1. Not so frozen North
2. Revisiting Part 36
3. Panama Canal drought
4. Crew training
5. Shipping leaders
6. West report
7. Cyber security
8. Carriage of goods by sea
9. Alternative fuels
10. Safety MOU
11. Loan calculator
12. Positive approach
Notices & Miscellany
Readers’ responses to our articles are very welcome and, where suitable, will be reproduced. Write to: email@example.com
1. Not so frozen north
By Michael Grey
There were some exciting times in the far north this month. For a start, the passengers aboard the small expedition cruise ship Ocean Explorer, getting up close and personal to glaciers on the coast of north-east Greenland, found that they were unable to go anywhere after their ship ran aground in the spectacular Alpefjord. There they remained for five days, with the nearest Danish patrol ship scrambled from 1200 miles away, although they would have been comforted by the fact that they were in sheltered waters, if anywhere in that latitude can be so described. In the event, the weather stayed kindly and as if from nowhere, the research ship Tarajoq popped up to help haul the ship off the shelf.
It was a reminder that in these remote places, you cannot completely guarantee the depth of water or the accuracy of the charts, and that if you insist on going into such latitudes, you will be largely on your own, far from any meaningful assistance. A few years ago, I was present at a fascinating presentation by the Norwegian emergency services, which explained the detailed planning they have been required to undertake with the increased numbers of big cruise ships seeking spectacular sights in potentially dangerous places.
The scenario involved the rescue of several hundred people, of the demographic one expects, from an abandoned vessel in conditions of heavy ice and bad weather and it all seemed very scary, involving long distance flying, landing on ice and other hair-raising operations. One just felt relieved that the Norwegians were on the case and hoped that they would not have to undertake the exercise for real, not least because of the sheer numbers aboard some of the larger ships. Ocean Explorer, aground off Greenland, was a mere minnow.
While this was happening, on the Northern Sea Route above Russia, the capesized Gingo, fully laden with 164,600 tonnes of ore concentrate, was making a 13 day passage between Murmansk and China, assisted by a couple of nuclear icebreakers. A triumphant photograph of the ship, with the largest cargo ever to have been transported on the NSR was taken by one of the icebreakers, apparently illustrating the ease of such an operation for a ship that was not ice strengthened. Ploughing through the murk, it showed a worrying amount of floating ice, presumably cleared by her atomic friends.
It was also revealed that during this season, at least two other large tankers had made the voyage through the Barents, Kara and Laptev seas, en route to Chinese ports. Neither was apparently ice-strengthened although it might be assumed that the crude cargo would have the protection of double hulls. It was not revealed whether the bulk carrier would have had more than a single skin on the load waterline.
We are being asked to accept that this is now perfectly routine, with the melting ice from climate change making the NSR a perfectly viable alternative for commercial all-year-round navigation. The Russian authorities, who seem in their announcements to be oblivious about the political horrors of the war and sanctions, suggest that the sea route could be carrying up to 200m tonnes by the end of the decade and that transits by non-ice strengthened ships would be routine in the summer.
You have to hope that they know what they are doing. You only have to read accounts of navigation in these remote and poorly charted areas, to realise that the weather and indeed the climate, are exceedingly fickle. It was only in 1932 that a Soviet icebreaker succeeded in completing the passage and just a year later, a small fleet of ships which set out from Murmansk for Vladivostok, to take advantage of the good ice conditions in August, was crushed by the returning ice, just short of the Bering Strait, and destroyed.
The ice, from all accounts, comes and goes in an unpredictable fashion, hugely prone to weather and wind changes, with the seasons lengthened and shortened without much notice. And despite all the technology, forecasting and the presence of the world’s most powerful icebreakers, you have to be worried that the Russian need to get their oil to market, in the teeth of sanctions, will encourage them to take risks with the environment that should not be taken. It is not that many years ago that they thought it perfectly acceptable conduct to abandon their time-expired nuclear submarines in the Kola Inlet, to rot among their leaking radiation.
It does not take much to punch a hole in a ship that was never designed for high latitudes and low temperatures. You should not count on assurances about “climate change” and its suggestions that these waters are suddenly, and permanently, safer.
Michael Grey is former editor of Lloyd’s List.
2. Revisiting Part 36
HFW has put together an interesting piece on revisiting Part 36 penned by Brian Perrott and Lee Forsyth (see firstname.lastname@example.org).
Part 36 is a useful tool in court proceedings whereby an offeror may be awarded (inter alia) increased costs if the offeree fails to ‘beat’ the offer at trial. Offers similar to Part 36 are also used in arbitration and are frequently taken into account by tribunals when determining costs after an award.
