Welcome to the New Year’s edition of SEA Watch with more updates and commentary on what’s happening in the world of shipping and marine insurance.
First on offer is the Rubber Ducky Award which is all about a recent collision in the Singapore Straits between a very large LNG carrier and a container ship that had the potential to become a major catastrophe. With some serious luck, the damage was happily limited but still expensive. However, stories like this highlight the worsening problem of seafarer incompetence which is often negating the positive risk reduction effect of high tech navigational aids and equipment. So what to do? Read on to find out what your editor’s unconventional opinion is on how to deal with the problem. Don’t agree? Well tell us about it and we will be happy to print your response.
Next in line is an update on changes in the SEAsia crew in Singapore. Our General Manager, Colin Fordham has moved on to a new career as a marine liability underwriter and our Capt Kunal is now in the Pilot chair. We all wish Colin the best of luck and we are confident of hearing from him and his new colleagues in the future as even the best accounts can bring some nasty surprises on the loss front.
Our third article was prepared by our new GM, Capt Kunal, on The Green Ships Revolution and its impact on MARPOL regulations. The bad news for owners is that the drive for Green Ships is not going to go away as long as there are politicians out there banging the Green drum to bring in votes. The good news is that the technology and Green fuels are out there to solve the problem, albeit at extra cost in a poor charter market and with no immediate sign of a lasting upturn. So it’s a big issue and the only way to survive is through keeping up to speed to improve foresight and planning.
Our fourth slot contains an article from our Senior Claims Exec, Oliver Rentzow. Oliver’s focus is on the danger to freight forwarders and logistics intermediaries when relying on the SLA’s or in fact any organisation’s Standard Terms and Conditions (STC’s) as a protection against claims. There are protocols to be observed to make them effective and the underlying issue is that the courts do not like anything which has the smell of an exclusion clause. So watch out!
Last but certainly not least, we are pleased to provide our update on the SEAsia India team who, under their parent company’s name of Metcalfe & Hodgkinson (headed by Capt DK Verma), must be one of the longest existing and most experienced marine survey and P&I correspondent companies in the world today. SEAsia India can provide assistance at virtually every port in India and they are standing by to assist in an often difficult environment.
Finally, well it’s another New Year. All of us at SEA Watch and SEAsia hope that all of our readers and their families will enjoy a prosperous and happy time in 2014. So take care and read on.
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
Rubber Ducky Award:
Collision of the Giants in Singapore Straits + “the Solution”
The 205,000 cbm LNG tanker “Al Gharrafa” (built 2008) and the 10,114 TEU boxship “Hanjin Italy” (built 2011) collided in international waters in the Singapore Strait between Singapore and the nearby island of Batam.
The incident occurred during darkness on the evening of 28 Dec at about 2024 hrs local time. Our photos show that the boxship suffered damage to her starboard side at the midships area while the LNG carrier suffered bow damage at her stem area.
The “Al Gharrafa”, (managed by OSG ship management) was fully loaded with LNG and was en route from Ras Laffan to Singapore. Luckily for all, including the densely populated City State of Singapore, her LNG cargo tank containment area was not damaged.
“Hanjin Italy”, is owned and managed by Danaos Shipping of Greece. The Liberian flag vessel was en route from Singapore to Yantian, PRC (eastbound in the Straits), at the time of the incident.
Our photos appear to show that the “Al Gharrafa”, which was also eastbound in the Straits and heading towards Singapore, collided at 90° with the “Hanjin Italy” on her starboard side. So how could two eastbound vessels, both traveling in the same direction, end up being at 90° to each other?
The answer is provided by the attached YouTube video which is astounding in respect of both the physical circumstances as well as what appears to be the massive stupidity of both Masters. Is the video reliable? Yes, as it is based on continuous GPS position data transmitted by both vessels through their AIS systems which can be received by anyone with an AIS receiver in their office e.g. lawyers looking for collision work.
So what does the video show? The quality appears to have been down graded but it depicts the tracks of the two vessels with the “Hanjin Italy” (shown in green with yellow track) tracking slightly to the north of the “Al Ghaffara” (shown in purple with orange track) with both vessels heading north east but on a converging collision course. It also shows the “Al Ghaffara” to be the faster and therefore overtaking vessel such that under the International Collision Regulations (COLREGS), she was obligated to keep clear of the “Hanjin Italy” which had right of way.
