1. Container security
2. Cargo shortage claims - who's responsible?
3. Coffee contaminated by wood preservatives
4. Hydrogen sulphide alert
5. Weighbridge accuracy
6. Theft from containers
7. Fumigation (phosphine) explosions
8. Bunker problems caused by quality decline and emissions compliance .
9. Ship operators still overlooking risks from hatch covers
10. Forged Bills of Lading - West Africa
11. Failure to Collect Cargo Problems
12. Distillers Dried Grain
13. Cargo on board reefer vessels and in reefer containers
14. Charter party Clauses - Indemnity for insured risks

Container security

The container security seal industry is constantly striving to improve on the designs of seals in order that they cannot be breached without leaving evidence that the seal has been opened.
Signum Services Limited, is also the UK Government's official agency entitled 'Security Seal Testing Authority' for the testing of security seals.
The seals themselves, from manufacturers all over the world, are sent to the Authority and are then strenuously tested by an engineer to ensure that they cannot be unsealed without leaving telltale signs of interference. Having undergone these stringent tests, only those that pass receive the approval of the UK Customs and Excise, a qualification highly sought after by manufacturers as a selling point; no other country in the world requires seals to be tested in this way.
Consequently, over the years, the quality of seals has risen with a far greater proportion being impregnable without leaving signs of tampering.
The result is that thieves wanting to steal all or some of the cargo from a sealed container and wishing to leave the seal intact are resorting to other means to open the doors.
If, on receipt of a container at the consignee's premises, the cargo is missing but the original security seal is in place and intact, there is a simple explanation and the explanation is always simple - cargo cannot magically disappear through the walls of a steel container. If the seal is of good quality and is one which cannot be opened without leaving evidence, and the container bears no evidence of a hole having been cut in its metal work then the only way entry has been gained is by tampering with the door mechanism.
This is becoming a more frequent problem and usually occurs in one of two ways: either by removing the handle lock set complete, with the seal in place, from the right hand container door by cutting off the rivets which hold it on (upper photo), or by cutting off the rivet which holds the handle in the locking bar handle hub (lower photo).
Thieves who adopt either of these two methods can then open the doors of the box and remove the cargo. The door is then secured by replacing the missing rivets with bolts, the original seal being undisturbed.
All this is possible because the entire door locking mechanism and both parts of the seal bracket are fixed to the door itself and no part of them to the body of the container.
Cable and barrier or bar seals combat the problem by being looped or hooked around the locking bars of both doors. These seals of course cost extra money. However, boxes are now being manufactured with one part of the seal bracket being at the foot of the locking bar, on the cam on the right hand door and the second part of the bracket welded to the container itself on the bottom of the box on the door sill.
The seal therefore, when in place, secures the locking bar to the container itself. The result is that no bolts, rivets or parts of the locking mechanism can be removed enabling the container to be opened leaving the seal intact. If the doors have been opened, the seal must have been breached. As containers are renewed and replaced over the years, they should be replaced with those bearing the seal brackets at the bottom of the locking bar and on the door sill.

 Cargo shortage claims - who's responsible?
Requirement to state quantity of cargo in the bill of lading
Under the Hague and Hague-Visby Rules Article III Rule 3, the carrier must state the quantity of cargo in the bill in accordance with the information provided in writing by the shipper. The statement is prima facie evidence that the ship received that quantity. Under the Hague-Visby Rules the carrier is bound by this statement of quantity where the bill has been transferred to a third party.

Proviso under the Hague and Hague-Visby Rules
However, there is a proviso at the end of Article III Rule 3 that the carrier is not bound to state the quantity of cargo where he has grounds for suspecting that the shipper's figure is not accurate or he has no way of checking it.

Reservations in the bill of lading
It is common to see reservations made to the statement of quantity in the bill, e.g. "Weight ... quantity ... unknown". Under English Law this has been held to be effective where the master has no means of knowing the quantity shipped, so that other evidence will have to be produced to prove any shortage (New Chinese Antimony Company Ltd v Ocean Steamship Company Ltd [1917] 2 KB 644 approved in the 'MATA K' [1998] 2 LLR 614). There are however many jurisdictions which will not give effect to such reservations e.g. USA.

Knowledge that the shippers' figure is inaccurate
The master may not be able to rely on the reservation where he knows the shippers' figure is inaccurate. The safer course then is for the master to write the ship's figures alongside the shippers' figures in the bill of lading. Where the discrepancy is so great the bill of lading figure is obviously wrong, it may not be safe even under English Law to rely on the reservation (see the 'SIRINA' [1988] 2 LLR 613 at 615).

