In addition to hundreds of smaller vessels, more than 10 large commercial vessels were damaged along the Japanese coast by a massive tsunami that followed the 9.0 earthquake which hit the northern region of the island nation on March 11, including vessels connected to major ocean carriers "K" Line, NYK Line, Mitsui O.S.K. and Hyundai.
At the time the tsunami hit, Lloyd's of London reports that up to 3,300 vessels were located along the eastern coast of Japan. As of Thursday, these are the major commercial vessels in Japan that have been reported damaged due to the tsunami.
The 175,775-dwt bulker China Steel Integrity, which was anchored off of the Port of Kashima and working under a "K" Line charter carrying iron ore when the earthquake hit, was driven aground near the port. All 25 of the mixed Taiwanese/Chinese crew were able to get off the vessel without injury. The vessel sustained some damage to the hull and mechanical systems, but no oil leaked from the vessel.
The 91,439-dwt Japanese-flagged cargo vessel Shiramizu was preparing to unload 70,000 tons of coal at Sinchi when the tsunami struck, slamming the vessel into the pier. All of the crew were reported safe, however, fuel and ballast tanks on the Shirmizu were holed and oil was reportedly leaking from the vessel. Hachiuma Steamship Co., a subsidiary of Tokyo-based ocean carrier NYK Line, operates the vessel.
The 77,739-dwt Panama-flagged bulker Shirouma, also working for NYK Line, was hit by the tsunami shortly after unloading a cargo of coal at the Port of Haramachi. The vessel was torn from its moorings and washed ashore near the port. All crewmembers were reported unharmed.
Berthed at the Port of Onahama when the tsunami hit, the 75,200-dwt Panama-flagged bulker Coral Ring carrying 60,000 tons of coal was driven against the dock, destroying the pier and suffering hull damage. Though the ship was immobilized due to damage, operator NYK Line said all crewmembers are reported safe and there were no reports of oil leaks from the vessel.
The 51,419-dwt Bahamas-flagged freighter M/V Emu Arrow, was caught by the tsunami waves while unloading cargo at the Port of Kashima. The ship collided with other vessels but remained afloat and damage assessments are underway. None of the 26 crewmembers were injured.
The tsunami tore the 32,385-dwt Panama-flagged handysize bulker C.S. Victory from a berth at the Port of Ishinomaki and drove the vessel aground in a shallow harbor. All crewmembers were reported to be safe. Mitsui O.S.K. Lines, which had chartered the vessel, reported Thursday that the vessel had been able to pull out of the shallow harbor under its own power and was now safely at anchor.
The 27,161-dwt Japanese drilling vessel Chikyu lost one of its six azimuth propulsion pods when hit by the tsunami about 170 miles north of the Japanese Port of Sendai. The highly advanced deep-sea drilling vessel was in the Port of Hachinohe when it was warned of the impending tsunami. The vessel departed the port at full speed, a maneuver that tore off the engine pod. The ship remains in the port awaiting repairs.
The tsunami washed South Korea-based Hyundai Glovis' 6,901-dwt freighter Glovis Mercury ashore in Sendai. No other details regarding the vessel or crew were reported.
The tsunami also pushed the 6,175-dwt Panama-flagged Capesize freighter Asia Symphony onto the road along the shore of Kamaisha. The Mitsubishi Logistics Corp. vessel remains high and dry, upright on the shore with the rear quarter of the vessel hanging over the water.
The 1,592-dwt Japanese freighter Koshin Maru either sank or ran aground due to the tsunami, though no location or fate of the crew has been given. The vessel is classified as a Hazard D dry cargo vessel.
The tsunami dragged the 523-dwt Russian reefer ship Khrizolitoviy inland from its berth at the Port of Ofunato, before the ship was carried back out into the port where it is now reported to be adrift with a damaged main engine. One crewmember suffered an unidentified broken limb. The 13 crewmembers aboard were rescued and reported in good condition. Two additional crewmembers were ashore at the time of the tsunami, but reported safe.
An unidentified ship, with 81 dock and/or shipyard workers aboard, was swept away by the tsunami from a shipyard in Ishinomaki. While initially feared lost, the Japan Navy and Coast Guard eventually located the adrift vessel and rescued the workers using helicopters. It was also reported at the same time that the unknown vessel had sprung a leak and was taking on water.
Japanese authorities on Thursday said that the northern ports of Hachinohe, Ishinomaki, Onahama and Sendai have been severely damaged, if not fully destroyed. Other northern ports with varying degrees of damage include Hitachinaka, Hitachi, Kesennuma, Kamashi, Miyako, Ofunato, Shiogama, and Soma.
Friday, March 18, 2011
Tuesday, March 15, 2011
Southern California Ports Perform in 2010
By Keith Higginbotham, California Contributing Editor
keith@pacmar.com
There is a saying in the shipping industry that all things are cyclical. If this is true, then 2010 will be remembered by the ports of Long Beach and Los Angeles as the year the cycle turned decidedly upward and put the effects of the global economic downturn firmly in the rearview mirror.
The two neighboring ports, which together make up the busiest container port complex in the Western Hemisphere, each boasted major cargo volume increases in 2010. The two ports reported a combined increase over 2009 of 2.25 million TEUs. This increase was greater than the total containers handled in 2010 by all but three other US ports.
While the final results for the year reaffirmed Los Angeles’ position as the busiest single port in the nation, number two Long Beach posted the largest single-year gain in total container volume in port history.
Despite the massive turnaround, 2010 was also the year that both ports began to publicly express a serious degree of concern about the looming threat faced by the set 2014 opening of an expanded Panama Canal.
Both ports continued to implement solutions to the Panama Canal problem in 2010, mainly in the form of expanded development of facilities.
In Long Beach, a $4 billion facilities program continued to gain steam, including the securing of funds for the $1 billion replacement of a key bridge, progress on a $750 million terminal development project, continued work on a redevelopment of the port’s bulk terminal facilities, and forward movement on the development of a brand new $650 million terminal.
Across the bay, the Port of Los Angeles began a major roadway rehabilitation project, moved into the final phase of a major dredging project, secured funding to construct an additional railyard, and took steps to bring an iconic World War II battleship to the port as a museum attraction.
In addition, despite the heavy load of development sprouting throughout the two ports, the environment remained a main focus for both ports in 2010.
The two ports’ similar Clean Truck Programs reported significant cuts to air pollution generated by ports-servicing drayage trucks. Various incentive programs continued to promote vessel speed reduction to cut vessel emissions, and both ports sponsored serious pilot programs to test alternative fuel vehicles.
Cargo Rebound
Cargo volumes at the two ports in 2009 were considered to be some of the most dismal in memory. Some terminals reported volume drop-offs of more than 30 percent compared to 2008, with an average decline across the ports of about 20 percent.
At the beginning of 2010, industry analysts did not have good news for the two ports, predicting that at the very most both could expect only a single digit percentage increase by year’s end. Most were predicting further declines.
“Many experts predicted that we might not get close to our peak levels of 2007 until the middle of this decade – or even later,” Long Beach Port Executive Director Richard Steinke said during a speech in January 2011.
In fact, both ports proved the analysts were off the mark by wide margins.
The Port of Los Angeles posted a year-end 16 percent increase in total cargo traffic over 2009, cementing its place yet again as the Western Hemisphere’s busiest container port.
The port handled a total of 7.83 million TEUs in 2010, an increase of more than 1.25 million TEUs over the year-end numbers for 2009.
