen this occur in respect of the Mongolian and Sri Lankan flags as well. As a consequence, dodgy crewing agents and the document forgers who are creating fake COC’s (we understand that this is a thriving industry in Bangkok) are taking advantage of what appears to be the abject failure of a large number of flag state administrations and their regional representatives to run basic COC validity checks. Indeed, what is to stop them when one considers the IMO’s apparent failure to take preventative action and enforce sanctions?
Is it difficult to run a COC validity check? No, because the IMO recommends that flag states provide a COC verification capability and that the system should be easy to access and a significant number of flag states have voluntarily complied. Take a look at here. This is the IMO’s COC verification website which will take you to all of the flag state verification sites currently up and running (approximately 36 flag states so far), including Myanmar and Indonesia (but not Georgia).
The verification websites operated by the Myanmar and Indonesia flag state authorities work well and provides an immediate verification of COC validity. These sites, and the others available, should always be used by ship flag state administrations when endorsing foreign COCs. They must of course also be used by crewing agents (the honest and legitimate ones anyway!) as part of the STCW regulated crew recruitment process. Finally, ship owners and managers must run a personal and final verification check as a part of their legally mandated STCW Convention and ISM Code procedures together with their contractual “seaworthiness” obligations under charter parties, bills of lading and insurance policy terms.
If shipowners fail and it all goes very wrong, then SEAsia and owners’ P&I Clubs will be there to help them pick up the pieces. However, the ultimate cost (including potentially uninsured losses) will be far more than the cost of a routine few minutes of a ship owner’s or 3rd party manager’s time to personally check COC validity. So if this is not already a part of your ISM Code crew recruitment procedures, then it certainly needs to be. Preferably from today!
Wet Cargo Claims and Radar Loss Prevention?
We all know that a ship’s Radar is an essential loss prevention tool for the Master and crew in relation to collision avoidance and navigation. But what about Radar’s use for the prevention of cargo damage due to the sudden onset of rain storms when loading or discharging water sensitive cargo such as rice, fertiliser and many similar products?
As shown in the photo, rain showers and associated storm fronts are readily detectable by radar. So much so that shipboard Radar units are fitted with a “rain switch” designed to modify the Radar wave transmission and desensitize the Radar return from rain storms. This allows solid targets, such as other ships and land hiding in the rain clutter, to be displayed on the Radar screen. Further, many of us now make use of local weather forecasting websites which show a Radar display of rain shower activity along with its movement and anticipated arrival at our locale.
Your editor first learned about the cargo loss prevention use of Radar as a Cadet with the Blue Star Line (so long ago many ships still did not have Radar!) and used it successfully throughout his sea-going career. Regrettably, judging by the significant number of rain damage cargo claims we see, it seems to be a forgotten technique that needs to be urgently re-introduced to the world’s seafarers and ship managers.
The technique is simple and must be implemented when loading or discharging water sensitive cargo during the local ‘rainy season’, or if rain is forecast. A deck officer (or trained AB/lookout) should be stationed on the bridge and the Radar display unit should be switched on. That person must be in VHF radio contact with the ship’s duty cargo officer who, in turn, must liaise closely with the stevedore foreman and the ship’s Bosun who will direct the ship’s crew in the closing the ship’s hatches.
If rain showers are detected on Radar, then the intensity, direction of movement and ETA of the rain’s arrival at the ship’s berth can be quickly assessed and relayed to the ship’s cargo officer. The stevedore foreman and Bosun can then be alerted and the hatches closed promptly.
Simple and effective loss prevention which costs nothing in terms of additional equipment or crew apart from the application of good seamanship and forward planning by the Master. The positive result? No cargo hold mess as shown in the accompanying photo, no claims and a happy cargo receiver, cargo insurer and P&I Club. Oh yes, not to forget, it can prevent you ship from being arrested by cargo interests as will usually occur in Vietnam. In fact, it’s happening right now as this article is being written!
So if you’re a ship owner, operator or P&I Club, why not help yourself and your ship’s crews to be reminded of or introduced to this alternative and practical use of Radar as a cargo loss prevention tool by copying this article to your ship Masters and members? Also, how about incorporating it into your ISM Code cargo handling procedures? It makes sense and it’s essentially for free.
Written by: ‘Ancient Mariner’
SEAsia’s Network Partners in Vietnam: SEAsia Vietnam/NSC
SEAsia Vietnam’s parent company is NSC which was established in 1995 in Ho Chi Minh City, formerly known as Saigon. It is headed by Director Mr. TT Tap and Deputy Director Mr. NN Hoang who had previously spent many years working with Bao Minh Insurance in this well-known company’s survey and adjusting division.
SEAsia Vietnam/NSC has now expanded with branch offices located at both Hai Noi and Hai Phong. This allows prompt attendance at all of Vietnam’s major ports including Vung Tau and Da Nang.
