My subject was major maritime casualties with particular emphasis to the fact that most of these casualties have happened due to human error and they could have been prevented and/or mitigated before they occurred. The topic was “PREVENTION IS BETTER THAN CURE”. I have prepared a summary of the presentation assuming that it may be of interest to some of The Marine Deal News readers.
Nobody wants a maritime casualty, none more so than insurers who have to pick up the bill at the end of the day. Maritime casualties can be extremely costly not only to the insurers but to the environment as well. Therefore The Global Insurance Industry, in particular the International Group of P&I Clubs are very focused on Loss Prevention as are other P&I insurers and H&M Underwriters. Majority of maritime casualties are caused by human error and the Costa Concordia is a very good example of this. Cost of wreck removal was in excess of USD 1 Billion and the total claim floats around USD 2 Billion. The cause of the incident was a simple negligence.
Most maritime casualties go unnoticed by the general public but an incident resulting an oil pollution or wreck removal ,which affects the environment, makes major headline news and attracts a great deal of attention.
I will now mention a few major casualties as selected examples among many others.
How many of you remember M.T. Torrey Canyon ? This tanker ran aground on the rocks off Cornwall, between Cornish Mainland and Scilly Island in Southern UK on 18/03/1967, spilling 119,328 tonnes of crude oil. At the time it was the largest oil spill ever. Inquiries made at the time found the Master to be blamed for taking a short cut rather than following the normal navigational route. Furthermore, it was also found that the helmsman was unaware that the steering selector had been accidentally left on autopilot position hence was unable to carry out a timely manoeuvring.Two simple human errors. Can you imagine how much this loss would have costed in today’s environmentally sensitive World?
M.T. Prestige , 81,000 DWT Tanker sank about 150 Miles off Spain in Atlantic Ocean on 19th November, 2002. 76,000 tons of oil spilled into the sea polluting the sea bed and contaminating the coast line of Galicia which is a very important ecological area supporting coral reefs and many species of fish and birds. The Hull sustained damages during a heavy storm on Nov 13, 2002 and The Captain, fearing that the ship would sink, called for help from Spanish Authorities asking to be brought into the harbour. Spanish authorities refused the ship to approach Spanish Coasts and ordered the ship to proceed Northbound. French Authorities immediately reacted and ordered the vessel to proceed South, then Portuguese Authorities send Naval Ships to the vessel so that she does not approach Portugal shores. With the French, Spanish and Portuguese authorities refusing to allow the ship to find a safe shelter, the condition of the single hull tanker quickly deteriorated and as the storm was getting heavier finally sank about 150 miles off Spanish Coasts.
Would Spanish Government have allowed the ship to get into the harbour at the beginning, Authorities say that this might not have happened.
M.V. Napoli , 4,419 TEU (62,000 DWT) Container Ship, sustained severe damages during the heavy storm Kyrill about 50 Miles off Cornwall Coasts causing a flooded engine room. Captain ordered the crew to abandon the ship who were later on salved by RAF Helicopters. UK Authorities must have learned from Prestige incident that when M.V. Napoli was in danger of sinking in the English Channel a rapid decision was made to deliberate beach of the vessel off the Devon coast at Lyme Bay on 19th January 2007, which prevented a potential environmental catastrophe. It was still a major pollution and wreck removal claim for the insurers but it could have been much worse.
M.V. Selendang Ayu, a Panamax grounded off Unalaska Island in Western Alaska with 60,200 tons of soybeans due to engine breakdown on 8th December, 2004. Thereafter she was broken into two. 1,300 tons of heavy bunker spilled damaging the environmental life. The cause of the incident was cracking of the No 3 Cylinder. Chief Engineer and The Crew tried to segregate the broken cylinder with the attempt to restart the engine without No 3 Cylinder but as a result of some technical mistakes they have done during dismantling they could not restart the engine. The wind speed of about 30 knots caused the vessel to drift ashore and eventually grounded. The Captain could have sheltered a nearby safe port instead of trying to repair the engine in a stormy weather. At the time, US Coast Gard were also criticised for their failure to timely acquire the appropriate assets to prevent and respond to the oil spill.
M.V. Rena, 3,351 TEU (47,231DWT) Container ship grounded near Tauranga ( Astrolabe Reef off the Bay of Plenty), New Zealand with 1,368 containers on board. 1,700 tonnes of heavy bunker and 200 tonnes of diesel oil on 5th October 2011. The hull cracked on 14th October. The end result was a very expensive wreck removal cost ( about $ 750 Million) and oil pollution. According to the Transport Accident Investigation Commission of New Zealand , the cause of the incident was the failure of The Master and Crew to follow the proper voyage planning, navigation and watch keeping practices and the ship management’s insufficient vessel management system that led to the grounding. Human error again.
….and these are just a small selection.!!!! In all these cases the P&I insurers and Hull and Machinery underwriters had to pick up the bill.
