President’s Message

Before commenting on anything else, I want to give a grateful “THANK YOU” to this past year’s officers and board members for their efforts in looking forward to the future of NAMSGlobal. We plan to continue on this path of greater recognition of NAMSGlobal throughout the maritime world and to expedite those adjustments necessary for us to have a worldwide influence.

Some of the things you will see in the near future, will be a greater influence in recruiting qualified members, both in the CMS status and younger potential CMS’ who are presently eligible for an Associate status. We will be looking for more of our senior members to be looking for recently retired U.S. Coast Guard Marine Inspectors, Chief Engineers, and Masters, recent maritime college graduates, and other potential surveyors, to be brought into our organization as Apprentices, to be mentored into quality CMS’, much like John L. Kingston, NAMS-CMS (Retired), mentored people like past president, Tommy Laing, NAMS-CMS, and myself, into becoming successful members of the profession.

We will also be reviewing all of our testing content and procedures to bring the question content and wording into easily understood language, while not reducing the quality and thoroughness of the tests. This is an immediate goal, which we intend to see completed in the next six months. The longer goal is to determine a way to administer the tests by computer, without compromising the test security, and eliminating the need to have a CMS lose a days production by having to attend the test as a proctor. I admit this will take awhile longer to perfect.

To affect these improvements, we are receiving enthusiastic responses from those returning, and those new, committee chairmen for the current two-year terms. A few committee chairmen will be retiring, and some moving on to other activities, and their service has been greatly appreciated by all. This gives us the opportunity to bring fresh blood to the organization management with more member participation.

On a different note, the recent fire in the office building, which we have been renting on a month-to-month basis, is a disaster no one wanted to happen. However, thanks to quick action by our venerable Office Manager, Evie Hobbs, our computer hard drive was saved. Many thanks also to our Nat. VP, Greg Gant, NAMS-CMS, who took the time to go to Chesapeake and assist Evie in working with the insurance adjuster and checking out other office locations, and to Mike Beijar and others in working to salvage all our records.

While this was an unfortunate incident, the bright spot is we will now be able to have a definite, renewable, time lease at a nearby location, with only a reasonable rate increase.

Final results will be sent out as soon as everything is signed.

I look forward to seeing all of our members at the next San Francisco Conference, and the following Mid-continent Conference in St. Louis, which is within commuting distance of everyone. More on that later!!

Richard L. Frenzel, NAMS-CMS, National President

NAMS Applicants, New Members, & Changes In Status

Members Requesting Change In Status

Upcoming EducationalNAMS Applicants Events

June & July 2010, various locations

IRCA ISO ISM Lead Auditor Training by Register Training Institute (IRTI), a department of the International Register of Shipping. International Register Training Institute (IRTI) is a division of the well-known classification society International Register of Shipping (IRS). IRS has vast experience in training its international network of surveyors for compliance to meet IMO or Flag State requirements. Classes atMiami, Florida June 7-11, July 5-9, New Orleans, Louisiana July 19-23 and Panama July 26-30. Prices vary depending on region. All courses are prepaid. Registration: Please Click Here to Download the application, fill out and send to [email protected]

CONTACT: (305) 576 – 4403 or email: [email protected]

08 June 2010, Jersey City, New Jersey

The second regular meeting of TAPA Americas in 2010 will be held in, June 8 and 9, at ISO. Click here to register now. The focus of the meeting is: TAPA AND INSURANCE. They will also be taking a look at international piracy, a TSA update on their cargo inspection program, roll out of the new IIS reporting system, and a presentation on certification — how it works, how it helps and why companies use it. Insurance is critical to the supply chain and this is an opportunity for TAPA to educate the insurance industry about why participation in TAPA and TAPA certification in the supply chain are important to underwriters.

