Despite many advancements in cargo handling and navigation technics due to the unpredictable nature of the sea, shipping is still inherently risky. Each year ship operators incur losses. These losses can be described as being either Total or Partial (Particular Average).
A Total Loss may be either an Actual Total Loss (ATL) or a Constructive Total Loss (CTL).
An Actual Total Loss is where the vessel is actually destroyed or wrecked or where the owner is irretrievably deprived of his vessel e.g., when a ship is sunk in deep waters where any salvage attempt would be impossible. A Constructive Total Loss is when it appears that the vessel is unlikely to be saved or recovered or when she can only be recovered and repaired at a cost, which exceeds her insured value.
Particular Average
Particular Average means a partial loss caused by a peril insured against within the Hull policy, e.g., damage caused by grounding and other such examples as listed in the Institute Time Clauses or Additional Perils Clauses. A claim against such a loss is subject to the important proviso that the loss or damage has been sustained by accident and not from the result of lack of due diligence by the assured, owners, or managers.
Cargo ship ran aground
due engine failure
General Average
A General Average (G.A.) loss is a partial loss incurred through a deliberate act performed to protect all the interests involved in a voyage from the danger that threatens them.
There are four main features for a G.A. loss to occur:
- the deliberate act ( sacrifice or expenditure ) must be extraordinary. i.e., an act that would not normally be carried out by the vessel. e.g., working the engines when the ship is fast aground, resulting in damage to the engines or the jettisoning of deck cargo to save the stability of the vessel and hence the ship and the rest of her cargo.
- the act must be intentional or voluntary e.g., beaching a holed ship to save her and her cargo.
- there must be peril, i.e. real and substantial risk
- the action must be for the common safety of all interests in the voyage.
In the event of General Average being declared after an incident, the Master will be notified by the Management Company. In this event, any cargo on board must not be released until the Company has given its authority.
As in all incidents, a full report backed with comprehensive documentation is necessary. However, G.A.'s calculation can be very complicated and requires a great amount of detail concerning all expenses, including wages and overtime to personnel, bunkers, provisions, and all other consumables used throughout the G.A. period. The Master, therefore, must ensure that these are carefully calculated and documented. He must also prepare a detailed deviation statement.
The shipowner has a lien on the cargo at the date of the General Average act, which can be enforced if no adequate security can be obtained from the contributory parties in G.A.
In these instances, the vessel owners may instruct the Master to refuse delivery of the cargo until Average Bonds have been signed by the consignee, or underwriters (on behalf of cargo interests) have given a guarantee to pay their share of the expenses. They need to furnish important documents and information as may be required.
In most cases, the act or damage and subsequent action are sufficient for the parties to recognize that a G.A. act has taken place. In some situations, however, the Master must notify the other parties to this Maritime Venture. If it does become necessary for the Master to 'declare' G.A., the management office will instruct you to send a message.
The seaworthy ship
A seaworthy cargo ship is one that can take its cargo to sea without risk of danger and damage to either the ship or the cargo arising out of the ordinary marine environment or the failure of the ship itself. A seaworthy ship must be fit concerning its hull and machinery, its holds and equipment, and its manning and shipboard procedures. The vessel must be in good condition and must have everything it needs in order o perform its task properly.
"Carriage of goods sea" rule imposes an obligation on the carrier to take good care to make the ship seaworthy. As the Master represents the shipowner on board the vessel, he needs to be aware of the precise meaning of seaworthiness. In cases of a serious issue affecting ships hull, machinery, or cargo, he would understand the kind of evidence that needs to be preserved, which will be required to enable owners to defend any claims brought against them. A vessel must be in a seaworthy condition at each stage of a voyage. To be seaworthy, a ship must be:-
- properly crewed, fuelled, provisioned,
- have all equipment in working order,
- be equipped with up-to-date and corrected navigational charts,
- be structurally and mechanically sound, and
- have all certificates valid for the duration of the voyage.
Due Diligence
Under the Rules, the carrier is obliged to exercise due diligence to make the ship seaworthy before it puts to sea. Exercising due diligence means taking good care.
If problems arise on board during a voyage, the test for determining whether the carrier has taken reasonable care to make the ship seaworthy is as follows:
Should the defect have come to light by the careful checking of the ship before the voyage began?
If so, would a careful owner have mended that defect before sending the ship, with her cargo on board, to sea?
