Ship agent liable for negligence leading to excessive dunnage disposal charges

International Transport Intermediaries Club (ITIC) has recently reported a dispute in which a ship agent in Australia was held liable to its shipowner principal for excessive charges demanded by a contractor for the disposal of dunnage and other materials related to the packing of cargo.

The agent was asked by its principal to arrange for the disposal of the materials upon the arrival of the principal’s ship in Australia, where strict local quarantine regulations apply. The agent engaged the services of a licensed disposal company which, although it had previously been used to dispose of ship’s garbage and other more hazardous waste, was not the company the agent normally used to dispose of dunnage.

The agent instructed the disposal company by telephone, without verifying the total cost. The materials were disposed of and the disposal company submitted its bill for approximately Aus$70,000. When the owner questioned the unusually high charges, the disposal company said it had charged its usual rate for licensed waste disposal. Subsequent enquiries by the agent, meanwhile, confirmed that the amount which its usual dunnage disposal company would charge to deal with dunnage and packing materials would have been approximately Aus$7,000.

The owner was unwilling to pay more than the reasonable costs which should have
been incurred. Because the agent had been negligent in its selection of the disposal company, ITIC reimbursed it the balance of the invoiced sum, amounting to Aus$63,000, which the agent was liable to pay the owner.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Bureau Veritas pursues external growth strategy with the acquisition of TMC Marine

Neuilly-sur-Seine, France, May 04, 2016 – Bureau Veritas has reinforced its position in value-added marine services with the acquisition of leading international consultancy TMC Marine Ltd.

TMC has been providing pre and post casualty advice and support to the marine industry since 1979. The business focuses on marine claims and accident investigations, salvage and wreck removal consultancy and marine expert witness services for a client base that spans P&I clubs, law firms, marine insurers, salvage companies and ship owners.

Headquartered in London, TMC has a network of offices in the US, China, Singapore and Australia. It employs over 50 people and generated revenues of EUR 8.5 million in 2015.

“Our Marine & Offshore business, the historical activity of Bureau Veritas, is one of our eight key growth initiatives to 2020. As such, it is evolving rapidly. We are diversifying our service portfolio and developing our technological leadership in order to meet all our clients’ expectations in risk management. TMC is a recognized brand that enables the Group to enhance its offering to the marine insurance consultancy market, thereby expanding the services that we already provide in offshore to the maritime market,” commented Didier Michaud-Daniel, CEO of Bureau Veritas.

 “We are very happy to be joining the expanding Marine & Offshore division of Bureau Veritas, a leading service provider to the international marine industry. This is a strategic alliance that will provide TMC with technical synergies and greatly enhance the services we can offer to new and existing clients while at the same time continuing our plan of further geographic expansion,” added Tony Bowman, Chairman of TMC.

 http://tmcmarine.com/

About Bureau Veritas

Bureau Veritas is a world leader in laboratory testing, inspection and certification services. Created in 1828, the Group has 66,000 employees in 1,400 offices and laboratories around the globe. Bureau Veritas helps its clients improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.

Bureau Veritas is listed on Euronext Paris and belongs to the Next 20 index.

Compartment A, ISIN code FR 0006174348, stock symbol: BVI.
For more information, visit www.bureauveritas.com

Contacts
Analysts/Investors: Mark Reinhard: +33 (0)1 55 24 77 80 finance.investors@bureauveritas.com	Press: Cathy Pianon: +33 (0)7 71 43 12 96 cathy.pianon@bureauveritas.com Véronique Gielec: +33 (0)1 55 24 76 01 veronique.gielec@bureauveritas.com

S&P affirms London P&I Club rating on an interactive basis

Following S&P’s recent announcement that it would soon be withdrawing public information ratings for insurance companies in Western Europe, the London P&I Club took the decision to proceed to an interactive rating. The process has just completed, and S&P has confirmed the Club’s rating at BBB; Outlook Stable.

Ian Gooch, CEO of the Club’s management team comments, “A key and pleasing element in the interactive rating is S&P’s positive assessment of the Club’s financial strength, with capitalisation to remain extremely strong according to their capital model. At the same time – and as in S&P’s previous pi based ratings – the levels of our recent combined ratios are highlighted as constraining the rating. This is an aspect of the Club’s performance which we are focused on improving so it is therefore also pleasing to note S&P’s views on the measured and achievable planning that we have in place to strengthen technical results.”


www.londonpandi.com

www.standardandpoors.com

Concern persists over unpaid wages despite positive MLC enforcement

Specialist marine insurance intermediary Seacurus says that overall confidence in the successful implementation of the Maritime Labour Convention 2006 (MLC) should not conceal the fact that there is continuing concern over the risk of abandonment and the timely payment of crew wages.