If you have any questions regarding events, hotel, or other related details, please do not hesitate to contact Andrea Johnson at [email protected]

14/15 June 2010, London, UK

International Institute of Marine Surveyors (IIMS) Conference delayed due to Iceland volcanic ash disruption: The IIMS Annual Conference will be held in London on HQ Wellington. The theme is “Screens and Windows”. (“Is your head stuck in the screen or are you looking out of the windows?”) To register, email your name and email address to [email protected]

22 – 24 August 2010, San Francisco, California

NAMSGlobal 42nd Annual National Marine Conference West: Conference Chair, Lorne Gould, and NAMS-CMS. Location: Radisson Hotel Fisherman’s Wharf, 250 Beach Street,. 94133. Room rate $129.00 plus taxes per night. For direct hotel reservations phone 415.392.6700 or Central Reservations 877.497.1212. In order to receive the special group rates, you will need to identify the group and dates of the events, and make your room reservation by Wednesday, August 6, 2010.

28 – 30 September 2010, Louisville, Kentucky

The International Boatbuilders Exhibition & Conference (IBEX). The renowned IBEX Seminar Series is produced by the editors of Professional BoatBuilder magazine in conjunction several leading marine industry associations. Intensive education hosted by the foremost marine industry authorities on their respective topics and receive valuable and timely inside information on new techniques, materials and methods, as well as cost-saving solutions and ideas to enhance your factory, yard, or shop, or improve the way you do business. Eleven specialized tracks allow you to customize a seminar schedule that meets your career or company needs. All qualified marine industry professionals are invited to attend IBEX. There is no charge to walk the exhibit halls, but registration is required. Click HERE to register for a FREE exhibit hall badge. Please register in June. For more details go in the worldwide web tohttp://www.ibexshow.com/index.php

Register for Seminars EARLY & SAVE! — Pre-Registration Discount Deadline: August 20, 2010. IBEX is for the TRADE ONLY, and is not open to the general public. You must be directly involved in the marine industry to attend. A business card showing your affiliation to the marine industry is required to register.

01 October 2010 Louisville, Kentucky

Joint Great Lakes-Western Rivers Region Conference, immediately following the end of the IBEX. Details to be posted on NAMSGlobal Website under the “Events” tab (www.namsglobal.org/events) as more details become available.

15 – 17 October, 2010 Morehead City, NC – Draft Survey School

Marine Cargo Consultants, LLC will be holding a three-day school of instruction on the practice of draught surveys October 15 – 17 in Morehead City, North Carolina. Limited to 10 students, the program will take the mystery out of the science of accurately determining a vessel’s weight by water displacement. Designed for the tank gauger / petroleum inspector who has no previous draft survey experience, the program will be presented by an instructor who is an extremely experienced and practicing draft surveyor in a fun, relaxed and easy to understand format. Using surveys and publications collected from actual vessels attended by the instructor, attention will be directed toward practical application rather than only text book instruction. Draft survey school will take place  October 15, 16 & 17 (Fri -Sat – Sun) in theMaritime Building at the NC State Port Authority – Morehead City. Although the course of instruction will focus on ship surveys (both metric and imperial system of measurement), inland barge surveys will also be addressed.

For complete course description, please direct your inquiry to: [email protected] or 202-239-2729.

10 – 12 April 2011 St. Louis, Missouri

The NAMSGlobal 49th National Conference East (Spring 2011) will be held mid-continent in St. Louis, Missouri at the Crown Plaza Hotel. More details as they become available.

NAMSWorthy

NAMSGlobal Member Jack Hornor installed as Treasurer of ABYC Board of Directors

April 16, 2010, Annapolis, MD: ABYC recently announced the election of its Officers, as well as new incoming Board Directors. Election results were validated at ABYC’s Annual Meeting, which was recently held in Annapolis, Maryland, headquarters to the standards and technical workforce education and certification industry institution. Representing key segments of the marine industry, ABYC’s Board provides guidance in furthering ABYC’s mission of standards and education. During the meeting, Chair Gerry Douglas of Catalina Yachts officially introduced both incoming and outgoing Board members to the general membership.  Jack Hornor is the President of Marine Survey and Design Company and a long-time surveyor, naval architect, a graduate of the Westlawn Institute, and current board member of ABYC. Jack is a member of both the National Association of Marine Surveyors (NAMS) and the Society of Accredited Marine Surveyors (SAMS).

