Life in Shipping Industry "An Adventure in itself"

They say "Shipping Industry is an adventure and the one working in the industry are daredevils, rebel, or the way Indians like to call it as Khatron ke khiladi". 

who know may be they are true to some extend or may be not. But down here are 10 reasons how I would describe this adventure.

1. Sleeping is the most important activity in our daily routine, but in shipping industry forget those 8 hours of heavenly feeling for most of the days in a year. Some days in a year  you are able to get those 8 magical hours, if  you are lucky enough.
2. Since we have enjoyed our life to the fullest in our childhood, school, college,university etc we don't feel like enjoying our life anymore.
3. life in this industry is full of tension so don't even expect to live carefree.
4. We want to have disturbed family life.
5. We strictly follow one line in the Holy Book of Hindus "Geeta" that is KARM KARO PHAL KI KAMNA NA KARO.which simply means work without expecting any fruits of your labor. 
6. we don't want to spend quality time with our loved ones.
7. we simply want to take revenge from ourselves.
8. If you want to breakup with your Girlfriend, friends or willing to get disappear from a period then welcome the the industry ma men...
9. Social life...!!! what the hell is that...  !!!. Exactly no time to fool around social networking sites.
10. And last but not the least We love to work on Sundays, weekends and Public Holidays.

Hope you guys liked it and could relate it with yourself to some extend do let me know down in the comments section, and don't forget to like and follow me to stay in touch with awesome posts like this in future.

Seaworthy Vessel

As per the International Conventions (bunch of rules and regulations) Carrier has certain responsbilities to be fullfilled, which are as followes

1. To provide a seaworth ship, properly manned,equipped,holds chambers and other parts of ship fit and safe for a voyage.

2. To properly and carefully load, handel, stow, carry, keep care and discharge the cargo.

3.Too issue Bill of Lading showing marks, numbers. quantity, weight and the order and the condition of the goods as provided by shipper in writing.

4.Not to Deviate the Ship from agreed Route.

SEAWORTHINESS & UNSEAWORTHINESS

A ship is seaworthy if she is fit in design, condition and all the necessary equipments are intact to commence and to encounter the ordinary perials of that particular voyage.

On the other hand a ship is unseaworthy if she has any kind of defects in it like

1. Material of which she is made of & her construction

2.Qualification of master and the crew including officers

3.Weight, Description, stowage of cargo Ballast and Condition of Hull, machinery and equipments
are not fit in every respect for that particular voyage.

For example :
If a ship if fit to carry all kinds of cargo except cargo which have moisture in it, though the ships machinery is capable of handaling other cargo but not cargo which have moisture Hence the ship is unseaworthy for carring that particular cargo ie cargo which has moisture in it.

Container Leasing & its advantages.

Owning and Leasing.

there are two ways of procuring any property either buying it or hiring the property,same way  this principle is applicable for containers. Containerization in itself is very huge investment for shipping companies, this investment includes  building new ships ,setting up terminals , handling equipment etc.

Advantages of using leased containers.

1) To avoid tying up the funds.:
Purchasing of  containers by company requires huge amount of funds at one time while leasing becomes much easier as the container are hired for a fixed period and for a fixed rate which makes it easy for the company and containers can be returned back whenever they are not needed.

2)To avoid Depreciation.
leased containers are used by the companies and are not part of companies assets so they are not subjected for depreciation.

3)To avoid risk of having idle facilities
owing container can be idle if there is no business so hiring container eliminates the risk of having idle facilities.

4)To save storage charges while idling.
while owned units would incur storage charges if kept in depots, leased units can be returned back whenever they are not needed.

5)To avoid maintenance
containers are prone to damages while moving from one part to another so the maintenance part of the units are taken care by the leasing companies making it easy for the companies who are hiring it. 

Multimodal transportation of goods act 1993.

Multimodal transportation of goods act 1993.

This Act may be called the Multimodal Transportation of Goods Act, 1993.

It extends to the whole of India except the State of Jammu and Kashmir.

It shall be deemed to have come into force on the 16th day of October 1992.