The case involved a deed under which a former husband and wife agreed to leave shares in their company to their children and to make wills to that effect. Contrary to the deed, the husband made a will leaving his shares to his second wife. After his death, the Claimants asserted that the will was ineffective.
It was common ground that even if the second wife (the Defendant) was successful, the Claimants had a right to acquire the shares at full value. The point of the litigation was to decide whether the Claimants had to pay for the shares or not.
The court decided that the original deed was effective. During the course of proceedings, the Claimants offered to pay the Defendant £150,000 in exchange for a transfer of the shares, which was framed as a Claimant’s Part 36 Offer. The Defendant argued that it was not effective as a Part 36 offer as it could only be interpreted as an offer to pay costs, which was inconsistent with Part 36 and so ineffective.
The Court made reference to the fact that a Part 36 offer must be interpreted according to ordinary objective principles, i.e., as it would be interpreted by a reasonable person in the position of the offeree with knowledge of the relevant background. The court found that no reasonable person would have seen the offer as an offer to pay £150,000 by way of a contribution to the Defendant’s costs. The fact that the Claimants could not have been ordered to make a monetary payment to the Defendant except by way of costs did not alter this reasoning. The Court emphasised that an offer can take effect under Part 36 even if it proposes an outcome which the court could not order after a trial – in this case relating to the transfer of the shares.
The Part 36 offer was valid and the relevant consequences followed, including enhanced costs for the Claimants.
The case highlights the benefits of making a Part 36 offer and the pragmatic approach of the courts to such offers, even in circumstances when the claim is not for a sum of money.
Colicci (et al) v Grinberg (and another)  EWHC 2075 (Ch)
3. Panama Canal drought
The Panama Canal continues to suffer the consequences of a severe regional drought with water levels at lows not seen since 2016. The passage has been in operation since 1914 and is a key maritime transit point for global trade with 13,000 vessels transiting the canal in 2022. In this latest opinion piece, Drewry assesses the impact of the ongoing disruption on trade routes, charter rates and nearby regional gateways with particular focus on the main bulk shipping sectors.
4. Crew training
Improper operation of a ballast water treatment system (BWTS) can result in additional costs, delays and compliance issues for shipowners. Crew training is an essential element in a BWTS installation to provide technical insight, operational expertise and regulatory knowledge to avoid trouble and ensure smooth-running ballasting operations, according to Optimarin.
The Norwegian BWTS supplier, which has delivered over 1000 such systems to date for vessels worldwide, has therefore developed an online training programme dubbed OptiLearn as part of its educational efforts to empower crews for effective ballast water management. OptiLearn courses have so far been completed by more than 1200 successful participants with positive feedback.
In addition, Optimarin provides training on system simulators at various onshore locations and through its service engineers during BWTS commissioning onboard.
“The purpose of such training is to give the crew a good overview of the system to understand its functionality and components, how it operates and what are the maintenance requirements,” says Optimarin System Engineer Øystein Myhrvold, who created the OptiLearn portal and content.
“This ensures a good user experience for operators of the system and correct operation of the BWTS in accordance with laws and regulations for handling of ballast water.”
Many crews are still on a learning curve with ballast water treatment, which is relatively new technology for shipping as it only became a regulatory requirement in September 2017 when the IMO’s Ballast Water Management Convention entered into force.
The Convention, which will require all ships to comply with the so-called D2 standard for ballast water discharges from September 2024, stipulates that each vessel must have a valid Ballast Water Management Certificate, a Ballast Water Management Plan and Ballast Water Record Book.
“There are several risk factors with ballasting operations. A major one is incorrect operation of the BWTS that can result in both environmental damage and serious financial consequences in heavy fines from port states due to non-compliance with the Convention, which they are required to follow,” Myhrvold explains.
And simply installing a class-approved BWTS is not sufficient to achieve compliance in the longer term as it requires crew knowledge of different ballast water testing requirements in various parts of the world, such as the US.
Clearly, inefficient ballasting can also result in costly delays at port that can have a commercial impact for the shipowner by affecting voyage schedules and delivery times. For more details see the Optimarin website.
5. Shipping leaders
Major maritime industry players have come together in a collaborative effort to implement Daphne Technology’s SlipPure methane abatement solution onto the Angelicoussis Group’s LNG carrier Maran Gas Chios.
With Daphne Technology as the technology provider, the project involves the integration of their innovative SlipPure system onto a liquefied natural gas (LNG) carrier, signifying a significant pilot initiative. Key players within the maritime industry, including Lloyd’s Register (LR) as the independent auditor, Maran Gas Maritime Inc. as the ship operator, Wärtsilä as the engine provider, Shell International Trading and Shipping Company Limited (Shell) in the role of charterer of the vessel and project co-ordinator, and DNV providing the relevant class approvals for the retrofit, have embarked on this joint endeavour to reduce methane emissions.