Of this total, Los Angeles port officials reported handling 3.98 million loaded inbound TEUs in 2010, a 12.8 percent increase over the 2009 calendar year.
The port also handled 1.84 million loaded outbound TEUs, a 10.3 percent increase over 2009. Export volumes in 2010 shattered the previous calendar year export record, set in 2008, by just over 172,000 TEUs.
“The 2010 volume gains far surpass our initial estimates, and we’ve been able to facilitate some export opportunities in the past year through our TradeConnect initiative and increased networking with local business stakeholders,” Port Executive Director Geraldine Knatz said in January.
Next door, Long Beach port officials in 2010 recorded the largest single-year gain in total container volume in port history. The port handled nearly 24 percent more containers in 2010 than the previous year, boosted by 12-solid months of growth in both import and export volumes. The year-end numbers also reaffirmed Long Beach’s status as the second busiest container port in the Western Hemisphere for 2010.
During 2010, the Long Beach port handled a total of 6.3 million TEUs, a 23.6 percent jump over end-of-the-year numbers in 2009. In total, the port handled 1.2 million more containers in 2010 than it did in 2009, the largest single-year gain since the port began tracking TEU numbers in 1971.
Loaded inbound volumes rose 23.4 percent in 2010 to 3,128,860 TEUs, and loaded outbound volumes were up 15.6 percent to 1,562,398 TEUs.
Ending the calendar year, the port handled 523,311 TEUs in the month of December 2010, a 12 percent increase compared to December 2009, and the port’s thirteenth consecutive month of gains. Port officials reported handling 256,889 loaded inbound TEUs in December 2010, a 10.4 percent increase over the year ago period. Total loaded outbound containers were up 14.7 percent in December 2010, to 141,140 TEUs.
“This was a tremendous rebound, and happened much faster than predicted,” said Port of Long Beach Executive Director Richard D. Steinke. “Best of all, the additional cargo has brought back thousands of port-related jobs throughout the supply chain – and we’re very optimistic that the job growth in this industry will continue in 2011.”
Challenges and Solutions
In addition to focusing considerable energy on solving the short-term problem of cargo volume downturns, the ports also spent a great deal of time and effort in 2010 focusing on two long term threats: the impending opening of an expanded Panama Canal in 2014 and continued calls for the two ports to address the environmental impacts of their operations.
After several years of dismissing any serious threat to West Coast dominance in transpacific cargo posed by the Panama Canal expansion, 2010 became the first year that the canal threat became a commonplace topic in the public conversation by port officials.
In large part as a response to the Panama Canal threat – and the threat of other developing ports, such as Prince Rupert in Canada – Southern California port officials in 2010 began a stepped up campaign of major capital investment.
In Long Beach, a more than $4 billion program to develop terminals and goods-movement infrastructure began in earnest.
The major component of this project is a $1.1 billion replacement of the aging, capacity-limited and height-restricted Gerald Desmond Bridge – a major point of truck ingress and egress for both ports. In 2010, port officials managed to secure the necessary funding for the project and receive approval on the required environmental documents to move forward with construction, set to begin this year.
Another major component of the Long Beach plan – the Middle Harbor Project – also began work in 2010. The 10-year, nearly $1 billion project will transform two smaller odd-shaped and aging terminals into a single geographically efficient mega terminal.
Two additional Long Beach terminals projects saw progress in 2010: the $850 million dollar redevelopment of the Pier G breakbulk facility and the creation of a new $650 million terminal on Pier S.
At the neighboring Los Angeles port, similar efforts to increase the efficiency, capacity and environmental friendliness of facilities also moved forward in 2010.
In March, the port broke ground on a $22 million rehabilitation of a main surface street truck route from San Pedro and Wilmington to State Route 47.
In July, after nearly a five year delay, port officials and the Army Corps of Engineers kicked off the final phase of a $370 million dredging project to deepen the port’s main channel.
“The Main Channel Deepening Project is a lifeline to maintaining our competitive edge during the critical years ahead as we face increased competition on a number of fronts,” the port’s Knatz said.
The main channel project is being conducted in parallel with several terminal development projects.
“We presently have $350 million in terminal expansion projects underway at our China Shipping and TraPac container facilities,” Knatz said. “Resumption of the Main Channel Deepening Project is key to delivering those projects on schedule – a commitment we have made to those terminal operators.”
In October, the port secured $16 million in federal funds to be used to construct an intermodal railyard connecting the port’s on-dock railyards with the Alameda Corridor. The project includes a new railyard for a short-line railroad serving Union Pacific, Burlington Northern Santa Fe, and the two ports.
Port officials also joined an effort to bring the famed World War II battleship USS Iowa to the Los Angeles port as a floating museum. If approved by the federal government, the attraction is estimated to bring between 137,000 and 236,000 visitors a year to the port area.
Environment and Community Efforts
A major focus for both ports over the past five years has been the deleterious impacts the port has on the surrounding communities. In the early 2000s, the two ports were identified by state air regulators as the single largest stationary generator of diesel emissions in the Southern California basin.
Since 2006, when both ports adopted the Clean Air Action Plan to guide environmental mitigation into the future, both ports have achieved some notable successes.
In early 2010, it was revealed that the two ports’ separate Clean Trucks Programs had reduced ports-generated diesel emissions by more than 80 percent, a primary goal of the trucks programs. The early attainment of the goals also prompted the two ports to adopt even more stringent rules for the next several years of the truck program.
Both ports also continued to focus on ship emissions with the main efforts based around the Vessel Speed Reduction program. In 2010, each port’s incentive programs, designed to encourage carriers to slow their vessels down as they approach the harbor, continued to bring in more participants. More than 90 percent of all frequently calling vessels at the two ports now participate in one or both of the ports’ programs.
In addition, both ports have become test beds for advanced emission control technology for goods movement vehicles. State-of-the-art hybrid, electric and alternative fuel vehicles continue to be field tested in either pilot programs or small fleet rollouts at the two ports.
While dealing with the negative impacts of operating major industrial facilities virtually surrounded by residential communities continued to be a primary focus for the two ports in 2010, officials at both ports also continued with outreach efforts to the communities.
“It’s not just about making a difference on the docks,” Long Beach’s Steinke said.
“Of all the port’s many commitments, none is more important than our pledges to our community.”
The Port of Long Beach’s Green Port fest, free harbor boat tours, and numerous public forums continued to draw record-setting attendance. At the Los Angeles port, similar community programs, including the nationally known Lobster Fest also drew large numbers of the community.
In addition, both ports continued their long-standing tradition of providing for education in their respective communities. The Long Beach port provided more than $60,000 in scholarships to area high school and college students in 2010.
In 2010, the governing board for the Los Angeles port authorized $1.2 million for the Port of Los Angeles to sponsor maritime-related educational programs in Southern California high schools to promote international trade and career opportunities. The scholarships will allow hundreds of students to continue to receive classroom knowledge and field exposure to port and maritime business operations, as well as port-related job opportunities.
“Even in lean budget times, we understand how critical it is to educate our youth about the maritime industry and enlighten them to potential career paths,” Port Deputy Executive Director Mike Christensen said. “This investment is well worth it for the dividends that these students produce for our communities.”
keith@pacmar.com
There is a saying in the shipping industry that all things are cyclical. If this is true, then 2010 will be remembered by the ports of Long Beach and Los Angeles as the year the cycle turned decidedly upward and put the effects of the global economic downturn firmly in the rearview mirror.
