Failure to incorporate terms and conditions could find shipping out of its depth

International Transport Intermediaries Club (ITIC) has warned its members of the need to incorporate terms and conditions into their business dealings in order to limit their potential exposure to liability.

ITIC cites the case of the agent at a discharge port who advised a shipper with cargo on board an inbound vessel that that the maximum draft was 40ft. Since the vessel’s draft was just under 41ft, it made an interim call to unload some cargo.

The agent subsequently received a claim from the shipper alleging that the
information it had provided was incorrect, and that vessels with drafts in excess of 40ft could still call at the port, but with two pilots on board, rather than one. The shipper argued that the agent should have been aware of this, and claimed $250,000 in respect of the costs of the wasted call and transporting the excess cargo.

The agent could not find the relevant provision relating to vessel draft on the website of the local pilots’ association, but was subsequently advised by the shipper that there was a link on the agent’s own website to an article explaining that vessels over 40ft could call at the port, providing there were two pilots on board. The agent contacted the local pilots’ association who confirmed that it was possible to call with a draft of 41ft and that the information was on its website, albeit not easy to find.

The agent had incorporated standard trading conditions which limited its liability to ten times its agency fee. This amounted to $36,500, which sum was accepted by the shipper and reimbursed to the agent by ITIC.

ITIC says the claim demonstrates the importance of businesses incorporating their terms and conditions into all their business dealings. ITIC’s terms and conditions, and guidelines for incorporating them, can be accessed at: https://www.itic-insure.com/knowledge/standard-trading-conditions/

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
charlotte.kirk@thomasmiller.com

ITIC says simple checks will defeat shipping industry fraudsters

International Transport Intermediaries Club (ITIC) says ship brokers and agents are among those most at risk of exposure to fraud in the shipping industry, and urges them to carry out simple checks in order to protect themselves.

In the latest issue of its Claims Review, ITIC cites the case of a ship broker which received an emailed freight invoice from an owner for $120,000. The bank account detailed in the invoice was the same as that previously used by the owner but, several hours later, a further email was received, apparently from the owner, advising a change to the bank account details because the original bank account was ‘no longer available to receive payment due to an internal audit.’

The message was not in fact from the genuine owner, but from a very similar email address created by a fraudster, who had also provided a fake account registration form. The broker failed to notice the change in the email address, and it was only after the owner enquired about the whereabouts of the freight that the scam was discovered. The charterer had to pay the freight again and claimed from the broker for negligence. The broker reimbursed the charterer and ITIC reimbursed the broker.

In another incident, a ship agent received an email purportedly from its principal explaining that the principal’s bank details had changed and that funds were to be sent to a new bank account. Although the new bank account had no apparent link to the principal, the agent duly transferred into it the sum of $53,000. The principal, however, did not receive the funds, because the agent had paid the money into the wrong account, failing to notice that the email address notifying the change of bank account was slightly different to the correct email address of its principal. ITIC duly reimbursed the agent for the full amount.

ITIC says it continues to see a large number of such frauds. While most of the victims and intended victims have been ship brokers and ship agents, ITIC has also received reports from members carrying out a wide range of other activities.

ITIC emphasises that anyone making a payment could be the target of fraudsters, and warns that any message purporting to change bank account details should be regarded with suspicion. It has urged its members when transferring funds to use
the telephone to check account details with a trusted representative at the recipient’s office. Simple checks, it says, will defeat the fraudsters.

To access a dedicated fraud section on ITIC’s website, which contains advice and information relating to potentially fraudulent activity, go to:
https://www.itic-insure.com/knowledge/circulars/fraud-circulars/

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
charlotte.kirk@thomasmiller.com

Tanker brokers count cost of failure to pass on claims documentation

International Transport Intermediaries Club (ITIC) says delay in submitting - or failure to pass on - documentation is the most common cause of claims against tanker brokers. Moreover, the tightening of procedures in a difficult market may serve to make such failures more costly.

In the latest issue of its Claims Review, ITIC cites the case of a demurrage claim for $352,122 which was passed onto a charterer by a broker within the 90-day charter party time limit period. The charterer, however, declined to pay because it had not been given notice that a demurrage claim would be made within the 60-day period provided for in the charter party. Although the owner had informed the broker within the 60-day period that a demurrage claim would be made, the broker had not passed on this information to the charterer.

