From: Vijay Soman Date: 22/08/2014 5:44 AM Subject: Fwd: MV Cappuccino Bunkers Attachments:MV Cappuccino Bunkers ; Cargo Discrepancies ; mv Cargo Discrepancies /Presentation; mv Cargo Discrepancies /Presentation To: WMTC's FM: WSM/SID Pls see attached from Genco and ensure is shown to genco staff before joining during briefing. The matters addressed are not limited to genco but affect industry wide so all centers can benefit and adopt/adapt for briefings and should be rank specific and juniors to be also shown so they learn before taking senior positions. Brgds Vijay

From: <operations@gencoshipping.com>

Date: 21/08/2014 9:34 PM

Subject: Cargo Discrepancies

8/21/2014

To: Master of mv Genco Spirit

To: Master of mv Genco Beauty

To: Master of mv Genco Leader

To: Master of mv Genco Auvergne

To: Master of mv Genco Claudius

To: Master of mv Genco Carrier

To: Master of mv Genco Normandy

To: Master of mv Genco Avra

To: Master of mv Genco Mare

To: Master of mv Miletus

Cc: Wallem

Cc: Anglo Eastern

Cc: V-Ships

Cc: Thome

Fm: Genco NY Ops

====== VERY IMPORTANT ======

Dear Captains/Christos

Lately we have noticed that a lot of cargo discrepancies between vessels figures

and shore scale figures, for expensive bulk cargoes, occurred in many ports,

especially in Europe, Argentina, Brazil, Black Sea, USA-Mississippi River, North

Africa and WCSA ports.

We have been across very difficult situations where Master sign clean Mates

Receipts, where large cargo differences exist.

In this case vessel and Owners are liable for large shortage claims.

Please make sure accurate draft surveys will be performed, In case of

discrepancy/cargo differences between vessel and shore scale figures.

Pls follow below instructions/steps carefully.

====================

No1:

Call your undersigned operator, anytime, any day.

If undersigned operator cannot be reached, please call operations managers Mr.

Steve Vassilakis or Mr. Robert Dishman and/or your managers.

No2:

Regardless head charterers or sub-charterers, shippers, agents instructions or

pressure put on you to sign clean mates receipts and sail asap.

====DO NOT SIGN CLEAN MATES RECEIPTS WHATSOEVER====

Always master's remarks (declaring ship's figures along with shippers/shore scale

figures) should be entered on the MRs for any discrepancies occurred, cargo

condition..etc. and signed with ship's figures only.

It is master's right to do so.

If charterers, for any reason required clean mates receipts with shore scale figures

to be entered, in this case an ====LOI===== from head-charterers should be

provided to owners prior vessel departure from berth, stating clearly that vessel

will not be kept responsible for any cargo shortages, claims, damages,....etc.

In this case only mates receipts can be signed clean with shore scale figures, and

always below terms should be entered.

"SAID TO BE SAID TO WEIGHT"

"CARGO QUANTITY AND QUALITY UNKNOWN"

"QUANTITY LOADED AS PER SHORE SCALE/SHIPPERS FIGURES"

even if above terms are entered on the MRs without an LOI provided, vessel will

still remain responsible for any cargo discrepancies occurred.

No3:

Tender a letter of protest for cargo differences exists to all concerned parties.

No4:

Besides comments for cargo condition and/or cargo quantity loaded entered on

mates receipts, same comments should be entered on the SOF as well, declaring

clearly any cargo difference, between surveyors figures, vessel figures, and shore

scale/shippers figures.

No5:

Do not provide letter of authorization to agents, to sign B/L on your behalf, till last

moments prior vessel's sailing, when dispute is resolved.

No6:

Do not vacate the berth, unless clearly instructed from Genco NY.

Do not follow attending P&I surveyor's instructions, prior consult undersigned

operator or managers first.

No7:

Please print and file this mail and hand this over as part of handing over notes to

new Captain.

Pls confirm good receipt and full understanding of this message.