The two neighboring ports, which together make up the busiest container port complex in the Western Hemisphere, each boasted major cargo volume increases in 2010. The two ports reported a combined increase over 2009 of 2.25 million TEUs. This increase was greater than the total containers handled in 2010 by all but three other US ports.
While the final results for the year reaffirmed Los Angeles’ position as the busiest single port in the nation, number two Long Beach posted the largest single-year gain in total container volume in port history.
Despite the massive turnaround, 2010 was also the year that both ports began to publicly express a serious degree of concern about the looming threat faced by the set 2014 opening of an expanded Panama Canal.
Both ports continued to implement solutions to the Panama Canal problem in 2010, mainly in the form of expanded development of facilities.
In Long Beach, a $4 billion facilities program continued to gain steam, including the securing of funds for the $1 billion replacement of a key bridge, progress on a $750 million terminal development project, continued work on a redevelopment of the port’s bulk terminal facilities, and forward movement on the development of a brand new $650 million terminal.
Across the bay, the Port of Los Angeles began a major roadway rehabilitation project, moved into the final phase of a major dredging project, secured funding to construct an additional railyard, and took steps to bring an iconic World War II battleship to the port as a museum attraction.
In addition, despite the heavy load of development sprouting throughout the two ports, the environment remained a main focus for both ports in 2010.
The two ports’ similar Clean Truck Programs reported significant cuts to air pollution generated by ports-servicing drayage trucks. Various incentive programs continued to promote vessel speed reduction to cut vessel emissions, and both ports sponsored serious pilot programs to test alternative fuel vehicles.
Cargo Rebound
Cargo volumes at the two ports in 2009 were considered to be some of the most dismal in memory. Some terminals reported volume drop-offs of more than 30 percent compared to 2008, with an average decline across the ports of about 20 percent.
At the beginning of 2010, industry analysts did not have good news for the two ports, predicting that at the very most both could expect only a single digit percentage increase by year’s end. Most were predicting further declines.
“Many experts predicted that we might not get close to our peak levels of 2007 until the middle of this decade – or even later,” Long Beach Port Executive Director Richard Steinke said during a speech in January 2011.
In fact, both ports proved the analysts were off the mark by wide margins.
The Port of Los Angeles posted a year-end 16 percent increase in total cargo traffic over 2009, cementing its place yet again as the Western Hemisphere’s busiest container port.
The port handled a total of 7.83 million TEUs in 2010, an increase of more than 1.25 million TEUs over the year-end numbers for 2009.
Of this total, Los Angeles port officials reported handling 3.98 million loaded inbound TEUs in 2010, a 12.8 percent increase over the 2009 calendar year.
The port also handled 1.84 million loaded outbound TEUs, a 10.3 percent increase over 2009. Export volumes in 2010 shattered the previous calendar year export record, set in 2008, by just over 172,000 TEUs.
“The 2010 volume gains far surpass our initial estimates, and we’ve been able to facilitate some export opportunities in the past year through our TradeConnect initiative and increased networking with local business stakeholders,” Port Executive Director Geraldine Knatz said in January.
Next door, Long Beach port officials in 2010 recorded the largest single-year gain in total container volume in port history. The port handled nearly 24 percent more containers in 2010 than the previous year, boosted by 12-solid months of growth in both import and export volumes. The year-end numbers also reaffirmed Long Beach’s status as the second busiest container port in the Western Hemisphere for 2010.
During 2010, the Long Beach port handled a total of 6.3 million TEUs, a 23.6 percent jump over end-of-the-year numbers in 2009. In total, the port handled 1.2 million more containers in 2010 than it did in 2009, the largest single-year gain since the port began tracking TEU numbers in 1971.
Loaded inbound volumes rose 23.4 percent in 2010 to 3,128,860 TEUs, and loaded outbound volumes were up 15.6 percent to 1,562,398 TEUs.
Ending the calendar year, the port handled 523,311 TEUs in the month of December 2010, a 12 percent increase compared to December 2009, and the port’s thirteenth consecutive month of gains. Port officials reported handling 256,889 loaded inbound TEUs in December 2010, a 10.4 percent increase over the year ago period. Total loaded outbound containers were up 14.7 percent in December 2010, to 141,140 TEUs.
“This was a tremendous rebound, and happened much faster than predicted,” said Port of Long Beach Executive Director Richard D. Steinke. “Best of all, the additional cargo has brought back thousands of port-related jobs throughout the supply chain – and we’re very optimistic that the job growth in this industry will continue in 2011.”
Challenges and Solutions
In addition to focusing considerable energy on solving the short-term problem of cargo volume downturns, the ports also spent a great deal of time and effort in 2010 focusing on two long term threats: the impending opening of an expanded Panama Canal in 2014 and continued calls for the two ports to address the environmental impacts of their operations.
After several years of dismissing any serious threat to West Coast dominance in transpacific cargo posed by the Panama Canal expansion, 2010 became the first year that the canal threat became a commonplace topic in the public conversation by port officials.
In large part as a response to the Panama Canal threat – and the threat of other developing ports, such as Prince Rupert in Canada – Southern California port officials in 2010 began a stepped up campaign of major capital investment.
In Long Beach, a more than $4 billion program to develop terminals and goods-movement infrastructure began in earnest.
The major component of this project is a $1.1 billion replacement of the aging, capacity-limited and height-restricted Gerald Desmond Bridge – a major point of truck ingress and egress for both ports. In 2010, port officials managed to secure the necessary funding for the project and receive approval on the required environmental documents to move forward with construction, set to begin this year.
Another major component of the Long Beach plan – the Middle Harbor Project – also began work in 2010. The 10-year, nearly $1 billion project will transform two smaller odd-shaped and aging terminals into a single geographically efficient mega terminal.
Two additional Long Beach terminals projects saw progress in 2010: the $850 million dollar redevelopment of the Pier G breakbulk facility and the creation of a new $650 million terminal on Pier S.
At the neighboring Los Angeles port, similar efforts to increase the efficiency, capacity and environmental friendliness of facilities also moved forward in 2010.
In March, the port broke ground on a $22 million rehabilitation of a main surface street truck route from San Pedro and Wilmington to State Route 47.
In July, after nearly a five year delay, port officials and the Army Corps of Engineers kicked off the final phase of a $370 million dredging project to deepen the port’s main channel.
“The Main Channel Deepening Project is a lifeline to maintaining our competitive edge during the critical years ahead as we face increased competition on a number of fronts,” the port’s Knatz said.
The main channel project is being conducted in parallel with several terminal development projects.
“We presently have $350 million in terminal expansion projects underway at our China Shipping and TraPac container facilities,” Knatz said. “Resumption of the Main Channel Deepening Project is key to delivering those projects on schedule – a commitment we have made to those terminal operators.”
In October, the port secured $16 million in federal funds to be used to construct an intermodal railyard connecting the port’s on-dock railyards with the Alameda Corridor. The project includes a new railyard for a short-line railroad serving Union Pacific, Burlington Northern Santa Fe, and the two ports.
Port officials also joined an effort to bring the famed World War II battleship USS Iowa to the Los Angeles port as a floating museum. If approved by the federal government, the attraction is estimated to bring between 137,000 and 236,000 visitors a year to the port area.
Environment and Community Efforts
A major focus for both ports over the past five years has been the deleterious impacts the port has on the surrounding communities. In the early 2000s, the two ports were identified by state air regulators as the single largest stationary generator of diesel emissions in the Southern California basin.
Since 2006, when both ports adopted the Clean Air Action Plan to guide environmental mitigation into the future, both ports have achieved some notable successes.
