1. Badly out of tune
2. Unlawful detentions
3. Cyber threats
4. Christmas congestion
5. Vaccination in Singapore
6. Safe parking
7. EEXI and CII Rules
8. UNCLOS effectiveness
9. Bond issues
10. Global resilience
11. IUMI analysis
12. Employee supervision
Notices & Miscellany
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1. Badly out of tune
By Michael Grey
It is funny how different items of news mesh with each other. Cop 26 is over, thank goodness and the thousands of delegates have jetted off to their homelands, leaving a heavy smell of jetfuel over Argyll, but what we are learning to call “the supply chain problem” remains. A queue of big containerships is a permanent feature outside ports in the US, Asia, and to a certain degree, Europe. And now there is angst about the exhaust fumes from the massed fleets of big ships either lying to their anchors, or steaming around in circles, waiting for a berth to become available. It is, so activists around the ports aver, a reprise of the “diesel death zone” crisis – a term which Californians used to draw attention to their air quality. Nobody ever dared to suggest that the deaths might be contributed to by obesity and a lack of exercise.
It is quite difficult to know what sea carriers ought to be doing. They can hardly shut down their generators and wallow around like dead ships with all the lights out, or dawdle across the Pacific with the machinery barely turning over, because they have to go like the clappers to get in the queue in the first place.
I was talking to a former stevedore about the problem and he was adamant that none of the difficulties were being caused in the ports, which have been getting rather too much flak from stupid politicians and ignorant people who rage about their Christmas goods not expected to turn up until next Easter. He has no hesitation in blaming accountants for the mess we are in, because of a whole generation of financial folk who have turned against the idea of carrying any stocks of absolutely anything.
You can see what he means if you go to your supermarket and finding an empty shelf, ask the manager if the missing item might be available “in the back store-room”? Once upon a time the manager would despatch a minion to rummage around in the cardboard boxes and at least 50% of the time he or she would have returned triumphantly. Today, you are wasting your time even asking because the stuff barely draws breath between its arrival on the truck and its being put on the shelf. There isn’t a store-room either as that would have been defined as non-earning space. It was all part of the fashionable “just in time” philosophy, that saw so much storage space and warehouse volume scrapped.
It worked pretty well, just as long as every link in the logistics chain performed as required. The raw materials that fed the manufacturing process arrived just when they were needed, and the finished goods were stuffed into a container and instantly carried to the port for a speedy sea crossing, minimum dwell time in the arrival port and fast despatch to their ultimate destination. What could possibly go wrong, with ports equipped with amazing cargo-handling equipment, speedy and reliable ships and on land, all the trucks and barges and trains that were needed to keep the system purring along?
Before we even get into pandemics and their effects, we might throw a little of the blame for the eventual mess on the sea carriers, who were persuaded by their accountant-infested managements looking at their awful results to build colossal ships. This was not an incremental increase that could be coped with by any energetic port management, but ships with a capacity up to a third bigger than the ships they were replacing. It was all about unit costs, said the number crunchers, pointing to the wonderful logic that told them a 23000teu ship could actually make them a profit, where two 12,000teu ships would not.
It seemed a great idea, but ports and inland carriers, which had honed their systems around a certain steady throughput through their terminals suddenly found that they were overwhelmed one minute and idle the next. There had to be somewhere to put these huge shiploads before the trucks and trains and barges could take the stuff away. A terminal which could see a box off its premises in just over three days, now saw this time double. Congestion suddenly raised its ugly head.
Then came the pandemic and its resultant chaos which exacerbated all the problems of “supersized” ships tenfold. And one feature that became manifestly clear was that the pre-pandemic system was so finely tuned for its optimum performance that the smallest glitch could have widespread effects that quickly became global. There was no elasticity in the system, because that was seen by the all-seeing bean-counters as “waste”. So when some factory in the depths of a continent had failed to empty its boxes in time for them to be taken away for use by somebody else, the consequences, like the draught from that butterfly’s wings, would be felt far and wide.
You might argue that everyone has been doing their utmost to restore “normal service”, but the fact is that the conjoined problems, of insufficient storage, not enough land transport and a vast demand for post-pandemic consumption, have defeated the best of intentions. Now, with universal disappointment, everyone is looking for someone to blame. There is rage about sea carrier’s profits, anger about perceived poor port performance and a good deal of ignorance about the continuing effects of Covid in Asian logistic systems. People living on the coast are now complaining about the sea air having a whiff of fuel oil about it. Now there is a lot of talk about “on-shoring” and not relying on the manufacture of your widgets on the other end of a 12,000mile sea route. Like the consequences of all those Cop26 “pledges” in Glasgow, nobody has quite worked out what that might mean.
Michael Grey is former editor of Lloyd’s List.
