OPG Power Generation Pvt LtdOPG Power Generation Pvt Ltd

Unusual Cases in Shipping – Unusual Cases in Shipping – Converting Knowledge into MoneyConverting Knowledge into Money

Presented by Presented by

CK SharmaCK SharmaMD (Shipping)MD (Shipping)

22nd March 2017Leela Hotel Mumbai

Fertilizer from PG to Bangla Desh This is a case of 2015 for fertilizer cargo from Mesaieed

to Mongla port. Govt. of Bangla Desh regularly moves Fertilizers from PG to Bangla Desh. A local company won the tender for the cargo supply. This Company created a new paper company for Shipping and entered the market for COA for 5 voyages.

Since the Shipping company was new they agreed to pay 60 % advance freight which made the Ship Operator go for the COA.

After 3 voyages, the Charterer didn’t pay freight in time and didn’t pay Liner out costs which were on Charterers account. Ship Owner had no choice but to unload the vessel at Owner’s cost to get the vessel out which made the Owner lose more than a Million USD.

Certain places will always pose a risk to Ship Owners.

Cargo discharge at wrong disport Owner protecting unscrupulous Operator:

A Dubai Operator Hired a vessel from a reputed Owner & loaded Containers from Bombay for Umm Quasar from 5 shippers for carrying project cargoes. He got extra set of OBLs prepared at loadport showing Dubai as disport. Agent was unaware of the purpose & was conned.

Cargo was discharged in Bandar Abbas & vessel returned to Head Owners showing the fake documents to Owners.

Then the Operator asked the Shippers to pay freight again for reaching the cargo to Umm Quasar.

Some of the Shippers paid the freight again but one of them went tough.

Cargo discharge at wrong disport - II This Shipper went to Bandar Abbas and hired a vessel

to ship the cargo himself to Umm Quasar. Then filed a case against the Head Owner for all costs.

Head Owners fearing difficulty, changed the name of the vessel and stopped her trading in India.

Shipper got the vessel arrested at Singapore Anchorage during her bunkering & obtained P&I Club’s Guarantee.

Head Owner contested the case on the strength of documents given by the Operator.

The Operator closed his shop in Sharjah and disappeared.

Head Owner lost the case & had to pay up full costs including legal costs to the Shipper.

Declaring Option before time A VLCC was Chartered by Oil Industry to transport Crude

from PG to WCI with Charterer’s option to discharge at Mumbai Lighterage point or at Vadinar declarable latest passing Quoin Island after loading.

The concerned company officer declared the disport as Vadinar when loading had just commenced whereas he could have waited for 3 more days.

After loading there was an urgent need to send the vessel to Mumbai. The Charterers advised the Owner before reaching Quoin Island that the vessel is required at Mumbai.

Owner refused saying that there no provision for multiple declaration of disport option. Charterers had no choice but to pay USD 30,000 demanded by Owners to bring the vessel to Mumbai – an avoidable loss.

The famous case of “OOS”(Owners Option Substitute)

A Purchase Manager who didn’t know Shipping put his company to USD 150,000 loss by fixing a Gas carrier without knowledge. The case is as follows: The Purchase Manager made a trip to Norway without

informing the Chartering Manager and fixed a ship with the Owners.

The deal provided employment of a vessel mv Igloo Tana oos on Voyage Charter to transport VCM cargo. Owners took advantage of the fact that the purchase manager had no clue what is oos. Owners insisted for 72 hrs laytime as per ASBATANKVOY and Demurrage rate of USD 12,000 per day. This was correct demurrage rate for Igloo Tana, a new Ethylene carrier with minus 104 deg C capability. VCM is normally carried in cheap old vessels as it needs carrying temp minus 04 deg C.

The famous case of “OOS”(Owners Option Substitute) - II

The discharge time required for Lighterage for VCM was 15 days as against agreed laytime of 72 hours.

Owners deployed a junk old vessel costing about USD 5,000 per day but charged demurrage of USD 12,000 per day as per CP.

When he explained the meaning of OOS, the purchase dept was depressed and said that they had seen this word in last C/P. But little did they realize that last time OOS was protected by a following clause which said:

“Substitute vessel, if any, subject to Charterers approval which shall not be unreasonably withheld”

Chartering is indeed complicated affair and the skills of a knowledgeable Chartering Officers must be respected.

Case of 2 freight payments for same cargo A reputed Group Company in India has to import a Project

cargo from China to Bombay. They had to hire a ship. Sellers recommended their agent in India for helping to

arrange the ship. It was a friendly recommendation. The agent worked as broker and fixed a Korean vessel to

load 40,000 mts of Project cargo @USD 1.5 Million and agreed to take freight in Indian Rupees in Bombay.

Ship loaded in time & Charterers paid the freight as per CP to the agent/broker in Bombay.

But the Ship Owner did not release the BLs saying that the freight was not received by them.

The agent had closed his office and disappeared. Charterers had to pay freight again to the Ship Owner. Rest is history.

Surprises are always there – Can you possibly check everything?

Charterers - Buck GmbH Consulting and Trading (German co) Vsl – Mv. Agria ; Cargo – Iron ore.

Vsl arrived loadport Vizag. Buck/shippers had no workable L/C. Cargo was ready.

After 20-25 days Buck Germany called “Force majeure” Now Owners are proceeding to Arbitration. Surprisingly, Buck Shipping, a 25 year old company has

no assets. Although their sister company has assets. “Check before fixing” was not followed but carried away

by big name of Principal. Now we have claim of over USD 250,000 with

questionable chances of recovery.  Moral:: Be careful for every breath if u are in Shipping.

Vessel not completed loading in 30 days ….. Charterers Dilemma

A multi Billion dollar Indian Company hired a ship to load Coal from Indonesia to East Coast India.

Ship arrived loadport in time. Shipper could load only 35,000 mts cargo in a Panamax

and took 30 days. Charterers decided to absorb the dead-freight loss and

asked thee vessel to proceed to India. Master said that the Coal cargo is smoking/burning and

has to be unloaded at loadport only. QUESTION::: WHAT SHOULD CHARTERERS DO?

Ports & vessels with similar Names

London & East London case. China:

vessel at Shanghai was fixed to load at ZhAnjiang (south China) but proceeded to Zhanjiang……. Map on next page.

Voyage Instruction of mv Maharshi Karve given to Maharshi Dayanand.

Operations Dept is the most important dept of a Ship Operating and Ship Owning Company to save the company from surprise costs.

THANK YOU FRIENDS