Insurers Feel the Strain

The marine insurance market has had a difficult couple of years for a wide variety of reasons, although by far and away the biggest factor has been the impact of the economic downturn. As Deirdre Littlefield, the president of the International Union of Marine Insurance (IUMI), explained during the organization’s annual winter meeting in January, the marine insurance industry is “inextricably tied to global trade”. Prior to the onset of the financial crisis in 2008, the shipping industry had been booming, and vessels were worked hard in order to meet demand. However, when the economic downturn hit, levels of trade dropped off, and although this has hit shipowners particularly hard, the impact has also trickled through to the marine insurance market. In the cargo insurance market, underwriters have seen less business due to the downturn, and consequently the volume of premium entering the market has decreased. Hull and machinery underwriters have also suffered at the hands of the downturn, although the number of vessels entering some state of lay-up has impacted premium volumes considerably. As shipowners placed vessels into lay-up, hull and machinery underwriters found they were less exposed to risks, and consequently premiums reduced. Vessel values have fallen owing to reduced demand, and this has also impacted the hull and machinery insurance industry. Both cargo and hull and machinery underwriters have also been impacted by the problem of piracy off the coast of Somalia. With no indication that onshore stability will return to the country any time soon, underwriters in the marine insurance market are likely to have to factor in the risk of hijacking when providing coverage for the foreseeable future. It is not only the hull and machinery and cargo markets in the marine insurance industry that have been suffering, with offshore energy underwriters also experiencing varying degrees of pain, albeit for different reasons. Deductibles were increased and limits reduced for property and casualty cover, while the rise in cost for windstorm protection was so great in some instances that a few energy companies decided it was not viable and chose not to purchase it.   (Lloyd’s List, 5/13/2010.)  Courtesy AIMU Weekly Bulletin.

USCG – Inland Navigation RulesInland Navigation Rules moved to CFR

The US Coast Guard issued a final rule placing the Inland Navigation Rules in the Code of Federal Regulations (CFR). Several years ago, Congress authorized the Coast Guard to adopt regulations for the Inland Navigation Rules and directed that the statutory version of the Rules would be repealed upon such adoption. The final rule comes into effect on May 17. This is solely an administrative process and no substantive changes to the Inland Navigation Rules are intended. (April 15, 2010). Courtesy: Bryant’s Maritime Blog – Bryant’s Maritime Consulting [email protected]Website http://brymar-consulting.com © Dennis L. Bryant

Busier Hurricane Season

The Tropical Meteorology Project at Colorado State University is predicting a volatile 2010 hurricane season – much busier than last year, when Claudette was the only tropical storm to make landfall along the U.S. east coast. The new forecast, published April 7, calls for 15 named storms, eight of them hurricanes. Last year, there were nine named storms, of which three were hurricanes. The new numbers represent an upward revision of the project team’s original forecast for 2010. “We only had three hurricanes last year, and none of them hit the U.S.,” says Gray. “This year we are predicting for the entireU.S. coastline a 69 percent chance a Category 3, 4 or 5 hurricane will hit.” He cautions, however, that it is impossible to precisely predict hurricane activity in early April. He says he will continue monitoring El Niño and present an updated report June 2.  (Soundings, 6/2010.) Courtesy AIMU Weekly Bulletin.

Average Adjusters ask: Who gets the residual value?

Lee Coppack writes to Bow Wave: Who is entitled to the residual value of a marine hull, so badly damaged that it is declared a constructive total loss (CTL), was the challenging question put to the Association of Average Adjusters (AAA) at their annual meeting held yesterday (Thurs) in the Lloyd’s Old Library, London. It is a particularly relevant issue at a time of volatile hull values.

AAA Chairman for 2009-10, High Court judge Mr. Justice Tomlinson, spoke to the meeting on the subject under the title “Underwriters decline notice of abandonment” some new questions raised by an old phrase. He was the presiding judge in the important 2009 case of the WD Fairway, a mega-size trailer hopper dredger which became a CTL as a result of a collision off the coast of China.

Mr. Justice Tomlinson described how once a ship or rig has been so badly damaged that it is declared beyond repair, it may still have material commercial value. As such, there can be a tussle between the owners and underwriters about who is entitled to what. Underwriters will not accept notice of abandonment, because it would also mean accepting the associated liabilities, such as wreck removal and pollution. At the same time, having paid the claim, they want to protect their interest in the residual value, which would be much clearer in law if they did accept notice of abandonment.