No person to carry on business without registration

Provided that a person carrying on the business of multimodal transportation immediately before the commencement of this Act, may continue to do so for a period of three months from such commencement; and if he has made an application for registration within the said period, till the disposal of such application.

Registration for multimodal transportation

Any person may apply for registration to the competent authority to carry on or commence the business of multimodal transportation.

An application under subsection (1) shall be made in such form as may be prescribed and shall be accompanied by a fee of ten thousand rupees.

On receipt of the application, the competent authority shall satisfy that the applicant fulfills the following conditions, namely: 

That the applicant has offices or agents or representatives is not less than two other countries,

And on being so satisfied, register the applicant as a multimodal transport operator and grant a certificate to it to carry on.

A certificate granted under sub-section (3) shall be valid for a period of one year and may be renewed from time to time for a further period of one year at a time.

An application for renewal shall be made in such form as may be prescribed and shall be accompanied by a fee of two thousand rupees.

Issue of multimodal transport document

Where the consignor entered into a contract for the multimodal transportation and the multimodal transport operator has taken charge of the goods, he shall, at the option of the consignor, issue a negotiable or non-negotiable multimodal transport document.

The multimodal transport document shall be signed by the multimodal transport operator or by a person duly authorized by him.

Responsibility of the consignor

The consignor shall be deemed to have guaranteed to the multimodal transport operator the adequacy and accuracy, and takes charge of the goods as furnished by the consignor for insertion in the document.

The consignor shall indemnify the multimodal transport operator against loss resulting from inadequacy or inaccuracy.

No way limit his liability under the multimodal transport contract to any person other than the consignor.

Basis of liability of multimodal transport operator

The multimodal transport operator shall be liable for loss resulting from-

Any loss of, or damage to, the consignment.

Delay in delivery of the consignment and any consequential loss or damage arising from such delay, where such loss, damage or delay in delivery took while the consignment was in his charge.

If the consignment has not been delivered within ninety consecutive days following the date of delivery expressly agreed upon or the reasonable time, the claimant may treat the consignment as lost.

Loss of right of multimodal transport operator to limit liability

The multimodal transport operator shall not be entitled to the benefit of limitation of liability under any of the provisions of this Chapter if it is proved that the loss, damage or delay in delivery of consignment resulted from an act or emission of the multimodal transport operator with intent to cause such loss, damage or delay or recklessly and with knowledge that such loss, damage or delay would probably result.

Limit of liability of multimodal transport operator for total loss of goods

The multimodal transport operator shall not, in any case, be liable for an amount greater than the liability for total loss of goods for which a person will be entitled to make a claim against him under the provisions of this Act.

Notice of loss of or damage to goods

The delivery of the consignment to the consignee by the multimodal transport operator shall be treated as prima facie evidence of delivery of the goods as described in the multimodal transport document unless notice of the general nature of loss of, or damage to, the goods is given, in writing, by the consignee to the multimodal transport operator at the time of handing over of the goods to the consignee.

Where the loss or damage is not apparent, the provisions of sub-section (1) shall apply unless notice in writing is given by the consignee of the loss of, or damage to, the goods within six consecutive days after the day when the goods were handed over to the consignee

Cargo Loss Prevention.

Loss prevention doesn’t just happen. You’ve got to make it happen and the key word is “YOU”

            But you can’t do it alone. You need others to make it happen and the key word is “OTHERS”.

            You and others or in more general term people. Cargo loss prevention is a people’s effort primarily. People working together to accomplish the successful movement of cargo from point of origin to point of destination

            Mechanical methods probably will be required to load, move or unload cargo but people will run the machines. Accompanying documentation probably will be required in each case to legalize the movement for proper identification of who gets what and for secure payment of all charges. Again people will control all aspects of documentation. Protection of cargo throughout its move, during its transit storage and in any transhipment activities may range from an ultrasonic alarm system to an ultra-simple canvas cover. Again people will be responsible for exercising such protections

            So we hope we have driven home the point right from the start that people are the most important ingredient in cargo loss prevention. In similar line of thought a person’s knowledge of cargo loss prevention just don’t happen either. It has to be learned, and then taught to others.

Scope.

·         It can be used for knowledge of stevedores and other people interested in cargo.