In the past, this 60-day notification deadline that a demurrage claim was coming had not been strictly adhered to, the owner and charterer tending to concentrate instead on the 90-day demurrage time limit for the relevant documentation to be sent to the charterer. A tightening of procedures by the charterer, however, meant that the claim in this case was rejected, whereupon the owner sought recovery from the shipbroker.

The relevant clause in the Shellvoy charter party provided that failure to give notice extinguished the claim and that subsequent presentation of the claim within 90 days did not remedy the situation. Although, in this case, there were issues as to whether the previous conduct had amounted to a waiver of the right to rely on the 60-day notice period, the fact that the broker had failed to pass on the message meant that it had to contribute substantially to the claim.

ITIC says the failure to pass on claims documentation within the relevant time limit is the most common cause of claims against tanker brokers. It adds that it has also settled liabilities arising from a failure to pass on documents relating to deviation and port costs, among other things.

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

London P&I Club warns on enclosed space entry and testing procedures

The London P&I Club says it continues to see cases of injuries and fatalities associated with entry into enclosed onboard spaces, including cargo holds on bulk carriers where atmospheres have not been treated as potentially dangerous.

In a recent case, two shore staff were permitted by the ship’s crew to enter the cargo hold of a bulk carrier via the usual means of access. But, due to an atmosphere which did not have sufficient oxygen to support life, one member of the shore staff died, along with a crewman who made an attempt to rescue them without following proper emergency procedures.

London Club Loss Prevention Manager Carl Durow says, “Despite the recent introduction of legislation relating to drill requirements for personnel engaged in entry into enclosed spaces, the club is still concerned about the number of spaces which should be considered potentially dangerous but may not be by crew who might focus on the traditional spaces such as ballast tanks and bunker tanks.

“The carriage of goods in bulk which may deplete oxygen content or produce toxic substances remains a threat, together with the dangers arising from the use of fumigants in ships’ holds. Ships’ officers in particular should consider the risks of cargo hold entry at all points during the voyage and ensure that, by means of onboard training, drills and toolbox meetings, crew are also minded to question circumstances in which they and others are entering holds.

“Furthermore, the club hopes that ships’ officers and crew will practise the necessary skills and emergency response procedure established in their safety management systems, so there is every possible chance of a positive outcome in the event of such an incident.”

www.londonpandi.com

London P&I Club reports increased free reserves

THE London P&I Club’s result for the 2015/2016 financial year produced an overall operating surplus of $3.3m, lifting the free reserve to $160.7m. This result was underpinned by a technical underwriting surplus of $15.3m, with the combined ratio standing at 82.5%.

In a circular summarising the result, the club’s management team says there was a substantially improved claims outturn following the unusually adverse experience seen in 2014/15. The club’s annual report will be released as usual in July and will contain further details of developments, including particular reductions seen in the costs of claims in the high severity and attritional retained layers, together with positive developments in the cost of older policy years. The cost of International Group Pool claims notified by other clubs, meanwhile, was in line with expectations.

For the first time since 2008/2009, the club recorded a negative return on its investments, amounting to 2.5% or $11.5m, a position which has been reversed since the year-end.

Moving into the current P&I policy year, the club, which this year celebrates its 150th anniversary, saw further steady growth from existing and new members in its owners’ entry and a year-on-year increase of about 600,000gt following the 20 February renewal. There was also growth in its charterers’ book of business, including the addition of a number of European and Far East-based operators.

www.londonpandi.com

London P&I Club underlines importance of proper enclosed space entry drills

The London P&I Club says a recent claims incident resulting in the deaths of two crew members on board a bulk carrier loaded with coal underlines the importance of proper crew training and awareness in relation to the dangers associated with entry into harmful hold atmospheres.

In the latest issue of its StopLoss Bulletin, the club reports an incident in which the deck crew on an anchored ship loaded with a cargo of coal for discharge were asked to obtain samples from each of the vessel’s cargo holds. A misunderstanding occurred involving the method of sample collection to be employed and, when one of the cargo hatches developed a fault and failed to open fully, the sampling device used from the main deck was discarded.

