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25 November 2010. Issue 136 in the series
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Welcome to TT Talk Edition 136
Contents:
1. Who is happy to see ‘10,000 lost containers every year’?
2. International Maritime Solid Bulk Cargoes Code (IMSBC Code) becomes mandatory
3. Brief reprise on Standard Trading Conditions (STCs)
4. Conclusion
1. Who is happy to see ‘10,000 lost containers every year’?
On 21 October 2010 the Chairman of the European Parliament Transport & Tourism Committee (Brian Simpson MEP) led a debate in which he claimed that a ‘staggering 10,000 containers were lost each year’, the majority of which fell overboard, and that shipping lines and insurers where happy to accept this figure and do nothing about it. This assertion was in part prompted by the MARIN ‘Lashing@Sea’ report issued earlier this year. The TT Club experience over the last decade would lead us to question the validity of the number of containers lost at sea, but it raises a pertinent and persistent matter for liner operations.
Mr Simpson demanded that the European Commission take immediate action to look at the compensation schemes for local authorities who are left to clear up the debris after all these containers come ashore. This sentiment was echoed by a number of fellow Members of the European Parliament (MEPs) who suggested that shipping lines and insurers should be held responsible for the after effect of non chemical toxic releases into European waters.
The MEPs cited many reasons for all these containers falling overboard. Amongst them was ‘shoddy workmanship’ by those involved in stowing containers, reporting that many containers were lost from short sea ships which ‘often’ released the lashings prior to the ship entering port.
Another reason suggested by the MEPs for containers being lost at sea was that they were mis-declared and were overweight. Mis-declaration of the cargo mass is a serious problem and the MEPs again demanded that containers were weighed at the port prior to loading.
As the Club has repeatedly advised, responsibility for providing accurate gross mass information rests with the shipper/consolidator and thus arguably catching mis-declaration at the port is too late. This is clearly so, but in intermodal transport mandating the opportunity to validate weight at this nodal point is one the Club would support, with the knowledge that all transport contracts allow recovery of costs from malfeasors.
Wrongly declared containers can present the ship planners with a serious problem, as they could be stowed higher or lower in a deck stack than would be correct for their actual mass. A container with a mass larger than those below them will adversely affect the stack’s stability and should be avoided, but equally a container with a smaller mass can compromise stability calculations. Thus, the Club would assert that the risks relate to under and over weight declarations – and the impact is felt as much on land as at sea.
In addition to training for the those involved in lashing containers, one solution suggested by the MEPs was that every container should be equipped with a beacon that would allow it to be located when it was in the sea to alert nearby ships and smaller vessels of its presence so that it could be avoided or recovered. The beacon could also be used to identify the owner so that a penalty could be levied against them for any salvage and clean up costs.
The European Commission replied stating that there were European Directives (2004/35, 2005/35 and 2009/20) that covered insurance risks, compensation and penalties. Furthermore the Commission felt that every action should be taken to protect the world’s seafarers and the proper forum for such action was the International Maritime Organisation, despite the MEPs assertions that the IMO had ‘to be one of the slowest international organisations the world has ever come across’.
2. International Maritime Solid Bulk Cargoes Code (IMSBC Code) becomes mandatory
Following a decision made in 2008 by the Maritime Safety Committee (MSC) of the International Maritime Organisation (IMO), the old ‘Code of Safe Practice for Solid Bulk Cargoes’ (BC Code) was renamed the International Maritime Solid Bulk Cargo Code and its first edition is due to become mandatory from 1 January 2011. This Code is the solid bulk equivalent of the International Maritime Dangerous Goods Code (IMDG Code), which deals with packaged dangerous goods, and has been deliberately aligned with the IMDG Code in name, status and regular revision. In particular, the IMSBC Code will be mandatory and the defined revision cycle will accommodate the latest thinking and accident experience.
Whilst the Code covers stowage and carriage by sea, it also deals with loading and unloading issues.
One issue has been tragically highlighted in the past two weeks. Some cargoes can liquefy if loaded wet and, in that condition, can act like water and cause a ship to take on a list and even in extreme cases capsize. Despite there being a calm sea, this is believed to have happened with a ship carrying nickel ore and crew members are missing believed lost. Another example is DRI which if loaded when wet can emit hydrogen and heat and, in the confines of a ship’s hold, can cause fire and explosion and severe damage as well as complete loss.