Thomas Brown, managing director of Seacurus, says, “Recent figures from the Paris Memorandum of Understanding (MoU) on Port State Control indicate that the MLC Convention is being well-enforced, with 113 ship detentions relating to MLC deficiencies recorded since MLC 2006 entered into force on 20 August, 2013.

“Overall, it seems that progress is being made and that MLC can deliver on its promises. But the Paris MoU figures also show that detainable MLC-related deficiencies were most frequently recorded in the areas of ‘payment of wages’ (39.5 percent) and ‘manning levels for the ship’ (28.6 percent).

“Moreover, a survey earlier this year by seafarer website and employment agency Crewtoo appears to bear out the Paris MoU data. Almost half the respondents to the survey, which gathered the views of over 1,000 seafarers, said they had had to wait at some point for delayed wage payments to be made by their employer. The same survey also revealed that 36 per cent of seafarers had been forced to work without pay, while 17 percent had been abandoned.

“Overdue salaries are one of the red-flag indicators of financial distress for shipping companies, and many seafarers are being subjected to undue stress, frustration and uncertainty over wage payments. MLC 2006 states that wages should be paid at least every month, so it is disappointing to see that so many seafarers have experienced delays. There are clearly reasons for concern in this regard.

“It seems that seafarers feel positive about the effect that MLC 2006 is having on their day-to-day existence, reflecting both the spirit and the letter of the convention. Seafarers are aware of the protective systems in place, such as the Seacurus CrewSeacure cover, and are willing to research the subject before sailing. This could be something of a tipping point for the industry. But it is not quite time for pats on the back and high-fives. There are still problems which need to be addressed.”

The latest issue of the monthly ‘Seacurus Bulletin’ can now be accessed on the Seacurus website at http://goo.gl/mxnXFu . In addition to MLC 2006 enforcement news, it includes articles on piracy, the OW Bunker & Trading collapse, and the ban on ransom payments for terrorism.

Seacurus Ltd is an FCA-regulated insurance broker, founded in 2004, specialising in bespoke revenue protection cover for the maritime industry. It is a market leader in the design and implementation of solutions to protect companies from unforecasted balance-sheet impacts, including credit default, charter party cancellations, hijackings and voyage disruptions caused by political events. Seacurus established the first delegated underwriting binding authority for marine kidnap insurance and is an approved Lloyd’s Coverholder. www.seacurus.com

Formed in 2007, Barbican Group Holdings is an insurance group writing business predominantly through its syndicates at Lloyd’s. It also has a non-Lloyd’s financial solutions business based in Guernsey which offers insurance and reinsurance programmes to the global market. Barbican Syndicates 1955 and 6113 at Lloyd’s has a stamp capacity of £227.5m for the 2013 year of account and underwrites cyber liability, financial and professional lines, healthcare liability, international casualty reinsurance, marine insurance, marine reinsurance, North American casualty reinsurance, property, property reinsurance and corporate, middle market and scheme/affinity group clients in the UK and Ireland. www.barbicaninsurance.com

ITIC warning for ship managers on unsuitable cargoes

ITIC has warned ship managers of the potentially severe financial implications of nominating unsuitable ships for the carriage of specific cargoes.

In the latest issue of its Claims Review, ITIC cites the case of a commercial ship manager which fixed a ship for a voyage of 4,000 metric tonnes of ammonium nitrate in large bags. This type of cargo had been carried by the manager’s fleet on several occasions, but the cargo had always previously been described as being in loose/bulk condition.

After the ship had loaded about 950 metric tonnes of cargo, port state control came aboard and stopped any further loading, as it was established that the ship had permission to load ammonium nitrate only in loose condition. After checking the position with the owners, the classification society and the flag state, it was confirmed that the ship which had been fixed was not suitable to load the ammonium nitrate in bags.

In order to keep costs to a minimum, the commercial manager fixed a different ship in its managed fleet for the same cargo, with the agreement of the charterers. The charterers then looked for reimbursement of the additional costs to the owners, who in turn held the manager liable. ITIC duly settled this claim on behalf of the manager.