Best Regards

Christos Kyrkorianos

Operations Department

Genco Ship Management

(As agents only)

Office tel: 646.443.8521 (ext.) 8521

Cell: 917-825-2726

Email: operations@gencoshipping.com<mailto:operations@gencoshipping.com>

From: <operations@gencoshipping.com>

Date: 21/08/2014 9:33 PM

Subject: MV Cappuccino Bunkers

Attachments:Coping With Capuccino Bunkers.pdf; Cappucino Bunkers Singapore

Bulletin 826.pdf; How_to_reduce_bunker_claims.pdf

8/21/2014

To: Master of mv Genco Spirit

To: Master of mv Genco Beauty

To: Master of mv Genco Leader

To: Master of mv Genco Auvergne

To: Master of mv Genco Claudius

To: Master of mv Genco Carrier

To: Master of mv Genco Normandy

To: Master of mv Genco Avra

To: Master of mv Genco Mare

To: Master of mv Miletus

Cc: Wallem

Cc: Anglo Eastern

Cc: V-Ships

Cc: Thome

Fm: Genco NY Ops

Re: Singapore Bunkering /Cappuccino effect /possible discrepancies.

====== VERY IMPORTANT ======

Dear Captains/Christos

There seems to be increasing frequency in suspected Cappuccino Bunkers during

the bunkering operation

included but not limited to Singapore port, ( In spite of owners appointed

surveyor's attendance) please ensure the following:

1) Pls ensure Bunker barge ullages are checked and witnessed and agreed prior to

load

by Chief Engineer.

2) Pls ensure that every single tank on the bunker barge is ullaged and

visual checked and certified free from air entrainment (cappuccino effect).

3) Ensure bunker barge is not listing and ensure it is brought upright prior

to any measurement being recorded.

4) CAPPUCINO BUNKERS :

Please make sure Chief Engineer together with appointed surveyor

to continually monitor the fuel oil being loaded for signs of

cappuccino effect.

5) The bunker tank temperatures shall be recorded using an appropriate

approved and calibrated thermometer, and check calibration record of said

thermometer.

6) If flow meter used for quantity determination chief engineer should:

a) Verify opening reading prior to any delivery.

b) Inspect meter calibration certificate and record the date last

Calibrated.

c) Record weather it is a temperature compensated meter. If not, pls ensure

volume is adjusted basis temperature recorded in tanks.

7) Samples can be taken from barge manifold or vessel manifold depending on

custom of bunker port ideally using a drip sampler. You are required to

delegate a responsible officer to witness the taking of oil samples by the

Supplier's representatives. These samples should be taken and sealed in the

presence of the responsible officer. One of these Supplier's samples should

be retained for our exclusive use, together with a note as to the origin of

the samples (e.g. bunker barge drip sampler / ship's drip sample).

Pls do not accept pre-prepared samples from any other source.

8) The Sample container attached to drip sampler should be sealed and

checked for tampering regularly during the bunker operation and on

completion of bunkering.

9) On completion vessels representative will inspect seal integrity on drip

sampler container. Witness the sample being thoroughly shaken and then

decanted into four or five sampling containers of at least 750mls, making

three or four passes into each container in turn.

Vessel samples to be distributed; two for vessel, two for bunker barge and

one for surveyor.

Pls witness all samples being sealed and

ensure seal numbers recorded on BDN.

IN CASE OF A DISPUTE:

GENERAL INSTRUTIONS

1) Any discrepancy in ship soundings, ullages or records and bunker

companies readings or dispute in volume lifted or reservation as to the

quality must be advised to charterers, ourselves/GENCO, appointed surveyors and

agents immediately, as well as

reserving our position on any delivery note that may be presented for

signature, ---REFUSE TO SIGN--- , if pressure put to you sign for "receipt only",

and tender a LOP.

Pls call immediately the undersigned operator anytime.

a) CHARTERERS INDIVIDUAL BUNKERS STEM (most often case scenario)

If it is charterers sole stem, please advise charterers asap(send an e-mail and call

charterers PIC anytime) and seek their clear instructions in writing (very important

to avoid any misunderstandings), that must be followed strictly.

Also, Time Charterers bunkering instructions provided in the voyage orders and /or

prior bunkering as to how bunker disputes are to be dealt with, should be

followed strictly.