·         Useful in containerisation field.

·         Bulk carrier can use the ideas or steps to prevent or minimize loss.

·         Relevant knowledge of the industries through case studies for students.

·         To know how to prevent loss of different types of cargo by using different methods.

·         It can help us in decision making and giving advice to the company

     Skuld Shortage Claim (case study)

 Facts:

 A cargo of bagged rice was being transported from Ko Sichang, Thailand to Abidjan, Ivory Coast

A shortage of 8,922 bags was recorded on completion of discharge.

 In addition to shortage, several bags along the hold sides were found to be mouldy on discharge, despite being protected from any direct contact with the steelwork. The mould was found to be due to condensation

No pre-loading survey was conducted and thus it was difficult for Owners to prove precisely what was loaded onto the vessel and the condition of the cargo loaded

The lack of a pre-loading survey made it hard for Owners to defend the shortage claim and prove the damage to the cargo was not as a result of their own negligence. A recourse claim against charterers also proved to be more difficult According to the local customs rules in Abidjan all discrepancies noted between the cargo noted on the B/L and the cargo discharged is subject to an automatic fine of USD 2 per missing bag for rice cargoes

The local agent, under local law, is held to be the legal representative of the Owners, even if appointed by charterers  The local agent responsible for payment of the fine to the customs department demanded a guarantee for payment in the form of a LOU before allowing the vessel to leave

Claim amount = USD 437,500

 Shortage = 8062 short landed bags

Cargo loss = 64 mouldy bags and 1480 bags torn during handling

Lessons learnt:

Always conduct an independent pre-loading survey which includes an independent tally of cargo loaded.

 Moisture tests on the cargo must be conducted to ensure they are within the moisture content limits noted on the cargo quality certificate

Pre-loading inspection/ continuous tally should be conducted on board to ensure that only sound bags are loaded onto the vessel

 Visual quality inspection of the cargo can help to eliminate the loading of all damaged, cut/ torn and heavily stained bags

 Contact the club immediately

 Place Charterers on notice of the claim as soon as possible

Future.

The state of Goa has an extremely favourable geographical location that offers a natural gateway into Indian Subcontinent. Promoting it as a logistics hub can act as a critical enabler to its economic growth.

Cargo loss prevention is a necessity in today’s growing business world.. As far as trading is taking place, Cargo loss prevention is a must procedure because, a manufacturing unit produces in a large quantity and to keep the material in a safe and sound condition cargo loss prevention is necessary. Cargo loss prevention plays an important role for seasonal products especially in agro products which are produced only for a certain period of time but has to be constantly supplied to consumers.

Secondly, Goa is one of the smallest states in India. The land available is very scarce. The available land is also expensive. Being an industry, no benefits have been implemented by the government. The proprietors are on their own while entering in this sector. 

Capt. Lincon Wiegas of Richards and Ericson’s states that cargo loss prevention plays a very important role in shipping industry and as such it provides regular source of income to people involved in this business.

FINDINGS AND CONCLUSIONS

From our study, ‘Cargo loss prevention’’, we come to the conclusion that cargo loss prevention is an important aspect to trade. It provide protection to the goods between production and consumption. There is a need for cargo loss prevention of the goods so as to make them available to buyers as and when required in an intact conditions.

The growth of the Indian Cargo loss prevention sector is primarily driven by the industrial growth of the country. While the Indian economy is predominantly driven by the service-based industry, manufacturing also acts as a key growth driver for economic activity. Both services and manufacturing have thus far been the key demand generators for Cargo loss prevention in India.

.With the improvements in infrastructure and manufacturing bases in various sectors such as pharmaceuticals and computer hardware, Goa could grow into a more competitive trading state.

From our study of theory of cargo loss prevention and practical visits to the agencies following this we found that there was complete synergy between theory and practice. We also understood that there is no option to cargo loss prevention and has to be religiously implemented.

We can therefore conclude that cargo loss prevention is one of the most important links in the world of Marine Insurance. With the increasing demand of commodities, cargo loss prevention in Goa and India is gaining the much needed importance.

International Maritime Dangerous Goods Code.