Noting that the claim could have been significantly higher if a suitable substitute vessel had not been available, ITIC says that commercial managers need to be fully aware of all the limitations of ships under their management with regard to the carriage of particular cargoes. It emphasises that they need to pay careful attention to the detailed description of any cargo which they agree to commit their owners to in any charter party fixture.

Copies of the ITIC Claim Review can be requested from: chris@merlinco.com

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Seacurus provides industry first with insurance cover for unpaid crew wages

SPECIALIST marine insurance intermediary Seacurus has launched a new insurance policy to indemnify seafarers in the event of the financial default of their employers which, for the first time, offers recompense in respect of unpaid crew wages. The policy will enable all employers of seafarers to meet their regulatory obligations under the Maritime Labour Convention 2006 (MLC), which enters force on 20 August, 2013.             

The new policy, CrewSEACURE, provides up to $10m of cover in the event of an employer’s financial default. It includes personal accident protection and covers medical expenses as well as subsistence and repatriation costs. It will also respond, unlike any other product currently on the market, in respect of the non-payment of seafarers’ wages, for a period of up to six months.

CrewSEACURE is underwritten by first-class A-rated global insurers in the Lloyd’s and Company markets in London. It offers an independent round-the-clock claims service managed by Thomas Miller Claims, the world’s leading maritime ‘people claims’ service provider. It also includes a claims mandate which protects the interests of shipowner and seafarer alike to ensure a fair claims process.  A 24-hour helpline is available for seafarers and their advisers, who are afforded direct access to the insurers’ claims adjusters. In order to deliver the CrewSEACURE product to market, Seacurus will act as managing general underwriters with access to Lloyd's security led by Brit Syndicates Ltd and companies' market security provided by Aspen Insurance UK Ltd.

CrewSEACURE provides cover which meets flag state and port state control approval, and is authenticated by a ship-specific MLC2006 insurance certificate to demonstrate compliance with the Maritime Labour Convention.  Comprehensive cover is provided at low cost, with premiums of as little as 50 cents per-seafarer per-day available.

Thomas Brown, managing director of UK-based Seacurus, says, “CrewSEACURE has been designed to cover the requirements of MLC. The shipping industry faces economic challenges. Not all shipowners and operators will survive the current global recession, and this will inevitably have a knock-on effect on those seafarers who are caught up in the resulting bankruptcy cases. Just recently, for example, we saw arrest orders issued by a court in the Far East in respect of two tankers after crew complained they had not been paid for almost three months.

“The fact is that any cover that does not provide for the indemnification of unpaid wages fails to adequately protect seafarers against the real risk of abandonment. History shows that the only way for seafarers to recover unpaid wages in the absence of any form of financial security is to remain on board until the ship is sold. This serves only to make matters worse for the shipowner as well as for seafarers and their families, who suffer further financial loss and hardship as a result of the long delays that can accompany the judicial sale of a vessel. CrewSEACURE removes the need for seafarers to remain on board an abandoned vessel by ensuring that they receive their unpaid wages before being repatriated home to seek new employment opportunities.

Giles Heimann, secretary-general of IMEC (International Maritime Employers Council Ltd), says, “IMEC and its members believe that the Maritime Labour Convention is the most significant piece of maritime legislation for many years. We are committed to supporting our members in the run-up to its introduction in August 2013, and to working with them to secure effective and fit-for-purpose provision for seafarers and employers alike. I am pleased to see that companies such as Seacurus are providing options for the industry, to support their obligations under MLC.”

Thomas Brown concludes, “MLC is a watershed moment for shipping. It has been called the seafarer’s ‘bill of rights’, and with good reason. Previously, there had been a lack of political will or force of law to encourage the insurance industry to provide a workable system of financial security. But that will change with the imminent implementation of MLC. Seacurus believes that effective employment protection must include crew wages. For that reason, it has provided an effective system of financial security to put an end to the spectre of seafarers becoming the cashflow casualties of their employers’ insolvencies.”

