1. Blow the man down
2. Turbulent times
3. Salvage contracts
4. Pollution prevention
5. Cyber ransoms
6. Climate change damage
7. EEXI transition clause
8. Seafarers International Relief Fund
9. R&D funding to decarbonise
10. Multi-modal legislation in Singapore
Notices & Miscellany
Readers’ responses to our articles are very welcome and, where suitable, will be reproduced. Write to: contactus@themaritimeadvocate.com
1. Blow the man down
By Michael Grey
“We are a seafaring nation” remarked some eminent politician the other day, perhaps more specifically addressing the sentiments expressed by a parliamentary colleague who, demonstrating an acute grasp of geography, noted that we are “an island nation”.
You can probably cavil at each of these observations. As to the first, I became a British seafarer in 1956, and I can honestly say it has been downhill ever since. And while we are an island, the Channel Tunnel and many thousands of aeroplanes tend to reduce the impact of such a statement, which would have resonated more fiercely a century and a half ago.
I should, of course, be able to cite the context of both these pretty meaningless statements, but I cannot entirely recall which was a loud hurrah for the UK government’s recently-published shipbuilding strategy, and which represented an enormous raspberry for the behaviour of P&O Ferries at its offloading of 800 sea staff. It doesn’t really matter which as both observations suit either scenario.
Let’s face it, most of us have been preoccupied by the hideous war in Ukraine and its maritime implications, with some 75,000 Ukrainian crew and around 200,000 Russians employed in the international fleet. Some informative and serious reading about this tragic situation is contained in a pastoral letter from The Mission to Seafarers’ Revd. Andrew Wright and it is to be strongly recommended. He cites the case of a ship in New Zealand with seven Ukrainians and six Russians aboard. Some have been on the ship for 9.5 months but cannot go home and no crew changes are possible. And there are such sad circumstances, with people trying to operate a ship while sick with worry, aboard hundreds of vessels, all over the world.
But let us move to something more positive with the UK Shipbuilding Strategy, which was reissued, in a “refreshed” edition, earlier this month. Fundamentally following the recommendations of Sir John Parker, whose practical and sensible ideas formed the pre-pandemic iteration in 2017, you have to admit that it is positive and optimistic. Its sub-title “A refreshed strategy for a globally successful, innovative and sustainable shipbuilding enterprise” seems to offer some optimism that has been markedly absent in this sector for some time.
It is heavily defence related, with the strategy presented to Parliament by the Secretary of State for Defence, who perhaps unfortunately is now termed our “Shipbuilding Tsar”. They may want to revisit that title. But a National Shipbuilding Office has been established and there were encouraging words from the Prime Minister, who suggests that the strategy is “building on our maritime heritage”. Seriously, we really ought to forget about our heritage, of which there is altogether too much in this country, as it is the present and future that should be concerning us. It was a German comedian who observed a few months ago, about the strange fact that the Brits do more shopping than practically anyone else in Europe, but they don’t make anything.
But we must make something in the shipbuilding sector, because the report claims that the industry supports 42,600 jobs and is worth ÂŁ2.8bn annually and that is surely worth building on.
It is a readable and pragmatic report, but it is a real challenge to see it moving from words on the page into ships under construction, components, designs and worthwhile employment for those active in the industry, with the proposed 150 ships to be built in the next 30 years. There will have to be some real changes in the whole ethos of naval procurement, with, less gold-plating, a smoother flow of orders to the yards, faster processes to move from concept to delivery and less Treasury stop-start interference, all of which ensures that ships are effectively redundant when delivered, at multiples of the original cost.
There are optimistic noises made about non-military ships, but there is no point in ignoring issues of competitiveness and the difficulties of tendering and delivering one-off sophisticated ships, when there are muscular competitors all around Europe, let alone in the East. Obviously, we can build lighthouse tenders, research vessels and other ships that don’t run to series – goodness we put together two mighty aircraft carriers – but it is important that these one-off ships don’t bankrupt the builders, in which case the exercise is a bit pointless. All of which was observed by Sir John Parker, even if the admirals and shipbuilding policy people may have shuddered at his views.