Daphne Technology’s SlipPure solution, which was last year awarded approval in principle from LR and DNV, is an after-treatment system that reduces methane emissions of LNG-fuelled engines, so-called methane slip. Methane slip results in increased greenhouse gas (GHG) emissions and ground-level ozone.
6. West report
West P&I Club has launched its inaugural ESG & Sustainability Report, revealing how the marine insurance leader supports green shipping and healthy oceans. Additionally, the report, released during London International Shipping Week 2023, demonstrates the Club’s commitment to seafarer wellbeing and investing in talent.
Environmental regulatory compliance for an industry under pressure to reduce its carbon footprint and the expectation from financial institutes that shipping companies make ESG a core strategic objective also features. This issue is increasingly important to maritime stakeholders, according to the report, which was launched at West’s LISW23 event, ‘No ocean. No shipping’, hosted in association with the Club’s charity partner, the National Oceanography Centre.
West’s report explains the changing nature of shipping, with cargo carrying capacity doubling since 2005 in an industry that accounts for up to 90% of global trade. This creates three challenges for the Club’s members: people and safety, environmental impact, and technology / digitalisation. The Club’s first ESG and sustainability report outlines the progress made by West, its future aims and how it plans to help Members on this journey.
The report also focuses on West’s ESG-related initiatives, showing how in recent years it has committed to the United Nations’ Sustainability Development Goals (UN SDGs). Actions include supporting seafarers’ physical and mental wellbeing, accelerating gender diversity and introducing training programmes for West employees. Moreover, the Club has moved to more sustainable premises to help combat climate change, provided Members training on new fuels and technologies to support their decarbonisation transition, and advised them on how to protect the marine environment.
Other actions taken by West include creating a dedicated ESG Department and ESG Committee exclusively made up of staff; establishing its operational carbon footprint by commissioning carbon emissions reports on all offices; introducing the West Mentoring Programme; and taking a zero-tolerance stance to greenwashing. The Club contributes to ESG investment funds, promotes ethical business practices among its workforce and is a member of the Maritime Anti-Corruption Network.
Commenting on West’s inaugural ESG report, Tom Bowsher, Group CEO, said: “The maritime industry is going through a period of great transformational change and it is crucial that during these times of uncertainty and increased demands, we continue to support our Members in all areas of their business to confidently navigate through the challenges and opportunities this presents. As part of the various initiatives the Club has underway, I am delighted to present our first ESG & Sustainability Report. Every business has a crucial role to play in the transition towards a sustainable future and West’s strategy places emphasis on the environment, social responsibility, legal integrity and a commitment to maritime resilience.”
Read the full ESG & Sustainability Report.
7. Cyber security
The risk of personal data and cybersecurity breaches affects organisations of all sizes. In its latest insights briefing Hill Dickinson takes a look at some key issues arising in this area and provide some guidance on steps that can be taken to protect your position.
8. Carriage of goods by sea
The Comite Maritime International (CMI) has embarked on a campaign to get the Rotterdam Rules ratified. As well as the drive to get States to ratify the Judicial Sales Convention CMI President Ann Fenech has asked Stuart Hetherington of Colin Biggers & Paisley to chair a CMI Standing Committee whose objective is to get the Rotterdam Rules back on government and industry agendas and ratified. This Australian case provides a good example, as Hetherington says in the Case Note below, of the chaos of the present system. Governments, he says, need to take note.
As Hetherington points out “If ever a case could be held up as showing the disuniformity and the international chaos in the regulation of international shipping in the carriage of goods by sea, the case of Poralu Marine Australia Pty Ltd v MV Dijksgracht  FCA 1038 is it. It exemplifies the unnecessary expense that the parties to cargo litigation are being put through because of the lack of uniformity in the area of cargo litigation.”
It involves, as did The Superior Pescadores  1 Lloyds Rep. 561, the interpretation of a Clause Paramount, which lacked clarity as to the cargo liability regime which the parties intended to apply to their contract of carriage.
The Full Court of the Federal Court of Australia has partially allowed the Appeal from the first instance decision of Stewart J. The leading judgment on Appeal is a joint judgment given by Steven Rares and Sarah Derrington JJ., of some 162 paragraphs. Their honours early in their judgment noted: “…the somewhat surprising feature of the appeal that in 2023 there remains uncertainty as to whether the almost 100 year old Hague Rules apply to a contract of carriage negotiated in late 2019 by a French ship and chartering broker with a Dutch carrier. The contract involved a shipment from Ireland, a country that has not ratified the Hague Visby Rules (but has enacted them by domestic statute), to Australia which has enacted a version of the Hague Visby Rules modified by domestic statute (despite having denounced the Hague Rules) and to which the consignee asserts English law applies.”