A crew member entered the hold with the aim of collecting a sample, and unfortunately collapsed at the bottom of the ladder. The crew member had been seen entering the hold by a duty watchman on deck, who subsequently decided to enter the hold himself to effect a rescue. Sadly, he suffered a similar fate. A full muster and enclosed space rescue was undertaken after the alarm was raised by the standby man on deck. Sadly, two fatalities occurred in this incident as a result of the inhalation of an oxygen-depleted atmosphere.

Ian Barr, claims director with the London Club management team, says. “The incident highlights the importance of sound decision-making under such circumstances and the need for proper training of ships’ crews with regard to the potential dangers of bulk carrier hold atmospheres.”

The club has meanwhile reminded its members about new SOLAS Regulation 111/19, which came into effect on 1 January this year. This requires that all persons involved in enclosed space entries, death of crew members, harmful hold atmospheres,and/or those assigned enclosed space rescue duties, are required to take part in enclosed space entry and rescue drills at intervals not exceeding two months. The new SOLAS regulation prescribes both the frequency and content of such drills.

The London P&I Club has recently produced a new Bulk Carrier Hold Safety poster which it hopes will raise awareness of the circumstances under which it is safe to enter a cargo hold.

www.londonpandi.com

ITIC says careless errors result in claims against ship agents

Careless errors by ship agents are resulting in costly claims, according to ITIC.

In the latest issue of its Claims Review, ITIC cites the case of a ship agent which incorrectly calculated two pro-forma invoices in respect of port dues, using the cheaper rate for a cargo of malt, rather than the rate for the cargo of wheat booked for discharge from two ships. The wheat cargoes had been discharged, and the final invoices for port dues sent out, before the error was discovered.

The difference between the invoiced port dues and the correct port dues totalled Euros 14,000. But the owner refused to make up the shortfall because, relying on what it had been told, it had in turn charged the lower amount to the charterer. The claim was settled by ITIC.

Another case referenced by ITIC involved the submission by a port agent of all relevant cargo declarations in respect of a ship which had tendered notice of readiness in a Middle East port. These declarations included a document which the agent had translated into Arabic and English, and which described the cargo and the names of the consignees.

When the ship arrived, the only berth at which it could discharge was not available for a further ten days. The mistakes in the translation of the cargo declarations were subsequently noticed, resulting in a three-day delay in clearing the ship for berthing, which coincided with the last three days of the overall ten-day delay.

The owner claimed against the port agent for the full ten-day period of delay, arguing that the ship had not legally been able to berth due to the documentary error. ITIC helped the agent negotiate a settlement based on 50 per cent of the overall delay of $110,000, which ITIC paid.

ITIC says, “Errors such as these put pressure on commercial relationships. Attention to detail is important.”

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

London P&I Club advises closer focus on masters’ night orders

The London P&I Club says its ship inspection department has recently observed a number of negative findings in connection with masters’ night order books.

In the latest issue of its StopLoss Bulletin, the club notes, “The value of masters’ night orders should not be under-estimated in the quest for the efficient and safe performance of a ship, particularly during port calls. Invariably, deep-sea masters function as ‘day-workers’ and, with an early morning ETA at the pilot station, there is a great deal for ships’ officers and crew to prepare after a long voyage. Efficient planning in advance can help an operation to be carried out in a controlled and safe manner with the minimum of stress for all parties.

The master’s night orders are traditionally a set of bespoke instructions for overnight bridge officers to digest and act upon to ensure that, by the time a ship reaches the pilot station, all required crew are at their stations and all physical preparations are made, and the ship is in all respects ready to enter port.

The club says, “When writing night orders, there are a number of points which could be included in the instructions to be considered by the master. These include calling the master with sufficient time available to appraise the full navigational situation and to develop proper night vision before reaching the pilot station or taking the con, and calling the pilot station to confirm ETA and berthing prospects. Masters’ night orders should also seek to ensure that day crew are called at a reasonable time so that items such as anchors are cleared, pilot boarding arrangements are safely in place, and flags/call signs are ready to be run up.

