Among all the risks covered by P&I Clubs, it seems that FFO (damage to fixed and floating objects) risk has not yet been mentioned enough, and generally, claims for FFO liabilities take up only a very small proportion. However, such liabilities arising from contact damage to piers, sub-sea cables, coral reefs, aquaculture installations and other third-party property should not be underestimated. Several recent incidents where ships strike piers or shore cranes have put shipowners and clubs under huge losses, and some even led to a claim so big that it exceeds USD$10 million and the liabilities need to be pooled amongst 13 IG Clubs.

I.      Reasons for these incidents

First, with the upsizing of ships, there have been increasing risks of contact damage to docks and loading cranes when ships berth, unberth or transit narrow channels. The kinetic energy generated in such contact, according to classical mechanics, is directly proportional to the mass of the ship and to the square of its velocity. Despite the fact that ships move at a rather low speed in berthing/unberthing operations, ships nowadays with a deadweight tonnage ranging from tens of thousands to hundreds of thousands tonnes can easily cause catastrophic damage.

In addition, our experience in claim handling has proved that the role of pilots matters. In countries and regions where the official language is not English, only the pilots are able to communicate with tugboat operators. This means that once pilots and masters are divided in opinion, especially in a close quarter situation, the masters and crew members will be faced with a dilemma.

II.       Typical cases

Case No.1: Container ship A crashed into a gantry crane at Suez Canal Container Terminal when leaving Port Said in Egypt. The crane collapsed onto another crane, which then knocked over several containers containing inflammables and immediately caused a large explosion at the site. Container ship A, with a length of 366 meters, was reported to has turned around in a narrow area that measures 370 meters in width.

Case No.2: Bulk carrier B collided with a pier while berthing at the Port of San Lorenzo, Argentina to load grains due to the incorrect angle and high speed. The pier sustained damages, and cargo operations at the port were affected since it was peak season of soybean export at the time of the collision.

Case No.3: Container ship C contacted two quay cranes when mooring at Terminal 1 of a port in Dubai, UAE. One collapsed and both were damaged.

Case No.4: Bulk carrier D, under effect of wind and its own movement, lost control when unmooring off Dalian port after discharge of cargo. Despite the tugboat’s assistance, it contacted the chemical terminal across the fairway, which suffered severe damage and was then out of operation for more than half a year.

III.    Claim handling considerations

The Association has confronted many difficulties in handling claims regarding a ship’s contact with a berth.

1.      Repair of port terminals and cranes can be laborious.

For collision incidents, the repair of ships follows a rather established pattern – most are moved to a dry dock for repair, and temporary repairs are performed on site to those not suitable for navigation or towage. Repair of port terminals and cranes can be a different story. First, restoration or reconstruction of the entire site shall be approved by the competent authority, followed by a very limited selection of technicians only through bid inviting. Also, weather, season, and many other factors may affect the cost and progress of projects. For example, in winter at Northern Chinese ports, the work may not be carried out efficiently and with spring festival around the corner, the project may be put off until after the holiday.

Most gantry cranes worldwide are produced in China, and if substantial damage is done at foreign ports where repair on site in not an option, these cranes will be shipped back to China for repair. As a result, round-trip transportation fees plus repair costs may probably exceed the value of the cranes.

2.      Contact incidents can incur loss of use just like collision incidents.

Loss of use of port terminals as the result of a contact incident is excluded from cover according to standard terms if FFO risk is placed under hull insurance. Calculation of loss resulting from loss of use of port terminals can be more complicated and controversial than that of loss resulting from delay in delivery – both are provided in Article 10 &12 of the Provisions of the Supreme People’s Court on Compensation for Property Damages in the Trial of Ship Collision and Contact Cases. Payment of hire is relatively more established a concept with the same type of ships on the market and different shipping indexes as easy reference, while the calculation of depreciation, loss of profit and fixed expenditure arising from the loss of use of port terminals remain uncertain with not many references available in practice.

3.      Limitation of liability for maritime claims

Limitation of liability can be the last line of defense of shipowners’ rights in the event of any maritime casualty or serious incidents. The amount of limitation of liability is not a fixed value but depends on the ship’s jurisdiction and applicable international conventions. Ways to calculate the limits of liability are provided differently worldwide. As stipulated in the International Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships 1957, the Convention on Limitation of Liability for Maritime Claims 1976 and the Maritime Code of the People’s Republic of China, the amount is calculated based on the ship’s gross tonnage.

In some previous cases handled by the Association, owners have managed to limit the amount of their liability. However, port terminal operators that sustained substantial losses are expected to battle with owners by exploiting loopholes of laws or picking on owners’ faults through all means available.

4.      Unsafe port

When handling ship’s contact incidents, the Association may consider recover compensation from the charterers by arguing that the charterers were in breach of any safe port warranty in the charterparty. “The Ocean Victory” was a typical case where the vessel foundered on the breakwater while exiting the port in heavy weather conditions and the owner claimed a total loss of up to USD$140 million against the charterer for breach of the safe port warranty. To date, a safe port is famously described in “The Eastern City” [1958] 2 Lloyd’s Rep.127 as a port where “in the relevant period of time, the particular ship can reach it, use it and return from without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship”.

IV.    Advice to Members

1.      Exercise prudent ship maneuvering.

The master should be familiar with the ship’s maneuvering characteristics and the port environment. A myriad of factors including the effectiveness of rudder and thrusters, the ship’s draught, navigation clearance, the water depth, visibility, current conditions, wind direction at the berth, as well as buoyage, pilotage, tugs, mooring lines, all need to be constantly attended to. An important lesson learnt from previous incidents is that to maintain an appropriate speed while berthing with considerations on the ship’s movement and the environment.

2.      Make detailed berthing/unberthing plans.

A vessel should have a complete and continuous berth-to-berth passage plan, with or without a pilot. Key navigational elements such as NGA, EMEG ANCH, and abort points should be marked on the chart. The master should communicate with the bridge team and crew members running mooring lines about this information, and make sure they understand the passage plan and are warned of key points. Also, make appropriate watch arrangement to relieve fatigue and pay close attention to local traffic so that immediate actions can be taken to avoid collision.

3.      Practice effective Master/Pilot communication.

When the pilot is onboard, the master should inform the pilot of the ship’s maneuvering characteristics and current movement and understand his pilotage plan. While the ship is under pilotage, all crew members on bridge should avoid talking about irrelevant things that may distract the master, the pilot, the navigating officer, or the helmsman. The bridge team should work together to make sure each order is clearly communicated and executed. Also, the master is responsible for his own professional competency and should be able to point out any pilot error in his judgement as soon as he sees one.

4.      Properly follow emergency procedures.

In the event of any collision or contact incident, the master should follow the emergency procedures as provided in SMS in terms of recording, reporting and evidence collecting. Preserve the VDR data in time, especially if the device has a limited memory capacity. Putting up a notice of detailed operations is recommended.

5.      Be cautious about signing.

The master and crew, while cooperating with investigation carried out by delegated lawyers, experts, and surveyors, should provide truthful statement without reckless admission of any liability, and refuse to sign any document if having doubts about it. Seek timely advice from owners or the Association instead.

For more information, please contact Managers of the Association.