John Southam, Loss Prevention Executive, and David Richards, Director (Claims), both from North P&I Club, offer lessons learned and discuss avoidable claims related to the carriage of finished and semi-finished steel products which continue to remain an issue.
The issues highlighted by North P&I include the importance of recording the preload condition and defending yourself against allegations of unseaworthiness with strong evidence.
In some recent cases it became apparent that the preload condition of the steel cargo was poor, whether it was physical damage through impact or corrosion damage from wetting. And when such damage to the cargo is noted at discharge, a high value claim can result.
Precautionary survey
Precautionary surveys on steel cargoes are in two parts. The first part covers the monitoring and recording of the apparent order and condition of the cargo being loaded (or being nominated for loading).
If there are issues with the cargo condition, then the two usual options are to either clause the mate’s receipts and bills of lading as appropriate, or to replace the damaged cargo with sound cargo.
The second function of the steel preload survey is the hatch cover test, where the hatch covers and other cargo hold openings are thoroughly checked for weathertightness. Contemporaneous evidence of properly conducted weathertightness testing is vital in proving seaworthiness and defend against allegations of poor vessel maintenance. While hose tests are acceptable, it should be noted that ultra-sonic testing (UST) is more accurate as it considers hatch cover compression and therefore its sealing ability when in a dynamic condition.
As North Club P&I says, there are instances where part of the cargo of steel is loaded onto the vessel in good condition, but then wet cargo is loaded into the same hold. This usually occurs when it rains during loading, and the remaining steel for the same hold has been wetted whilst sat on the quay. When the wetted cargo is later loaded on top of the dry cargo, that too becomes damaged. What’s more, there have been cases where steel cargo has been worked in rain conditions, despite the Master’s initial protests. Charterers then may offer to issue a ‘rain letter’ in exchange for owners agreeing to continue loading.
Clausing bills of lading
Finally, according to North P&I, “Issues arise when, despite the steel preload survey showing preshipment condition issues, bills of lading have not been claused to reflect the apparent condition of the steel on loading. Instead, the carrier has relied solely on a survey report.”
This is an inherently risky practice, even where the carrier inserts a so-called RETLA clause into the bill of lading, which is intended to qualify a statement that the cargo was loaded in apparent good order and condition by saying the carrier does not represent the cargo is free of visible rust or moisture.
Read another article relating to P&I clubs: International Group of P&I Clubs publishes its first Sustainability report