A further complication is that the law governing the marine insurance contract, more specifically English law in this analysis, is rarely the law which applies to the location of the damaged ship or rig.

What Mr. Justice Tomlinson called “the ritual steps of the dance which invariably follow the occurrence of a CTL” usually resolve the issues between owner and underwriter by co-operation, but it is not inevitable thanks to what he described as the “idiosyncrasies of the marine insurance contract.” Courtesy Bow Wave–the marine and transport e-zine. BOW WAVE is published each week to over 15 000 Readers in the transport, insurance, shipping and finance industries.  To subscribe contact Sam Ignarski[email protected]

Bubbles Up

There has been a resurgence of interest in the use of air under a ship’s keel to reduce drag. NYK and Mitsubishi heavy industries in Japan recently launched a vessel with air bubbles, while last month inSweden, Stena Bulk had a high-profile press launch of the Stena Airmax , its 15 m model ship to test the air cavity concept. These two vessels represent two differing uses of air to reduce ship friction. Neither is radically new, but with the dawning of a new environmental age in ship design, both are having something of a renaissance. It is too early to say if they will catch on in a shipping industry that is more renowned for its slow conservatism than the fast-changing pace shown by other businesses, such as telecoms and electronics. But with environmental regulation likely to achieve what consumer demand cannot, there is a belief that these unique concepts can gain a hold in the mind of the shipping executive. The two ideas both work by pumping air under a ship’s keel. Acting as a lubricant between the hull and the water, it reduces frictional drag, allowing the vessel to move through the water more easily. This has the clear benefit of reducing fuel consumption, something all owners and charterers who pay fuel bills are having an increased interest in achieving. (Lloyd’s List, 4/27/2010.)Courtesy AIMU Weekly Bulletin.

Human Error Claims Concern Underwriters

Crew standards remain a concern for the hull and machinery insurance market as partial losses remain high despite the impact of the economic downturn. Hull and machinery total losses have reduced in recent years as the downturn in the shipping industry has limited the amount of trade around the world. However, the number of partial losses has remained high, with underwriters concerned with the standard of crewing as human error tends to be the most common cause of claims. Question marks over the quality of crew is not a new concern for underwriters; during shipping’s boom period – which ended with the onset of the financial crisis – sub-standard crews were employed due to the lack of other options and shipowners had little choice but to employ crews with little experience to meet demand. Once the downturn hit the market, underwriters hoped shipowners would employ better trained crews due to their renewed availability, but that does not appear to have happened. One suggestion has been that shipowners, who remain financially constrained, have looked to keep costs low by continuing to employ cheaper crews. (Lloyd’s List, 5/13/2010.) Courtesy AIMU Weekly Bulletin.

Owners threatened with prosecution for ‘significant breaches’ of rest time regulations

The Maritime & Coastguard Agency’s (MCA) decision to stage a crackdown on compliance with the rules governing seafarers’ hours of work and rest has been welcomed by many in the shipping industry.

Announcing the campaign last month, the MCA warned that shipping companies could find themselves in court if checks discovered that they were flouting the regulations. Paul Coley, the Agency’s assistant director of seafarers and ships, commented: ‘It has been known for many years that tiredness caused by long working hours and low manning is dangerous to both ships and their crews.

‘Shipping companies have been warned about the consequences of fatigue many times. This time it’s not just a warning,’ he added.

‘The MCA is determined to stamp out excess hours in UK waters and so significant breaches of the regulations will be reported to our enforcement unit and may result in prosecution.’

Both UK and non-UK ships will be subject to inspection, the MCA said, and vessels operating busy schedules with small crews -such as feeder containerships and general cargo ships operating in short sea trades – will be targeted for the checks. Surveyors will be scrutinizing onboard schedules and work records, comparing them with the operating pattern of the ship to verify their accuracy.

‘Where time does not permit for detailed checking onboard, copies will be requested of relevant documents so that they can be checked after the event,’ the MCA added.