This article will provides a brief overview of the IMDG code structure and requirements...

The objective of the International Maritime Dangerous Goods (IMDG) Code is to:

Enhance the safe transport of dangerous goods

Protect the marine environment

Facilitate the free unrestricted movement of dangerous goods

The International Maritime Organization (IMO)

The IMO is a United Nations specialized agency which has developed international legislation dealing with two key issues for the maritime industry:

The safety of life at sea

Prevention of pollution from ships

The IMO has developed two international conventions to address these issues:

The SOLAS Convention (covering safety of life at sea)

The MARPOL Convention (covering pollution prevention)

To supplement the principles laid down in the SOLAS and MARPOL Conventions, the IMO developed the International Maritime Dangerous Goods (IMDG) Code.

The IMDG code contains detailed technical specifications to enable dangerous goods to be transported safely by sea.

The IMDG Code became mandatory for adoption by SOLAS signatory states from 1st January 2004.

The IMDG Code is based on an internationally agreed system which:

 Groups dangerous goods together based on the hazards they present in transport (classification).

Contains the dangerous goods in packagings/tanks which are of appropriate strength and which will prevent the goods escaping.

Uses hazard warning labels and other identifying marks to identify dangerous goods in transport.

Requires standard documentation to be provided when

dangerous goods are being transported.

Lays down principles for ensuring that dangerous goods which will react dangerously together are kept apart.

Lays down principles for where to place dangerous goods on

board ship to ensure safe transport.

Provides emergency response advice for dangerous goodsinvolved in a fire or spillage on board ship.

Updating the IMDG Code

The IMDG Code is evolving and is updated every two years to take account of:

New dangerous goods which have to be included.

New technology and methods of working with or handling dangerous goods.

Safety concerns which arise as a result of experience.

IMDG Code Classification System

The purpose of the IMDG Code’s classification system is:

To distinguish between goods which are considered to be dangerous for transport and those which are not.

To identify the dangers which are presented by dangerous goods in transport.

To ensure that the correct measure are taken to enable these goods to be transported safely without risk to persons or property.

Dangerous goods are classified into 9 classes according to properties.  The way in which different classes of dangerous goods are handled in transport will depend upon these properties and hazards, for example:

The type of packaging that can be used.

What classes of dangerous goods can be transported together in freight containers.

Where the goods can be stored within the port and on the ship.

The 9 classes:

Class 1  Explosives

Class 2  Gases

Class 3  Flammable liquids

Class 4  Flammable solids

Class 5  Oxidizing substances and organic peroxides

Class 6  Toxic and infectious substances

Class 7  Radioactive material

Class 8  Corrosive substances

Class 9  Miscellaneous dangerous substances and articles

These 9 hazard classes have been established internationally by a United Nations (UN) committee to ensure that all modes of transport (road, rail, air and sea) classify dangerous goods in the same way.

Dangerous Goods labels.

  

Marine Insurance and P&I clubs.

What is insurance?

Insurance is protection against future loss

Also means promise of reimbursement in the case of loss, paid to people or companies so concerned about hazards that they have made prepayments to an insurance company.

Insurance is broadly divided into two categories

General Insurance -: General insurance or non life insurance policies includes automobile and homeowner policies provides payment depending on the loss from a particular event.

Marine Insurance -: Marine insurance covers the loss or damage of ship, cargo, and any transport or cargo by which property is transferred between the points of origin and final destination.

Protection and Indemnity Clubs (P&I clubs)

What are P & I clubs?

Protection and indemnity insurance more commonly known as P & I club. Insurance which is a form of marine insurance provided by a P & I club and is a mutual insurance association that provides cover for its members who typically be ship owners, ship operators etc. Unlike a marine insurance company which is answerable to its shareholders similarly P & I club is only responsible to its members.

Following are some of the P & I clubs 

The Standard Steamship Owners Protection & Indemnity association Ltd.

North England P&I Association.

The Steamship Mutual Underwriting Association.

The Sweden Club.

The West of England Ship Mutual Ins. Association.

Schutzveren Detacher Raeder VAG, Hamburg.

The Ship Owners Protection & Indemnity Association Ltd.