Where the master is pressured to sign an inaccurate bill of lading
Where physical threats or coercion are used, the master may be forced to sign the bill of lading stating an inaccurate quantity. Once the master reaches a place of safety, he should consider issuing a protest.
Where the charterer relies on a clause stating that bills must be signed by the master as presented, the master is not required to sign bills which are factually incorrect (see the 'BOUKADOURA' [1989] 1 LLR page 393).
If commercial pressure is applied by the shipper, the owner may have to consider whether to try to negotiate, accept the commercial risk of signing the incorrect bills of lading or accept a letter of indemnity.
If a letter of indemnity is issued where the bill of lading figure is clearly wrong it will be unenforceable under English Law on the grounds of fraudulent misrepresentation. (Brown Jenkinson v Percy Dalton [1957] 2QB 621, 639).
It is also dangerous to sign bills of lading containing inaccurate information as P&I Club cover may be lost.
The law in this area is complex and the consequences serious. It is essential that the Member discuss the position with his P&I Club and lawyers.

Owners' or charterers' bills of lading
If a party is identified on the front of the bill of lading as the 'carrier' on whose behalf the bill has been signed, this is likely under English Law to prevail over printed clauses on the reverse e.g. a Himalaya Clause (the House of Lords in the 'STARSIN' LMLN 611 overturning the Court of Appeal). (See 'case updates').
Where it is a charterers' bill, owners may still be sued in tort or bailment.

The NYPE Inter-Club Agreement (ICA)
Where there is an ICA clause in the charterparty, owners are normally entitled to recover a 50% contribution from charterers for shortage claims. If the shortage was due to cargo handling and Clause 8 has not been amended with "and responsibility", charterers' contribution is increased to 100%.

Shortage resulting from stevedore pilferage or negligence
If the stevedores are responsible for shortage, this may operate as a defence to a cargo claim or the basis of a recovery against charterers, depending on who is contractually responsible for those stevedores.
Under the bill of lading:
If the bill incorporates the charterparty terms under which charterers are responsible for loading and discharge, under English Law this arguably absolves owners from responsibility for losses resulting from stevedore operations, (see the 'CORAL' [1993] 1 LLR 1).
Under the charterparty:
Where charterers are responsible for loading, stowage and discharge, owners may recover cargo shortage claims from charterers on the basis of breach of contract.

Period of responsibility
Under the Hague and Hague-Visby Rules the carrier's responsibility ceases when the cargo is discharged over the ship's rail. Any shortage after discharge should not be the ship's responsibility (although in practice this depends on having the appropriate evidence in a jurisdiction which applies the Rules properly).

Obviously, evidence is vital in trying to show that there is no real shortage. The ship's draft survey, tallies and independent surveys can prove invaluable. However, the weight they are given depends on the particular legal regime where the claim is brought.

 Coffee contaminated by wood preservatives
 We have been advised of an incident where the treatment of container flooring resulted in a consignment of coffee being contaminated.
Prior to loading the coffee into the containers, wood preservative products containing dichlorophenol were used for the treatment of the container's boarded wooden floors. Dichlorophenol, a chemical used to produce the herbicide 2.4D, is toxic and causes severe tainting in most foodstuffs through its pervasive and long-lasting odour. Articles detailing the effects of dichlorophenol are available to Members on the Encyclopaedia on www.epandi.com.
On delivery, the coffee was found to give off a bad odour. Further analysis of the coffee showed that small amounts of dichlorophenol were present. Due to this contamination all the coffee carried in these containers was condemned for human consumption, and with no other alternative, the coffee was destroyed.
Considering the consequences of carrying foodstuffs in containers previously treated with products containing dichlorophenol, we advise all Members to ensure that they try to obtain data on the history of containers prior to their use. If practicable, separate pools of containers designated for loading chemicals or foodstuffs could be kept, so as to avoid claims such as this in the future.

