The global container shipping market is currently experiencing extraordinary demands. In part driven by the ongoing effects of the COVID-19 pandemic, there is extremely high demand along major shipping routes in particular the transpacific and Asia-Europe trade lanes. Market forces have resulted in container shipping costs reaching unprecedented highs in recent months; the outlook suggests that this trend is set to continue into 2022, notes Mr. Mike Yarwood, Managing Director Loss Prevention at TT Club.
Strong demand and high costs have resulted in some large retailers, or beneficial cargo owners (BCOs), along these trade lanes to consider radical alternatives, including procuring containers and chartering ships directly themselves. The aspiration being to improve control over their respective supply chains, bringing greater resilience and certainty in terms of both cost and service levels.
The heated market conditions have resulted in reduced accessibility to purpose built container ship tonnage. This has led in recent months to a number of bulk carrier ships being chartered to carry containerised cargo, for which they are generally not designed. While such chartering might provide a more cost effective short-term solution and be favourable to the ship owner who would otherwise be undertaking a ballast voyage, due care is required.
Where the carriage of containers on a bulk carrier is concerned, there are a number of critical safety, statutory, contractual and classification considerations. Standard charter party terms for a bulk carrier might not for instance provide for the carriage of cargo on deck. In fact, there might be explicit exclusions of liability for cargo carried on deck, with the associated risks resting with the shipper.
Due to the design and intended stowing arrangements of containers, the point load at the corner castings (corners) when placed in the hold or on the deck of a bulk carrier risks damaging the ship and resulting in container stack collapses. While steel “I” frames can assist in spreading the load across the loading area, complex engineering calculations are required to assess and mitigate the risk.
BCOs and those supply chain actors shipping containers in this way should be mindful of the potential liability exposures. Particularly where issuing house bills of lading, it is important to seek back-to-back terms to provide protection in the event of a loss. Recognise that NVOCs will retain a duty of care to carry the cargo safely under their house bills of lading. Where for instance a bulk carrier has not been adequately prepared to carry containers, or failed to obtain Class approval for material changes made to accommodate containers, the ship is likely to be considered unseaworthy at the commencement of the voyage. Prior to concluding the charter party, it would be prudent to obtain independent legal advice on this point.
As we head into the winter months in the northern hemisphere, which in recent years have witnessed a number of container overboard losses from container ships, one of the primary concerns for BCOs and freight forwarders will be the safe stowage on board the ship, ensuring that the cargo arrives in the condition it was packed in the origin country. Losing containers overboard is not the only risk in this context for bulk carriers.
Container stacks stowed within the hold, if not sufficiently secured, are at significant risk of collapse. Since bulk carriers are designed for the carriage of bulk cargoes, a container stack collapse also risks causing structural damage to the ship, potentially leading to pollution or total loss casualties. Furthermore, lightly loaded bulk carriers generally have larger GMs than laden container ships resulting in potentially increased acceleration forces. Shippers should be aware of this and consequently take additional precautions in securing goods within the containers.
The Code of Safe Practice for Cargo Stowage and Securing (CSS Code) provides an international standard for the safe stowage and securing of cargoes promoting the safety of life both at sea, and during loading and discharge. While general guidance exists to secure containers on non-cellular bulk carrier ships, interests engaged in shipping containers in this way should undertake due diligence to ensure that detailed provisions, including lashing plans, are included in the “Non Standardised Cargo” section of the Cargo Securing Manual (CSM) of the chartered ship. What equipment is available to be used and are the crew sufficiently trained to use, monitor and maintain the equipment during the voyage?
A CSM prescribes how cargo on-board a ship should be stowed and secured and is required on ships engaged in the carriage of all cargoes other than solid and liquid bulk cargoes. One challenge in this context is that bulk carriers will not generally be designed with the required lashing points and gear to secure containers and so potentially significant changes are likely to be required on board, requiring Class or Flag State approval.
Shippers should also assess risks associated with shipping more specialised cargoes, including those containers requiring power (reefer units) and those carrying dangerous goods. While the IMDG Code would continue to apply whether the cargo is shipped on board a fully cellular container ship or a bulk carrier, provisions available on board a bulk carrier to fight a containerised fire for example, may require further attention. While a bulk carrier will be provided with a ‘Document of Compliance’ by the Flag State, which will detail the ‘bulk’ cargoes which may be loaded, and those that may not be loaded, seeking clarity on the carriage of packaged Dangerous Goods on a bulk carrier would be a prudent step.
Shipping sensitive and high value cargoes in this way should also be given greater consideration. The atmosphere in the hold of a bulk carrier is likely to be different from that in a fully cellular container ship; the construction of the ship and ventilation provisions, could give rise to increased ambient temperatures resulting in condensation that may lead to damage of sensitive cargoes. Consideration should also be given as to how any applicable shippers’ instructions are passed to the crew.
From a supply chain perspective, it is less likely that the voyage will commence and conclude in a traditional container terminal, which in many cases will either be operating at capacity levels or contract bound preventing them from servicing ad hoc bulk carriers. While clearly advantageous in the context of seeking to avoid berth congestion, this may result in the need to position and collect containers from other multipurpose port facilities.
Such facilities are less likely to operate purpose built ship to shore crane equipment. This might lead to containers being loaded by either mobile harbour cranes or the ship’s crane equipment. Loading containers this way will certainly be less efficient in terms of time, but arguably expose the container and cargo within to greater dynamic forces increasing the likelihood of damage through the loading and discharge phases.
All the matters raised here need to be discussed with your insurance provider, since they materially change the nature of the risk. Further, as chartering interests, it would be prudent to ensure that the owners’ P&I cover has not been prejudiced, seeking confirmation of cover for the specific circumstances from the owners’ P&I Club.
The views presented hereabove are only those of the author and do not necessarily those of SAFETY4SEA and are for information sharing and discussion purposes only.