At first instance Stewart J. described the case as giving rise to, inter alia, the following issues: “(i) Was a Booking Note the contract of carriage in circumstances in which no formal charter party was entered into; if so was it a charter party for the purposes of determining whether an international Treaty applied to it?; (ii) What was the meaning and effect of the Clause Paramount; (iii) What was the status of a sea waybill that was issued; (iv) What was the law that applied to the contract; (v) Were the Hague Visby Rules compulsorily applicable under Dutch law?; (vi) Was Ireland a contracting State to the Hague Visby Rules?; (vii) Did the Himalaya clause protect the owner?; (ix) Did Article 9 of the Hague Rules (the Gold clause) apply?; (x) When a bill of lading or sea waybill is issued electronically where is it in fact issued?”
In his first instance judgment at paragraphs 16 to 22, his Honour identified the four different liability regimes which were relevant to the case, and for completeness also referred to others, as follows:
1. The International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, opened for signature 25 August 1924, entered into force 2 June 1931, under which regime a carrier’s entitlement to limit its liability was “100 pounds sterling per package or unit” and Article 9 which provided that those monetary units are taken to be gold value, (known as the Hague Rules).
2. The Protocol to amend the International Convention for Unification of Certain Rules of Law Relating to Bills of Lading signed at Brussels on 25 August 1924 (open for signature 23 February 1968), entered into force 23 June 1977 (known as the Visby Protocol which affected amendments to the Hague Rules), pursuant to which the limitation of a carrier’s liability was amended to be defined as the equivalent of 10,000 francs per package or unit or 30 francs per kilo of the gross weight of the goods lost or damaged (whichever is the higher) and known as the Hague-Visby Rules.
3. The Protocol amending the International Convention for Unification of Certain Rules of Law Relating to Bills of Lading, 25 August 1924 as amended by the Protocol of 23 February 1968, opened for signature 21 December 1979, entered into force 14 February 1984, pursuant to which the limitation of liability of the carrier was amended to 666.67 units of account per package or unit or two units of account per kilogram of gross weight of the goods lost or damaged, whichever is the higher and the “units of account” being the Special Drawing Rights of the International Monetary Fund, known as the SDR Protocol.
4. The Amended Hague Rules as enacted by the Australian government which gives effect to a version of the Hague-Visby Rules, specific to Australia, and which is set out in Schedule 1A to the Carriage of Goods by Sea Act 1991 (COGSA) legislation. It adopts the same limitations as in the SDR Protocol and is known as the Amended Hague Rules
5. The United Nations Convention on the Carriage of Goods by Sea 1978, opened for signature 31 March 1978, entered into force 1 November 1978, known as the Hamburg Rules.
6. The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, open for signature 11 December 2008 (not yet in force), known as the Rotterdam Rules.
7. Last but not least are other hybrids such as the Chinese Code, known as the Hybrids.
The facts in this case
Between 6 and 11 December 2019, 23 pontoons (described as “breakwater units”) and 11 pallets were loaded on board the vessel Dijksgracht at the Port of Cork, Ireland as breakbulk cargo consigned to Poralu Marine Australia Pty Ltd the plaintiff in these proceedings for installation at the Royal Geelong Yacht Club. The cargo was discharged on or about 13 February 2020 and three of the pontoons were found to be damaged.
The result of the case at first instance
The questions posed for the court’s determination included whether or not the carrier was entitled to limit its liability to £100 per package and his Honour found it was so entitled. He did not believe that that amount was limited to the present value of 100 pounds of gold in 1924, nor did he find that it was limited to 666.67 units of account per package or 2 units of account per kilogram of gross weight of the goods and he also found that the limitation applied equally to the plaintiff’s claims in bailment and negligence against the vessel’s owner, the second respondent, by reason of the Himalaya clause.
The result of the case on Appeal
The appeal was allowed in part: the carrier was not permitted to limit liability to 100 Pounds per package. The Full Court agreed with Stewart J that the carrier was not permitted to limit liability to the present value of 100 Pounds of gold in 1924 per package. The Full Court also found that the carrier was entitled to limit its liability to 666.67 units of account per package or 2 units of account per kilogram of the gross weight of the goods, whichever is the higher, unless article 4(5)(e) of the Hague Visby Rules as set out in the third schedule of the Merchant Shipping (Liability of Shipowners and others) Act 1996 (Ireland) is found to apply (that being the breaking limit provision in those rules.)