 Hydrogen sulphide alert
 The Club has been made aware, from several sources, of rising safety concerns in respect of high levels of H2S in some crude oils. Bearing in mind the serious risk of damage or fatality to crew and shore personnel we reproduce below an alert notice issued by the Oil Companies International Marine Forum (OCIMF).
"While the dangers relating to hydrogen sulphide (H2S) are not new there is a growing body of evidence suggesting that H2S levels in some crude oils is on the increase. The reason for this apparent increase is unclear.
H2S is known to be present in crude oil exported from a number of countries including Iran, Qatar, South America, Mexico, Poland, Latvia, Russia and Turkey. Recently higher than normal amounts have been detected in Brent crude and within the last few days very significant amounts of H2S have been found in the ullage spaces of two tankers loading fuel oil cargo at Jubail in the Arabian Gulf.
Terminal operators should remain alert to the dangers posed by the presence of H2S, either within cargoes being delivered or remaining within the residues from a previous cargo. The precautions and procedures described within ISGOTT must be strictly adhered to.
"The advent of inert gas and closed loading systems has largely negated the need to open tanks except for non-routine purposes, although reducing tank pressures to near zero for sampling is a relatively common practice.
"Purging for cargo preparation is also common, thus the planned release of the entire tank atmosphere, particularly where unexpectedly high levels of H2S are involved, poses a significant danger to individuals in the immediate and, in some cases, the not so immediate, area.
Some countries, particularly in Europe, have already stipulated maximum H2S levels in tanks prior to loading and some terminal operators, most recently BP, have reduced their acceptable arrival levels from 10ppm to 5ppm.
"In view of the above, we believe that it is sensible to encourage all crude vessels to monitor tank atmospheres and to advise of H2S levels in order that terminal operators may gauge the magnitude of what is clearly a growing problem. In addition, it may be prudent to encourage the monitoring of fuel oil vessels from areas which historically are known to pose a problem, such as, Jubail. Regarding measurement, please be aware that while Draeger type tubes provide an accurate indication of H2S levels regardless of whether the tank atmosphere is inerted or not, H2S readings taken with an electronic meter in an inerted atmosphere do not.
"Readers are asked to take note of the above and to advise operational staff, surveyors and other relevant personnel accordingly."
The Club has also been advised that in some cases shore installations have been turning away fuel oil stock with H2S. It is believed these stocks could be finding their way into the bunker stream thereby affecting all Members not just tanker operators.
Most people know H2S by its rotten egg smell, however crew should be reminded that it could be fatal to rely on this method of detection as H2S deadens the sense of smell very quickly. A more reliable method of determining concentrations of H2S is by the use of Draeger type tubes or by the use of personal warning monitors.

Weighbridge accuracy
So you thought weighbridge figures were accurate? Recent experiences in Dar Es Salaam might make you want to think again. Receivers are notorious for ignoring draft survey reports on the basis they are inaccurate the following might make them want to re consider.
The photographs, above and below, highlight a novel way of saving time on a weighbridge not long enough to take a complete articulated unit.
We are advised that instead of uncoupling the trailer the front end of the unit is weighed, the unit then drives through leaving the rear axle on and another reading taken. The readings are then added together. This is done both empty and full the difference being the weight of the commodity.
The Club strongly recommends that:

  • Members be aware that port weighbridge figures in Dar Es Salaam could be suspect.
  • Members should contact the Club's correspondent if outturn figures are to be based on weighbridge calculations alone.
  • Members should make charterers aware that there could be a problem with outturn figures in this port.
  • As a general rule:
    • Members should always make sure, if possible, hatches are sealed prior to leaving the load port in the presence of a third party surveyor.
    • Invite charterers/receivers to attend at the discharge port to witness the seal breaking.
    • Always conduct an independent draft survey, inviting charterers/receivers to attend.
    • Closely monitor any spillage at time of discharge, keeping photographic and written evidence. If spillage is excessive contact the Club's correspondent.
    • If Members are faced with shortage claims based on weighbridge figures it is essential for weighbridge calibration records to be checked. The actual method of use of the weighbridge itself should also be checked for irregular practices as above.