In early 2010, it was revealed that the two ports’ separate Clean Trucks Programs had reduced ports-generated diesel emissions by more than 80 percent, a primary goal of the trucks programs. The early attainment of the goals also prompted the two ports to adopt even more stringent rules for the next several years of the truck program.
Both ports also continued to focus on ship emissions with the main efforts based around the Vessel Speed Reduction program. In 2010, each port’s incentive programs, designed to encourage carriers to slow their vessels down as they approach the harbor, continued to bring in more participants. More than 90 percent of all frequently calling vessels at the two ports now participate in one or both of the ports’ programs.
In addition, both ports have become test beds for advanced emission control technology for goods movement vehicles. State-of-the-art hybrid, electric and alternative fuel vehicles continue to be field tested in either pilot programs or small fleet rollouts at the two ports.
While dealing with the negative impacts of operating major industrial facilities virtually surrounded by residential communities continued to be a primary focus for the two ports in 2010, officials at both ports also continued with outreach efforts to the communities.
“It’s not just about making a difference on the docks,” Long Beach’s Steinke said.
“Of all the port’s many commitments, none is more important than our pledges to our community.”
The Port of Long Beach’s Green Port fest, free harbor boat tours, and numerous public forums continued to draw record-setting attendance. At the Los Angeles port, similar community programs, including the nationally known Lobster Fest also drew large numbers of the community.
In addition, both ports continued their long-standing tradition of providing for education in their respective communities. The Long Beach port provided more than $60,000 in scholarships to area high school and college students in 2010.
In 2010, the governing board for the Los Angeles port authorized $1.2 million for the Port of Los Angeles to sponsor maritime-related educational programs in Southern California high schools to promote international trade and career opportunities. The scholarships will allow hundreds of students to continue to receive classroom knowledge and field exposure to port and maritime business operations, as well as port-related job opportunities.
“Even in lean budget times, we understand how critical it is to educate our youth about the maritime industry and enlighten them to potential career paths,” Port Deputy Executive Director Mike Christensen said. “This investment is well worth it for the dividends that these students produce for our communities.”
New Long Beach Port Bridge Will Include Bike and Ped Paths
The aging Gerald Desmond Bridge is a major ingress and egress point for cargo truck traffic at the Port of Long Beach with more than 15 percent of the nation's cargo moving over it annually. Its replacement, which will provide greater vehicle capacity and increase clearance to allow larger vessels to transit underneath, will also include a concession to the local communities – a bike and pedestrian path allowing the public to cross the proposed structure.
Earlier this year, concerns had been raised by some local elected officials and the biking community that such a path would not be included in the estimated $950 million bridge replacement project.
Port commissioners were told Monday by port staff that the bike/pedestrian path is included in the request for proposal (RFP) that will go out to the four firms selected earlier this month by the port to bid on the bridge project. Port staff had previously assured the Long Beach City Council that the bike/pedestrian path would be part of the project, and port Managing Director of Environmental Affairs and Planning Robert Kanter told the commission that this commitment remains part of the bridge project.
"The [RFP] package will require bids to include a Class 1 bike path and pedestrian path in the solicitation – these are mandatory requirements and must be included for the [bidders] to be considered responsive," Kanter said.
A Class 1 bike/pedestrian path, according to Kanter, is an area for bicycles and pedestrians that is separated from vehicle traffic on the bridge.
In response to repeated questions from the commissioners, Kanter said that the bike/pedestrian path will be included in the estimated $950 million cost of the replacement bridge, which is being funded by a mix of federal, state, regional and local dollars.
The port and the California Department of Transportation (Caltrans) are now finalizing the first draft of the bridge project RFP that will go out to the four identified bidders in late April or early May, according to Kanter.
Following a comment period where the bidders can offer input to and/or seek clarification of the bidding package, the port and Caltrans will develop a final draft of the RFP by September Kanter said.
Final bids from the four firms are expected to be opened by the port sometime in November or December.
Although the bike.pedestrian path will not add any additional cost to the total $950 million estimate of the bridge project, the port's Managing Director of Engineering Doug Thiessen warned about the repercussions of further additions to the project.
"We have made [the bike/pedestrian path] part of the project, but, there could be a great temptation to add additional scope of work to the project," Thiessen told the commissioners, "As we progress down the road, we must resist this temptation or the budget [for the bridge project] will continue to grow."
Built in 1968, the current Gerald Desmond Bridge is outdated and, while deemed safe for commuters to travel on, the bridge suffers from a low "sufficiency rating" from Caltrans.
With millions of car, truck and port cargo trips annually crossing the bridge, the traffic now exceeds its operational capacity, posing safety, congestion and maintenance challenges.
In addition to the bike/pedestrian path, the new bridge will not only provide vehicle emergency lanes, but also three main traffic lanes in each direction, and a reduction in the bridge's steep grades to improve traffic flow and safety. The replacement will also have a higher span over the port's main channel, allowing the newest generation of cargo ships to access the port's back channels.
Earlier this year, concerns had been raised by some local elected officials and the biking community that such a path would not be included in the estimated $950 million bridge replacement project.
Port commissioners were told Monday by port staff that the bike/pedestrian path is included in the request for proposal (RFP) that will go out to the four firms selected earlier this month by the port to bid on the bridge project. Port staff had previously assured the Long Beach City Council that the bike/pedestrian path would be part of the project, and port Managing Director of Environmental Affairs and Planning Robert Kanter told the commission that this commitment remains part of the bridge project.
"The [RFP] package will require bids to include a Class 1 bike path and pedestrian path in the solicitation – these are mandatory requirements and must be included for the [bidders] to be considered responsive," Kanter said.
A Class 1 bike/pedestrian path, according to Kanter, is an area for bicycles and pedestrians that is separated from vehicle traffic on the bridge.
In response to repeated questions from the commissioners, Kanter said that the bike/pedestrian path will be included in the estimated $950 million cost of the replacement bridge, which is being funded by a mix of federal, state, regional and local dollars.
The port and the California Department of Transportation (Caltrans) are now finalizing the first draft of the bridge project RFP that will go out to the four identified bidders in late April or early May, according to Kanter.
Following a comment period where the bidders can offer input to and/or seek clarification of the bidding package, the port and Caltrans will develop a final draft of the RFP by September Kanter said.
Final bids from the four firms are expected to be opened by the port sometime in November or December.
Although the bike.pedestrian path will not add any additional cost to the total $950 million estimate of the bridge project, the port's Managing Director of Engineering Doug Thiessen warned about the repercussions of further additions to the project.
"We have made [the bike/pedestrian path] part of the project, but, there could be a great temptation to add additional scope of work to the project," Thiessen told the commissioners, "As we progress down the road, we must resist this temptation or the budget [for the bridge project] will continue to grow."
Built in 1968, the current Gerald Desmond Bridge is outdated and, while deemed safe for commuters to travel on, the bridge suffers from a low "sufficiency rating" from Caltrans.
With millions of car, truck and port cargo trips annually crossing the bridge, the traffic now exceeds its operational capacity, posing safety, congestion and maintenance challenges.
In addition to the bike/pedestrian path, the new bridge will not only provide vehicle emergency lanes, but also three main traffic lanes in each direction, and a reduction in the bridge's steep grades to improve traffic flow and safety. The replacement will also have a higher span over the port's main channel, allowing the newest generation of cargo ships to access the port's back channels.