Surveyors will also be checking for compliance with the requirement for ships to post a dedicated lookout at night, and will look for evidence that companies are carrying out audits to ensure that the hours of rest requirements are being met.

The MCA said the campaign – which is already under way – is being mounted as part of a three-year strategy to combat fatigue and the initiative will be undertaken in ports right across the UK. It promised that ‘the instructions to surveyors on dealing with hours of rest issues will remain in force after that, even when the focus may have moved elsewhere.’ Asked by the Telegraph if action would also be taken against seafarers for noncompliance, a spokesman for the Agency stated: ‘It will depend on the circumstances of the case. We have to apply the law as it stands.’

The MCA said no additional surveyors would be directed into supporting the crackdown on fatigue, with the campaign focusing on hours of work within the existing inspection regime.

A 91-hour week is still permitted by the regulations, something that is manifestly unsafe and would not be permitted in other safety-critical sectors such as aviation.

The campaign comes as the European Commission-funded Project Horizon research project this month begins simulator trials designed to assess the impact of long working hours on seafarers. Experts at the Chalmers University of Technology in Sweden and the Warsash Maritime Academy will examine the effects of fatigue on the cognitive performance of watchkeepers under different watch patterns, using bridge, engine and liquid cargo handling simulators.

Courtesy FLASHLIGHT, a free monthly e-newsletter circulated to more than 5,000 people involved in marine surveying around the world. It is circulated to anybody who wishes to receive a copy. It is a collation of articles relevant to our profession taken from various publications together with contributions from readers. Letters, opinions and articles relating to our profession are welcomed for the newsletter.[email protected]

Coast Guard Seeks Applicants for Boating Safety Advisory Council

In the May 10, 2010, Federal Register, the Coast Guard advertises for positions on this unpaid advisory committee which “advises the Coast Guard on recreational boating safety regulations and other major boating safety matters.”

Coast Guard Seeks to Amend Its Recreational Boating Regulations

In the May 7, 2010, Federal Register, the Coast Guard publishes a Notice of Proposed Rulemaking which would “amend its rules related to numbering of undocumented vessels and reporting of casualties. These changes would align and modernize terminology used in the Standard Numbering System (SNS), the Vessel Identification System (VIS), and casualty reporting; require validation of vessel hull identification numbers; require SNS vessel owners to provide personally identifiable information; and provide administrative flexibility for States.”

Courtesy Admiralty Update, the copyrighted and trademarked e-newsletter on developments in U.S. Coast Guard regulations, state and federal court decisions of interest to commercial and recreational marine communities, written, edited, and produced by  the firm of Goldsmith & Ogrodowski, LLC, based inPittsburgh, Pennsylvania, U.S.A. Contact: [email protected]

Cargo Liabilities Supreme Court Challenge

The U.S. Supreme Court is expected to unsnarl a tangle that leaves carriers and cargo owners questioning who should be liable for damages on cargoes shipped from a foreign port. The court ruled in 2004 that a railroad’s liability is limited under the 1936 Carriage of Goods by Sea Act when it is transporting goods on the shipping line’s through bill of lading. But that decision in Norfolk Southern v. Kirby did not consider the 1978 recodification of the 1906 Carmack Amendment to the Interstate Commerce Act.

Liability under Carmack originally covered only goods transported within the U.S. and exports to Mexicoand Canada. However, when Congress recodified the law in 1978, it left out the portions defining the law’s geographic limits. Without the boundaries written into the post-1978 law, some shippers argued that Carmack, and not COGSA, should apply to the inland leg of international shipments. Federal appeals courts came to opposite conclusions, which led to oral arguments before the high court on March 24 in the case of “K” Line, a Japanese ocean carrier, and Union Pacific Railroad against a group of shippers led my motion-control parts manufacturer Regal-Beloit.

It should be no surprise that railroads want their liability limited by COGSA when they transport containers under an ocean carrier’s bill of lading — as written, COGSA limits liability to a fixed amount per package. Carmack says the railroad receiving the shipment is liable for its full value through the entire trip. In the real world, carriers and shippers routinely negotiate lower liability limits in exchange for better rates or service. The confusion will be compounded if the Supreme Court rules that the Carmack Amendment applies to all inland transportation, said maritime attorney Chester D. Hooper said.