Reasons of Stewart J at first instance
At first instance, it was held that the contract of carriage was to be found in the Booking Note, entered into by the shipper (which was also the consignee) and the ship owner’s commercial agent (Spliethoff Transport, the first Respondent), and not the sea waybill which was issued subsequently.
One of the terms of the Booking Note was:
“General Paramount Clause
(a) Except in case of US Trade, articles 1-8 inclusive of the Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading dated Brussels, 25 August 1924, shall apply to this Booking Note….In determining the liability of the Carrier, the liability shall in no event exceed Pounds 100 (GBP) sterling lawful money of the United Kingdom per package or unit.”
It is to be noted that what is generally referred to as “the Gold Clause” (Article 9 of the Hague Rules) was not incorporated. As Stewart J suggested in his Judgment such a sum (calculated with reference to its gold value) would be approximately Pounds 38,167 today (or about AUD70,000) per package or unit.
Where insureds enter into contracts of carriage by way of a Booking Note confirming the terms of the arrangement between the shipper and the carrier, a court may find that any subsequently issued Bill of Lading or Sea Waybill will be merely treated as a receipt (as opposed to the contract of carriage). That could therefore take the arrangement out of the range of an international convention governing the liability of the carrier, which excludes charterparties. Accordingly, provisions which lessen the limitation amount from the amount which would have applied had a more generous international cargo liability regime been applicable, cannot be said to be null and void under Article 3 rule 8 of the Hague Rules 1924, which provides that a provision which has the effect of “lessening” the carrier’s liability under the Rules “shall be null and void and of no effect.” Article 3 was therefore given no effect because Article 9 was not itself expressly incorporated in the Booking Note. It is surprising that the Court did not appear to have been invited to find that the limitation relied upon by the carrier (100 Pounds) did lessen the carrier’s liability under the Convention and therefore should not apply at all. This is particularly surprising when the Court found that Article 3 rule 8 was relied upon in the context of an argument (which was rejected), that the Australian Amended Hague Rules applied.
Stewart J was able to discount the provisions of Article 10 in the Australian Amended COGSA which seeks to make that hybrid version of the Hague/Hague Visby/Hamburg Rules applicable where certain Conventions are not incorporated in a particular contract of carriage because none of the provisions in Article 10 was held to be applicable in the circumstances of this case. Those provisions refer to: (a) the Brussels Convention; (b) the Brussels Convention as amended by either the Visby Protocol or the SDR Protocol or both; and (c) the Hamburg Convention.
The Judgments in the Full Court of the Federal Court in the Appeal
The Full Court differed principally from Stewart J in the manner in which they found the contract of carriage had been entered into. The Court found that a “second recap email” contained the terms of the contract, not the Booking Note. It applied English law to it. In addition, by its application of the standard form of Spliethoff’s bill of lading, it also incorporated another form of Paramount Clause, that is one which applied “the Hague Rules as enacted in the country of shipment”, to the contract, which was then to be interpreted in accordance with English law.
Their honours found that the Hague Visby Rules as enacted in Ireland in the Merchant Shipping Act 1996 applied in reliance on:
(i) the reasoning in Kyokuyo Co Ltd v AP Moller-Maersk (The Maersk Tangier)  2 Lloyds Rep 59 by which the second recap email as the contract of carriage was covered by a bill of lading within the meaning of Article 1(b) and the chapeau to Article 10 of the Hague Visby Rules;
(ii) the Carriage of Goods by Sea Act 1971 (UK) by section 1(2) gave the force of law to the Hague Visby Rules and in consequence clause 3 (a) of the bill of lading that would be issued pursuant to the second recap email fell within Article 10(c) of those Rules; and
(iii) the Australian Rules did not apply because of Article 10(2) of those Rules.
The Full Court judgments contain a detailed analysis of the law relating to contract formation, including the Australian High Court decision in Masters v Cameron  91 CLR 353 and the decision of McLelland J in Baulkham Hills Private Hospital P/L v GR Securities P/L  40 NSWLR 622; Toll (FGCT) P/L v Alphapharm P/L  219 CLR 165, and the English decisions in RTS Flexible Systems Ltd v Molkerei Alois Miller GmbH and Co KG (UK Productions)  1 WLR and Pagnan SpA v Feed Products Ltd ) 2 Lloyds Rep. 601; “The Starsin”  1 AC 744; and Papas Olio JSC v Grains Fourrages SA  2 Lloyds Rep. 152.
Their honours also considered the earlier English Court of Appeal decision of the Superior Pescadores  1 Lloyds Rep. 561 which they considered stated the law as it applied currently in the UK as to the meaning to be given to the incorporation of “the Hague Rules” in a Clause Paramount, which the Court of Appeal had decided should be treated as applying to the Visby amendments as well.