OK, no problem then as all the Master of the “Al Ghaffara had to do was alter course to starboard to run parallel to the “Hanjin Italy” and slow his engines to allow the “Hanjin Italy” to move ahead and out of the way of danger. Text book stuff straight from an oral examination for a Class 1 Master’s certificate. But no, what happens instead is that the Master of the “Al Ghaffara” maintains his course and speed straight into an obvious collision situation by getting closer and closer and almost contacting the “Hanjin Italy” starboard quarter.
At this point, the video shows that something bizarre happens. The “Hanjin Italy” swings hard to starboard, directly across the path and bow of the “Al Ghaffara”. Insane but it explains the apparent 90° angle of blow as evidenced by the hull damage to both ships. Was this due to an intentional “agony of the moment” alteration to starboard by the “Hanjin Italy” or was it possibly due to vessel hull interaction caused by the pressure of the “Al Ghaffara’s” bow wave acting on the starboard quarter of the “Hanjin Italy”.
So who was at fault? Well, it will no doubt be the case that both vessels will be found to be partially to blame in an apportioned amount adding up to 100%. The challenge will be in assessing where the majority of the blame lies. Important, as this figure will be applied directly to the apportionment of monetary damages in relation to the cost of repairs, 3rd party damages and consequential losses for delay. Your editor’s bet is that the preponderance of blame (as lawyers would say) lies with the “Al Ghaffarah”. As to the apportionment of blame lying with the “Hanjin Italy”, much will turn on whether her Master deliberately and without warning turned to starboard across the “Al Ghaffarah’s” bow. And if so, was this a classic “agony of the moment” decision” which may provide an old but arguably applicable defence in law?
So how do such immensely stupid scenarios occur in a world where large vessel are all fitted with multiple radars with auto plotting devices and AIS displays to show precisely the name, course and speed of all other vessel in the area? Add to this the use of constant GPS positioning and electronic charts with auto tracking plus the mandatory simulator training of ships’ officers in ship maneuvering and bridge team management. And finally, add the on-going radio advice to Masters provided by the Singapore Vessel Tracking Service (VTS). Should it not be impossible for ships to collide?
The answer and the intention is that it should not be possible and, statistically, collisions and groundings are slowly declining. However, the significant risk of collision and the associated costs are still with us and although an arguably happy event for P&I correspondents and surveyors, they are a financial nightmare for owners and their insurers. So what is to be done? Well based on existing and rapidly developing technology, it must ultimately be the effective removal of the human element which – as always - is the weakest link in any risk assessment chain. Crazy? Impossible? Absolutely not.
Think for a moment about the self parking car and the consequent reduction of risk to insurers. Think also about airplanes which can now land by themselves, driverless trains and driverless iron ore trucks at mine sites in Australia as well as experimental but operating road vehicles which never run off the road due to an inebriated or fatigued driver. Think of a world in which maritime VTS operators do not just give advice but give orders to Captains as air traffic controllers do. The marine industry application of this technology is just around the corner dear readers and we may then see the ship’s bridge crew, their high maintenance costs and costly ‘balls ups’ go the same way as the now long redundant radio officer and the sextant.
Meantime, we are pleased to award this month’s Rubber Ducky Award to the Master of the “Al Ghaffarah” who must need cheering up as he undoubtedly faces on going interrogation from his owner’s P&I club lawyers, possible criminal prosecution by Singapore for his failure to obey the COLREGS and a very uncertain future. As for the Master of the “Hanjin Italy”? Well, he gets a Rubber Ducky Commendation because under the COLREGS, no Master is entitled to maintain his course and speed into a collision situation, regardless of whether he may initially have right of way.
Crew changes at SEAsia Singapore: Capt Kunal
takes over as GM from
Colin Fordham first joined SEAsia in mid-2011, some time after leaving Thomas Miller, Singapore where he was MD of the TT Club transport liability division. It was a time when SEAsia needed help on the transport claims front and Colin jumped in to assist and take us forward. In fact, he was so good at it that he was quickly invited to stay on board as our new GM.