Charterers are the purchasers of the bunkers, bunker stem is a contract between

charterers and suppliers , that is why charterers remain sole responsible for any

issues arise, therefore Charterers Instructions must be strictly followed in case of a

dispute.

b) JOIN BUNKERS STEM WITH CHARTERERS

If it is a join with charterers stem(charterers + owners), please advise charterers

asap (send an e-mail and call charterers PIC anytime) and seek their clear

instructions.

When charterers WRITTEN instructions on hand, please communicate same to our

office, to determine if we should proceed the same way.

Furthermore, Please send to our office any instructions provided in the voyage

orders and /or prior bunkering as to how bunker disputes are to be dealt with, for

Owners confirmation.

2) Note Bunkers have been purchased basis BUNKER BARGE ULLAGES AS

FINAL AND

BINDING. Pls ensure that you agree with bunker barge ullages prior and

after loading.

3) Pls make sure chief engineer or high rated engine officer to

perform soundings on barge and on vessel together with appointed surveyor.

FYG, Please see attached circulars send from UK P&I club, regarding cappuccino

bunkers.

Please confirm good receipt of this msg

Best Regards

Christos Kyrkorianos

Operations Department

Genco Ship Management

(As agents only)

Office tel: 646.443.8521 (ext.) 8521

Cell: 917-825-2726

Email: operations@gencoshipping.com

Friday 25

th May 2012

Bulletin 826 - 05/12 - Cappuccino Bunkers - Singapore

It has come to the Club’s attention that some bunker deliveries at Singapore have

contained excessive amounts of air. As a result the quantity of fuel delivered and

received was significantly overstated. This effect is termed "Cappuccino" as the

entrained air causes the fuel to "foam" which makes traditional manual measurement

at the time of delivery unreliable. After a few days the foam tends to collapse and tank

measurements then show a significant "loss" of fuel. The following guidelines have

been compiled to assist ship's crew with identification of this potential problem and

hopefully help with dispute resolution.

The following precautions should be taken when the bunker barge arrives alongside the

receiving ship;

1. Under the Singapore bunkering procedure safe access to and from the delivery barge

is to be provided by the ship. This may comprise an accommodation ladder or pilot

ladder or a combination of both. Safe access is important as a competent member of

the ship's crew, preferably the Chief Engineer should attend on the barge to carry out

measurement of all the barge tanks before the delivery starts. This should be done

even if an independent Bunker Surveyor has been appointed.

2. All barge tanks, including any tanks declared empty or not intended for this delivery

must be measured and the temperature of the contents established. This must also

include any slop or waste oil tanks. The drafts of the barge should also be obtained.

It is important that when these measurements have been made that the barge Master

and Chief Engineer sign a record of these measurements.

3. Opening of ullage hatches or tank hatches should provide an opportunity to observe

any foam on the surface of the bunkers. Foam may also be detected on the ullage

tape. If there is no foam then the oil level on the tape should appear distinct with no

entrained bubbles. If by observation of the tape and the surface of the fuel you

suspect entrained air then obtain a sample of the fuel by lowering a weighted bottle

into the tank. Pour the sample into a clean glass jar and observe carefully for signs

of foam or bubbles.

4. If these observations show entrained air the Chief Engineer should not allow the

bunkering to start and contact his head office immediately. If the fuel is being

provided by a charterer then they need to be made aware of the problem. Owners

and/or charterers should then request for an investigation by an independent Bunker

Surveyor. The barge Master should be issued with a letter of protest and a copy sent

to the ship's agent. If the barge Master decides to disconnect from the ship and go to

another location then the agent should immediately inform the port authority and try

to establish where the barge has gone. All relevant times and facts should be

recorded in the deck log book.

Before delivery starts

5. The Chief Engineer should discuss with the barge Master which barge tanks will be

discharged during the bunkering and check that the quantity held in these tanks is

consistent with the quantity to be delivered and that on the bunker delivery receipt.