“Consideration should also be given to calling the duty engineer to ensure that engines are on standby suitably in advance of being required for manoeuvring. It is also important to endeavour to ensure that bridge manning is increased as required, that mooring ropes are prepared, and that bridge arrival checklists are completed, and required systems checked.

www.londonpandi.com

London P&I Club warns on failure to preserve VDR data

THE London P&I Club says failure to preserve Voyage Data Recorder (VDR) data in the event of an incident can compromise the owner’s position in the event of a claim

In the latest issue of its StopLoss Bulletin, the club says that its ship inspection programme confirms that the operation of VDR units is generally well-understood by its shipowner members. But it notes that there have nevertheless been instances where masters have failed to perform the steps required to preserve VDR data, or failed to recognise circumstances in which such data – and particularly voice traffic on VHF and on the bridge – may be very valuable in the defence of a claim.

In one instance, a ship heading into port was presented with a ‘head-on’ situation as described in Rule 14 of the International Rules for the Prevention of Collisions at Sea. Although it was a departure from the rules, a deal was struck on the VHF between the two ships, involving an alteration of course. The ships subsequently collided, resulting in a substantial claim on the club.

The club says, “The master did not save the VDR data, presumably because the data could have been incriminating and used against him. While the same information was not likely to have reversed any liability for the incident, it may have been useful evidence to assist in reaching an amicable settlement. The effect on the settlement of the claim cannot now be quantified, although it stands to reason that the shipowner would have preferred the master to have saved the information. In an attempt to protect himself, the master may have exposed the owners to a larger settlement.”

In another incident, a container ship entered with the club was forced, due to impending poor weather, to depart from a container berth with many of its containers unlashed. Unfortunately, when the ship was exposed to the poor weather, a number of the unlashed containers were lost overboard. The club says, “In some ways, understandably, the master did not consider this situation to be one where VDR data ought to be saved. But, during the handling of the ensuing claim, the club felt that the VDR data would probably have represented a valuable narrative of the exchanges between the port authorities and the bridge team and could have helped greatly in the claim negotiation.”

The club notes that onboard emergency guidance manuals usually contain aide memoir sheets to assist the master with those structured and ordered tasks which need to be taken in priority order, and are aimed at ensuring that steps are not missed in an emergency. It advises its members to consider the insertion or addition of VDR data saves in an appropriate position on such lists.

www.londonpandi.com

London P&I Club reports increased free reserves

THE London P&I Club’s result for the 2012/2013 financial year was a surplus across all classes of $9.4m, increasing the free reserve to $154m.

Claims experience over the financial year was mixed. In the retained layer there was an encouraging picture at the attritional level, involving claims up to $100,000. There was also a continued moderation of claims in excess of $1m, but there were additional indications of increasing claims cost and activity in the band between $100,000 and $1m. Meanwhile, the club’s management team notes that adverse claims experience within the International Group’s Pool layers means that 2012/13 is looking likely to prove the most expensive year on record for claims on the pooling system.

In the year to 20 February 2013, the London Club recorded a return on invested assets and cash of approximately $23.7m, or 6.9 per cent, reflecting positive results across the whole of the asset base and, in particular, benchmark-beating performance by the investment-grade fixed income holdings, which form the lion’s share of the portfolio.

Over the course of the policy year the club secured additional entries from many existing members as well as from new members in countries which included Germany, Greece, India, Turkey, the United Arab Emirates and Ukraine.

There was also a relatively high level of ships withdrawn during the year, some sold for further trading but many for scrapping. As a result there was a small increase in the club’s owned entry to approximately 41.5m gt. In addition, the charterers’ facility continued to make steady progress. www.londonpandi.com

London P&I Club reports negative findings on enclosed space entry

THE London P&I Club has noted that reports generated during the club's ship inspection programme show an increase in negative findings in relation to enclosed space entry on board ships. It says that, despite a global acceptance of industry standard procedures, incidents continue to occur year-on-year.