The Full Court also decided that it was unnecessary to determine whether the contract amounted to a Charter Party as it incorporated the terms of the bill of lading which it was held resulted in the Hague Rules as enacted in Ireland being compulsorily applicable under English law.
The Full Court also found that it was unnecessary to determine “the interesting question about the interaction between Articles 10(6) and 10(7) of the Australian (Amended) Rules in the context of sea carriage documents issued under charter parties. Nor is it necessary to explore what appears to be the anomalous position that the avowedly cargo friendly Australian (Amended) Rules may provide cargo interests with rather less protection when goods are shipped pursuant to sea carriage documents when issued under a charter party than the protection offered under the Hague Visby Rules. That is because of the requirement (in Article 1(i)(g)) that any such sea carriage document must be negotiable, thereby excluding the possibility of the Australian Rules applying to straight bills of lading.”
As mentioned earlier the multiplicity of alternative carriage of goods liability regimes which are in force around the world is causing a huge hindrance to the efficient operation of cargo claims handling which greater uniformity would otherwise supply. The complexity in having a multiplicity of different carriage regimes which are legislated for around the world and the variety of Paramount Clauses incorporated into Charter Parties or Bills of Lading cause claimants, their insurers and lawyers and shipowners/carriers, their insurers and lawyers litigating recovery claims to face the prospect of incurring ever greater legal expenses in cargo claims litigation in identifying the relevant liability regime which applies to a particular cargo claim. There is much to recommend the international acceptance of the UNCITRAL drafted Rotterdam Rules Convention of 2008 at the earliest opportunity, provided states that ratify those Rules also repeal any national legislation dealing with cargo liabilities and renounce any previous Convention or Protocol which they have ratified once the Rotterdam Rules enter into force with 20 Ratifications.
The effect of the first instance decision highlights only one aspect (of many) as to why the nearly one hundred year old Hague Regime is anachronistic in modern shipping. The fact that any bill of lading could have contemplated that a limitation sum of 100 pounds is still appropriate (when the states that approved the Rotterdam Rules at UNCITRAL in 2008 agreed limitation sums of 875 SDRs per package or shipping unit or 3 SDRs per kilogram of the gross weight of the goods (Article 59)) shows that intervention by states in the form of ratification of a fit for purpose modern regime such as the Rotterdam Rules or domestic legislation giving effect to those Rules is urgently needed to improve the efficiency of supply chains, to properly enable E-Commerce, and to improve safety of the sea.
The writer is the Chair of the Standing Committee of the Comite Maritime International charged with seeking to encourage states to ratify the Rotterdam Rules Convention, which it drafted and passed to UNCITRAL to enable a new Convention to be drafted in 2001. It is the view of the Comitė Maritime International that States need to ratify the Rotterdam Rules and denounce all previous regimes that they have ratified and/or amend their national legislation in order to embrace the Rotterdam Rules in their entirety. It is extraordinary that there are only 5 ratifications at the present time after the CMI spent 13 years developing a draft instrument which it hoped would enable uniformity to be re-established, a further six years of debate took place at UNCITRAL, and there has been inactivity (except from the five states who have ratified the Rotterdam Rules) for some 14 years since then. At the time when the Rotterdam Rules were concluded at UNCITRAL there was unanimity of views in favour of early ratification of the Rotterdam Rules by all sectors of industry, from shipowners (and carriers) and their representative organisations, to insurers and their representative organisations and, most importantly, cargo owners whether as shippers or consignees who saw the necessity to replace the Hague Rules and make it more fit for purpose in the 21st Century.
9. Alternative fuels
Jose Femenia has put pen to paper on the issue of alternative fuels. Much is being said about using ammonia as a fuel for new construction vessels, but it appears retrofitting existing vessels to use ammonia as a substitute for hydrocarbon marine fuels has not been discussed. Unfortunately replacing the world’s commercial fleet with ammonia fueled vessels by relying on new construction will take decades. Concurrent with new construction the world’s marine industry needs a way of retrofitting ammonia fuel systems on existing vessels.
The only way of decreasing the marine industry’s CO2 emissions in a relatively short period of time is by retrofitting existing vessels with systems that will enable existing ship power plants to utilize fuels with less or no carbon. Hydrogen (H2) is an obvious zero carbon fuel, but the onboard storage and handling difficulties preclude its use. Ammonia (NH3) is the other non-carbon fuel. Ammonia-oil emulsions are a way of retrofitting existing vessels and reducing the marine industry’s contribution to the worlds CO2 emissions. Although its use as a marine fuel has challenges, including being highly toxic, it is easier to store and handle aboard ship than hydrogen. Ammonia-oil emulsions are a way of accomplishing retrofitting existing vessels and reducing the marine industry’s contribution to the worlds CO2 emissions, presently estimated at three percent of the world’s total CO2 emissions.