Colin worked tirelessly to add to his well developed transport knowledge by learning all he could about P&I and marine insurance while modernizing our IT systems and data storage, restructuring staff functions and marketing our services to his many friends and contacts in the insurance industry. It was an outstanding effort for which your editor and all at SEAsia will always be very grateful. However, Colin’s first love in terms of work has always been underwriting. Thus, when a senior liability underwriting position in Singapore became available at the end of last year with the Watkins Syndicate, it was agreed that he should seize the opportunity to move on.
Losing Colin has been a wrench. However, we were fortunate enough to have been able to recruit Capt Kunal Pathak as our Survey and Loss Prevention Manager during early 2012. SEAsia has therefore been able to fill the GM gap with a young Master Mariner with a great deal of P&I and survey supervision experience already under his belt. We are therefore confident that SEAsia will be in good hands for 2014 and for many years thereafter.
Capt Kunal’s full CV details are available on our website. However, highlights include eleven years of sea-going experience on board bulk carriers and large tankers engaged in international trade. Kunal also holds an MBA in Maritime Management from Greenwich University, London and an HND in Nautical Science from Glasgow College, Scotland. Kunal’s MBA dissertation was based on the realities of Eco-ship operation and potential savings and this is still a subject – with a focus on regulatory and liability aspects - in which he is keenly interested.
The rest of the SEAsia Singapore team remain in place including Robert Gordon as MD, Oliver Rentzow as Senior Claims Executive, Ashok Narayanan as Finance Manager and Jenn Woo who is now moving up to Marine Survey Coordinator to assist Capt Kunal with daily operations. So some things have changed but much remains the same, including SEAsia’s dedication to the provision of 24/7 claims and survey services throughout Asia.
The Green Ships Revolution: ClassNK’s Green Technology seminar in Singapore
The year 2013 was an interesting (some might say “expensive”) year for new maritime regulations which have now come into force. As a part of this process, the IMO’s MEPC, at its sixty-fourth session, adopted additional guidelines for the implementation of the MARPOL Annex IV mandatory regulations on energy efficiency for ships. These new requirements, occurring in tandem with an UNCTAD reported 4.2% ton-mile global increase in maritime transport and a 6.2% year-on-year growth of the world’s shipping tonnage, have created a market demand for innovative eco-ship design and technology. Yes, dear readers, it’s the inevitable Green Ships revolution and there is no escape for shipowners.
A recent ClassNK seminar in Singapore showcased some very interesting technologies which have been developed to reduce GHG (Green House Gas) emissions from both existing, as well as from new vessels. The seminar included technologies such as LNG powered main engines, air lubrication to reduce hull drag, binary cycle power generation system and, most importantly, ClassNK’s commitment to make the energy efficient/environmentally friendly vessel a reality. Our Capt Kunal attended and his summary of the main ‘Green’ technologies presented is as follows:
Liquefied Natural Gas (LNG): this may be the most promising fuel for marine transport in the years to come and such vessels are already in operation. During the presentation by Dr. Koji Takasaki, Technical Adviser to ClassNK, it was clearly demonstrated (by using video of LNG combustion occurring inside a cylinder), how LNG reduces CO2 emissions by 20 to 25%, NOx emissions by 90% and SOx and PM by 100%. Now, that surely sounds promising, but right now the biggest hurdle in way of this technology is the lack of infrastructure for LNG bunkering as well as current crew training which does yet not include training for handling LNG as a fuel. There is no doubt that one solution will follow the other as the world is yet to discover an alternative to LNG, which is available in abundance, has very little processing requirement and is ready to meet the challenges presented by Annex VI of MARPOL.
Air Lubrication System: this was another fascinating technology which was presented by Mr Chiharu Kawakita, from the Mitsui Engineering & Shipbuilding Co., Ltd. Hull skin frictional drag accounts for 50 to 70% of the ship’s hull friction and has been a long-standing problem for the shipbuilding industry. With the race to optimise economies of scale by transporting cargo in larger vessels, the problem is here to stay and perhaps get much bigger in times to come. The answer seems to lie in air lubrication technology which injects millimeter sized air bubbles along the flat bottom of the vessel through hundreds of openings to provide a separation between the vessel’s hull and the seawater thus reducing frictional drag. The net power saving at the sea trials is claimed to be in the region of 13%. As assuring as it sounds, the technology seems most effective for smaller vessels and may not provide the same results for larger along with associated ton mile economies of scale.
