The London P&I Club has issued LP Focus including analysis on its experience on tanker cargo shortage and contamination claims. One of the most common areas of bulk oil cargo claims that the Club has experienced has been focused on cargo out-turn/shortage or cargo contamination, or a mixture of both, particularly with multiple grades being carried at the same time.
There are many areas where the transfer of bulk liquid cargoes and the methods used can give rise to either a short out-turn or a cargo contamination.
If we consider the cargo loading and discharge cycle, a ship must first be prepared with suitably clean tanks to load the cargo; then a correct loading sequence using the minimal number of lines and valves and each grade properly segregated from non-compatible grades; then transported at the correct temperature and carriage requirements; then discharged ashore in the correct sequence to the correct shore tank.
Therefore, it is of vital importance during custody transfer of liquid bulk cargoes that there is an accurate cargo measurement procedure to prevent potential cargo shortage claims and good sampling practices to prevent potential cargo contamination claims, as well as understanding the cargo characteristics with respect to previously loaded cargoes, tank preparation required and tank coating compatibility.
Cargo shortage claims
A cargo shortage out-turn claim, where the quantity discharged is less than the ‘Bill of Lading’ (B/L) loaded quantity, can arise from either a ‘physical’ loss or ‘paper’ loss.
A ‘physical’ loss may be the result of evaporation loss during the voyage (high heat cargo or poor pressurevacuum valves), leakage into other tanks, pollution, poor pumping and discharge performance i.e. ‘Remains On Board’ (ROB), measurement errors onboard and ashore, incorrect pipeline settings onboard and ashore and also theft when loading into trucks or cargo diverted to ship’s fuel tanks.
A ‘paper’ loss may occur as a result of the overstatement of the quantity loaded (inaccurate B/L), understatement of the quantity received in shore tanks, calculation and measurement errors in producing the B/L and errors in measuring the shore tank(s). If we consider ‘physical’ loss, it is important to accurately measure and record the cargo figures at all stages of the cargo cycle to determine where the loss may have happened. Normally, it is done four times during custody transfer between the loading port and discharging port:
1. Before Loading – all pipelines and valves should be set correctly and verified by another crew member, the On Board Quantity (OBQ) carefully measured taking into consideration trim and heel, tanks verified ready for loading by the shore representative and a ‘Tank Clean Ready for loading certificate issued’, cargo gauging and monitoring equipment operational, cargo quantity and tank loading plan and sequence checked.
2. After loading – determine the loaded quantity, better known as the ‘Ship’s loaded figure’, by an accurate measurement of ullage, temperature, water dips using calibrated equipment and the correct ASTM/API/ Institute of Petroleum Measurement tables for temperature and density. During the voyage monitor cargo temperatures, any heating system and pressure vacuum system.
3. Before discharge – determine the ‘Ship’s Arrival figure’ by accurate and careful cargo measurement, in particular by checking the temperature at the top, middle and bottom when carrying a heated cargo, checking for any free water and then this should be compared with the ‘Ship’s Loaded figure’ to determine any voyage loss. Any discrepancy should be investigated before commencement of discharge and notified to Owners and the Club. Pumping rates should be agreed and monitored to ensure effective stripping of all tanks.
4. After discharge – all tanks, lines and pumps should be carefully stripped of all cargo and then the tanks measured for any ROB quantity. A ‘Tank Dry Certificate’ should be issued to confirm all cargo has been discharged ashore and any ROB noted. Check also if shore lines were full or empty before and after cargo operations. A large quantity of oil can be lost within shore pipelines especially when there are multiple tanks and berths.
Learn more by reading London P&I Club’s LP Focus on tanker cargo shortage and contamination claims
Source: The London P&I Club