West Coast Ports: Too Soon to Know Impacts of Japan Disaster on Trade
Major West Coast ports are reporting that it is too early to determine what impact the massive 9.0 earthquake and subsequent tsunami that devastated northern Japan on Friday will have on trade with the island nation.
The ports of Long Beach and Los Angeles handle more than $44 billion a year with Japan, with the major players being ocean carrier's NYK and K-Line and automakers Nissan and Toyota.
Japanese cargo represents 10 to 15 percent of the Port of Los Angeles' annual cargo volumes, while the neighboring Port of Long Beach reports slightly lower amounts.
The most of the major commercial cargo ports in Japan are located in the central or southern regions of the nation and were spared direct damage from the earthquake or tsunami. However, reports suggest that at least several major manufacturing suppliers are located in the devastated northern regions. Depending on the severity of the direct damage to these facilities – which remains unknown at this point – coupled with the ongoing difficulty of simply moving in an out of the hard hit areas as well as the nation's focus on humanitarian efforts, manufacturers in the central and southern regions could experience disruptions in their supply chains.
"Even though most of the ports are in the central and south, there are suppliers in the north that may have some impact on the supply chain, but it is hard to tell right now," Port of Long Beach spokesperson Art Wong said Monday.
According to the Port of Los Angeles, roughly 83 percent of the port's Japanese commerce is moved through the central and southern Japanese ports. Of the remaining 17 percent, 3 percent was moved through port of Sendai, one of the hardest hit ports by the earthquake and tsunami. The Japanese government estimates Sendai port, and up to five other northern ports, will be closed for "many months."
Staff at the ports of Long Beach and Los Angeles both report difficulty in communicating with Japanese representatives.
The majority of the bulk grain and lumber exported from the United States to Japan moves through the various Columbia River ports. Damage to the northern Japanese ports "could potentially impact some bulk shipments," Port of Portland spokesman Josh Thomas told the Wall Street Journal.
A Port of Seattle spokesperson also told the Journal that about 15 percent of the port's annual container volume is either heading to or coming from Japan.
Over the weekend, Tokyo-based ocean carrier NYK Group temporarily suspended service on its Japan-China Express shipping service which called at Sendai as one of four stops in Japan and four in China as well as Los Angeles and Oakland.
While NYK reported that the company's offices are open in Japan, "telecommunication to/within Japan especially in the eastern and northern part of Japan is still unstable, and may continue due to planned outage announced by electric power company."
NYK also reported, "Due to the earthquake, operation has suspended at many ports in Japan last weekend and we may face delay due to berth congestion. The current situation may warrant a temporary change of rotation or omission of ports which will be considered on a vessel by vessel basis, to improve the schedule integrity."
Ocean carrier K-Line, which does not operate a regular service at any northern Japanese ports, reported Sunday that all of the central and southern ports it services in Japan were open, including Nagoya, Osaka, Tokyo, Shimizu, and Yokohama.
The ports of Long Beach and Los Angeles handle more than $44 billion a year with Japan, with the major players being ocean carrier's NYK and K-Line and automakers Nissan and Toyota.
Japanese cargo represents 10 to 15 percent of the Port of Los Angeles' annual cargo volumes, while the neighboring Port of Long Beach reports slightly lower amounts.
The most of the major commercial cargo ports in Japan are located in the central or southern regions of the nation and were spared direct damage from the earthquake or tsunami. However, reports suggest that at least several major manufacturing suppliers are located in the devastated northern regions. Depending on the severity of the direct damage to these facilities – which remains unknown at this point – coupled with the ongoing difficulty of simply moving in an out of the hard hit areas as well as the nation's focus on humanitarian efforts, manufacturers in the central and southern regions could experience disruptions in their supply chains.
"Even though most of the ports are in the central and south, there are suppliers in the north that may have some impact on the supply chain, but it is hard to tell right now," Port of Long Beach spokesperson Art Wong said Monday.
According to the Port of Los Angeles, roughly 83 percent of the port's Japanese commerce is moved through the central and southern Japanese ports. Of the remaining 17 percent, 3 percent was moved through port of Sendai, one of the hardest hit ports by the earthquake and tsunami. The Japanese government estimates Sendai port, and up to five other northern ports, will be closed for "many months."
Staff at the ports of Long Beach and Los Angeles both report difficulty in communicating with Japanese representatives.
The majority of the bulk grain and lumber exported from the United States to Japan moves through the various Columbia River ports. Damage to the northern Japanese ports "could potentially impact some bulk shipments," Port of Portland spokesman Josh Thomas told the Wall Street Journal.
A Port of Seattle spokesperson also told the Journal that about 15 percent of the port's annual container volume is either heading to or coming from Japan.
Over the weekend, Tokyo-based ocean carrier NYK Group temporarily suspended service on its Japan-China Express shipping service which called at Sendai as one of four stops in Japan and four in China as well as Los Angeles and Oakland.
While NYK reported that the company's offices are open in Japan, "telecommunication to/within Japan especially in the eastern and northern part of Japan is still unstable, and may continue due to planned outage announced by electric power company."
NYK also reported, "Due to the earthquake, operation has suspended at many ports in Japan last weekend and we may face delay due to berth congestion. The current situation may warrant a temporary change of rotation or omission of ports which will be considered on a vessel by vessel basis, to improve the schedule integrity."
Ocean carrier K-Line, which does not operate a regular service at any northern Japanese ports, reported Sunday that all of the central and southern ports it services in Japan were open, including Nagoya, Osaka, Tokyo, Shimizu, and Yokohama.
Earthquake Disaster Shutters Japanese Auto Industry
Nearly the entire Japanese auto industry has been shuttered in the wake of Friday's 9.0 earthquake and tsunami, either due to direct damage to manufacturing facilities or other infrastructure and utility-related problems, according to a research report from IHS Automotive released Monday.
While the report made clear that the situation in Japan was still being appraised, it pointed to at least temporary closures to facilities throughout Japan operated by Honda, Mazda, Mitsubishi, Nissan, Toyota, Subaru and Suzuki.
“Many more auto plants throughout the country are at risk of closure, some owing to temporary rolling blackouts that are being considered in order to conserve power in light of the damage to several Japanese nuclear power plants, and some through disruption to the country’s transport infrastructure, affecting everything from parts delivery, personnel mobility and shipping activity at the country’s ports.”
IHS said that in addition to those closures, and the disruption to the country’s transportation and power networks, dozens of other auto parts manufacturing facilities have also been affected.
These problems could quickly ripple outward to impact the rest of the world, IHS said, since many car makers, including those in the U.S., rely on parts manufacturers located in the hardest hit areas of Japan.
“Stoppages at those plants that produce parts that have second or third sources for manufacturing are unlikely to affect overall production very much, but disruption to production of parts that are unique and cannot be easily shifted has the potential to hit output badly at several automakers through the near term,” the report said.
Honda shuttered a research and development facility north of Tokyo after a cafeteria wall collapsed in the earthquake, and has closed several manufacturing facilities until at least March 20. Honda produces about 80 percent of its US-market cars in the United States.
While Mazda has most of its production facilities in the relatively unscathed southern parts of Japan, the carmaker idled production anyway.
Mitsubishi planned to keep its plants closed until at least Tuesday at it evaluates its supply chain logistics with suppliers in the northern part of Japan.
Nissan reported building or equipment damage at six plants, including the Oppama plant where it makes the new electric Nissan Leaf. The carmaker is assessing the impact to future Leaf supply to the United States. Nissan, which manufactures about 80 percent of its vehicles in Japan, said it is shuttering four Japanese plants until at least Wednesday, while two others will shut until at least Friday. The firm lost 2,300 finished vehicles in the disaster, and said some shipments of vehicles to the US could be delayed.