Theft from containers 
During the past six months there have been three losses of substantial amounts of computer related cargo from containers that have been shipped from the USA and discharged in Santos, Brazil. These three losses totalled over US$1,000,000 in value.
The seals on the containers were checked immediately before loading in the United States and checked again immediately upon landing at Santos. In two cases, the seals on landing were found to be different and in one case no seal at all was present. In one case, later in the day, a routine check by Brazilian Customs on empty containers discharged from the same vessel found most of the missing cargo from one of the boxes.
The Club's investigative unit, Signum Services Limited, found that the cargo being shipped was carried in cartons 205mm x 250mm x 485mm and that when the loaded containers, all stowed below deck, were in their stowage positions there existed a gap of between 250mm and 300mm between the container doors, a steel walkway and safety railings in the hold. This gap enabled the doors of the container to be opened sufficiently for a man to enter the container and the cartons of computer equipment passed out through the open door.
Further investigations showed that in the case of the two containers examined routinely by Customs these had been stowed immediately adjacent to one of the containers from which cargo had been stolen. In the other two cases, empty containers had either been stowed adjacent or nearby.
It was clear from all the enquiries that stevedores at the port were obtaining details of containers stuffed with this valuable cargo which were due to be discharged and also the stowage positions of empty boxes which were also scheduled to be landed at Santos.
During the twelve or more hours between the time that the vessels came alongside and the boxes in question were actually discharged, the stevedores were busy in the holds below deck, out of view, stripping the contents of full containers and putting them in empties which could later be taken out of the terminal without the stringent security measures applied to loaded boxes.
The vessels' agents have placed security guards onboard whilst the vessel is in port but it will be difficult for these guards to prevent this type of theft.
Signum have recommended that, if possible, 20-foot boxes instead of the usual 40-foot be used to carry this cargo and the containers stowed door to door, above deck on tiers 86 and 88, in order that it is impossible to open the doors. Even if 40-foot containers are used, these too should be stowed on the third or fourth tier above deck.
With the stevedores at this port now knowing that they can open container doors up to 300mm whilst they are stowed in the racks below deck and the fact that the cargo is being stolen onboard before passing over the ship's rail, it is important that empty containers are, if possible, stowed above deck in higher tiers to prevent other cargo which could be passed through this relatively small gap being stolen.
 Fumigation (phosphine) explosions
We have been informed of an explosion that occurred recently on a ship while at sea and under fumigation with phosphine gas. Whilst no crewmember was injured as a result of the explosion, a pair of hatchcover panels was blown upwards, coming to rest against the accommodation block. The cause of the explosion was attributed to the ongoing fumigation of the cargo grain that was being treated with phosphine gas generated from aluminium phosphide tablets.
We understand that whilst not a regular occurrence, this is not the first time this has occurred.
Phosphine gas has long been recognized as highly toxic. However, it is not widely known that it is, potentially, an inflammable gas, with a low flammability level of 1.8% by volume in air. In the event that a mixture of air/phosphine - in which the phosphine concentration exceeds its inflammable limit - is ignited in a confined space, it is highly probable that an explosion will occur.
Phosphine gas is generated from aluminium phosphide tablets by reaction of the aluminium phosphide with moisture in the air. This process, in addition to liberating phosphine, also produces aluminium oxide as a by-product. Additionally, small quantities of another gas known as diphosphine are also sometimes produced during this reaction. Unlike phosphine, diphosphine is spontaneously inflammable, reacting instantly with oxygen in the air.
Production of diphosphine occurs in a similar way to that generating phosphine i.e. by reaction between aluminium phosphide and moisture, but in this case the aluminium phosphide tablets contained an imbalance between the aluminium and phosphorous, with an excess of phosphorous compared to aluminium. Such a situation may arise during production of the tablets if an excess of phosphorous is inadvertently used during preparation.
Although not proven definitively, we have been advised that it is likely that potentially explosive mixtures of air and phosphine are frequently encountered during the first 12 to 24 hours of phosphine fumigations when the phosphine concentration in the upper areas of the hold reaches a peak concentration. The resulting high concentrations of phosphine then disperse by diffusion, with the gas diffusing into the less accessible lower portions of the cargo. In this recent case, the explosion occurred some 12 hours or more after the fumigation had been started and the hatchcovers had been closed. Although no source of ignition was identified conclusively, it is suspected that defective aluminium phosphide tablet(s), containing localised excesses of phosphorous were the cause. Such tablets could be envisaged as producing localised high concentrations of diphosphine leading to a very rapid reaction with oxygen and to ignition.
Aluminium phosphide tablets are routinely used in fumigation and a very large number of shipments are fumigated annually without any problems. Incidences of explosions are therefore very rare and, as far as we have been advised, fumigant explosions have only been encountered when companies have used cheaper brands of aluminium phosphide tablets produced in developing countries.
We would advise Members that when cargoes are fumigated in ports in the developing world that the presence of crewmembers on deck adjacent to or in the vicinity of the holds and hatchcovers under fumigation is kept to a minimum during the first 24 to 48 hours after the fumigation has been set.
Source   :  UK P & I Club ( from Oct. 2002 – Sept.2003 )  
Bunker problems caused by quality decline and emissions compliance by North of England P & I Club  on 30 Jul 2005
Shipowners face a general decline in worldwide bunker quality and potential problems complying with the new sulphur oxide (SOx) emission limits required by annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78), according to North of England P&I club.

Mike Salthouse, a director of the 54 million GT club's FD&D department, says North of England has experienced a steady increase in the number of claims and enquiries relating to bunker quality during the past year.

'There is widespread concern about the general decline in bunker quality at many ports,' he says. 'Getting the right fuel at the right price will be a major challenge for vessel operators seeking to comply with the new emission standards.'

Annex VI came into force on 19 May 2005 and, by the end of June, had been ratified by 25 countries representing 63% of world tonnage. It imposes a global cap of 4.5% sulphur content in bunkers and will impose a much more stringent limit of 1.5% in designated SOx emission control areas or 'SECAs'. The first of these – the Baltic – comes into existence on 19 May 2006 and the North Sea and English Channel SECA starts in autumn 2007.

'We anticipate problems with availability of the low-sulphur fuel required in the first SECA, both in quantity and geographically, and there is also likely to be a significant cost premium,' says Tony Baker, manager of North of England's risk-management department.

The club is thus advising members to plan well ahead to obtain suitable bunkers. In a special supplement to the 60th issue of its loss-prevention newsletter Signals, North of England has also spelt out the precautions shipowners need to take when stemming bunkers – particularly the importance of obtaining a representative sample.

'All samples should be sealed and signed by the supplier and the ship's officer in charge of bunkering operations,' says Baker. 'Shipowners also need to ensure they obtain properly completed bunker delivery notes, which should include a signed declaration by the supplier that the sulphur content is less than 4.5% or 1.5% as required and that the fuel is within the specification defined in MARPOL annex VI regulation 18.'