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10. Safety MOU
Two international associations closely involved in the port and terminal industry are committing to cooperate in improving safety and sustainability across the global industry. The Port Equipment Manufacturers Association (PEMA) and International Cargo Handling Coordination Association (ICHCA) have announced their joint signing of a Memorandum of Understanding (MoU) to effect their mutual aims.
The collaboration will enable each organization to better achieve their objectives through a programme of cooperation, which will include agreed actions and initiatives, meetings, sharing and exchange of information and ad hoc task forces to enhance their respective impact on issues and topics where both organizations have a common interest.
The MoU provides a framework to pursue cooperative projects. Though not a commitment of funds, the future cooperation that is agreed will enable each group to benefit from the common activities in their respective strategies, furthering a wider understanding where areas of joint interest have been identified.
PEMA’s President Achim Dries commented, “At PEMA we are thrilled to announce the signing of this Memorandum of Understanding with ICHCA. It is a momentous step toward fostering greater collaboration and innovation within the maritime industry. This partnership holds immense significance for PEMA as it underscores our commitment to advancing the global port and terminal sector,” he said.
“Together with ICHCA, we are poised to harness collective expertise, drive sustainable practices, and elevate safety standards, all for the benefit of our industry stakeholders. This MoU signifies not only a union of two influential organizations but also a shared vision to shape the future of safer port equipment and operations. We look forward to strengthening this partnership and achieving remarkable milestones together.”
In welcoming the initiative represented by the joint signing, Richard Steele, CEO of ICHCA added “At ICHCA we remain committed to our efforts to improve safety, security and sustainability in the global logistics supply chain, especially at the ship/port interface. I believe our agreement with PEMA will significantly enhance our ability to deliver on that commitment. The mutual cooperation between our two organisations will be aimed at the universal understanding and application of measures for the safe handling. I am particularly pleased that ICHCA is now teaming up with such a highly respected organisation as PEMA; one that has a global reputation for passionate commitment and practical action to drive safety measures. I’m excited by the prospect of working together.”
A crucial element of the MoU will be an exchange of information and the collaboration of staff and association members, who can offer an unequalled wealth of professional expertise, which can become a fountain head of knowledge in best practice and improved standards throughout the industry worldwide.
11. Loan calculator
Shipowners can now access accurate estimations of financing terms in an instant thanks to the upgraded tool released by oceanis, the Hamburg-based ship finance company.
This industry-first tool, developed by oceanis, automatically predicts the loan terms available to Dry Bulk, Tanker, and Container vessels, providing shipowners with valuable insights into their financing options.
The upgraded version of the tool requires as few as five inputs to generate a reliable estimation of loan terms. Shipowners simply need to provide the vessel’s (IMO) number, Fair Market Value, the requested Loan-to-Value (LTV) ratio, employment status, and specify whether the loan is for an acquisition or a refinancing. By inputting additional information such as charter rates and durations or operating costs, shipowners can further enhance the accuracy of the predictions provided.
“We are thrilled to introduce this product to the maritime community,” stated Erlend Sommerfelt Hauge, co-founder of oceanis. “Our aim is to streamline ship finance by providing shipowners with the most relevant information available; this simple and efficient tool does exactly that. With the support of oceanis, shipowners can make better-informed decisions, optimise their financing strategies, and ultimately unlock new opportunities for growth.”
Sommerfelt Hauge added, that a common theme in the financing markets is whether shipowners are looking to benchmark their financing terms, to either confirm they sit with a strong offer, or to seek an improvement. Having a simple validation tool providing guidance on this, he hoped would be appreciated by the market.
The new prediction tool uses extensive data analysis of the more than $6bn in terms submitted via the oceanis platform, estimating terms based on available cashflows to deliver remarkable accuracy. While the results generated by oceanis will perfectly match the exact loan terms available from any individual bank, they have proven to be pleasingly accurate during extensive testing.
“The loan margin calculation has shown itself to have a lower difference to the market-best than the margins offered by lenders on an individual financing,” explained Will Robinson, Investment Associate and one of the designers of the tool. “This feature sets oceanis apart, making our tool potentially more informative than simply asking one banker for what their best loan terms in the market are.”
By providing shipowners with reliable predictions of loan terms, oceanis aims to increase transparency in ship finance markets and ensure that shipowners are finding the best possible financing terms for their fleet.
Go to: https://oceanis.io/loan-oracle
12. Positive approach
The International Union of Marine Insurance (IUMI) recently presented its analysis of the latest marine insurance market trends at its annual conference in Edinburgh, Scotland.