I will now try to emphasize the importance of Risk Assessment and Loss Prevention applied by the insurance industry, particularly by PandI Clubs around The World. Almost all major PandI Clubs have their special Loss Prevention web sites which contains a wealth of ideas and suggestions picked up by dedicated risk assessors. The most important aspect of Loss Prevention is collaboration between The Insurance Industry and State Administrations. Exceptional cases such as ‘Costa Concordia’ and ‘Rena’ proved the importance of working collaboratively to improve efficiency and co-operation in dealing with major Wreck Removal operations. With this understanding in mind, The International Group of PandI Clubs developed The Outreach Program, where a Memorandum of Understanding (MOU) is endorsed by The Group Clubs and by some of the leading maritime states. The program focuses not only on improving co-operation and streamlining response activities following a major casualty, but also addresses mutual training and engagement outside of specific casualties. The Large Casualty Working Group within the program has an on-going duty to review major casualties involving removal of wreck and to provide guidance and recommendations to Group Clubs on possible ways in which the response to such casualties may be improved and the resultant costs more effectively can be controlled and monitored.
This is consistent with the historical experience of The International Group of PandI Clubs in dealing with wreck removal operations, which reveals that with the exception of ‘Costa Concordia’ and ‘RENA’ the average cost involved in wreck removals has generally not exceeded the pool retention,
Once a loss has occurred indemnifying that is an easy process for the underwriters but the most important issue is to prevent that loss to occur. SCOPIC (Special Compensation PandI Clause) in Salvage Agreements is another good example of Loss Prevention in Salvage and Wreck Removal operations.
Is using money as a “cure “or as a “prevention” always the best option or perhaps in certain circumstances “ let nature takes it’s course” ?? works better.
Oysters, for example, have long been lauded for their ability to challenge our appetite, but these salty little bivalves are so much more than just being delicacies on our tables.
In Tasmania, they have proven to be eco-friendly, where oysters are currently being used in a project to filter heavy metals out of long-polluted Derwent River. Pollution in Derwent River is well documented and is the result of many years of abuse from industrial runoff upstream. Heavy metals such as mercury, zinc, cadmium, lead and copper are all in the deposits throughout the river. For years Government officials have warned the public against eating sea food, mainly shellfish, from the river because of metal contamination. Oysters are well known for capturing large amounts of metal through their natural feeding process of filtering water, with no real negative effect on the oysters except becoming inedible. Thus, the idea to farm oysters to use as filtration instead of food was created.
The project is a Tasmanian based collaboration and belongs to The Museum of Old and New Art, MONA, whose grounds sit before a polluted patch of The River.
Currently, just off MONA’s jetty sits a small farm of oysters, self-sacrificing as they suck the Derwent of heavy metals.
After their lives as environmental soldiers reaches its climax, The MONA Oysters are harvested, dried and cast in concrete or glass before being added to an oyster mausoleum in remembrance of their noble work. This is an elaborate scientific artwork to honour the humble oysters and is to my knowledge a very good example of ‘prevention’ as well as ‘curing’ the environmental pollution by The Civil Community. With estimates it would take up to 1.1 trillion oysters to clean the whole river of metals, obviously it is not a quick fix but it is at least a start.
Insurers have a vast amount of experience in handling serious casualties and the financial strength to meet the cost of clean up or removal of wreck should such an incident occur. Governmental / Political interference do not always help when dealing with such incidents as in most cases it leads to increase the costs of the “cure ”. It is not fair to ask the underwriters to just give their cheque book to a third party to throw money at a casualty without any real thought as to the best method to remedy the situation and at the same time be cost effective.
The above examples were mostly examples of removal of wreck. Removal of wreck may usually follow an unsuccessful salvage operation. The two, though look similar in nature, are quite different topics and operations. A wreck removal, if ordered by a competent authority is a PandI liability and historically has been so, while salvage has historically been dealt with by hull underwriters with little involvement by PandI Clubs.
Last but not least the terrible explosion in Tianjin port in August of this year is another unfortunate example of a major casualty, which could have been prevented. According to the Tianjin Police, the explosion happened in a warehouse operated by a logistics company specializing in handling dangerous goods. The warehouse is reported to have been designed to store dangerous chemicals, including sodium cyanide (which is classified as “extremely harmful”) and the explosives sodium nitrate and potassium nitrate.
It was reported in the last IUMI (International Union of Marine Insurers) conference that the insured losses from the explosions at the port of Tianjin have now reached to USD 6 billion.
• Over 150 people killed, around 700 injured
• An estimate of 10.000 vehicles is likely to be destroyed or damaged.
• About 18.000 containers are said to be completely destroyed, while other cargo has reportedly been heavily contaminated by toxic dust
• About 90.000 people live within a 5 km radius of the blast site.
The incident will most likely be a market-changing event due to its scale and underwriters will certainly be looking at better managing their future accumulation risks. Property damage, business interruption, Cargo, Life, Liability, Supply chain claims are among the major types of insurance claims can be counted. This incident was the latest in The World which rang the bells again reminding us that PREVENTION IS ALWAYS BETTER THAN CURE.