6. If the Chief Engineer has not observed any entrained air during the initial barge

survey it is still possible that air can be introduced to the barge tanks or the delivery

line during the pumping period. The Singapore Bunkering Procedure SS 600

prohibits the use of compressed air, from bottles or compressors during the pumping

period or during stripping and line clearing. It should be confirmed with the barge

Master that he will follow this procedure (Reference SS600 paragraphs

1.12.10/11/12/13). Stripping of barge tanks can also introduce air and stripping

should only be performed at the end of the delivery for a short period of time. The

barge Master must agree to inform the Chief Engineer when he intends to start

stripping and when it has been completed.

7. It is important that the Chief Engineer measures and records the contents of all his

bunker tanks before the delivery starts and if an independent surveyor is attending he

should be asked to verify this record.

During the delivery

8. Ship's crew need to be alert during bunkering and check for the following signs:

Bunker hose jerking or whipping around.

Gurgling sound when standing in vicinity of bunker manifold.

Fluctuations of pressure indication on manifold pressure gauge.

Unusual noises from the bunker barge

Excessive bubbles observed on the sounding tape while taking sounding of

bunkers in the ship's tanks.

9. These observations suggest that air is being introduced into the bunkers and the

Chief Engineer should request the barge Master to stop the pumping operation. The

Owner's office and/or the charterer need to be advised. The Chief Engineer should

attend on the barge again to take measurements and record the contents of all the

tanks and obtain the signature of the barge Master on this record. The contents of all

the ship's bunker tanks need to be recorded. A letter of protest should be issued to

the barge and the ship's agent advised. All pertinent details should be recorded in

the ship's deck log book.

10. If the delivery is suspended for the above reason an independent surveyor should be

appointed by Owners or Charterers to evaluate the situation and the agent should

inform the port authority.

11. The bunker receipt should not be signed and no agreement reached with the barge

Master on the quantity discharged or received. This should be checked and verified

by an independent surveyor. Again, if the barge departs then the time of departure

needs to be recorded and the ship's agent advised.

After the delivery

12. Assuming that the delivery has been completed without incident the Chief Engineer

should then re-measure ALL the barge tanks and perform calculations, using the

approved barge calibration tables and the appropriate petroleum tables to establish

the quantity discharged by the barge. He would also measure his bunker tanks and

calculate the quantity received.

13. The barge outturn quantity should be similar to the ships received quantity.

14. If there is a significant difference (more than a few tons) between the barge outturn

and the ships received figures then the Chief Engineer should repeat the

measurements of the barge and ship tanks.

15. If the difference between ships received figures and barge figures is significant and

this cannot be explained or resolved then Owners and Charterers should be informed

and they should appoint an independent surveyor.

16. As a further check it would be prudent to re-measure ALL the ship's bunker tank

contents about 12 hours after the delivery to check for any apparent loss but

remember it would be very difficult to resolve any differences after the Chief Engineer

has signed the bunker delivery receipt.

This advice given above is an extract from the forthcoming book by Chris Fisher to be

published later this year and is re produced with kind consent of the author.

Source of Information: Chris Fisher Bunker Claims International – A division of Brookes Bell chris.fisher@brookesbell.com

How to reduce bunker claimsand associated costsThe resolution of fuel quantity and qualitydisputes will rely on evidence provided

UK P&I CLUBIS MANAGEDBY THOMASMILLER

How to reduce the risk of bunkerquantity and quality claims andminimise associated costs

Fuel quantity and quality disputes are notoriously difficultto resolve and a satisfactory outcome will rely heavily onevidence provided by a ship’s crew. Detailed and correctdocumentation is vital. The following steps should befollowed to help prevent problems and provide essentialevidence if a claim arises.

FUEL QUANTITY

Quantity claims usually arise at the time of delivery and can beminimised if correct procedures are followed. The followingchecks and records must be made at the time of the delivery.

NB: If a shortage is not identified and the correct actions not takenat the time of delivery it would become almost impossible torecover any losses after the event.

Pre-delivery checks● Always try to segregate new bunkers from pre-existing fuel.

Loading into empty tanks will avoid incompatibility problems,make measurements easier, reduce the chance of spills and, ifthe new fuel has a quality defect, it will not contaminate otherfuel.