Other issues covered in the supplement include compliance certification, record keeping, managing dual pipe and tank systems, blending with marine diesel, exhaust-scrubbing technology, charterparty issues and EU proposals to reduce sulphur limits further in European ports in 2010.

Ship operators still overlooking risks from hatch covers by North of England P & I Club  on 22 Jan  2005
The level of losses suffered by the shipping industry due to defective or poorly maintained hatch covers shows no signs of diminishing, according to a leading P&I club.

In the latest issue of its loss prevention newsletter Signals, the 50 million GT, A- rated North of England P&I club says by way of example that it continues to experience three to four claims each year valued between US$ 500,000 and US$ 1,000,000 for water-damaged cargoes resulting from hatch-cover defects.

'The irony is that the cost of preventing these losses can usually be measured in a few thousand dollars or less,' says Tony Baker, head of the club's risk-management department. 'Often all that is necessary is the replacement of some defective rubber seals, some minor repairs to steelwork or sometimes just cleaning down a coaming.'

Baker says most problems are experienced on older and smaller ships. 'However, larger and newer ships are not exempt from hatch-cover problems and often give rise to the largest individual claims. No-one is immune.'

North of England is reminding its members of the importance of regularly testing hatch covers for weathertightness, using either a traditional hose test or ultrasonic leak detection. Though the latter requires specialist equipment and trained personnel, it is more accurate and avoids the risk of damaging any cargo in the holds.

The top five hatch cover defects identified by North of England are: seal rubber permanent set beyond the point of replacement; seal rubber worn, torn, displaced or missing; temporary seal fixes; wastage of steel support pads or coaming side plates; and blocked drain holes in hatch covers and coaming corners.

According to Baker: 'All hatch-cover seals should be replaced when the permanent set reaches half the design compression or if any part of the seal is damaged. The use of proprietary sealing tape or high-expansion foam may be acceptable as an additional precaution on a well-maintained hatch cover, but is not acceptable as an alternative to proper permanent repairs.

Forged Bills of Lading - West Africa

The Association would like to inform its Members about the problems encountered with forged Bills of Lading in West Africa. Following recent investigations it was revealed that the problem is quite wide-spread and forged bills are presented regularly.

Forged bills often pass the scrutiny of clerks working in agent’s offices who consequently issue 'Release Orders', enabling the cargo (usually containers) to be obtained from the terminal. Subsequent investigation and close examination of forged bills have shown various differences which might have been noticed had they been examined closely, or compared with genuine bills or the manifest in question.

Most of the forged bills presented in the past have been produced by back street printers and the printing is often poor quality. The following points highlight the common problems that were encountered when investigating this problem.

• In some instances the shipping line motif has not been reproduced correctly or there have been spelling mistakes.

• Words have been missing from the standard print on the front of the form, where details of a particular shipment should be placed.

• Sometimes in the right hand, top corner, where the bill of lading number is entered, the layout of the paragraphs has been different from those on a genuine form.

• On the rear of the form, whole paragraphs relating to the conditions have been found missing and again the layout has been slightly different from the genuine article.

• Sometimes the colour of the print on the form is either lighter or darker than the original.

• On some forms, there is a water mark which in the case of forgeries, is usually missing.

• The paper used in creating forged blanks is often of a different texture from the genuine article.

• The details of the shipment entered on the front of the bill have been typed on the form in slightly different positions (maybe only a millimetre or two) within the relevant box.

• In some cases the shipment details have been copied incorrectly and, on one occasion, '76 used motor cycles' was typed on the forgery as opposed to '67 used motor cycles' on the original.

The main problem for the shipping agent's clerk is that he doesn't have a sample of the original with which to compare the bill being surrendered to him, or in the case of the shipment details and their position on the bill, a copy of the actual genuine bill to compare the layout. This could possibly be rectified within the agent’s office if a replica of the genuine article can somehow be furnished to the agent. Care has to be taken with this, however, in case a corrupt member of staff uses the genuine bill to ensure that the forgery is accurately made.

With respect to the accuracy of the shipment details, these can be checked against the manifest which will have been sent in hard copy or electronically, the details shown on the manifest being exactly as those on the genuine bill of lading.
Source of information:  Signum Services


Failure to Collect Cargo Problems

The Association has recently faced problems in the Ukraine with consignees failing to collect cargo. The following advice, on the matter, has been received from the Club’s correspondent in Odessa.

“Container lines often face a problem of the delay or failure of consignees to collect cargoes. Due to the recent financial crisis more Ukrainian consignees have become unable to pay and their goods remain stuffed in the containers. At present 400 to 500 containers, with uncollected goods, occupy storage space in the container terminals of Odessa Port.