We mustn’t, of course, forget the ship we cannot any longer term as the Royal Yacht, but is now referred to as the “Government Ship” (I prefer to call it “Seaforce One”, which more accurately spells out its terms of reference). This vessel has the potential to cause more trouble than a squadron of Dreadnoughts, with already controversy building about who will crew the blooming vessel, and what on earth it will do when not showing the flag, carrying VIPs, or flogging things we actually make in Blighty. My own view is that she should fly the Red Ensign, be managed by the RFA, with accommodation for a Royal Marine Band. The RN, even though they are to be heavily investing in autonomous craft, will have enough trouble recruiting for the warships they operate.
Finally, returning to our “seafaring nation” theme, it took some doing to unite all political parties in this divided nation, but P&O Ferries, with their HR and PR joint disaster producing 800 seafaring job losses, managed it on steroids. It will be a long time before we are treated to such unity again.
Michael Grey is former editor of Lloyd’s List.
2. Turbulent times
Drewry has recently issued its own analysis on the outlook for shipping in the light of the Ukraine – Russia conflict. As the analyst points out, the ongoing conflict is having major repercussions on trade and sourcing and while the situation remains fluid, Drewry has provided an overview of regional shipping operations warning that insurance premiums for ships visiting the region have risen sharply, and vessel supply has tightened. Liner services have also changed in the area affecting the container segment. For more information on Drewry’s analysis of different sectors and the likely impact going forward.
3. Salvage contracts
The International Salvage Union got together this week for its annual Associate Members’ Day, this time face to face at Merchant Taylors’ Hall in the City of London so ISU members and associate members could get some feedback on the latest developments including the fact that the use of Lloyd’s Open Form will continue, following robust opposition to its abolition by the industry.
The keynote address was given by IUMI President Richard Turner who highlighted the increasing priority being given to the environment and the need for the insurance industry’s involvement. The insurance industry was in the front line of managing the aftermath of weather events, he told the audience. He also stressed that flood events that in the past occurred once in 100 years, are now happening annually. He highlighted concerns about the increasing size of ships as well as the fact that safety improvements needed to be made to the design of box ships.
As far as the situation in Ukraine is concerned, the position is changing very rapidly from the insurance angle and there is dislocation in the way the market is reacting. Insurers needed not only to consider compliance with different regulatory sanctions in force, although elements of these might not be clear, but also risk mitigation, as well as the issue of self- sanctioning, for example pulling out of Russia. How much exclusion activity there will be also going forward for ships going into Russian waters is also a question. How surveys are to be done and payments made for them is also unclear.
Another area of concern discussed at the meeting is that of charging electric cars on ferries and risks of battery fires
ISU Legal advisor Richard Gunn highlighted among other issues that guidelines on places of refuge which has been worked on quite extensively at IMO, are going to the legal committee for final approval. There has also been work on documentary issues in relation to the special compensation P&I club clause Scopic. Another issue he mentioned was non- Lloyd’s Open Form salvage , as was the case with the Ever Given where the salvage cost was considerably more than if a salvage arbitration had awarded it. There was a need for a global acceptance of salvage awards, he said.
Another issue raised was the International Group and ISU code of practice – a non- binding agreement. The fact that it was non- legal meant it was a crucial document in terms of trust, Gunn said. A successful salvage operation was about working together as a team he stressed.
Whether or not Scopic has been invoked, there are still commercial and moral obligations about how the parties are going to interact. Variations in the contract also have to be declared. There was also debate about the costs of deploying a casualty representative or SCR and the involvement of the SCR in the termination of the service. Payments on account are also to be actively considered in the code.
David Lawrence and Kevin Clarke of Lloyd’s Arbitration Branch considered in their presentation the Lloyd’s Open Form review. The potential phase-out of LOF caused a lot of discussion, coming as it did in the wake of the declining use of the form over many years. The market working group tasked with reviewing LOF and increasing the use of the form needed to address the perceived lack of transparency in the LOF process, the need to speak with one voice and resist complaints about LOF from the past. The issue of whether LOF awards are too high or too low also needs to be addressed.
Ben Harris gave the International Group of P&I Clubs’ perspective on the initiative to address contracting delays which are leading to losses and near misses, for example in the case of the Thea II casualty which led to a Marine Accident Investigation Branch report highlighting delays in the process. The MAIB found that the managers did not fully appreciate the vessel’s predicament and were unaware of the exact location of the grounding of the vessel and the severity of the weather, Harris told the audience.