Binary Cycle Power Generation Systems: allows the use of waste heat and steam to generate electricity for shipboard use. Based on thermodynamics, a binary vapor cycle is defined as a power cycle that is a combination of a cycle in a high temperature region with the other in a lower temperature region. This system is basically designed to save energy during slow steaming by creating power from heated air from the turbo charger and waste hot steam. It allows for 100kW of power generation at 90% load on the main engine for a Panamax sized bulk carrier. Savings in fuel consumption can be around 3%. Not huge, but over time every little bit counts in reducing running costs and improving profitability.
A number of other ‘Green’ technologies were also discussed during the ClassNK seminar and which are now being developed or are already in use. Further, as the maritime industry progressively embraces the ‘Green revolution’, it seems likely there will be challenges that may not be evident at this stage of development. For example, will there be additional or unforeseen risks associated with the use of LNG as a fuel for marine engines? What about the owner’s liability towards the charterers for a vessel’s performance in terms of fuel consumption and CO2 emissions? There seems a lot of work ahead that needs to be accomplished to first get all of the stakeholders in the maritime industry on the same page, before they can all be seen as being in the same boat. So for now, all maritime stakeholders - no matter what their connection with the maritime industry may be - need to stay alert and ‘tuned in’ to the ‘Green revolution’ and the concept of Eco ships which is being driven by both maritime economics and global politics.
A helpful and easy to understand mini-book on Green Ship Technology was prepared by the European Marine Equipment Council in 2010 (now needs some updating but the basic concepts are still relevant) and is available on the Internet. For those readers who might like to dig further into the future, take a look at Class DNV’s video DNV’s Shipping 2020 along with the associated DNV Shipping 2020 Executive Summary and Key Points publication. Essential stuff for forward planning and survival in a highly competitive shipping market.
Singapore Logistics Association (SLA) Standard Terms: impact of the Unfair Contract Terms Act (UCTA) on the SLA 9 month time bar (Patec v. Translink)
The shipper’s/Patec’s first engagement of the defendant/Translink as its freight forwarder unfortunately resulted in a very large claim: a valuable piece of machinery was damaged when in the custody of the forwarder. The machinery was insured and the cargo insurers paid the shipper's claim. However, for reasons that are not clear, the insurers did not commence a subrogated recovery action in the name of the shipper against the forwarder for damages until the 9 month contractual limitation period had expired.
In defence of the claim brought by the cargo insurers/shipper, the forwarder argued that, amongst other things, the shipper had only 9 months time to bring his claim under the terms of the Singapore Freight Forwarders’ Association Standard Trading Conditions (1986) (“the SFFA Conditions”, now known as the “SLA Conditions”), which governed the agreement between the shipper and the forwarder. It therefore followed that, at the time the action was brought, it was already too late as the time bar had expired.
The Court’s initial response to this argument was to uphold the 9 month time bar by stating that:
“Contracting parties must have a care for their own legal positions by ascertaining what terms are to be part of a contract before signing it.” That is to say, before one signs a contract, one must ensure full understanding the contract terms and their implications.
Despite the court’s initial response, the cargo insurer/shipper chose to challenge the legal validity of the contractual 9 month time bar by relying upon the Unfair Contract Terms Act of Singapore (“UCTA”). The purpose of UCTA is essentially to impose limits on the avoidance of civil liability through exclusion clauses in both consumer as well as business contracts. Exclusion clauses usually seek to limit one party’s liability for breach of contract, negligence or other breaches of duty, which otherwise would be much more extensive under statutory law.
Section 3 of UCTA states that where business parties deal on the basis of standard terms of business (e.g. SFFA or SLA terms), as properly incorporated by one of them, then any exclusion term one party wishes to rely upon, must be reasonable or, in other words, fair and sensible.
The burden of proof, that such an exclusion clause is indeed fair and sensible in the context of the contract, lies with the party who wishes it to be construed as a part the contract. Further, so as to ensure fairness, the content of the clause will be interpreted by the court so as to favour the party it is being used against (i.e. the shipper).