According to the provisions of most bills of lading if the Consignee fails to take delivery of the goods within a certain period of time (usually – 30 days) from the date of expiry of agreed storage time the Carrier may sell, destroy or dispose of the goods and apply any proceeds of sale in reduction of the sums due to him from the cargo owner.

Under Ukrainian law the Carriers cannot simply pass the cargo to an auction company for public sale. They shall declare a lien, discharge the cargo to a customs warehouse for responsible storage and then dispose of the goods as per the procedure provided for pledged property. In particular the carriers shall apply to the court with a claim against the Consignees and obtain a relevant decision following which the cargo will be sold at public auction by State Enforcement Service of Ukraine. The length of the whole procedure is 3-4 months. The costs include destuffing of the containers, storage of goods at customs warehouse, legal fees and expenses, cost of auction (10-14% of sales price) and fees of State Enforcement Service (10% of sales price).

If the Carriers do not linger accepting numerous promises of the Consignees and sell the cargo within 2-3 months from the time of delivery, whilst storage costs are relatively small, they have all chances to release the container(s) and recover storage and demurrage for account of the cargo.

In practice however the Carriers realize that something has to be done after the containers have stayed in the port for 6 months to several years and they owe USD 50,000 to 250,000 to the port for storage. As a rule by that time many cargoes become worthless and chances to release the containers get smaller every day. The remaining options to release the containers are:

1. Make a declaration on abandoned cargo to the port and let port authorities dispose of it;
2. Destroy the cargo;
3. Take the container with cargo back on the vessel and deliver (re-export) the same to another country for disposal or destruction.

The first option will release the Carrier of port storage costs but not allow him to recover any other losses as all sale revenue will go to the port. The procedure is very formalized. After the Carriers make a declaration on abandoned cargo to the port, the port shall obtain authorization for sale from the Committee on Uncollected Cargoes of Odessa Regional State Administration. The sittings of this Committee are held at intervals which sometimes reach 3 to 6 months. With the above mentioned congestion of containers they can only consider a negligible part of cases at each sitting. Priority may be given to goods which retain some commercial interest to the port, i.e. those which are necessary to the port itself (e.g. construction materials or tools) or can be sold quickly and at good price (e.g. new cars).

If the cargo is “not interesting” (e.g. cars more than 7 years old, expired food products etc) one can wait for the decision of the Committee for years and it may never be taken. Under Ukrainian legislation it is both the ports’ right and duty to dispose of uncollected goods. However the port often says neither “yes” or “no” to the Carriers and unless they take a quick alternative decision, the prospects of payment of storage costs may be hanging over them for years.

It should be noted that the option of abandoning the cargo to the port, if the port/Committee accepts same, is the least costly and problematic for the Carriers for the following reason. Any disposal steps with the cargoes are only possible after customs clearance which requires submission of an original bill of lading, invoice, certificate of origin, certificate of compliance etc. All these should normally be available with Receivers, not the Carrier who thus finds himself in a closed circle. The State Committee on Uncollected Goods does not need the above documents in order to sell the goods. This is a considerable advantage.

Destruction of the cargo requires not only customs permission but also permission of the state sanitary service, ecological service & sometimes phyto or veterinary service. The difficult task of collecting permission may be given to the destruction company, however the total cost of destruction arrangements in Ukraine usually puts the Carriers off, as in combination with storage costs aggregated by the time destruction is considered the price may exceed the total price of the containers. Moreover not all cargoes can be destroyed in Ukraine (e.g. old/damaged cars are not accepted for destruction).

Destruction and sale of uncollected goods in other European countries is generally less costly and formalized than in Ukraine. So after exploring all the above options the Carriers often resort to re-export. This is quite expensive and also requires customs clearance, but at least it allows the containers to be removed from the Ukraine which is renowned for bureaucracy in resolving seemingly straightforward problems.

Besides if the Carriers undertake destruction or re-export of long-stuck cargoes they have some chances to obtain a discount for storage costs from the port which is also interested in getting its storage spaces free.

Summing up the above, time is a key factor with uncollected cargoes in Ukraine. The Carriers’ losses/costs may only be reduced if they start disposal of uncollected goods by any option 2-3 months upon the vessel’s arrival. It is also reasonable to appoint a local correspondent and sometimes a lawyer for providing recommendations and practical help.”
Source of information: Dias Co Ltd,

Distillers Dried Grain
The Association frequently advises members on carriage of Distillers Dried Grain (DDG) or Distillers Dried Grain with Solubles (DDGS). Shippers declare these often as ordinary harmless bulk cargoes but at other times as hazardous under the provisions of IMO’s Code of Safe Practice for Solid Bulk Cargoes (BC Code) for seed cake. In view of this discrepancy in declaration, it needs to be stressed that DDG and DDGS closely resembles seed cake products and it is the view of the Association that they should always be carried on board ships in accordance with the recommendations set out by IMO’s Code of Safe Practice for Solid Bulk Cargoes (BC Code) in its provisions for this class of products. We shall explain.