SEAsia Vietnam/NSC’s team are shown in the accompanying group photo taken at a recent anniversary and company awards ceremony. It includes members of their specialty Marine Department who have been an integral part of the SEAsia Network for many years. Their CV’s and contact details can be viewed on the SEAsia website and include surveyors with both Master Mariner and Chief Engineer qualifications together with a Civil Engineer and a Naval Architect.
SEAsia Vietnam’s marine survey expertise includes loss prevention by way of P&I pre-entry surveys (including UTS hatch testing) and rice loading superintendence, as well as ship and cargo damage investigation, control/cargo separation and P&I defence. All SEAsia Vietnam reports are prepared in SEAsia’s standard format and are audited in Singapore (as an integral part of the SEAsia quality control process) before transmission to clients.
Mr. Hoang and his team are also adept at assisting the quick release of arrested vessels which have been detained by cargo consignees and their local insurers for damage or shortage claims. This is accomplished by immediate negotiation of best terms for settlement and then issuing of a letter of NSC/personal guarantee of payment so that the ship can sail without delay. Not always an entirely just outcome but a pragmatic solution in circumstances where the Vietnamese courts are unfortunately not much interested in the front and reverse terms on a Bill of Lading and claimants invariably refuse to accept a Club LOU direct.
Of course, loss prevention is always a better and much lower cost alternative to settling claims and SEAsia Vietnam are specialists in the loading superintendence of bagged rice cargo which is a major export. These services include, at client’s option:
Pre-load hold cleanliness, hatch weather tightness and ventilation system inspection.
Load tallying and draft survey weight confirmation.
Sampling and spot checks of bag moisture content as well as full lab analysis if required.
Stevedore control in relation to proper dunnaging, stowage/ventilation channels, clean footwear, water container spillage, cargo theft and the avoidance of cargo hooks
Advice to the Master in relation to the remarks to be placed on Mate’s Receipts and the signature of Bills of Lading as well as recommendations relating to cargo ventilation during the voyage.
Similar loss prevention services, along with damaged cargo separation and control, can also be provided to vessels discharging bagged fertilizer and other commodities at ports in Vietnam. Unfortunately, large claims for damage due to rain while discharging and shortage are very common. The loss prevention cost is therefore a good investment in peace of mind and always less that paying for a claim, especially when the cargo claim deductible in a P&I entry/policy is now often quite high. So if your vessel is either loading or discharging in Vietnam, it makes sense to have SEAsia Vietnam and Mr. Hoang and his team meet your vessel on arrival.
IMSBC Code amendments: can they control “the World’s deadliest cargo”?
The International Maritime Bulk Cargo (IMSBC) Code, now made mandatory for shippers and ship owners by SOLAS, has been around for years. Regrettably, despite the Code’s good intentions and a major revision (which came into force in January 2011), it didn’t prevent the loss of 5 bulk carriers and 66 seafarers’ lives caused by the sudden, silent and deadly liquefaction of nickel ore cargoes while on passage from mining ports in the Philippines and Indonesia to China.
The latest liquefaction loss was the bulk carrier “Trans Summer” (57,000 DWT, Built 2012) which capsized in mid August of this year during typhoon Utor. At the time, she was lying at anchor south west of Hong Kong. The vessel was a total loss but her 21 man crew luckily escaped with their lives; no doubt due to the close proximity of Hong Kong’s highly efficient helicopter search and recue team. If she had been underway in the South China Sea at the time, their fates would have been sealed.
So why are such terrible casualties still occurring? Much of it has been due to the original failure of the IMO to identify the danger (the IMSBC Code still did not include specific precautions for nickel ore even in its revised and re-titled edition). Worse, the Code is only available in the English, French and Spanish language; not the best help to the primarily Chinese and Indonesian crews who lost their lives. The other reason is the ubiquitous market greed, criminal behavior (including threats to surveyors and bribes to Masters) and ignorance which has become an unfortunate hallmark of globalization and trade with China.
To its credit, the IMO has recently released a major amendment to the IMCBC Code as Resolution MSC 354(92). The Resolution circular includes new text relating to Group A (cargoes which may liquefy) so as to protect ships and their crews from the dangers of nickel ore. However, it does not come into effect until 1 January 2014 (and then only on a “voluntary basis”) and will not be mandatory until 1 January 2015. Further, the IMO’s circular contains a warning in relation to the reliability of the well-known “can test” for moisture content as follows:
“If samples remain dry following a can test, the moisture content of the materials may still exceed the Total Moisture Limit (TML).”
