London P&I Issues Warning on Bagged Rice Cargoes

Press Release
Thursday, March 28, 2013

The London P&I Club has advised shipowners to seek advice before loading bagged rice cargoes in view of the inherent risks associated with the trade and an increase in the severity of claims in recent years.

In the latest issue of its StopLoss Bulletin, the club notes that poor freight markets have seen an increase in the number of owners employing their ships in the bagged rice trades. It says the size of individual consignments being shipped from southeast Asia to the Middle East and sub-Saharan Africa has also increased, magnifying inherent risks and contributing to an elevation in the severity of claims notified to the club. Moreover, owners often have to settle claims in the first instance before seeking a contribution from charterers, where possible.

The club says the fact that bagged rice is usually shipped nowadays on conventional bulk carriers up to supramax size introduces a greater practical challenge for owners. “In addition,” it notes, “there has been little improvement in efficiencies at ports of loading and discharge. The combined effect of port congestion and lengthy voyages from the Far East to West Africa often results in cargoes remaining on board for prolonged periods.

“Prolonged storage onboard increases the risk of condensation and damage where there is a high pre-shipment moisture content or poor stowage or ventilation during the voyage. Certificates of quality upon shipment usually record pre-shipment moisture levels and may provide scope to rely on an inherent vice defence. However, inadequate stowage or ventilation will increase owners’ exposure to bill of lading claims.

“Handling damage and cargo shortages also tend to be endemic in this trade. In some ports, the stevedores may be in a monopoly position, meaning there is no competition, and ship operators effectively have no choice. Stevedores are usually unskilled and provided with only rudimentary equipment for slinging bagged cargo loads. They often receive bonuses for prompt discharge, with the result that preservation of the cargo can be sacrificed in the interests of maintaining a quicker cargo outturn.

“Pilferage at some West African ports is also widespread. In addition, owners can encounter difficulties with inaccurate tallies. Both loading and discharging operations require careful supervision, including performance of tallies and cross-checking figures with other interested parties. It is usually best to appoint independent surveyors who can dedicate their time to these tasks. Sealing cargo-hold openings and performing draft surveys may also assist in defending shortage claims.”

The club urges owners entering this trade to give careful consideration to the allocation of risk under the relevant charter party, as well as to the suitability of the ship and the capabilities of the hold ventilation system. It says members should notify the club in advance of loading rice cargoes to discuss appropriate loss prevention measures.”


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