DDG and DDGS are derived from grain and produced mainly in distilleries as co-products of ethanol for bio fuel use but also, although to a much lesser extent, by alcohol distilleries and breweries. The grain involved is mostly maize but other grains (barley, rice and rye) are also used. During fermentation the major component of the grain, which is starch, is converted to ethanol. The removal of starch results in concentration of other nutrients (protein, fibres, oils, minerals) about three-fold. The solid residual mass separated after fermentation from the aqueous distillate, forms the DDG product. As regards DDGS, the solids in solution are recovered from the aqueous fraction by drying and are blended with the DDG product. Consequently, in chemical composition DDG and DDGS are very similar. They are rich in nutrients and have a long history as valuable feed for livestock. Recent years has seen a sharp increase in the supply of DDG and DDGS resulting from the global drive to develop bio fuels as alternatives to fossil fuels. In the US, the world’s leading producer of Distillers Dried Grains, annual production in 1998 was 1 mill tons, about 10 mill tons in 2006 and expected to further double within a few years. Only a very small portion originates from the beverage industry.

DDG and DDGS are oily products. Typical fat/oil contents are about 10% and moisture contents ranges from about 8 to 12%. From the point of view of chemical composition they therefore closely resemble oil rich seed cake products although, strictly speaking, they are not derived from normal oilseeds. But as oily plant products, and in common with normal seed cakes, they are liable to undergo dangerous oxidation in contact with air. In particular if wet or wetted, the microbiological heating associated with wetting may raise the cargo temperatures to levels at which direct air oxidation can take place and ultimately result in self-ignition and smouldering fires. It is therefore reiterated that the materials should be considered as seed cake and carried in accordance with the recommendations of IMO’s BC Code for these materials. We add that prior to popular interest in bio fuel, the production of DDG was largely limited to the alcohol beverage industry where the co-product formed after fermentation commonly is referred to as Brewers Grain Pellets. This material is specifically included in the BC Code as seed cake.

The BC Code classifies seed cake products into four hazard rankings primarily according to oil and moisture content as follows:

• Seed Cake UN 1386 (a): Products containing more than 10% of oil or more than 20% of oil and moisture combined.
• Seed Cake UN 1386 (b): Products containing not more than 10% of oil and when the amount of moisture is higher than 10%, not more than 20% of oil and moisture combined.
• Seed Cake UN 2217: Products with not more than 1.5% oil and not more than 11% moisture. DDG and DDGS are relatively rich in oil and do not conform with this UN entry.
• Seed cake non-hazardous. Specific seed cake products exempt from classification as hazardous cargoes. Exemption does not include DDG or DDGS.

Before loading, under the provisions of the IMO Code the shipper is obliged to present a certificate from a recognized authority to the Master stating the oil and moisture contents of the seed cake cargo to be shipped. These parameters determine the category of hazard and thus provisions of carriage involved. As regards seed cake (including DDG and DDGS) cargoes falling under UN1386 (a), it should be stressed that IMO allows such products to be carried only with special permission from the competent authorities provided certain conditions are met. For this category, the competent authority in the country of shipment should therefore certify that those conditions are met when granting permission for shipment. Other than that, DDG and DDGS should be shipped according to the provisions set out under Seed Cake UN1386 (b).

Source of information:  Carefully to Carry Committee
With thanks to Kai Aamlid of Brookes Bell

Refer the following links  for the details :