To ensure that good care has been taken, there is no substitute for the proper and regular checking of all aspects of the ship and its manning, of all work, maintenance, and repairs carried out on board. Moreover, all procedures and standing instructions in force on board should be reviewed to ensure that they are adequate and well-suited for the ship putting to sea and safely carrying its cargo. All checks and regular maintenance work should be carried out regularly to avoid failure in the vessel, its personnel, or its procedures.
The Master and the crew should not rely on the outside examiners' findings such as classification society or underwriters" surveyors. These surveyors have different interests and do not usually work to the same guidelines, standards or requirements.
All of the checks and regular maintenance work carried out by the crew should be properly recorded and documented. If something does go wrong and cargo is lost or damaged, then the presumption will be that the carrier has not taken proper care to make the vessel seaworthy. To refute this presumption, the carrier must have evidence in the form of logbooks, work schedules, workbooks, work specifications, accounts, standing instructions, reports, and contemporaneous correspondence to show that proper care has been taken the vessel seaworthy.
Note of Reference
Types of losses - Total or Partial or general average losses
A Loss can be described as being either Total or Partial (Particular Average). A Total Loss may be either an Actual Total Loss (ATL) or a Constructive Total Loss (CTL). An Actual Total Loss is where the vessel is actually destroyed or wrecked or where the owner is irretrievably deprived of his vessel e.g., when a ship is sunk in deep waters where any salvage attempt would be impossible. A Constructive Total Loss is when it appears that the vessel is unlikely to be saved or recovered or when she can only be recovered and repaired at a cost, which exceeds her insured value....
P&I Clubs guideline
The P&I Clubs are correctly called Protection and Indemnity Associations and number around 20 worldwide, with the majority being the United Kingdom-based. The shipowner in taking out insurance with a particular association becomes a member of that Club. The Clubs are mutual, which means that all costs involved in providing cover or paying out a claim to anyone member are shared by all members. This is achieved by setting a rating or premium for the owner, known as an "advance call," and is based on the owner's history and exposure to risk.
War risks areas -related advisory
There are additional trading restrictions placed on the ship regarding so-called war risk areas. War risk areas do not necessarily mean an area where there is a war and may include hostile environments such as areas where civil commotion or revolution is taking place.
Cargo ship procedure - Deviation clause and port of refuge
A deviation is a departure from the intended voyage or contract of carriage. It can occur either where the course of the voyage is specifically stated and is departed from or where the course of the voyage is not stated, but the usual route or customary route is departed from. However, it should be noted that deviation does not necessarily mean a physical change in the course and can occur in a simple case of slowing down to receive stores at an intermediate off-port-limits call. ...
Salvage contract -Using The Lloyd's Open Form for "No-Cure-No-Pay" salvage contract
The Lloyd's Open Form or "LOF" is the most widely-used "No-Cure-No-Pay" salvage contract. In return for salvage services, the salver receives a proportion of the salved value (the value of the ship, its cargo and bunkers).
The Master’s Responsibility during Salvage Operation
Request for Salvage -
The Master shall typically request salvage after consultation with the Company. However, he has complete authority to seek salvage assistance without reference to the Company if he considers this necessary.
Requirement of towing arrangement in oil tankers, readyness, & training onboard
All Oil, Chemical, and Gas Tankers above 20000 DWT, constructed on or after 1st July 2002, are equipped with an "Emergency Towing Arrangement (E.T.A.) both Forward And aft to provide the ship with a rapidly deployed towage capacity in an emergency.
Other info pages !
Basic guideline for Container Ship Operation
Tanker vessel safety guideline Check items in oil tankers operation
Questions from user and feedback Read our knowledgebase
Cargo care at sea Precautions to be taken
Reefer cargo handling Troubleshoot and countermeasures
DG cargo handling Procedures & Guidelines
Cargo securing Check items prior departure port
Safe navigation Various factors affecting ships navigation at sea
Hull strength & stability Prior loading how to ensure hull strength & stability of ship
stevedores injury How to prevent injury onboard
Environmental issues How to prevent marine pollution
Safety in engine room Standard procedures
Our additional pages contain somewhat larger resources regarding procedures / guidelines about container stowage and safe handling in port,care at sea, Stacking weights,cargo securing prior departure port, Lashing Strength, Dangerous Cargo Stowage & Segregation,handling Reefer units, Special Container Stowage, Irregular Stowage of Containers, Over-stow of Containers,safety of navigation,Hull strength & stability,stevedores injury and reporting, Hatch Cover Clearance (High cube containers Under Deck ) and many more detail topics related with containership operation and business.
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