Loss Prevention Circular No. 08-01
Introduction
Taking onboard off-spec bunkers can cause significant disruption to a
vessels ability to trade. In addition,
it creates problems in recovering from the insurers costs incurred due to a
lack of and/or limitation in cover.
This circular is intended to provide an example of the problem as
experienced by shipowners. The case
described below relates to a passenger ship, but applies equally to all types
of vessels. Loss Prevention Circular No. 08-01 is the next instalment in a
series of circulars produced by Gard Services dealing with damages associated
with bunkers and bunkering1 and outlines problems which may arise
when passenger ships have to deal with off-spec bunkers.
Passenger ship operations are very sensitive
to operational disruptions. Costs of disruption can occur in the form of hull
and machinery damages, damages and compensation to passengers and crew as well
as damage to reputation that may influence future bookings and earnings. Compensation to customers beyond the initial
costs due to commercial considerations can easily fall outside the scope of
cover of hull and machinery, loss of hire and P&I cover.
Course of events
Upon arrival in Singapore, the vessel was
firmly secured to the pier at 0550 hrs.
At 0800 hrs, a bunker barge came alongside to deliver bunkers to the
vessel. The barge commenced bunkering
at 0810 hrs and completed the operation at 1255 hrs. The bunker delivery statement noted that 90 metric tonnes of
supposedly IFO 180 cst was supplied.
Fuel samples were taken for testing by a credible bunker quality testing
company. However, the results from this
bunker test would not be available for another 2 3 days.
The vessel departed Singapore for Thailand
at approximately 1745 hrs on that same day. At 2215 hrs that evening, the
vessel experienced a total blackout, including the loss of all navigational
equipment. Power was temporarily
restored at 2217 hrs. A second blackout
occurred at 2218 hrs resulting in the vessel not being under control. Although power was finally restored at 2220
hrs, the vessel was only able to continue at half speed.
The Chief Engineer observed that the bunker
which had been supplied in Singapore that day, had a high degree of carbon
residue, clogging the complete fuel system in the main and auxiliary
engines. The Master informed the owners
of the problem and the decision was made to return to Singapore due to safety
considerations.
At 1100 hrs the following day, fuel samples
were taken in the settling and service tanks where the bunkers had been loaded
and the vessel began discharging the off-spec bunkers at 1200 hrs. A representative from the Singapore Maritime
Port Authority informed the vessel at 1230 hours that they were being cautioned
due to the emission of black smoke apparently the result of the burning of
the off-spec bunkers. An engine repair
contractor boarded the vessel at 1600 hrs and upon surveying the situation,
indicated that repairs would take at least two days provided no extensive
damage was found. After consultations
with the owners, the Master decided to abort the cruise.
At 0630 hrs the following day, the
debunkering operation was completed.
Another bunker barge began loading a fresh supply of IFO 180 cst at 0810
hrs and the operation was concluded at 0945 hrs. All passengers were discharged from the vessel at 0945 hrs. A second agency was used for the sampling of
the second bunkers taken and a different bunker testing company was used to
analyse the second bunkers. The results
of the tests of the first and second bunkers indicated high ash, water and
total sediment potential (TSP) content.
In addition, high sodium to water content was also reported, indicating
the presence of seawater in the bunkers.
However, the bunker brokers advised the
company that the samples had not been taken at the bunker barge as required by
the Singapore Standard CP60:1996.
Further samples were drawn at the barges manifold and sealed with a
barge seal.
Damage to
machinery
The damage to the main engine as a result of
using the off-spec bunker was abrasive wear marks on all fuel nozzles, abrasive
wear on all fuel pump barrel/plunger assemblies as well as heavy fouling of all
turbochargers. The turbocharger
impellers were noted to be heavily fouled, the labyrinth seals on the gas sides
were choked with carbon deposits, and the bearing bushes were worn. In addition, the boiler burner unit was also
heavily fouled. Upon review of the
engine logbooks, there was no evidence of any problems with the engines prior
to taking on the off-spec bunker. The
running hours of the main and auxiliary engines were noted to be well within
acceptable limits for overhauls.