The report found that there had been communications failures and a focus on the commercial aspects of the situation rather than on a detailed understanding of the vessel’s position. Given the delays in this and other cases, the International Group decided to commission an independent report which was undertaken by former SOSREP Hugh Shaw, which will be published soon.
Key findings include a majority view that delays might exacerbate a situation, and that delays were becoming more prevalent. Contributions to the delays included financial considerations which were considered to be very significant according to responders to the survey. Uncertainty over the contract was also a contributor to delays. When asked what considerations they took into account when deciding on a contract, pollution and threat to the environment was a significant factor, however crew safety and welfare was relegated to fourth place. The consequences to the vessel’s master were not high up the importance agenda either.
The report is due to be published by the end of June with the aim of finding a solution to ensure that there is no delay about doing the right thing in a casualty situation and costs involved do not stop the right procedures being put in place.
4. Pollution prevention
Members of the International Salvage Union provided 226 services to vessels carrying 2.6 million tonnes of potentially polluting cargo and fuel during operations in 2021 which demonstrates the critical role of professional salvors in protecting the marine environment. The data come from the results of the ISU’s Annual Pollution Prevention Survey for operations in 2021.
President of the ISU, Captain Nicholas Sloane, said: “The shipping industry knows only too well that it is under the spotlight for its environmental performance: both for the environmental impact of operating ships and for the threat they, and their cargo, present to the environment. All casualties have the potential to develop into serious incidents and, in a world where even the smallest amount of pollution is unacceptable, the work of our members is essential. “The most eye-catching number in these results is for containers. ISU members provided services to vessels carrying more than 100,000 TEU amounting to more than 1.5 million tonnes of cargo. The mixed nature of such cargoes – including dangerous goods, harmful chemicals, plastic pellets – means that they are potentially highly polluting and difficult and dangerous to deal with.”
Sloane added: “Shipowners and insurers are increasingly under pressure to demonstrate their ESG credentials (Environmental, Social and Governance) and, where engaged, ISU members play an important role in helping them to meet their environmental obligations and demonstrate their commitment. Continued global provision of the professional salvage services offered by members of the ISU is essential.”
Crude oil cargo was relatively low in 2021 at 103,408 tonnes while cargoes of refined oil products rose to 182,232 tonnes. Chemical cargoes fell significantly to 24,126 tonnes in 2021. The number of containers involved in ISU members’ services in 2021 climbed dramatically to 103,935 TEU equating to some to 1,559,025 tonnes (allowing a nominal 15 tonnes per TEU.) Bulk cargoes decreased significantly to 424,719 tonnes in 2021 compared to 744,246 tonnes last time. This category includes products such as coal, scrap steel, grains, soya and cement.
A number of bulk cargoes are not included as potential pollutants and ISU members also provided services to bulkers carrying 209,475 tonnes of non-hazardous dry bulk – mainly metal ores. 11 cases had more than 2000 tonnes of bunkers on board and the total of bunkers involved was 89,456 tonnes. An increased number of the services noted in the survey did not record the quantity of bunkers or the cargo type. ISU is clear that not all these potential pollutants were at immediate risk of going into the sea. Some cases will have had limited danger, but many others will have carried a real risk of causing substantial environmental damage.
5. Cyber ransoms
New research has found that where cyberattacks in the maritime industry lead to a ransom payment, shipowners pay more than US$3 million on average to the perpetrators.
The report, which was produced by maritime cyber security company CyberOwl and global law firm HFW, also reveals significant gaps in cyber risk management that exist across shipping organisations and the wider supply chain, despite progress made by IMO in 2021.
It is based on a survey of more than more than 200 industry professionals, including C-suite leaders, cyber security experts, seafarers, shoreside managers, and suppliers.
The research was carried out by maritime innovation agency Thetius.
Other key findings include:
- The financial cost of a cyberattack can be extreme: where they lead to a ransom payment.
- Despite this, most shipowners significantly under-invest in cyber security management: more than half spend less than US$100,000 per year.
- Two-thirds of industry professionals don’t know whether their insurance covers cyberattacks.
- Only 55% of industry suppliers are asked by shipowners to prove they have cyber risk management procedures in place.
- More than 25% of seafarers don’t know what actions would be required of them during a cyber incident.
- Within organisations, the more senior someone’s role, the less likely they are to be aware of a cyberattack.