The can test is presently the only available IMSBC Code recommended field check on the truth and accuracy of a shipper’s certificate of cargo moisture content which can be conducted by a marine surveyor or ship’s crew. However, what credible loss and death prevention tool does this now provide in the face of a shipper’s certificate issued by a shipper who – as recently experienced by a SEAsia surveyor acting for shipowners - refuses to allow independent cargo sampling and analysis? And what shipowner facing abysmal charter rates (which are now often less than operating costs) and a bank threatening re-possession is going to stand up to such shipper/charterer intimidation? Not many: so the shipper’s get away with it and “never mind the consequences, the P&I Club will pay”.
As a back up to the aforementioned IMSBC Code amendment, the IMO has also issued Resolution MSC.1/Circ 1454 which provides guidance on Group A cargo testing, control procedures and their approval by local authorities. Technically useful stuff but regrettably written by political appointees ensconced in the IMO’s recently refurbished Thames side headquarters in London. Such people, who are no doubt well meaning and technically competent, have almost certainly never been to an Indonesian or Philippine Group A cargo mine site and ‘port facility’ to witness the monsoon rains, the mud, the incompetence and the general disregard for human safety along with the greed, the threats and the corruption. If they had, then they would know that their Resolution’s “ sampling, analysis and control procedures” and requirement for “approval by a competent authority” are effectively a sick joke, and a deadly one at that.
In summary, the sad and high risk IMO review result is to continue to leave ships and seafarers’ lives at extreme risk for the next 15 months. Even then, the positive impact of the IMSBC Code (as a compulsory loss prevention tool) will continue to be inadequate. Why? Because the IMO (a UN politically funded organization with no teeth) has no ability to exercise direct sanctions against greedy shippers and complacent local authorities as perpetrators of crew death and ship destruction.
So what can be done? This is a time when the marine insurance industry needs to stand up and take some real and not just precautionary action. Yes, almost all of the P&I Clubs have issued warning circulars about Class A Cargoes, including nickel ore, iron fines and iron sands, copper concentrates etc. But when is the first Club going to issue an effective warranty term to members which states that a member who contracts to carry a Class A cargo must:
Inform the Club at the time of contracting and certainly 72 hours before vessel arrival at load port.
Appoint a reputable and experienced Marine Surveyor, (who can demonstrate his knowledge of the IMSBC Code and danger of Class A cargoes) to attend to take pre-load samples for independent analysis as well as to superintend the loading process.
Ensure that the Master and crew are provided with the latest edition of the IMSBC Code, together with all associated IMO Resolutions in a language that the Master and Senior Officers understand (preferably a translation into their own national language).
Ensure that the Master is provided with the latest Club circulars relating to Nickel Ore and Class A cargoes along with the Intercargo circular Nickel Ore: Stop, Think, Verify.
Would the above loss prevention plan galvanize ship owners and Masters into positive action and save lives? Well it would certainly have prevented the nickel ore tragedies and deaths that SEA Asia has investigated. It also makes a lot more sense than relying on the IMO’s well meaning but unfortunate ‘toothless tiger’ approach to Class A bulk cargo safety. Meantime, a technology and humanity prize to the first testing equipment company who invents a portable Class A cargo moisture probe which works effectively and reliably and is also affordable.
The “STX Alpha” ship arrest: loss prevention tactics for owners
In last month’s SEA Watch, we advised of the arrest of the “STX Alpha” at Singapore by local bunker suppliers for monies owed not by owners but by time charterers. Due to circumstances beyond his control, the owner had to pay up. We now provide our recommendations to prevent such a thing from happening to one of your time chartered vessels or even a sister ship.
1. Ensure that your ship management and commercial/chartering management departments are made fully aware of the dangers associated with the ordering and provision of bunkers by time charterers. This must include claims which can be anticipated from bunker suppliers if the time charterer should fail to pay. In particular, it is essential that on each occasion time charterer’s bunkers are received on board that a written request is sent by owners immediately to charterers to provide urgent confirmation of their direct payment to suppliers
2. Ensure that all time charters entered into includes a Rider Clause making it clear that at no time whatsoever does the charterer have any entitlement to act as the ship owner’s agent in relation to the purchase and supply of bunkers during the time charter period. Further, that at all times during the C/P, the charterer accepts that the bunkers on board remain as the charterer’s property and that the owner shall be entitled to endorse all BDN’s and other associated documents accordingly as well as apply a stamp which constitutes a prohibition of any and all liens against the vessel in relation to the non-payment of bunker invoices. Also, that the time charterer will indemnify and hold owners harmless in respect of any claim for unpaid bunkers brought against owners in respect of both the sum owed and all associated costs.