In the latest issue of its StopLoss Bulletin, the club notes, “Inspection findings vary in nature, but the enclosed space entry permit to work (PTW) and associated prescribed steps regularly present themselves as sources of negative findings in ship inspections. Even when fully completed PTW forms are presented, inspectors are repeatedly presented with: completed single PTWs which purport to cover entry into multiple enclosed spaces; checklists fully completed and signed off by the responsible officer and master, but the required safety equipment is not actually in place; no evident consideration of how a rescue would be undertaken from the space in the event of an emergency; no provision for continuous monitoring of the atmosphere of the space; oxygen/gas detection equipment presented in either a dubious condition or without proper evidence of calibration to statutory requirements.”

The club adds, “An alarming trend of tick-box culture has recently been detected in routine ship inspections. The importance of proper consideration of the steps which are required for an entry permit to be granted should not be overlooked. The exact requirements for each enclosed space entry will vary depending on, amongst other things, the location on board, the status of the ship, concurrent work, the previous contents of the space and the type of work to be conducted in the space. For this reason it is not acceptable practice to allow a single permit to apply to multiple space entries, particularly when these spaces are of a different designation.

“The officers in charge of the operation should always focus on their primary responsibility, which is to ensure that the operation is conducted as safely as practicable. However, should any further motivation be required, the club is aware of at least one case where a responsible officer faced criminal charges for allowing an operation to be conducted in an unsafe manner – despite having signed the paperwork suggesting that all necessary safety precautions were in place.”

www.londonpandi.com

London P&I Club issues warning on lifting equipment maintenance

THE London P&I Club has warned that failure to maintain a proper record of the inspection and testing of onboard lifting equipment can jeopardise owners’ position in the event of a claim.

The cub’s inspection programme has recently highlighted several instances of negative findings regarding the ship’s lifting equipment register. In the latest edition of its StopLoss Bulletin, the club says, “Anyone procuring lifting equipment should ensure that they are buying genuine and properly certificated equipment as there are counterfeit products on the market. All ships’ lifting gear should be fully recorded in a register, and a system of condition inspection and testing should be implemented in accordance with statutory requirements.

“If the equipment is not properly inspected and tested at regular intervals, there is a risk that it may present a hazard to the safety of the crew, and a lack of records could deprive owners of valuable evidence when dealing with claims. For example, a recent case involved serious damage to an ISO container and its contents during cargo operations when the container was dropped from height due to a parted wire.

“Owners can argue that a wire parted due to the stevedores’ mishandling, but they would need to show that the equipment had been maintained. If appropriate maintenance records are kept, owners should be able to demonstrate that the failure of the wire was not due to their omission. In the absence of such records, however, proving that the equipment was well maintained will prove challenging.

“Equally, records alone are not enough, as non-destructive testing can easily demonstrate whether or not a lifting wire has been properly maintained. Relevant paperwork should be kept up to date and the condition inspection and testing status of lifting equipment should be taken into account in preparing for heavy lift permit to work operations and in associated task risk assessments.”

www.londonpandi.com

London P&I Club sets general increase for next policy year

THE London P&I Club has set a general increase of 12.5 per cent in annual P&I call rates for the 2013/2014 policy year.

Commenting on the background to the decision, Ian Gooch, chief executive of the Club’s management team, says, “Claims in the Club’s retention layer for the current policy year show some encouraging signs, especially at the attritional level, where increased deductibles seem to be playing a part. Although claims in the highest band, in excess of $1m, are running at a moderate level, this band is volatile and has been very expensive in other, recent years. Overall, there remain clear signs of a strong inflationary trend, particularly in the cost of individual larger cases, something which may be reflected by the experience of the International Group Pool this year. The claims picture there is extremely unfavourable, both in terms of claim frequency and average claims severity.”

With regard to investments, the London Club year-to-date return stood at 4.05 per cent at 20 August, and the Club says a cautious approach to planning for the part to be played by investment contributions continues to be required in the current uncertain and low-growth environment.

Gooch concludes, “The Committee recognised the depressed market conditions in different shipping sectors. But, with claims increasing, the Committee considers it to be in the best interests of Members and Club to safeguard its financial strength and move to more balanced underwriting performance. It is against this and the said background that the decision was taken to set a general increase in annual call rates for the 2013/2014 policy year of 12.5 per cent. The Committee also emphasised that attention should be paid to the adjustment of rating and deductible levels for individual Members, where their record and/or exposure to risk requires it.” www.londonpandi.com