Daniel Ng, chief executive of CyberOwl said: “The findings in this report help shipping leaders benchmark their own organisations. This goes beyond anecdotes and hearsay to statistics, backed by data-driven evidence from the fleets that CyberOwl monitors. Maritime cyber risk management is a continuous journey, prioritisation is key. Identifying where the real gaps are will help the shipping sector make smarter decisions, so it is no longer the weak link in the cyber resilience of global supply chains.”
HFW partner Tom Walters added: “Technology in the shipping industry is changing at an astonishing pace. The use of IT already underpins so much within global supply chain operations, and as we look to the future and the adoption of alternative propulsion systems and autonomous ships, the importance of cyber security will only become more important. It is abundantly clear from our research that the shipping industry needs to do a lot more to protect itself from cyber threats. We hope that our report will provide the basis for further discussion in the next steps on this exciting journey.”
Nick Chubb, managing director of Thetius added: “Our industry has made great progress in recent years, both in terms of increasing awareness of cyber security and taking the action needed to close security gaps. But we have found that significant disconnects still exist between the industry’s expectations of cyber security and the realities on the ground.”
To read the full report, click here.
6. Climate change damage
A new report reveals that the global shipping and port industry is susceptible to billions of dollars in infrastructure damage and trade disruption from climate change impacts. Authored by RTI International, a non-profit research institute, for Environmental Defense Fund (EDF), “Act Now or Pay Later: The Costs of Climate Inaction for Ports and Shipping” explores data on climate-related disasters and projects the cost of future damages to the industry. Without ambitious action to reduce emissions, climate change impacts could cost the shipping industry up to $25 billion every year by the end of the century.
International shipping has grown enormously in the last 25 years, more than doubling in annual trade volume. Due to this growth in combination with shipping’s reliance on heavily polluting fuels, the industry has become a large emitter of greenhouse gases, currently accounting for roughly 20% of global emissions from transportation. Meanwhile, from sea level rise to increased storm activity to inland flooding, climate change threatens shipping infrastructure and operations.
“Just as the COVID-19 pandemic threw our ports and the global supply chain into crisis mode, the climate emergency will have major consequences for international shipping. In the face of climate breakdown, however, the shipping industry has an early warning bell and an opportunity to act,” said Marie Hubatova, senior manager for EDF’s Global Transport team. “By stepping up to reduce emissions and invest in zero-carbon fuels, shipping leaders could help avoid these costly consequences and build a more sustainable future for the industry.”
Based on past impacts and anticipated climate change scenarios, the report projects that the additional annual damage to port infrastructure could reach nearly US$ 18 billion by 2100. Storm-related port disruptions could add another US$ 7.5 billion each year, reflecting the economic losses incurred by ports, shippers, and carriers due to port closures and the costs to shipping customers. Together, these added future costs due to climate change are roughly equivalent to the total annual net earnings for the container port sector in 2019.
Global trade is expected to grow in the future and so is the volume of goods transported by sea. However, negative ripple effects through shipping and port networks can have significant global economic consequences and the report estimates that climate change impacts can reduce maritime trade volume. Assuming a steady growth rate, global trade is expected to grow to reach 120 billion tons in 2100 – but under the worst-case climate scenario, that growth could be stunted by up to nearly 10%.
Read the full report
7. EEXI transition clause
The deadline for compliance with the IMO’s Energy Efficiency Existing Ship Index (EEXI) is looming. Are charterparties flexible enough for the transition phase? How should parties approach the new time charterparties which they are entering into to cater for the vessel’s EEXI compliance? Gard takes a closer look at these questions.
8. Seafarers International Relief Fund
The Seafarers International Relief Fund (SIRF) has launched a new appeal to the maritime industry to support seafarers and their families impacted by the crisis in Ukraine.
The SIRF is currently addressing basic human welfare – shelter, food, water, transport, access to medical services, along with practical financial help. Support for seafarers and their families will be funded by the SIRF and delivered by maritime charities, trade unions and other not for profit organisations working in various countries.
The SIRF was established in 2021 in response to the COVID-19 pandemic in India. Managed by The Seafarers’ Charity and supported by The Mission to Seafarers, ISWAN, Sailors’ Society, Stella Maris, and other charities urgent support was delivered in key seafaring communities.