Subaru, which closed all of its domestic factories over the weekend, planned to resume production Monday.
Suzuki said all of its Japanese plants would be closed until at least March 17, when the company would reevaluate the situation.
Toyota shuttered production at all of its plants in Japan at least through Wednesday, curtailing 45 percent of the firm's global production. The car maker lost about 40,000 vehicles in the disaster, although IHS points out that this amount can easily be made up once production restarts. The company has two factories in the heavily damaged northern area of Japan.
While the report made clear that the situation in Japan was still being appraised, it pointed to at least temporary closures to facilities throughout Japan operated by Honda, Mazda, Mitsubishi, Nissan, Toyota, Subaru and Suzuki.
“Many more auto plants throughout the country are at risk of closure, some owing to temporary rolling blackouts that are being considered in order to conserve power in light of the damage to several Japanese nuclear power plants, and some through disruption to the country’s transport infrastructure, affecting everything from parts delivery, personnel mobility and shipping activity at the country’s ports.”
IHS said that in addition to those closures, and the disruption to the country’s transportation and power networks, dozens of other auto parts manufacturing facilities have also been affected.
These problems could quickly ripple outward to impact the rest of the world, IHS said, since many car makers, including those in the U.S., rely on parts manufacturers located in the hardest hit areas of Japan.
“Stoppages at those plants that produce parts that have second or third sources for manufacturing are unlikely to affect overall production very much, but disruption to production of parts that are unique and cannot be easily shifted has the potential to hit output badly at several automakers through the near term,” the report said.
Honda shuttered a research and development facility north of Tokyo after a cafeteria wall collapsed in the earthquake, and has closed several manufacturing facilities until at least March 20. Honda produces about 80 percent of its US-market cars in the United States.
While Mazda has most of its production facilities in the relatively unscathed southern parts of Japan, the carmaker idled production anyway.
Mitsubishi planned to keep its plants closed until at least Tuesday at it evaluates its supply chain logistics with suppliers in the northern part of Japan.
Nissan reported building or equipment damage at six plants, including the Oppama plant where it makes the new electric Nissan Leaf. The carmaker is assessing the impact to future Leaf supply to the United States. Nissan, which manufactures about 80 percent of its vehicles in Japan, said it is shuttering four Japanese plants until at least Wednesday, while two others will shut until at least Friday. The firm lost 2,300 finished vehicles in the disaster, and said some shipments of vehicles to the US could be delayed.
Subaru, which closed all of its domestic factories over the weekend, planned to resume production Monday.
Suzuki said all of its Japanese plants would be closed until at least March 17, when the company would reevaluate the situation.
Toyota shuttered production at all of its plants in Japan at least through Wednesday, curtailing 45 percent of the firm's global production. The car maker lost about 40,000 vehicles in the disaster, although IHS points out that this amount can easily be made up once production restarts. The company has two factories in the heavily damaged northern area of Japan.
OOCL Parent Firm Up $842M in 2010
If there was any doubt that 2010 represented a very robust recovery for some in the shipping industry compared to the upheaval of 2009, the Hong Kong-based parent of Orient Overseas Container Line (OOCL) put it to rest Monday.
Orient Overseas International, Ltd. (OOIL), which along with its subsidiaries including OOCL is known internally as the Group, announced that it had recouped a $377 million loss suffered in 2009 and ended 2010 with a $842 million profit.
Chairman C.C. Tung said the rebound "has been beyond all expectations."
"Unusually strong demand in the first half of 2010 and positive trading conditions throughout the remainder of the year saw our lifting volumes nearing 2008 levels. Improvements in freight rates across all trades, combined with cost savings implemented in 2009, have produced a record profit for our liner operation in 2010."
The Group's carrier arm, OOCL, reported 4.8 million TEU lifts in 2010, a 14.6 percent increase. The carrier's vessel utilization rate, a measurement of how well its ships are being used, grew from 74 percent to 81 percent. Average revenue per TEU rose to $1,178, a 27.5 percent increase over 2009.
However, despite the bumper year, Tung cautioned, "While the ongoing improvement in trade volumes and freight rates is good news, fuel and other cost pressures are again re-emerging as the global economic recovery continues. Continued focus on operational efficiency and pricing discipline will accordingly remain important in the current year,” noted Mr. Tung."
The Group posted profits from continuing operations of $1.87 billion for 2010, a massive jump from the $402 million loss suffered in 2009. These profits include the $1 billion net profit from the firm's 2010 sale of OODL, the Group’s former People's Republic of China property development business. Group profits were based on $6.03 billion in revenues generated during 2010, a major increase over the $4.4 billion in revenue generated in 2009.
Group Chief Financial Officer Kenneth Cambie said, “As of the 31st of December 2010, the Group had total liquid asset balances of $4.13 million compared with debt obligations of $248 million repayable in 2011. Debt-to-equity ratio changed from 0.31:1 at the end of 2009 to a net-cash position at the end of 2010 with the receipt of proceeds from the OODL sale.”
Looking forward, Tung said "The immediate outlook for 2011 remains positive though the level of demand growth seen in 2010 on the East-West trades is unlikely to be repeated in 2011."
He said the Group will "continue to invest in the expansion of the OOCL vessel and box fleets, and in the terminal infrastructure needed to support anticipated demand growth."
Near the end of 2010, Group carrier arm OOCL placed an order for two additional vessels with capacity of 8,888 TEU each from Hudong-Zhonghua Shipyard in China. With this new order, OOCL has a total of eight new 8,888 TEU vessels set for delivery between 2011 and 2014, with the first two vessels due in the first half of 2011.
Orient Overseas International, Ltd. (OOIL), which along with its subsidiaries including OOCL is known internally as the Group, announced that it had recouped a $377 million loss suffered in 2009 and ended 2010 with a $842 million profit.
Chairman C.C. Tung said the rebound "has been beyond all expectations."
"Unusually strong demand in the first half of 2010 and positive trading conditions throughout the remainder of the year saw our lifting volumes nearing 2008 levels. Improvements in freight rates across all trades, combined with cost savings implemented in 2009, have produced a record profit for our liner operation in 2010."
The Group's carrier arm, OOCL, reported 4.8 million TEU lifts in 2010, a 14.6 percent increase. The carrier's vessel utilization rate, a measurement of how well its ships are being used, grew from 74 percent to 81 percent. Average revenue per TEU rose to $1,178, a 27.5 percent increase over 2009.
However, despite the bumper year, Tung cautioned, "While the ongoing improvement in trade volumes and freight rates is good news, fuel and other cost pressures are again re-emerging as the global economic recovery continues. Continued focus on operational efficiency and pricing discipline will accordingly remain important in the current year,” noted Mr. Tung."
The Group posted profits from continuing operations of $1.87 billion for 2010, a massive jump from the $402 million loss suffered in 2009. These profits include the $1 billion net profit from the firm's 2010 sale of OODL, the Group’s former People's Republic of China property development business. Group profits were based on $6.03 billion in revenues generated during 2010, a major increase over the $4.4 billion in revenue generated in 2009.
Group Chief Financial Officer Kenneth Cambie said, “As of the 31st of December 2010, the Group had total liquid asset balances of $4.13 million compared with debt obligations of $248 million repayable in 2011. Debt-to-equity ratio changed from 0.31:1 at the end of 2009 to a net-cash position at the end of 2010 with the receipt of proceeds from the OODL sale.”
