Reels of paper lost overboard
A note on Debris Removal insurance Debris Removal cover is a special insurance often offered alongside marine cargo insurance. The need has arisen because of the costs of disposal of damaged cargo. Commonly, when a cargo of refrigerated goods arrives at destination and is condemned because the shipping company has not kept it within its correct temperature envelope, the cargo has to be dumped. The cargo is a total loss and the full insurance certificate sum insured is paid. This is often CIF (cost insurance and freight) plus 10%. This pays for the value of the damaged and lost cargo, and some inevitable flow-on expenses, such as re-ordering and communication costs. However, the costs of dumping tons of decomposing organic material are high. It is rarely borne by the shipping company who are the custodians of the cargo and often cause the damage. Usually the consignee pays if the rise in temperature occurred after loading the cargo on the container ship.
This is the story of how Vero Marine assisted Carter Holt Harvey Ltd., a major NZ exporter of paper products, when they lost three 40' export containers overboard from a ship.
The cargo was large rolls of paper, and – as the containers split open, and the contents floated – it threatened the coastline of New Zealand's beautiful Bay of Islands. The claim was not necessarily one under the Removal of Debris cover, but we saw that there was opportunity to assist a client because the clean-up costs could form part of the claim against MISC for cargo loss and damage arising from their failure as a shipping company to properly care and carry cargo.
In July 2000, The MISC vessel "Bunga Kenari" loaded three containers of kraft paper in Tauranga. The cargo was heavy – the 90 cubic metres of kraft paper 44 rolls weighed close to 75 tons. Why such a heavy load was on deck and high on the vessel remains to be disclosed by the shipping company, but in stormy weather – not unusual in New Zealand's winter – the containers, along with three others, were spilled from the vessel. No doubt on impact with the sea, the containers broke open. As is the practice, reels are not secured (tied down, dunnaged, tommed or otherwise) within containers: the reels are firmly packed with a minimum of void spaces. Because of this tight packing, there is no room for movement of the cargo within the container (for example, in a heavy train shunt). However – without the retaining walls and door of the container, the cargo floated free. Of the 44 reels, 27 ended up on the beaches of the Bay of Islands.
The Maritime Safety Authority, once notified by the ship, immediately issued a navigation warning for the entire Northland east coast. Their biggest fear was that there was a container floating just below the surface.
The Northern Regional Council recognised that these rolls of paper constituted a major environment issue. If left to break up either in the sea or on the foreshore, there would be – the words of the NRC harbourmaster Captain Ian Niblock – "a very unpleasant mess". They immediately chartered small aircraft to search for the approaching reels. A barge operation was launched from Opua to assist in the recovery of reels for reels that could not be removed overland or where the use of heavy vehicles would damage the environment.
The Bay of Islands Coastguard recovered on reel of paper and towed it to land at a local boat-ramp. They received a donation for their services. Donations were given to the local farmers who, by using their tractors, removed the reels from the foreshore, where they were threatening to break down.
Because of the speed at which the retrieval was organised, 31 tons of paper were able to be returned to the NZ exporter's processing plant and salvaged through their recycling plant. Four reels were so severely torn and sodden from their time in the sea that they were unfit for even recycling purposes.
An environmental incident was averted. Although they were in no way responsible, the NZ exporter was faced with a major PR issue. As insurers, we assisted by having a surveyor on the scene and by contributing to the retrieval and salvage operations. The total claim has cost in excess of NZ$150,000 to date. It could have been much worse. Someone could have lost their life in a collision with a floating reel. The environment of Northland could have been marred with container and paper debris.
And the shipping company, who lost the containers overboard? The Malaysia International Shipping Corporation and its representatives in NZ have steadfast in their total denial of their liability from the outset. Vero Marine's legal counsel McElroys are on the case, and legal action is pending ….
We'll update this photo feature at a later date.
Debris removal insurance, then is a contingent legal liability cover, in that it usually has a separate sub-limit, the cover is only activated if there is a physical loss or damage claim to cargo under the main Institute cover, and the commercial party holding the risk in the goods at the time of the loss are legally liable for the dumping costs. In the vast majority of cases, the cargo is condemned at destination for either temperature failure or water damage, and the container's contents are buried at the municipal dump. The cover includes one specific exclusion: it does not respond to legal liability under any pollution law.
Vero Marine acknowledges the assistance of Master Mariner Neil Abbott of Manu Marine (http://www.manumarine.com)
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