On the one hand, railroads have the clout to require shipping lines to indemnify their losses. On the other, ocean carriers will be obligated to inform shippers of the higher liability limits available under Carmack. “It’s very confusing. This nice door-to-door scheme that we set up in the Rotterdam Rules with one standard of liability throughout is going to be destroyed,” Hooper said. Hooper was a member of the U.S.delegation to a U.N. Commission on International Trade Law working group that finished the Rotterdam Rules last September. If the U.S. ratifies the Rotterdam convention, it will replace COGSA. The Rotterdam Rules will cover cargo liability on all legs of an international intermodal shipment. Hooper said the rules would greatly simplify the process for shippers that want to collect damages from errant carriers. If the Supreme Court decides the Carmack Amendment applies to all inland transportation, shippers will have to negotiate separate liability agreements with the ocean carrier and the inland railroad or motor carrier. (The Journal of Commerce, 4/5/2010.) Courtesy AIMU Weekly Bulletin.

Fall In 2009 Ship Losses

The commercial maritime industry saw a decline in total loss figures in 2009, compared to the previous year, at the same time that actual gross tonnage loss increased, according to data released by the International Union of Marine Insurance at its spring meetings in Hong Kong. According to IUMI, the number of losses are likely to rise as the year progresses.  Overall, this total remains at a low level when compared with the period 1980-2008. Cédric Charpentier, chairman of IUMI’s facts and figures committee, cautioned that ship and tonnage losses were likely to increase, given that all three main shipping sectors — tankers, bulkers and boxships — now show the largest number of vessels and deadweight capacity in history.

Weather continues to be the major cause of total losses, representing 43.2% between 2005 and 2009. The downside for owners is that they face increasing economic strife and more technical operating problems. The upside for insurers is that many ships have less demanding and strenuous schedules and overworked crews are under far less pressure. Machinery damage remains the primary cause of major partial losses, accounting for 35% of the total between 2005 and 2009, followed by collisions/ contact and groundings.

On a more upbeat note, IUMI noted that key economic indicators were looking positive for cargo insurers in 2010. The International Monetary Fund was forecasting a recovery in 2010 and 2011, predicting that all economies will be back in growth mode but at different speeds in various regions, with trade volumes in developed countries increasing by 2%, while developing countries would see increases in excess of 6%. (Lloyd’s List, 4/7/2010.) Courtesy AIMU Weekly Bulletin.

Low-sulphur rules are creating serious challenges, seminar is warned

New ‘green’ fuel rules are posing a big risk to safety and are causing costly claims arising from engine damage, surveyors warned last month. Speaking at a marine insurance seminar in London, Gerry Williams – principal surveyor with BMT Marine & Offshore Surveys Ltd – said the increasingly complex low-sulphur regulations being applied in the US and Europe are creating ‘a huge challenge’ for shipping.

‘Potentially, this could result in some ships carrying four different fuel types at any one time,’ he explained. ‘The complex changeovers will inevitably increase the opportunity for errors which in turn may lead to costly claims.’

Mr. Williams said that in order to comply with the legislation, ship’s officers will have to maintain records to show that fuel has been changed in sufficient time before crossing into a control area.

The changeover can be done in approximately one hour, he added, but if it is done too quickly ‘there is a danger you can gas up the engine’. A rapid change of temperature can also cause thermal shock or seizure of the fuel pumps.

Mr. Williams pointed out that there is little experience of the effects of using 0.1% sulphur, and he warned that what was described as ‘bad fuel’ in casualties is often more to do with poor handling, rather than substandard fuel. In one example, a chief engineer experiencing severe purification problems, such as heavy sludging, forced through the out of specification fuel rather than reporting a problem, and as a result wrecked the engine.

Poor management of even above average specification fuel could cause a very costly failure, he added. Since 2001, BMT surveyors had dealt with at least 30 instances of engine damage caused by fuel problems related to catalytic fines. This problem is increasing and is likely to get worse with the additional demands for low sulphur fuels,’ Mr. Williams warned. Each of these casualties required a complete renewal of pistons, liners and injectors, at a cost of US$1m to $3m each.