Catherine Spencer, Chief Executive, The Seafarers’ Charity and Chair of the SIRF Stakeholder group said, “We were impressed by the immediate response from the maritime sector to the SIRF to provide relief from COVID-19. Funds were distributed very swiftly to alleviate need. More funds are now urgently needed to support seafarers and their families affected by the Ukraine crisis. The maritime industry is impressive when it comes together to help its own, and we hope that it will once more generously donate to the SIRF”.
Initial grants have been made to the International Seafarers’ Welfare and Assistance Network (ISWAN) and the welfare fund of the Ukrainian Marine Transport Workers Trade Union, Mortrans to provide immediate financial support to seafarers and their families impacted by the crisis.
Guy Platten, Secretary General, International Chamber of Shipping, said, “Our number one priority is the safety of our seafarers and their families. Ships and their crews in the area are under threat, while seafarers with families in Ukraine are rightly concerned. Ongoing conflict, violence and uncertainty are causing people to flee their homes and become separated from their families. In some areas, water, electricity, and phone connectivity have been affected with many people now unable to contact their loved ones at sea. I urge the maritime industry to give generously to this important cause and help our seafarers at this time of crisis.”
In addition to their existing and established delivery partners, The Seafarers Charity is establishing new contacts to deliver support on the ground in Ukraine, Romania, Poland, Hungary, Germany, Moldova, and operations are expanding as more is understood about the need.
Small grants are already available to seafarers and their families who have been impacted by the Ukraine crisis and need immediate and urgent financial support through the Ukraine Crisis Support Fund, administered by ISWAN on behalf of the SIRF. Seafarer-centred organisations – including maritime welfare charities, maritime unions, port welfare committees, ship management companies and manning agents – must apply to the Ukraine Crisis Support Fund on the seafarers or their families’ behalf. More information on the fund and how to apply can be found here.
9. R&D funding to decarbonise
Representatives of the global shipping industry, supported by governments, have laid out proposals on how a planned global R&D fund can be tailored to support developing economies.
Updated proposals submitted to the UN International Maritime Organization (IMO) outlined how a planned $5bn IMO Maritime Research Fund (IMRF), which will accelerate the development of zero-carbon technologies and fuels, could also be used to support the maritime decarbonisation efforts of developing countries.
Led by the International Chamber of Shipping and eight other international shipping associations which collectively represent the global merchant fleet, the modified proposal envisages allocating about 10% of the Fund to greenhouse gas (GHG) reduction projects in developing countries, including climate vulnerable small island states.
The updated proposals respond to questions raised by developing countries about ensuring access to the money raised by the R&D fund. The IMRF aims to raise US$ 5 billion via a US$2 levy per tonne of marine fuel consumed, to be paid for entirely by industry at no cost to governments.
The submission to IMO builds on the comprehensive proposal put forward last year by the shipping industry, in conjunction with major shipping nations such as Denmark, Greece, Japan and Singapore, and which now enjoys the support of 30 IMO Member States. Co-sponsors of the latest proposal include Liberia, Nigeria and Palau.
Simon Bennett, Deputy Secretary General of the International Chamber of Shipping, commented: “Developing countries are experiencing the worst of the climate crisis. Industry wishes to earmark some $50 million per year to support greenhouse gas reduction projects in developing and climate vulnerable countries, including Small Island Developing States. This would be a significant investment and a major boost to the IMO’s existing programmes to ensure that the global net zero transition is fair and equitable.”
Industry has also called on those governments who have so far sought to delay the immediate approval of the IMRF to reconsider their position at the next round of IMO discussions in May.
Bennett continued: “We are concerned that the European Commission may wish to delay the IMRF by combining it with separate discussions about carbon pricing. Although we also want an IMO market-based measure as soon as possible, this will likely take several more years to negotiate. Meanwhile, the need to drastically accelerate R&D is becoming ever more urgent if a net zero target by 2050 is to be plausible.”
Other elements in the revised proposal include encouraging funding for joint R&D projects between developed and developing countries, a formula for co-funding of projects to ensure differential treatment for companies and institutions in developing countries, and new provisions to assuage concerns raised by governments about intellectual property rights.
Last year, ICS announced the formation of the Just Transition Taskforce at COP26, to protect workers and their communities through the transition to green shipping. It provides policy recommendations to ensure an equitable, people-centred transition, focusing in particular on developing economies.