In this case, there was no indication that
the vessel had received the results from the first fuel test prior to
sailing. In addition, the vessel had
apparently a very limited amount of bunkers onboard prior to loading the first
off-spec bunkers. Therefore, the vessel
had to commence using the new bunkers prior to receiving the test results. In this circumstance, the vessel was not
able to create a buffer by using the existing bunkers while awaiting the test
results. Had this been the case, the
company may have been able to discharge the off-spec bunkers and taken on replacement
bunkers.
What types of damages are actually
covered?
In this type of case, shipowners can find
themselves in a situation where insurance cover can only pay a portion of the
costs incurred. For example, in this
instance the cost of repairs to the damage to the machinery was below the
deductible. For loss of hire, the
vessel was off hire but within the off hire deductible. The P&I entry covered the Member's "liability
to pay damages or compensation to passengers onboard the Ship in consequence of
a casualty" as per Rule 28(b) of Gard P&I Club's Statutes and
Rules. As stated in the Gard Handbook
on P&I Insurance2: "'compensation' relates only to the
Member's legal liability to the passengers and cannot include any claim by the
Member in respect of payments made to passengers to protect the Member's
commercial reputation." P&I
cover thus, does not include additional compensation to passengers above the
Member's legal liability made to foster customer goodwill.
The shipowners is therefore left to bear a
significant cost for business disruption in these types of instances, where
only limited insurance cover would be available under hull and machinery, loss
of hire and P&I. Dependent upon the
circumstances, demurrage may also need to be charged and thus creating problem
for the shipowner.
Lessons learned
The lessons learned from this case apply to
all types of ships. However, the
passenger ship industry can be more sensitive than most industries.
Fuel
testing
1.
Bunkering procedures, including fuel-testing
procedures, should be reviewed to ensure correct procedures when dealing with
off-spec bunkers. The crew involved
should also be properly briefed on these procedures to avoid costly and
time-consuming interruptions. In the Det Norske Veritas Annual
Report 2000, it is stated that only 40 per cent of the world fleet performs
fuel testing.3 This lack of
testing can lead to extensive damage to the vessels machinery which is costly
both to the owner and insurer alike.
On the other
hand, there are cases where there is a company fuel testing procedure but due
to commercial or other reasons the results of the tests are neither received in
time nor actions taken to adjust the fuel equipment and engines
accordingly. The improper use of
off-spec fuel can cause significant damage to the vessel and its ability to
trade. In the case outlined above, the
costs were considerable and were only partially recoverable from insurers.
Taking on bunkers
2.
Every precaution should be taken to ensure that
adequate bunker supplies are available to allow for the proper testing before
use of any new bunkers taken on. It is imperative that
passenger ships, as well as other vessels on tight charter schedules, are able
to deal with situations where it is necessary to use bunkers without the test
results being available. This may
involve complex contingency planning in order to properly evaluate and ensure
that a buffer exists. For example,
some shipowners maintain a quantity of marine diesel oil (MDO) onboard for
situations where off-spec bunkers need to be discharged and only limited IFO is
available.
Footnotes
1. Gard Services Loss Prevention circulars related to bunkers are: Loss Prevention circular 01-00 (Main Engine Damage Due to Ignition Delay), Loss Prevention circular 03-01 (Bunker Quality), and Loss Prevention circular 04-01 (Charterers Liabilities and Bunkers). These circulars can be found on the Gard Services website at www.gard.no.
2. Gard Handbook on P&I Insurance by Simon Poland and Tony Rooth. Published by Assuranceforeningen Gard. Arendal, Norway 1996. This handbook can also be found on the Gard Services website at www.gard.no.
3. Det Norske Veritas Annual Report 2000 can be accessed via their website at www.dnv.com.