N.B. A time C/P clause designed to protect owners is already included as a Standard Clause in the NYPE time charter form. However, the IG Clubs have recommended that the NYPE clause be reinforced or be introduced (as a Rider Clause) into any other time C/P as follows:
3. Ensure that all Masters, Chief Officers and Chief Engineers in your fleet are made aware of the commercial issues relating to the bunkering of the vessel while on time charter in respect to their signature on any BDN. In particular, BDN’s or other documents may contain words attempting to make the ship owner liable for the cost of the bunkers or which may attempt to prevent the ship’s officer in charge from applying a rubber stamp or endorsing the BDN with words which prohibit the attachment of a maritime lien to the vessel in relation to unpaid bunker costs. The ship’s senior officers must understand the possible negative impact on owners and must contact owners/mangers immediately if they have any concerns as to the wording of any BDN which is provided to them for their signature. If in doubt, don’t sign!
4. Ensure that in addition to point 3. above that the ship’s senior officers are provided with a rubber stamp and red ink pad so they apply the following imprint on all documents relating to the delivery of services, supplies or bunkers which are to the charterer’s account.
None of the above recommendations alone will provide a watertight defence to a bunker supplier’s claim. However, if they are all implemented together, they will certainly make a bunker supplier wary of instructing lawyers to arrest with legal costs of upwards of SGD 20,000.00 to the supplier’s account.
5. Finally, if bunker suppliers make written demands against you as the owner of a time chartered vessel, then ensure that you respond immediately to deny the claim and then notify your FD&D insurers without delay. If you then still fear that your vessel may be arrested, it is possible in a common law jurisdiction (such as Singapore) to instruct solicitors to file a caveat (caution) against arrest. This is a very powerful tactical weapon against possible bunker supplier arrest if implemented well before the vessel’s arrival.
In conclusion, it can be seen that the provision of time charterer’s bunkers can raise even bigger problems that those related to bunker quantity and quality issues with ensuing damage to the vessel’s machinery. It is therefore essential that owners ensure that their technical and commercial managers and their senior officers on board are made fully aware of the danger of pursuit and arrest by bunker suppliers along with the precautions necessary to minimize this potential hazard due to the time charterers’ default.
Hash ship goes up in desperate smoke!
The crew of the MV “Gold Star” (2100 dwt built 1975), engaged in smuggling 30 tonnes of hashish across the Mediterranean, torched their stash and abandoned ship prior to being busted.
Italian authorities had been monitoring the vessel for three days following a tipoff that it was carrying illegal cargo loaded in Turkey.
But just as they were ready to pounce, using fast patrol boats and a helicopter the crew of nine Syrian and Egyptian nationals tried to destroy the evidence by setting fire to the ship before jumping overboard near Sicily.
There was little left of the cannabis resin once fire fighters doused the flames but what was found still measured two by four metres in size.
Hashish, with a street value estimated at around GBP 50 million, is reported to have been hidden in the crew accommodation of the Tanzanian-flagged vessel.
A spokesman for Italian Customs advised: “The ship was intercepted after intelligence was received that it was carrying drugs - but we never expected such a huge consignment and for the crew to set her on fire.”
“The idea was no doubt to try and destroy the evidence so that we could have no case against them but their plan failed, the fire was put out and the drugs were found during the search.”
“Nine crew jumped into the sea but they didn’t get very far as they were several miles from shore and they had to be rescued by Italian customs officers.”
“The fire is now under control and the ship is being taken to a port where it will be thoroughly searched and the nine crew members will be questioned by prosecutors.”
SeaProf/BI Norwegian Business School intensive 3 day short course
Reminder: seats are selling fast so don’t miss out!
SeaProf, a sister company of SEAsia, is a leading specialist Maritime Executive Training organisation which partners with the renowned BI Norwegian Business School, Oslo, to conduct its acclaimed specialist courses.
Registrations are well under way for the 7th run of the SeaProf/BI “Key Elements of Shipping” course. As always, seats are filling fast and we expect to be “sold out” once again. Registered participants now include attendees from Miller Insurance Services, PSA, Jotun, PIL and more are signing up daily.
Speakers include Captain Robert Gordon of SEAsia Claims, Prof Catherine Bjune of BI, Prof Jasmine Lam of NTU as well as industry leaders from Class DNV, Nordea Bank, Ulstein amongst other well known maritime experts.
Participants can expect top level learning, networking sessions and experience-sharing opportunities throughout the day along with top quality meals, snacks, coffee and views over the harbor.
A BI “Certificate of Achievement” will be awarded to successful course delegates followed by a drinks reception at the end of the course hosted at The Klapson’s popular rooftop bar, Fabrika.
The great news for Singapore employers is that the course is approved by the MPA for the 70% MCF rebate as well as the 60% PCI rebate on the balance. So it’s almost for free and not to be missed as a terrific way to reward your employees and upgrade their knowledge and problem-solving skills at the same time.
Don’t miss the chance to attend as seats are available on a first come first served basis. Take a look at the BI website at KES Oct 2013 for full details including the programme, the speakers and Internet registration.