10. Multi-modal transport in Singapore
Dentons Rodyk discusses the issue of new Singapore legislation on multi-modal transport among other topics in its online newsletter Starboard.
The Multimodal Transportation Act (No.2 of 2021) (MTA) came into force on 28 November 2021 and is the first legislation in Singapore with regard to multimodal transportation. The MTA gives effect to the 2005 ASEAN Framework Agreement on Multimodal Transport (AFAMT) which Singapore ratified on 29 October 2021. The AFAMT aims to provide a single, unified framework for the multimodal transport of goods within ASEAN under a Multimodal Transport Contract (MTC) after all 10 ASEAN countries have ratified the agreement. As at the date of this article by Starboard, 8 out of the 10 ASEAN countries have ratified the AFAMT.
The MTA will apply to the carriage of goods by at least two different modes of transport under a single MTC where the origin and/or destination of the goods delivery is an ASEAN member state if the Multimodal Transport Operator (MTO) is registered with the competent national body established in the ASEAN member states. The different modes of transport defined in the MTA refer to transport by road, rail, inland waterways, sea or air. The MTA will apply to the MTO, its servants, agents, and any other person whose services the MTO had used to perform the MTC.
See https://dentons.rodyk.com/en/insights/alerts/2022
Notices & Miscellany
Ukraine update
The LSLC-YMP is holding a breakfast webinar to give an update on the situation in Ukraine with issues such as Conwartime, frustration and force majeure, and war risk cover on the agenda. The webinar will take place at 9am BST on March 29.
People and culture conference
The Spinnaker Maritime People & Culture Conference is due to take place on May 26 & 27 2022. For details see www.spinnakerconference.eventbrite.co.uk
American P&I changes
After 27 years’ service as Chief Executive Officer of Shipowners Claims Bureau, the managers of the American P&I Club, Joe Hughes will stand down from that role on August 1, 2022. Dorothea Ioannou, currently deputy chief operating officer of SCB, will succeed Hughes as CEO from that date, making history as the first woman to ascend to the top executive position of an International Group P&I club in the 167 year history of the marine mutuals.
At the same time, Vince Solarino will step down as Chief Operating Officer of SCB, Inc. after a similar length of service to that of Joe Hughes, with Dan Tadros, presently Chief Legal and Compliance Officer of SCB, taking over the role of COO from Vince Solarino.
Please notify the Editor of your appointments, promotions, new office openings and other important happenings: contactus@themaritimeadvocate.com
And finally,
(With thanks to Paul Dixon)
Job evaluations
1. This associate is really not so much of a has-been, but more definitely a won’t be.
2. Works well when under constant supervision and cornered like a rat in a trap.
3. When she opens her mouth, it seems it is only to change whichever foot was previously there.
4. He would be out of his depth in a parking lot puddle.
5. This young lady has delusions of adequacy.
6. He sets low personal standards and then consistently fails to achieve them.
7. This employee is depriving a village somewhere of an idiot.
8. This employee should go far and the sooner he starts, the better.
9. Not the sharpest knife in the drawer.
10. Got into the gene pool when the lifeguard wasn’t watching.
11. A room temperature IQ.
12. Got a full 6-pack, but lacks the plastic thingy to hold it together.
13. A gross ignoramus – 144 times worse than an ordinary ignoramus.
14. A photographic memory but with the lens cover glued on.
15. A prime candidate for natural deselection.
16. Bright as Alaska in December.
17. One-celled organisms outscore him in IQ tests.
18. Donated his brain to science before he was done using it.
19. Fell out of the family tree.
20. Gates are down, lights are flashing, but the train isn’t coming.
21. Has two brains: one is lost; the other is out looking for it.
22. He’s so dense, light bends around him.
23. If brains were taxed, she’d get a refund.
24. If he were any more stupid, he’d have to be watered twice a week.
25. If you give him a penny for his thoughts, you’ll get change.
26. If you stand close enough to him, you can hear the ocean.
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28. Some drink from the fountain of knowledge, he only gargled.
29. Takes him an hour and a half to watch 60 Minutes.
30. Wheel is turning, but the hamster is dead.
31. Since my last report, this employee has reached rock bottom and has started to dig.
32. His men would follow him anywhere, but only out of morbid curiosity.
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