2. Unlawful detentions
Tatham & Co’s Stephen Askins has put out an article on the issue of unlawful detentions co-authored by Cameron Miles who is a barrister specialising in public international law. It throws up some interesting issues.
The detention of vessels in and around the Singapore Straits by the Indonesian Navy in recent months (following an earlier cluster of cases in 2019) has presented challenges to the shipowners involved. It raises difficult issues in respect to what constitutes “innocent passage” and the tensions between that fundamental right under the law of the sea and the law of coastal states. It further puts in focus the political tensions in the region and the negotiated (and yet-to-be negotiated) boundaries between Singapore, Indonesia and Malaysia – all of whom have their own historic reference points and geo-strategic priorities.
Further, in the face of demands of payment of sums around US$300,000 by the Navy against a threat of prolonged detention of the vessel and imprisonment of the masters involved, a serious question arises as to the status of the funds paid in the face of such a threat. Should a payment (which feels more like a ransom paid to pirates) extorted under duress be a ‘bribe’ as understood in the context of anti-bribery legislation?
For the full story see https://tathamlaw.com/knowledge/unlawful-detentions-off-indonesia/
3. Cyber threats
Responding to the increasing threat of cyber-attacks in the maritime sector, Bureau Veritas and insurance consultancy major BESSÉ have announced a partnership to support shipowners with tailored solutions to improve their cyber security and cyber insurance.
This partnership will see BESSÉ and BV combine their complementary expertise to help shipping stakeholders manage the risk of cyber-attacks, which has risen in recent years, particularly for shipowners. This will also be key to helping them comply with IMO and IACS requirements.
Bureau Veritas helps shipowners and operators develop and implement an effective cyber security strategy on ships and onshore. To this end, BV has developed a set of rules (NR 659) which make up a framework for assessing maritime cyber security. This framework enables BV to assess the level of cyber risk for shipowners/operators and to recommend organizational, technical and procedural measures to reduce this risk to an acceptable level. This process includes:
• conducting a complete inventory of equipment, systems and networks connected at sea and on land;
• conducting a cyber risk analysis to identify vulnerable systems and equipment;
• developing and implement a cyber risk management policy;
• ensuring the effective implementation of technical and organizational procedures;
• enabling shipowners/operators to ensure compliance with IMO cyber security requirements.
• validating the management of cyber risk on board through an additional Class Notation.
BESSÉ then responds to the identified risks through insurance solutions, by helping shipowners transfer part of the cyber risk to insurers. As many insurance companies now require their clients to demonstrate high standards for cyber risk management, BESSÉ builds on the results of the systems optimization achieved though BV’s rules to assist its clients in presenting these risks to insurers.
For more information see https://marine-offshore.bureauveritas.com/
4. Christmas congestion
Congestion is not just for Christmas was the message from the Global Shippers Forum recently. Shippers across the globe might have to battle the effects of supply chain congestion and record high ocean freight ratees for some time to come. The question remains – when will they get relief?
The wave of congestion that is sweeping through global supply chains delaying deliveries of seasonal goods and essential commodities, stranding many shippers between meeting impossible delivery deadlines while paying record shipping rates is not set to subside anytime soon
“This is proving to be the ‘Peak Season like no other’, just as we predicted” says the Global Shippers Forum, the voice of cargo owners in international trade.
Speaking at a high-level maritime event, hosted by FIATA last week, James Hookham, GSF’s Director, highlighted the challenges that importers and exporters face in getting their goods on shelves and in warehouses for the winter holiday season. They are struggling with historically poor levels of service from shipping lines, ports and terminals, and inland logistics providers, yet paying the highest shipping rates and surcharges seen for decades.
“Global shippers are riding a tidal wave of congestion this Peak Season that started in exporting countries and is now arriving on the shores of importers and sweeping inland. First, we had lockdowns in Chinese ports, then an inexplicable shortage of empty containers, then the ships suddenly all maxed out and slots were like gold dust (and costing as much). Now our goods are queuing to get into ports, waiting for a crane to unload the box and then for a driver to move it inland to where we need it. It’s been a tough ride and it’s not yet over, but most of us are still standing, although, sadly, there will be ‘wipe-outs,’” he said.
“The most vulnerable businesses are the importers and distributors fighting to meet delivery deadlines, set by their retailer customers. They simply cannot predict when the goods they have paid so much to have transported actually will be available. Not only have they blown their logistics budgets this year, but they are facing stiff penalty charges for late delivery, and possible loss of future contracts. These are the businesses that are the victims of the maritime industry’s collective struggle to manage the ‘Great Shipping Crisis of 2021’.
“But with most deliveries expected to land in the next few weeks, and Thanksgiving and Christmas probably safe for this year, big questions remain