TThe Swedish Club highlights an often overlooked challenge that ship owners face when it comes to cargo damage – shortage claims. The club’s new publication, Focus on Bulk Cargo: Transporting Grain and Soybeans, examines the intricacies of transporting these commodities, and highlights the prevalence of cargo shortage claims.
These claims represent 63% of the total claims registered. The club said that such a large number should prompt ship owners to pay great attention to the issue.
Johan Kalmaitre, claims manager at the Swedish Club, explained: “In Argentina and many North African countries it is not unusual for there to be discrepancies between shipping company figures based on shore gauges and draft surveys. Each country has its own rationale for this, but the bottom line is that The operator can find himself out of pocket through no fault of his own.
The post outlines tips to help operators protect against such claims. Recommendations include the use of surveyors, accurate record-keeping practices, and the involvement of protection and indemnity clubs when third parties require signatures on statements.
Written by Joachim Enstrom, the Swedish club’s chief loss prevention officer, the guide provides an examination of all grain and soybean-related shipment claims between 2018 and 2022 that incurred costs of at least $5,000. The club has reviewed nearly 200 bulk carrier claims and performed in-depth analyzes of the statistics collected. The publication also provides guidance on effective fumigation and ventilation techniques, as well as assessing customs fines.
Countless challenges
According to the manual, loading, transporting and unloading bulk cargoes of grains and oilseeds presents a range of challenges. The crew faces various considerations before and during the transportation of these cargoes. The Club advises that gaining insight into the common problems encountered during the transportation of grains and oilseeds, and adopting strategies to mitigate them, can significantly reduce cargo damage and associated claims.
The post also presents the main statistical results.
It is worth noting that there has been a steady increase in the frequency of claims since 2019.
During this 5-year period, 68% of deficiency claims were prevalent during hospital discharge, and they occurred most frequently in North Africa and China. Discrepancies between ship numbers and shore numbers have fueled nearly 70% of shortage claims. While China saw few claims until 2021, a steady increase has been observed since then, although North Africa consistently hosted the highest number of claims over the entire period.
The evidence indicated that the emergence of claims in China could be related to the epidemic. “The strict lockdowns seen in many cases delayed the ship. They also made it difficult for surveyors to come to the ship for inspection. The crew and longshoremen were also more reluctant to interact with each other because of the risk of infection. This led to infection, the pilot said. Crews not being able to verify shipment and take draft numbers This reflects trends observed in soybean claims.
Claims costs
Shortage claims contributed a whopping 44% of the total cost of claims, with an average claim cost of $35,000. While the average claims may seem modest, the high frequency of deficiency claims is a concern. The guide also emphasizes the non-compliance with general average contributions, which make up 20% of the total cost, although they occur less frequently but carry a higher average claim cost of $800,000.
Moisture damage accounts for 13% of the total cost, with an average claim cost of $37,000. This category is often attributed to errors in calculation – essentially deficiency claims – and comprises 35% of all claims. Up to 80% of wet damage accidents occur during unloading at the port.
Meanwhile, improper handling of cargo on the coastal side contributes to 12% of claims, and occurs almost equally at ports of loading and unloading. Claims at ports of voyage and loading account for 16% and 10% respectively of the total claims in this category.
In cases where cargo damage is discovered during unloading, accurate recording of the location of the damaged cargo within the cargo hold is vital, the manual advises. Close observation of unloading procedures is also recommended, along with segregation activities, and it is advised that a local surveyor be appointed to document the condition of the cargo and supervise the inspection of damage, accompanied by the taking of grain samples during unloading.
The publication also addresses country-specific challenges.
Survey draft numbers are not recognized in Algeria, and Tunisia imposes customs fines for errors in data or spillage of goods.
Turning to soybean claims, the frequency of claims of 0.011 over the five-year period (equivalent to 1.1% of all bulk carriers), once again shows the impact of the pandemic. Extended anchor stays resulting from the closures increased the risk of heat damage to soybean shipments.
The overall aim of the guide is to highlight the risks that give rise to Swedish Club members’ claims. By proactively addressing these issues and implementing preventive measures, the club believes ship owners can significantly reduce the amount and cost of claims.
Source: The Swedish Club