Looking forward, Tung said "The immediate outlook for 2011 remains positive though the level of demand growth seen in 2010 on the East-West trades is unlikely to be repeated in 2011."
He said the Group will "continue to invest in the expansion of the OOCL vessel and box fleets, and in the terminal infrastructure needed to support anticipated demand growth."
Near the end of 2010, Group carrier arm OOCL placed an order for two additional vessels with capacity of 8,888 TEU each from Hudong-Zhonghua Shipyard in China. With this new order, OOCL has a total of eight new 8,888 TEU vessels set for delivery between 2011 and 2014, with the first two vessels due in the first half of 2011.
Friday, March 11, 2011
Some Maritime Terms Explained – Part 1
By Marilyn Raia
marilyn.raia@bullivant.com
Certain words and phrases are commonly found in marine insurance policies and maritime contracts, but may not be found in everyday parlance. Some have a long maritime history and others have arisen more recently as the result of court decisions in maritime cases. This multi-part series provides the background and meaning for some of those words and phrases.
Barratry
Barratry is a wrongful act willfully committed by a vessel’s master or crew to the prejudice of the vessel’s owner or charterer. It can be 1) an act committed by the master or crew involving a deliberate disobedience of the vessel owner’s instructions; 2) an act committed by the master or crew for a dishonest or unlawful purpose; or 3) a violation of the duty of the master or crew to the vessel owner arising from gross negligence.
Barratry is a covered peril under a vessel’s hull policy and the policy is not voided if, while committing barratry, the master or crew violates policy warranties. In U.S. Fire Ins. Co. v. Cavanaugh 732 F.2d 832 (11th Cir. 1984) Cavanaugh chartered his shrimp trawler to Ballard. Cavanaugh instructed Ballard about the 150-mile navigational limits in the vessel’s hull policy. Ballard intentionally took the vessel 400 miles beyond the navigational limits where it ran aground and burned. The Eleventh Circuit affirmed the trial court’s holding that 1) Ballard’s decision to operate the vessel beyond the 150-mile navigational limit amounted to barratry and 2) the resulting loss was covered under the hull policy. It rejected the insurer’s argument that the policy was void because of Ballard’s breach of the navigational limits.
The term “barratry” is used in another legal, but not maritime, context. It is also defined as the practice of bringing repeated legal actions to harass someone.
Bills of Lading
Bills of lading are documents issued by a carrier or someone acting as a carrier in connection with the transportation of cargo. Bills of lading can serve three roles: as a receipt for the cargo, as a document of title, and as a contract of carriage. Bills of lading are either negotiable (also known as “order” bills of lading) or non-negotiable (also known as “straight” bills of lading).
Bills of lading may be issued for different types of carriage including ocean, air, rail, and truck. A bill of lading may cover more than one type of carriage for a particular shipment and when it does, it is an “intermodal” bill of lading. A bill of lading covering the entire transportation of a shipment from the point of origin to the final destination and applying to all carriers of the shipment even if they are not named in the bill of lading, is a “through” bill of lading.
A bill of lading may be described as “clean,” which means there are no exceptions noted on it as to the condition or quantity of the cargo, or to the manner of packing or stowage. A “clean” bill of lading is prima facie evidence of the apparent good order and condition of the cargo when received by the carrier. When cargo is in a container or enclosed in another type of shipping unit such as a crate, a “clean” bill of lading is prima facie evidence only of the apparent good order and condition of the container or crate, not of the cargo itself.
A bill of lading may be described as “false” when it does not accurately state the facts about a shipment. For example, a bill of lading is “false” when it states a shipment has been laden on board a vessel but the shipment is still on the dock, or when it states a shipment is on board a particular vessel and it is not on that vessel. A bill of lading is also “false” when it does not contain any exceptions to the condition of the shipment and the shipment was damaged or short when delivered to the carrier. When a carrier issues a “false” bill of lading that is relied upon by the cargo owner, the carrier may lose its defenses, including the ability to limit its liability.
Bills of lading serving as contracts of carriage by vessel to or from the United States in foreign trade, are mandatorily subject to COGSA, described below.
COGSA
The United States Carriage of Goods by Sea Act, 46 U.S.C. § 30701 note, is most commonly known by its acronym, COGSA. COGSA was enacted by Congress in 1936 to govern the rights and duties of carriers and shippers of goods. It was based on an international convention regarding bills of lading known as the Hague Rules of 1924. Both COGSA and the Hague Rules addressed the efforts of carriers to exculpate themselves from cargo loss or damage, and attempted to strike a balance between the cargo owner and carrier interests. Most of the trading nations in the world have national legislation adopting the Hague Rules in some form.
By its terms, COGSA applies as a matter of law to contracts for the carriage of cargo to or from the United States in foreign trade. It does not apply to live animals, or cargo carried on deck and stated on the bill of lading to be carried on deck. By its terms, COGSA applies from the time the cargo is loaded to the vessel to the time it is discharged, otherwise known as “tackle to tackle”. The shipper and carrier may agree to extend the application of COGSA to deck cargo and live animals. They may agree that COGSA applies while the cargo is in the carrier’s custody but before it is loaded to the vessel and after it is discharged from the vessel. They may also agree COGSA will govern the liability of parties other than the carrier who are involved in the transportation of the cargo, such as stevedores and terminal operators.
COGSA sets forth the rights and duties of the cargo owner and carrier. Any term in a bill of lading that attempts to lessen the carrier’s obligations below the standards set forth in COGSA, is void. Under COGSA, a carrier has a duty to exercise due diligence to make the carrying vessel seaworthy. It must also properly load, stow, carry, and discharge the cargo. COGSA exempts a carrier from liability for cargo loss or damage caused by sixteen enumerated perils and a “catch-all” peril of all other causes without the carrier’s fault or privity or that of its agents or servants.
Under COGSA a carrier may limit its liability for cargo loss and damage to a minimum of $500 per package or if the goods are not shipped in packages, to $500 per customary freight unit, which is the unit actually used to calculate the freight. COGSA does not define the term “package”. The absence of such definition has given rise to much litigation.
Demurrage
Demurrage is a late penalty. It is assessed when a voyage charterer delays in loading or discharging a vessel beyond the “laytime” or the time allotted for such operations. It compensates the vessel owner for operating expenses incurred during the delay and the potential loss of revenue due to its inability to charter the vessel while delayed. It also refers to the daily charge assessed when a shipping container is not returned to the carrier in a timely fashion, that is, before the expiration of the “free time”.
Deviation
A deviation is a variation in the conduct of a vessel that exposes the cargo to greater risk of loss or damage. Historically, deviations were geographically based. They occurred when a vessel left the contracted for or customary voyage to stop at another port of call to discharge the cargo, or to take another route to the destination, or to save lives or property at sea.
The concept of deviation has, over the years, been expanded to include any variation in the performance of a contract of carriage whereby the risk of loss or damage to the cargo may be increased. It can involve handling of the cargo in a way that is not specified in the contract but exposes the cargo to greater risk of loss or damage. For example, the stowage of cargo on deck when a “clean” bill of lading has been issued is a deviation.
A deviation may be reasonable or unreasonable. When a vessel leaves its intended route to aid another vessel in distress, the deviation is usually held reasonable. When cargo is stowed on deck without the shipper’s approval and in the absence of a port custom for stowing such cargo on deck, the deviation is usually held unreasonable. An unreasonable deviation causes the carrier to lose its contractual defenses including COGSA defenses, and the carrier becomes an insurer of the goods. An unreasonable deviation also precludes the carrier from limiting its liability for loss of or damage to the cargo.