For a photo of Thomas Brown, email: chris@merlinco.com

Seacurus Ltd is an FSA-regulated insurance broker, founded in 2004, specialising in bespoke revenue protection cover for the maritime industry. It is a market leader in the design and implementation of solutions to protect companies from unforecasted balance sheet impacts, including credit default, charter party cancellations, hijackings and voyage disruptions caused by political events. Seacurus established the first delegated underwriting binding authority for marine kidnap insurance and is an approved Lloyd’s Coverholder. www.seacurus.com

Ship operating costs increase again but insurance costs plummet

International accountant and shipping consultant Moore Stephens says total annual operating costs in the shipping industry increased by an average 2.2 per cent in 2010. This compares with the 2.0 per cent average fall in costs recorded for the previous year, which was the first time since 2002 that operating costs had fallen. All cost categories showed an overall increase this time, with the exception of stores and insurance – with the latter falling by 4.7 per cent overall.

The findings are set out in OpCost 2011, Moore Stephens’ unique ship operating costs benchmarking tool, which reveals that all individual categories of vessel covered by the research, with the exception of handysize product tankers, experienced an increase in total operating costs in 2010, the financial year covered by the survey. Costs for the three main sectors covered – bulkers, tankers and container ships – were all up. The bulker index increased by 5 index points (or 2.9 per cent) on a year-on-year basis, while the tanker index witnessed a two-index-point (1.1 per cent) rise. Meanwhile, the container ship index (with a 2002 base year, as opposed to 2000 for the other two vessel classes) was up three index points, or 1.9 per cent. The corresponding figures in last year’s OpCost report showed falls in the bulker, tanker and container ship indexes of 1, 5 and 13 points respectively.

There was a 3.2 per cent overall increase in 2010 crew costs compared to the 2009 figure, which itself represented the most moderate increase for a number of years. In 2008, the report revealed a 21 per cent increase in this category. Tankers overall experienced increases in crew costs of 2.7 per cent on average, compared to 2.5 per cent in 2009. For bulkers, meanwhile, the overall increase in crew costs was 4.0 per cent, while for container ships it was 2.9 per cent.

For repairs and maintenance, there was an overall increase in costs of 4.5 per cent, compared to the 11.3 per cent decrease recorded for 2009. The biggest increase here was the 8.0 per cent recorded in the container ship category. For bulkers the increase was 7.6 per cent, and for tankers just 0.8 per cent. There were variations in the cost movements experienced within vessel categories. Whereas operators of handysize bulkers spent an average of 12.0 per cent more on repairs and maintenance in 2010, those running capsizes recorded an average increase of just 3.7 per cent. And whereas the average increase in repair and maintenance costs for panamax tankers was 8.4 per cent, operators of aframaxes actually spent 1.3 per cent less than in 2009. In the container vessel sector, meanwhile, increased repair and maintenance spend was fairly consistent across all box ship tonnage sizes covered by the report.

For the second successive year, OpCost reveals a fall in the level of spending on stores – down by 1.0 per cent. Overall, expenditure in this regard was actually up in the bulker sector, by 1.1 per cent, but down in the tanker trades (by 3.4 per cent) and in the container ship market (also by 3.4 per cent).

The insurance category showed the biggest movement in terms of costs – down overall by an average of 4.7 per cent across all vessel types in 2010. For tankers, the insurance spend was down by 7.9 per cent, for container ships by 3.8 per cent, and for bulkers by 2.9 per cent. Panamax bulkers were the only individual class of ship to spend more on insurance in 2010, while the likes of small chemical tankers (10.4 per cent), VLCCs (9.8 per cent) and aframax tankers (9.0 per cent) spent considerably less.

Moore Stephens partner Richard Greiner says: “The movement in operating costs during 2010 is fairly consistent with what we might have expected, bearing in mind the big fall in costs in 2009 and the continuing economic downturn. The average overall increase in crew costs of 3.2 per cent, up one per cent on the figure for 2009, is clearly a matter of continuing concern for owners and operators. But it is modest in comparison to some of the very significant increases recorded in this category in earlier years. The industry must continue to invest in personnel, and it is encouraging to see that it is not only doing so, but also doing so without suffering the huge surge in outgoings that was giving such a lopsided look to operating costs a couple of years ago.

“The 4.5 per cent average increase in expenditure on repairs and maintenance compares with a decrease of more than 11 per cent in 2009, but is significantly down on the 13 per cent-plus increases recorded in both 2007 and 2008. It is also an indicator not only of increases in the costs of labour and raw materials, but of a continuing willingness on the part of the industry to pay for the upkeep of its ships which, with increasingly stringent national and international regulations coming into force covering the likes of corporate and environmental responsibility, is a prerequisite for the continuing ability to trade.