The IMSBC Code, by becoming mandatory, places an obligation on the loading terminal as well as the ship’s master to ensure that where the Code makes stipulations regarding loading conditions they are adhered to before and during the loading operation. Some provisions of the Code will also have relevance ashore, eg coal in large bulk quantities whether aboard ship or ashore can self heat and precautions are necessary to deal with this.
The Code includes a Supplement which itself is not mandatory, although some flag states have given the BLU Code that status for their ships.
The Supplement includes the Code of Practice for the Safe Loading and Unloading of Bulk Carriers (BLU Code) and the Manual on such loading and unloading for Terminal Representatives. Also included are the IMO recommendations for entering enclosed spaces aboard ships and on the safe use of pesticides in ships applicable to the fumigation of cargo holds. ICHCA International and TT Club have collaborated to produce a pocket guide in relation to entry into ships’ cargo spaces. Please use the link below to view and download the guide.
>Click here to download the pocket guide<
Consequently, every terminal and ship that handles or carries cargoes covered by the IMSBC Code should hold a copy of the current edition which was published in 2009.
Members are also reminded that the IMSBC Code will in future be revised every two years in the same way as the IMDG Code. Amendment 1 has already been agreed by the Dangerous Goods, Solid Cargoes and Containers Sub Committee (DSC) at its meeting in September 2010 and will be considered by MSC next May for approval. Following that, it will be published this time next year, have a transitional year 2012 and come into mandatory force in 2013. Accordingly, a new IMSBC Code will come into force every odd year whereas with the IMDG Code a new edition comes into force every even year.
3. Brief reprise on Standard Trading Conditions (STCs)
Most contracts entered into by transport and logistics operators are formed by a series of exchanges with their customers through emails, phone calls and so on. But the most effective risk management tool for companies is to make these subject to their standard terms and conditions. This does not happen automatically.
A signature provides indisputable evidence that someone has agreed to the terms of a contract, and is the safest way to incorporate STCs into the contract. Once a person has signed a contract, it generally becomes irrelevant whether or not the terms have been read. In practice of course it does not always happen this way. But there are moments, even if reliance is generally placed on emails and phone calls, where customers do have to sign a document, for example when applying for a credit account. This provides a perfect opportunity to get a customer to agree to the STCs. Credit agreements should therefore contain STCs.
However, a signature may not always be necessary. Another way is to give the customer formal notice of the STCs before or upon the contract formation, thereby ‘incorporating the STCs by reference’ into the contract. The safest way to do this is to include the actual STCs with the notice. It is also helpful if notices containing the STCs are displayed in warehouses and other premises. Furthermore, there should be reference to the STCs on all standard or template stationary, such as letters, faxes and invoices. It is worth considering similar references in any periodic or promotional communication to customers.
If a transport operator has been trading with the same customer for some time, and has drawn the attention of the customer in the past to the STCs, it is easier to prove in the future that the customer was aware of them and had agreed to them.
It seems obvious that the same notice requirements should apply for contracts concluded over the internet. The effectiveness of this will depend on the configuration of the site. A prominently signposted link from the website to the STCs is useful, but consideration should be given to ‘forcing’ the customer both to use the link to view the STCs and to tick a box agreeing to the STCs in the course of placing an order.
Companies should review their procedures relating to their STCs in the same way as they carry out a risk assessment at their warehouse or other premises. Some of the issues to look at are:
- There should be up to date STCs
- Stationery and electronic templates should consistently refer to the STCs
- Any applications for credit should require the customer to sign up to the STCs
- STCs should be easy to find on the company’s website, and placing an order should be dependent on agreement to them.
The Club has for many years had available a variety of trading conditions for Members’ use. In addition, other organisations, such as FIATA, national forwarding associations and similar warehousing or haulage associations, usually have trading condition forms. In any event, it will generally be prudent to consult a shipping and transport lawyer to ensure that any adopted conditions are aligned to your specific operational and legal requirements.
4. Conclusion
We hope that you will have found the above items interesting. If you would like to have further information about any of them, or have any comments you would like to make, please email us. We look forward to hearing from you.
Peregrine Storrs-Fox
Risk Management Director
TT Club
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