All lines of business reported an uplift in their global premium base for 2022 with the total reaching USD35.8 billion, representing an 8.3% increase on the previous year. Global income was split by region: Europe 47.7%, Asia/Pacific 28.4%, Latin America 10.3%, North America 8.5%, Other 5.1%.
By line of business, the largest share was commanded by transport/cargo at 57.3% followed by global hull 23.4%, offshore energy 11.5% and marine liability (other than P&I covered by IG clubs) 7.7%.
Astrid Seltmann, Vice-Chair of IUMI’s Facts & Figures Committee, provided some context. “Marine underwriters have suffered poor returns over several years but from 2020 results started to improve. 2021 and particularly 2022 have shown a relatively strong growth in the global premium base across all lines of business. In combination with a benign claims impact, this has translated into a much better performance in terms of loss ratios, specifically for hull and cargo. The reasons are complex but are likely due to the post-pandemic rebound in global trade coupled with reduced market capacity, particularly for hull. We’ve seen a continued strong performance from Europe after many years of decline but, while still increasing, Asian market growth appears to be slowing. But overall, the general trend for global premiums continues to be upwards. For sustainability, claims trends need to be monitored, being coupled with vessel activity, value accumulation, nat-cat impact, the use of new technology and inflation impact on repair costs. In addition, fires continued to be a concern in 2022 and also into 2023.”
The full presentation is available to download from https://www.iumi.com
Opening IUMI’s annual conference, President Frédéric Denèfle expanded and explained the conference common theme of “strength and stability in turbulent seas”.
Discussing current turbulence, he began by setting out what is essentially “business as usual” for marine underwriters. He said:
“As marine underwriters, we are used to managing an array of casualties and losses onboard a variety of vessels and in ports and other shoreside facilities. Dealing with the fall-out from natural catastrophes such as earthquakes and weather events are also workaday issues. Similarly, operating amongst geopolitical chaos is an ongoing problem we face but this has been exacerbated recently with the war in Ukraine.”
“Marine insurers actively supported the creation of the original grain corridor to ensure that Ukrainian exports could still continue. Now that agreement has broken down, marine insurers are in discussions with the Ukrainian government to provide cover for the vessels moving Ukrainian cargoes.”
Continuing the theme of turbulence, Frédéric Denèfle explained how fragmentation was also causing headaches. From a trade perspective, covid had highlighted a range of strategic dependencies; it had led to a general reduction in global demand and had encouraged a relocation of activity closer to the consumer. On the legal side, shipping and insurance was being targeted with increased sanctions as well as local green regulations where, for example, some jurisdictions will not register vessels above a certain age. As the unified spokesperson for marine insurers, IUMI has liaised with various authorities and regulators to support both the industry and underwriters.
A consequence of inflation, caused by Covid and the war in Ukraine was already manifesting itself in the increased cost of claims, the requirement to take on more risk as asset values increase, and a related need for more capacity in the market. Added to this, a general technology shift in terms of clean energy, clean propulsion and autonomous vessels was creating more “turbulence”. However, all new technologies and climate change reduction measures are welcomed by IUMI which stands ready to act as an enabler to their introduction.
Although the marine insurance market was in a state of flux, Frédéric Denèfle was confident in its ability to cope: “As the world’s oldest insurance business, our sector has demonstrated its ability to flex to new needs and conditions, both market and macro-economic. I foresee a return to dedicated, experienced teams; a heightened reliance on intelligence and data systems to anticipate the consequences of geopolitical uncertainty; the emergence of local teams underwriting local business in their own areas to challenge fragmentation; an adjustment of market capacities and pricing to fight inflation pressures; and the creation of specialist teams to fully understand the implications of new technologies. Of course, much of this is already happening.”
Notices & Miscellany
Following his charity drive in Australia (see MA 834) arbitrator Jonathan Lux has recently returned from Australia. As he puts it he is “somewhat exhausted – having driven mostly on dirt roads over 6000 km from east coast to west!” The good news is about AUD1.5m for disabled/deprived kids.
Excellence in shipping
Capital Link is hosting the 13th Annual Operational Excellence in Shipping Forum on Tuesday, October 3, 2023 at the Divani Caravel Hotel in Athens, Greece.
The Forum showcases Operational Excellence in the Maritime Sector and explores Best Industry Practices across all major areas such as fleet management, technological innovation, crewing, energy efficiency and the environment, safety & security. Special attention will be paid to sustainability and ESG considerations.
The Forum provides an interactive platform on the topic of Operational Excellence, Best Industry Practices and Sustainability linking shipping companies, charterers, regulators, government and non-government industry associations, classification societies, P&I Clubs, flag registries, technology & service providers and the financial and investment community.
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