In the above diagram (01) vessel operator approaches the xyz to handle their ship. xyz looks (02) for the ship in the respective P & I clubs of which they are representative and asks for confirmation. After they get (03) confirmation from the P & I club they handle the ship. If the ship operator needs some survey to be done (05) xyz gets its done and charges the ship operator for the services (07). In case the ship operator fails to pay the amount due than xyz seeks help from the P& I club to recover the amount due.

Diagrammatic representation of Issuance of policy

XYZ is an intermediary to the Insurance Co. and the Insured.

If the customer wants to insure his goods, he will contact XYZ will select those insurance company which will offer lesser premium to insure his goods then he will be given a Proposal Form by the XYZ, in this form insured have to fill all the information of the goods, its value, and the owner of the goods and all the information required before getting the policy.

After the Proposal Form is submitted then the cheque will be issued by the Insured to the XYZ and then the cheque will be transferred to the Insurance Company. After the submission of the cheque, then the Insurance Company will issue the policy to the XYZ along with the receipt. XYZ will then retain the Original copy with them and issue a duplicate copy to the insured.

Renewal of the Policy: Renewal notice is send to the insured one month before the expiry of the policy, just in case if the insured forgets he comes to know that he has to renew the policy. Renewal notice includes insured name, policy no, sum insured, premium expiry date and Description.

Types of Insurance Policy

1.    Declaration Policy: This policy applies to marine open cover and minimum sum insured is 01 core and as per policy one can get maximum 50% of refund.

2.    Floater Policy: floater policies applies to those goods which are stored in warehouses but in different locations.

3.    Valued Policy: This policy applies to only those goods which can be valued.

4.    Unvalued Policy: This policy applies to unvalued goods.

Section 64VB

Section 64VB states that unless and until you will not pay the premium the risk will not be covered. So if the insured does not pay the premium and his goods gets damaged than his claim will be conceded. 

Principles of Insurance:

Utmost Good faith: The insurer while taking the policy should declare all the necessary information to the insurance company and should not hide anything.

Subrogation: when there is total loss insured gets all his cover but in return he gives the damaged property to the insurance company, this is called surrendering your right.

Contribution: means insurer insures his property with two different insurance company this is called co-insurance, here one of the insurance company is lead company with greater share of sum insured.

Insurable Interest: means the one who has taken the policy should suffer the actual loss and the property insured must be his own property and not someone else property.

Indemnity: this means when one suffer loss the insurance company bring him back to the original position before the incident happened. 

Proximate Cause: proximate cause is the actual cause why the insured suffered the loss or damaged his property.

Some important terms in Insurance

Cover note / Held cover letter: is issued in time of urgency, when issuing of policy takes time due to some reason or so and is only valid for two months and the insured cannot claim for damages or loss of goods on basis on cover note or held cover letter. This is only to certify that one has taken insurance policy.

Enhancement and Endorsement: Enhancement means increase in sum insured and Endorsement means any change in name, place etc.

Under insurance: when the declared value of the property is less than the market value of the property it is said to be underinsurance.

NCB: NCB means no claim bonus. You get this bonus only on motor insurance policies and the maximum limit of discount one can get is 50% on premium.

Reinsurance: reinsurance is done when one insurance company exceeds its capacity to insure the property and insures the property with another insurance company.

Calculation of premiums

Transit Insurance Premium = Sum Insured * 10% * Rate (given by insurance co.)  * Service Tax (12.36%) + Rupee 1 for Stamp Duty.

Motor Insurance Premium = Sum insured * Rate * IMT23% * NCB – Dedctables – Third Party + legal liability * service tax.

Inland Transit Clause

Here the Insurance of the Goods are done only during transit period. The policy starts when the goods are dispatched and ends after the goods get delivered to their destination.

There are different terms in this policy:

ITC-A = Here insurance of New goods are done during the transit. As the goods are new pre dispatch survey is not required unless the goods have been unloaded in between.

ITC-B = Here the insurance of second hand goods are done, and in this case pre dispatch survey is must before sending the goods.

ITC-C = Here goods which has to be repaired are sent and pre dispatched survey is not required.