The next part of this series will continue the look at some words and phrases routinely found in the maritime context.
Marilyn Raia is of counsel to Bullivant Houser Bailey and specializes in maritime and transportation law. She can be reached at marilyn.raia@bullivant.com.
marilyn.raia@bullivant.com
Certain words and phrases are commonly found in marine insurance policies and maritime contracts, but may not be found in everyday parlance. Some have a long maritime history and others have arisen more recently as the result of court decisions in maritime cases. This multi-part series provides the background and meaning for some of those words and phrases.
Barratry
Barratry is a wrongful act willfully committed by a vessel’s master or crew to the prejudice of the vessel’s owner or charterer. It can be 1) an act committed by the master or crew involving a deliberate disobedience of the vessel owner’s instructions; 2) an act committed by the master or crew for a dishonest or unlawful purpose; or 3) a violation of the duty of the master or crew to the vessel owner arising from gross negligence.
Barratry is a covered peril under a vessel’s hull policy and the policy is not voided if, while committing barratry, the master or crew violates policy warranties. In U.S. Fire Ins. Co. v. Cavanaugh 732 F.2d 832 (11th Cir. 1984) Cavanaugh chartered his shrimp trawler to Ballard. Cavanaugh instructed Ballard about the 150-mile navigational limits in the vessel’s hull policy. Ballard intentionally took the vessel 400 miles beyond the navigational limits where it ran aground and burned. The Eleventh Circuit affirmed the trial court’s holding that 1) Ballard’s decision to operate the vessel beyond the 150-mile navigational limit amounted to barratry and 2) the resulting loss was covered under the hull policy. It rejected the insurer’s argument that the policy was void because of Ballard’s breach of the navigational limits.
The term “barratry” is used in another legal, but not maritime, context. It is also defined as the practice of bringing repeated legal actions to harass someone.
Bills of Lading
Bills of lading are documents issued by a carrier or someone acting as a carrier in connection with the transportation of cargo. Bills of lading can serve three roles: as a receipt for the cargo, as a document of title, and as a contract of carriage. Bills of lading are either negotiable (also known as “order” bills of lading) or non-negotiable (also known as “straight” bills of lading).
Bills of lading may be issued for different types of carriage including ocean, air, rail, and truck. A bill of lading may cover more than one type of carriage for a particular shipment and when it does, it is an “intermodal” bill of lading. A bill of lading covering the entire transportation of a shipment from the point of origin to the final destination and applying to all carriers of the shipment even if they are not named in the bill of lading, is a “through” bill of lading.
A bill of lading may be described as “clean,” which means there are no exceptions noted on it as to the condition or quantity of the cargo, or to the manner of packing or stowage. A “clean” bill of lading is prima facie evidence of the apparent good order and condition of the cargo when received by the carrier. When cargo is in a container or enclosed in another type of shipping unit such as a crate, a “clean” bill of lading is prima facie evidence only of the apparent good order and condition of the container or crate, not of the cargo itself.
A bill of lading may be described as “false” when it does not accurately state the facts about a shipment. For example, a bill of lading is “false” when it states a shipment has been laden on board a vessel but the shipment is still on the dock, or when it states a shipment is on board a particular vessel and it is not on that vessel. A bill of lading is also “false” when it does not contain any exceptions to the condition of the shipment and the shipment was damaged or short when delivered to the carrier. When a carrier issues a “false” bill of lading that is relied upon by the cargo owner, the carrier may lose its defenses, including the ability to limit its liability.
Bills of lading serving as contracts of carriage by vessel to or from the United States in foreign trade, are mandatorily subject to COGSA, described below.
COGSA
The United States Carriage of Goods by Sea Act, 46 U.S.C. § 30701 note, is most commonly known by its acronym, COGSA. COGSA was enacted by Congress in 1936 to govern the rights and duties of carriers and shippers of goods. It was based on an international convention regarding bills of lading known as the Hague Rules of 1924. Both COGSA and the Hague Rules addressed the efforts of carriers to exculpate themselves from cargo loss or damage, and attempted to strike a balance between the cargo owner and carrier interests. Most of the trading nations in the world have national legislation adopting the Hague Rules in some form.
By its terms, COGSA applies as a matter of law to contracts for the carriage of cargo to or from the United States in foreign trade. It does not apply to live animals, or cargo carried on deck and stated on the bill of lading to be carried on deck. By its terms, COGSA applies from the time the cargo is loaded to the vessel to the time it is discharged, otherwise known as “tackle to tackle”. The shipper and carrier may agree to extend the application of COGSA to deck cargo and live animals. They may agree that COGSA applies while the cargo is in the carrier’s custody but before it is loaded to the vessel and after it is discharged from the vessel. They may also agree COGSA will govern the liability of parties other than the carrier who are involved in the transportation of the cargo, such as stevedores and terminal operators.
COGSA sets forth the rights and duties of the cargo owner and carrier. Any term in a bill of lading that attempts to lessen the carrier’s obligations below the standards set forth in COGSA, is void. Under COGSA, a carrier has a duty to exercise due diligence to make the carrying vessel seaworthy. It must also properly load, stow, carry, and discharge the cargo. COGSA exempts a carrier from liability for cargo loss or damage caused by sixteen enumerated perils and a “catch-all” peril of all other causes without the carrier’s fault or privity or that of its agents or servants.
Under COGSA a carrier may limit its liability for cargo loss and damage to a minimum of $500 per package or if the goods are not shipped in packages, to $500 per customary freight unit, which is the unit actually used to calculate the freight. COGSA does not define the term “package”. The absence of such definition has given rise to much litigation.
Demurrage
Demurrage is a late penalty. It is assessed when a voyage charterer delays in loading or discharging a vessel beyond the “laytime” or the time allotted for such operations. It compensates the vessel owner for operating expenses incurred during the delay and the potential loss of revenue due to its inability to charter the vessel while delayed. It also refers to the daily charge assessed when a shipping container is not returned to the carrier in a timely fashion, that is, before the expiration of the “free time”.
Deviation
A deviation is a variation in the conduct of a vessel that exposes the cargo to greater risk of loss or damage. Historically, deviations were geographically based. They occurred when a vessel left the contracted for or customary voyage to stop at another port of call to discharge the cargo, or to take another route to the destination, or to save lives or property at sea.
The concept of deviation has, over the years, been expanded to include any variation in the performance of a contract of carriage whereby the risk of loss or damage to the cargo may be increased. It can involve handling of the cargo in a way that is not specified in the contract but exposes the cargo to greater risk of loss or damage. For example, the stowage of cargo on deck when a “clean” bill of lading has been issued is a deviation.
A deviation may be reasonable or unreasonable. When a vessel leaves its intended route to aid another vessel in distress, the deviation is usually held reasonable. When cargo is stowed on deck without the shipper’s approval and in the absence of a port custom for stowing such cargo on deck, the deviation is usually held unreasonable. An unreasonable deviation causes the carrier to lose its contractual defenses including COGSA defenses, and the carrier becomes an insurer of the goods. An unreasonable deviation also precludes the carrier from limiting its liability for loss of or damage to the cargo.
The next part of this series will continue the look at some words and phrases routinely found in the maritime context.
Marilyn Raia is of counsel to Bullivant Houser Bailey and specializes in maritime and transportation law. She can be reached at marilyn.raia@bullivant.com.