Against this factual and legal background, the Court’s findings were that the effect of the contractual 9 month time bar clause in question was to strip the shipper of an additional five years and three months of time in which the shipper would otherwise be entitled to bring his claim under the usual 6 year statutory time bar which applied to non maritime claims in Singapore. The judge therefore concluded that the forwarder had not discharged the requisite burden of proof by showing that the contractual 9 month time bar was reasonable. Accordingly, the shipper’s claim was not time barred. However, the SFFA standard terms in relation to limitation of liability (currently SGD 5.00 per kg to a maximum of SGD 100,000.00) still applied such that the award of damages would be subject to those limits.
Conclusion and Loss Prevention Advice
The facts of this case and the ruling of the Singapore Court highlights the circumstances in which a freight forwarder/logistics intermediary can be caught off guard by believing that his adoption of the SFFA (now SLA) standard terms provide an irrevocable and binding contract, inclusive of a 9 month time bar, which cannot be overruled by law. This being the case, freight forwarders and logistics intermediaries must be very careful when incorporating standard terms to ensure that they cover all elements of the operations and obligations to be undertaken and that they meet the UCTA legal test of “reasonableness”. This is of course a task best accomplished before liability occurs, as an essential loss prevention exercise. If you or your organisation may need help with this exercise, then SEAsia Claims Services will be very pleased to assist you.
SEAsia’s Network Partner in India: SEAasia India/Metcalfe & Hodgkinson
The origins of SEAsia India’s parent company, Metcalfe & Hodgkinson, go back to Bombay in 1855 when the company was first started by Captain Metcalfe, a British Master Mariner. Later, as the business grew, Captain Hodgkinson joined as a junior partner with the partnership becoming a limited company in 1948. Readers will no doubt agree that this is quite an amazing track record for longevity and service in a world where ideas and companies now quickly come and go.
SEAsia India/Metcalfe & Hodgkinson has been headed up for many years by Managing Director, Captain DK Verma, along with the capable and loyal support of Director, VK Mathur, a Mechanical Engineer by profession. It has also expanded to now include 5 regional offices along with a total of 31 survey offices located at every major seaport in India. This facilitates prompt and economical response to client instructions: no matter where required in India, the date or time of day.
SEAsia India’s staff includes a core team of specialist surveyors headed up by Principal Surveyor, Mr Lawrence Coutinho, a Class 1 Marine Engineer. Lawrence’s CV and contact details, along with other core team members such as Capt Dilip Mishra, can be seen on the SEAsia Website.
SEAsia India/Metcalfe & Hodgkinson have experience with a wide range of insurance and commodity control work, both marine and non-marine. This includes appointment by the Solvent Extractors Assoc of India as well as acting as surveyors for Groundnut Oilcake, De-oiled Rice Bran, Soybean Extracts, etc. for both cargo buyers and sellers. So SEAsia India are good people to have on your team when cargo goes wrong.
Marine insurance work includes special project cargo superintendence, lashing and securing, cargo pre-shipment for both liquid and dry bulk, outturn surveys, cargo refurbishment and salvage sales, reefer cargo damage, marine hull damage, P&I loss prevention and casualty investigation, GA survey and control etc. In short, if it’s marine, then SEAsia India has been there and - as shown by the photos – they’ve done it.
Some of the very important work that SEAsia India undertakes is the loss prevention superintendence of Iron Fines shipped in bulk. Readers may recall that SEA watch highlighted last month the serious problem of controlling the shipment of this type of cargo. Not easy in circumstances where Iron Fines are not yet officially listed in the IMSBC Code but that it is known it must be treated as a potentially dangerous Group A cargo which may liquefy along with the resulting capsize of the carrying vessel and loss of her crew. Often, both sellers and shippers/charterers of such cargo don’t want to know about the Code and their legal obligations. This is when an experienced and assertive surveyor can become a large loss and human life saver for owners and their P&I Clubs.
As most of us will understand, working in India is not an easy task bearing in mind the huge distances from port to port, the politics, the culture and the uncertainties of the law and its application. This is where SEAsia India comes into its own with its long history of knowing how things work and getting the job done by finding solutions to problems – whether cargo damage, ship damage, pollution, crew injury - and then getting the client’s ship on her way, on time, economically and safely. Capt DK Verma and his SEAsia India team are standing by to help you.