North P&I Club explores the insurance implications when solid cargoes behave like fluids and presenting typical responses to claims arising from cases of liquefaction.
According to David Richards, Director (Claims), North P&I Club, liquefaction in the context of carriage of goods by sea describes the phenomenon whereby an apparently solid bulk cargo behaves in a manner similar to a fluid.
Various mechanisms within the cargo mass contribute to liquefaction, including moisture content, degree of saturation, pressure within the particle pore spaces and the loss of inter-particle frictional force.
Liquefaction can occur slowly over time or instantaneously without warning. ‘Dynamic separation’ can occur during a voyage whereby the cargo consolidates at depth, with moisture / fine particles in the cargo forced to the surface, flattening the stow profile and creating a free-surface effect and cargo shift.
The process is typically triggered by the exposure of the cargo to cumulative stress from ship motions during a voyage. Once a cargo has begun to liquefy or dynamically separate within the ship’s hold, the process is irreversible, and the ship’s intact stability may be adversely affected. Depending on the cargo and sea conditions, the vessel may capsize.
Liquefaction risk identified during loading
Cargo is often presented by the shippers as safe for shipment, but a risk of liquefaction is subsequently identified during the loading process, often after the crew carry out the complementary test procedure for determining the possibility of liquefaction laid down in the Code (known as a “can test”) or due to the involvement of a cargo surveyor.
Visual observations of cargo during loading, such seeing splatter on the sides of the hold, often give cause for concern.
Liquefaction risk identified during voyage
Liquefaction may only become apparent for the first time during a voyage and the ship may then have to call at a port of refuge. In some cases, however, the ship will have no better option than to continue to the intended destination.
Cargo experts will be able to advise on the level of risk in continuing the passage and on the steps which can be taken to minimise the danger. In such situations, the additional expenses incurred by the carrier in dealing with the emergency situation will in principle be recoverable in General Average. H&M will pay the ship’s share of GA (with discretionary P&I cover for any shortfall due to under-insurance) subject to the terms of the hull policy
Mr. Richards explains
Liquefaction causing the loss of a ship
The loss of a ship with the death of her crew following liquefaction will lead to various costs falling to P&I and other marine insurances. The loss of the ship itself will fall to H&M. P&I covers claims arising from the loss of cargo; injury or death claims relating to those onboard; wreck removal; and, pollution. Owners may pay for extensive search and rescue costs – either using their own assets or paying for state or private S&R efforts – which would not automatically fall to insurers.