“Spending on stores was down in 2010. This is perhaps something of a surprise, since the category includes lube oils, the price of which continued to rise throughout 2010, along with the cost of the additives which go into its manufacture. But the more widespread fitting of Alpha-type lubricating systems, the fall-off in some areas of trade, and the resort by some to slow steaming, appear to have made their effect felt in this regard.

“Insurance costs were the big mover in this year’s report, with spending down by almost 5 per cent. Conditions in the insurance market were more benign in 2010 than for a number of years. The general increases announced by the P&I clubs for 2011 are in most cases at their lowest levels for more than ten years, reflecting improved figures for 2010 and more optimistic forecasts for 2011 and 2012. The results of OpCost also point to a level of informed discernment in the commercial underwriting sector, with the likes of chemical tankers – notoriously ‘safe’ ships – paying over ten per cent less for their insurance in 2010 than in the previous year. Tighter regulation and stricter port state control should result in fewer accidents and, in an ideal world, will feed through to more favourable insurance rates.

“The global economic outlook remains both bleak and uncertain. Like other industries, shipping will both play a part in its recovery and suffer from its consequences. But the indications from OpCost 2011 are that operating costs are under a measure of control, which could prove crucial over the next couple of years.”

The latest report marks the eleventh year of publication for OpCost, which this time includes data from 2,600 ships, a record number. Running cost information is obtained on a confidential basis from clients of Moore Stephens, and from other shipowners and ship managers who submit data for inclusion. OpCost is widely used for benchmarking running costs, the preparation and ongoing monitoring of business plans and in forensic accounting. Copies of the OpCost 2011 report are available free to owners who submit their data for inclusion, or can be purchased by contacting Richard Greiner at Moore Stephens London.

Bone fide journalists can request an electronic copy of OpCost 2011 by emailing chris@merlinco.com

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 638 offices of independent member firms in 97 countries, employing 20,588 people and generating revenues in 2010 of $2.151 billion. www.moorestephens.co.uk

For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
richard.greiner@moorestephens.com

What price the specialist?

An insurance underwriter has launched a marine cargo policy which is apparently particularly suitable for brokers not used to dealing with traditional marine products. For the first time in the marine market, it is claimed, it will not be necessary to incorporate institute clauses.

This is supposed to make it easy to do business. Perhaps it will. But is it really what we want? For somebody who spent several years staring at the back of Bob Brown’s head at Willis Faber as he assiduously catalogued the wonderfully arcane marine clauses and their meanings, this is sacrilege.

Similarly, all those who spent a lifetime learning about the Inchmaree Clause and the Jason Clause (it worked both ways) will have to find something else not to understand if policies are going to start appearing without the institute clauses in them. It wasn’t just the clauses that appealed. It was the stories behind them, and how they got their names.

To be strictly accurate, a lot of the fun went out of the business when they dreamed up romantic names such as the Institute Cargo Clauses A, to replace what went before. But do we want marine business to be placed by brokers who are not used to dealing with it? The ones who know what they are doing are quite capable of making a mess of things without any help from tyro Tysers.

What is wrong with giving business to brokers who do understand the business? Is this part of the same thinking that is threatening to give us so-called Tesco law firms?

Move over, Cuthbert Heath.

chris@merlinco.com

Supply and demand

This will shock you. This will turn you white. Marine insurance underwriters are complaining that rates are becoming unsustainable and that, if things don’t change, they will stay as they are.

This argument has been running longer than The Mousetrap. And the thing that keeps it running is the fact that underwriters keep on writing business at very low rates.

The brokers, on the other hand, don’t agree that rates are low, and are determined to find even lower ones. Some were seen only this week.

What is the answer? (Please use both sides of the paper). Underwriters are perpetually heading for a disaster which is always just around the corner. Brokers are always looking to shave off a bit more than the next man. The only logical outcome is that rates will always go down, and the only logical winner is the shipowner.

Underwriters could help themselves a bit more. They could find a spokesman to replace Tony Nunn, for a start. Half the underwriters quoted in the paper these days are not really underwriters at all. They are just people photographed coming in and out of Lloyd’s.

Asked if he genuinely believed that rates would go up this year, one underwriter said, “I live in hope”. Interviewed for a response, a broker replied, “I live in Crawley”.

chris@merlinco.com