Cargo on board reefer vessels and in reefer containers

A continuous adaptation to changing customer demands is the key to success in the reefer business. The preferences of consumers all over the world determine the trade patterns for foodstuffs. 
There are three types of cargo that dominate the reefer industry: bananas, deciduous fruits and citrus fruits. Other commodities are meat, fish, seafood, vegetables, dairy products and exotic produce. Specialised reefer ships and reefer containers carry all these cargoes, each having their own reefer characteristics. Some cargoes, such as meat, have to be kept either chilled at −1.4°C or frozen at −18°C. Other cargoes, such as fruit, have to be kept at exact temperatures ranging from 0°C to +13°C to ensure that they arrive in the best possible condition. Reefer containers are built to maintain temperatures, not to lower them, and these cargoes should therefore be pre-cooled to the optimal carrying temperature. For some chilled products, such as avocados and asparagus, there has been increasing interest in providing equipment that will adjust the composition of the air inside a container or a reefer vessel. The resulting controlled atmosphere will improve product quality, decrease dehydration and extend shelf life. 
The main problem in the carriage of refrigerated goods is their end use. Such goods are generally destined for human consumption. Most countries have strict health and sanitary provisions prohibiting damaged cargo from being imported. The consequences of contaminated cargo can be disastrous, as it may not only be very difficult to dispose of the cargo, but also very costly both for the company and the P&I insurer. 
Whilst the problems involved in the carriage of reefer cargo are numerous, the main causes of damage are: 
Malfunction of the reefer machinery 
Deviation from the required cooling temperature 
Improper stowage preventing proper air circulation 
Other causes: Cargo shift, poor packaging (cartons), contamination/taint damage, fuel oil due to corroded piping (brine), harvest problems, lack of proper pre-cooling, defrosting, stowage and breakdown of compressor/machinery and the reefer plant. 
The consequential damages are: 
Premature ripening of fruit, or 
Thawing damage to meat and fish products 
Written instructions should always be obtained from the shipper prior to loading refrigerated cargo. These instructions should include details of pre-cooling, carriage temperature (only set point can be controlled), ventilation and stowage requirements (where applicable). The Master should not, however, accept carriage instructions that the vessel will not be able to comply with. Should the Master have any doubt about the instructions, he/she should 
Query the instructions in writing 
Ask for specific confirmation that they are correct 
This is very important, as even the slightest variation in the carrying temperature may result in a substantial claim. If in any doubt, the local P&I correspondent should be called in to assist. 
The Master should obtain a certificate from a class surveyor or other competent expert prior to loading refrigerated cargo on board the vessel. This should confirm the condition and suitability of the refrigeration machinery and reefer compartments for the carriage of the specific cargo in question. For containers, pre-trip inspections should be carried out. 
The carrier must show compliance with the carriage instructions and needs to ensure that proper documentation regarding the carriage can be presented in case of a claim or cargo problem. 
Pre-shipment origin 
Harvest problems, lack of proper pre-cooling of cargo, defrosting and stowage 
Things to consider 
Follow “frozen” or “chilled” cargo specifications as required 
For CA (controlled atmosphere) the carriage instructions should give the recommended gas levels for oxygen and carbon dioxide 
Ensure floor and drains are free of debris 
Arrange stowage mode to optimise vertical cooling 
Ensure weight is distributed evenly in container for maximum stability 
Do not load beyond the end of the T-floor or to the ceiling 
Cargo is to be stowed in cargo holds with vertical air supply and good air circulation. Reefer containers are often stowed by shippers, but otherwise it is important to follow shippers’ instructions and allow for proper air flow 
If palletised, place dunnage in centre channel/”chimneys” between pallets 
Block and brace cargo as necessary 
To cool down the cargo holds, full capacity of the reefer equipment is needed during the first 24 hours and then set on carrying temperature 
For containers, set air vent (for chilled cargo) as per instructions or ensure air vent is closed (for frozen cargo) 
A container vessel carried a number of reefer and other containers. Following very heavy weather and a lot of water on deck, there was a power failure on board affecting approximately 130 reefer containers. The reefer containers contained several perishable, frozen and chilled cargoes. Owners immediately contacted the Club, which in turn contacted a reefer/cargo expert. Information regarding the nature of the cargo in all the containers, their monitored temperatures and the carriage instructions were passed to the expert. All the affected reefer container sockets and circuit breakers were repaired or changed by the crew while at sea. On the basis of the information passed to the expert, he was able to recommend a prioritised sequence of repair, according to which cargo was most susceptible to damage within a short time. It took the crew a few days to re-plug all the containers, but in the end there was no claim. 
This shows that in case of problems with the reefer system it is important to obtain the necessary assistance from a reefer expert and to contact the P&I club as soon as possible. This may help the carriers in avoiding cargo losses and reject cargo claims.
Source: Skuld

Charter party Clauses - Indemnity for insured risks

A number of the International Group Clubs have recently been made aware of a clause that some charterers have been seeking to incorporate into their charterparties, in particular in the container trades. For the reasons set out below the clause has the potential to prejudice an
Owners P&I cover and should not be agreed without considering the full implications of doing so.
There are different versions of the clause but the most common form is:
"Notwithstanding anything stipulated in this contract to the contrary, Owners are responsible for and shall keep Charterers free from all insured risks as covered by P&I."
These or similar words are designed to impose responsibility upon the owner for all P&I liabilities that would otherwise be liabilities falling on a charterer, even if the latter is wholly at fault, in effect requiring the owner to be the charterer’s P&I insurer. The clause also bars recourse claims by the owner against the charterer, when the latter is or would normally be responsible for liabilities or losses incurred by an owner arising from an accident or casualty.
Members are advised to refuse this and similar clauses. Under an Owner's P&I entry liabilities incurred under a blanket indemnity and waiver of recourse of this kind are excluded. There is thus a considerable risk, if an owner agrees this or a similar form of clause, that he will be exposed to significant uninsured liability.
The Association will be happy to advise further, and it is recommended that any member asked to agree this clause or a similar form of clause, should contact the Association before doing so.
All Clubs in the International Group have issued a similar Circular.
Source: Skuld



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