He also expressed concern about unscrupulous suppliers adding chemical and other waste to fuel selling at up to $500 a ton, and warned that shipping companies should implement strict fuel management programmes to ensure sampling before use and regular inspection of handling.

(With thanks to the NAUTILUS Telegraph) Courtesy FLASHLIGHT, a free monthly e-newsletter circulated to more than 5,000 people involved in marine surveying around the world.  It is circulated to anybody who wishes to receive a copy.  It is a collation of articles relevant to our profession taken from various publications together with contributions from readers. Letters, opinions and articles relating to our profession are welcomed for the newsletter. [email protected]

Florida Federal District Court: Plaintiffs Entitled to Salvage Award of $290,700 for Their Efforts in Rescuing Three Vessels During Hurricane Wilma

In O’Hagan v. M&T Marine Group, LLC, 2010 WL 1372431 (S.D. Fla. Mar. 31, 2010), Thomas O’Hagan and Francisco Arroyo, independent maritime contractors working and living in Broward County, Florida and serving as sub-contractors for M&T Marine Group, LLC (“M&T”), noticed, during Hurricane Wilma, several brand new vessels owned by M&T “were taking on water because the floating docks the vessels were tied to were sinking and pulling the vessels over.” The court found O’Hagan and Arroyo provided services to three of the vessels, including cutting dock lines from the sinking piers, relocating the vessels to a seawall a few hundred yards away, pumping water out of the vessels, and taking steps to preserve and secure the vessels. The court found the post-salvage value of the three vessels to be $1,938,000 and awarded O’Hagan and Arroyo 15% of this sum, $290,700, to be divided equally. Courtesy Admiralty Update, the copyrighted and trademarked e-newsletter on developments in U.S. Coast Guard regulations, state and federal court decisions of interest to commercial and recreational marine communities, written, edited, and produced by  the firm of Goldsmith & Ogrodowski, LLC, based in Pittsburgh, Pennsylvania, U.S.A.Contact: [email protected]

Uberimmae Fidei Displaced by State Law

Black Stallion Enterprises v. Barry Ocean Marine, LLC, 2010 WL 1333272 (E.D. La. 3/30/10). A tank barge owner sought to recover for physical damages to the tank barge from a tug owner which had provided towing services for the barge. The tug owner responded that the tow was unseaworthy or that the damage was caused by an Act of God. Meanwhile, in a somewhat unusual theory, the tug’s hull/collision insurer filed a declaratory action, asserting that its coverage for both hull and collision liability was limited to scheduled vessels, including the tug, but not the tank barge which had been previously owned just prior to the voyage by the other co-defendant and insured. The insurer also contended that the policy’s express warranty of seaworthiness, along with any warranty implied at law, included not only the tug, but also the tank barge.

Needless to say, the fact situation which prompted the insurer’s argument is somewhat unusual. The co-defendant, when it still owned the tank barge, had previously requested the same hull insurer to add the barge to the policy’s schedule. To do so, the insurer required the assured to have the barge undergo a marine survey to confirm it was capable of traversing the Gulf of Mexico and the Caribbean Sea as was the owner’s intent. The insurer maintained that the co-defendants knew the barge was not suitable for that voyage. The defendant then proceeded with the voyage without obtaining the survey, the tank barge was never scheduled, and the tank barge sustained damage.

The insurer also claimed that the defendants had breached their duties under the doctrine of uberimmae fidei since they knew of the unseaworthiness of the tank barge and the request for the survey, but proceeded with the voyage anyway. The Court first held that there was no legal authority to extend a warranty of seaworthiness of a hull policy beyond the scheduled vessels.

Second, the Court held that the parties’ communication concerning the necessity for a marine survey prior to the voyage did not modify the insurance contract under Louisiana law, which requires specific written documentation to do so. Next, the Court held that the implied warranty of seaworthiness associated with hull policies only applies to the vessel actually insured. Finally, and most importantly, the Court held thatLouisiana law has displaced the doctrine of uberimmae fidei. Quoting from La. R.S. 22:860, the Court held that no oral or written misrepresentation or warranty made in the negotiation of an insurance contract by the insured or on its behalf shall be deemed material unless the misrepresentation or warranty is made “with the intent to deceive”, an entirely different analysis from the maritime doctrine of uberimmae fidei.  On this basis, the Court dismissed the insurer’s claims. (MLA on Marine Insurance and General Average, Spring 2010 Newsletter.) Courtesy AIMU Weekly Bulletin.

Marine Highway

The marine highways concept has a number of selling points. Cargo carried coastwise, on the Great Lakesor inland waterways relieves highway congestion, reduces greenhouse gas emissions and saves energy. Here’s another: Marine highways are safe. It doesn’t hurt that the transportation official in the Obama administration, Transportation Secretary Ray LaHood, is a fan. “I want to utilize (ports) to help us get into the marine highway,” LaHood told a summit of the American Association of Port Authorities in San Diegoin February. “We can use the waterways along the ports to take trucks off the road.” We’re going to make sure the people at the ports understand the marine highway is an alternative, and a good alternative, to getting trucks off the road, to cleaning up the air and to using the waterways in a way that can make the marine highway a very effective program.” (The Journal of Commerce, 4/5/2010.) Courtesy AIMU Weekly Bulletin.

Australia – investigation of fatality on container ship

The Australian Transport Safety Bureau (ATSB) issued the report of its investigation into the fatality on board a container ship at Townsville, Queensland on 24 November 2008. The crewmember died after he fell during an operation to stow the number three cargo crane hook. Investigation revealed that the design of the cargo crane hook cradle did not allow for unassisted stowage when the ship had a stern trim in excess of 2.1m; there were no guidelines or procedures available on board to assist the crew with the task of stowing the hook when it was misaligned with the cradle; the crane operations job safety analysis did not identify the risks associated with stowing the hook in these circumstances; and in these circumstances the crew routinely violated the working aloft procedure by climbing the emergency ladder adjacent to the hook’s cradle without a permit or appropriate personal protective equipment. The crewmember may also have been under the influence of alcohol, which may have adversely affected his reaction time. To see the Marine Safety Investigation Report, click here. (4/14/10). Courtesy: Bryant’s Maritime Blog – Bryant’s Maritime Consulting [email protected] Website http://brymar-consulting.com © Dennis L. Bryant

Theft Prevention on Transit Losses

Facing a spike in truck heists targeting high-value pharmaceuticals, Johnson & Johnson implemented a cargo theft deterrence program, said Scott P. Borup, director of corporate risk management. The deterrence measures and a new accounting method that helps Johnson & Johnson’s risk management department obtain favorable insurance pricing followed a series of truck thefts in 2008. To address the problem for Johnson & Johnson, Mr. Borup’s risk management department convened a task force in 2009 composed of personnel from its accounting, logistics and security departments. As a result of the task force’s findings, Johnson & Johnson trucks now operate with two drivers, escort cars are used often and tracking devices are installed in company trucks, among other security measures. The measures have prevented further thefts, Mr. Borup said. The task force revised the terms of certain high-value transactions so that title passes to the customer when the shipment reaches its destination. Therefore, Johnson & Johnson remains the insured party until the cargo reaches its customer. That allows Johnson & Johnson to purchase insurance that covers its manufacturing costs rather than coverage for the sales invoice price of the finished pharmaceuticals. (Business Insurance, 4/26/2010.)  Courtesy AIMU Weekly Bulletin.

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A 25 page list of IMO amendments which come into force in the next 8 months. A majority of the amendments take effect on July 1 2010. To view the list in PDF form, click here.

Yanmar America has received some reports from customers of unusual saildrive corrosion in the field. Upon investigating, they identified some installation and maintenance factors that can influence corrosion and in some cases failure of the drive leg. To maximize assistance and knowledge in the field, Yanmar has outlined steps that must be taken by installers of saildrives (OEM Boat Builders and Distributors/Dealers performing repowers) and items of owner maintenance to mitigate corrosion issues with the drives, along with information to assist.

To access the advisory (Yanmar America Corp. Advisory Number MSA2010-007) in PDF form, click here.

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