● Before the delivery measure all ship’s bunker tanks and recordsoundings or ullages and temperatures. Convert linearmeasurements to volumes using the tank calibration tables andtake into account vessel trim and list. Use densities and correctpetroleum tables to convert observed volumes to volumes atstandard temperature and weight factor to determine metrictonnes. Record all your findings.

● Prepare a bunker loading plan comprising all tankmeasurements before the delivery and expected tank contentson completion of taking bunkers.

● Check that the bunker delivery note shows the type of fuel andquantity intended for delivery is according to that expected. Donot sign the bunker delivery note or sample labels before thedelivery.

● Attend on the barge in the company of the barge master tomeasure and record the contents of all the cargo tanks,including any not designated for your delivery. Take thetemperatures of the fuel in all the tanks. Look for any signs offoam on the surface of the fuel or excessive bubbles on the

sounding tape. This may indicate that air has been blown intothe fuel. This is sometimes referred to as ‘cappuccino’.Measurements under these conditions, tend to overstate thevolume in the tanks. If excessive foaming is observed issue aletter of protest and consider calling an independent surveyor toevaluate the situation. Once the bunker transfer is under way itbecomes impossible to resolve this issue.

● Check the barge calibration tables have an official certificationstamp. If not, issue a letter of protest. Again, if you are notconvinced that the tables are correct consider calling anindependent surveyor.

● Use the barge calibration tables to convert linear measurementsto volumes at observed temperature, taking into account anytrim or list of the barge.

● Ensure that the barge master signs your record of barge tankcontents and temperatures.

● Agree with the barge master that stripping of barge tanks willonly be carried out at the end of the delivery as this process canintroduce excessive air into the fuel and make measurementsunreliable.

● Agree with the barge master that air-blowing of line content willonly be carried out at the instructions of the chief engineer atthe end of the delivery as this process can also introduceexcessive air into the fuel and make measurements unreliableand also prevent spill/over-flow.

● Agree with the barge master where and how his deliverysamples will be taken. Ideally this should be by continuous dripat the ship’s receiving manifold, however, continuous drip at thebarge discharge manifold should also be acceptable providingthe process can be observed by a member of the ship’s crew.If the barge master does not intend to take reliable continuousdrip samples then issue a letter of protest and inform him thatyou will take delivery of samples he may issue later but you willrecord that they were not taken properly.

● If you are not content with the barge sampling procedure thenensure that you take a continuous drip sample at the ship’sreceiving manifold and invite the barge master to witness thisprocess and sub division and labelling of samples oncompletion of the delivery.

● Carry out all pre-delivery checks and complete standard formsin accordance with the ship’s management system and localregulations.

Checks during the delivery● Ensure continuous drip sampling is performed throughout

the entire delivery. Do not stop the drip sampling until thebarge master has confirmed that the transfer has beencompleted.

● Make sure the fuel being loaded is entering the tanks that younominated and no fuel is passing to a non nominated tank. Topoff tanks carefully to avoid over filling and spills.

● Listen for unusual noises from the barge, or excessivemovement of the delivery hose as this may indicate stripping orair being introduced into the fuel by the barge operators. If indoubt attend on the barge to investigate and record anyproblems and issue a letter of protest if necessary.

Checks on completion of delivery● Measure and calculate the quantity of fuel on board, by

checking all ship’s tanks and record your findings. Thensubtract your starting quantity from your finishing quantity(whilst taking into account any consumption during delivery).This will provide the total quantity received.

NB: To calculate the volume at standard temperature andweight of fuel supplied you will need the density of the fuel andthis is usually provided on the bunker delivery receipt butremember the true density can only be established by testing adrip sample.

● Attend on the barge and measure the contents andtemperatures of all barge tanks together with the barge masterand record your findings and ask him to agree and sign therecord.

● Calculate the barge outturn and compare this against your shipreceived quantity. There may be a difference of a few tonnesdue to measurement error and tank calibrations.

● If you are satisfied that the quantity provided on the bunkerdelivery receipt has been delivered and received into your tanks(allowing for a minor discrepancy) then sign the bunker receipt“for observed volume at temperature only”.

● If you are not satisfied that you have received the quantity on thebunker delivery receipt then issue a letter of protest and if theapparent shortage is large (more than 10 tonnes on a largedelivery) then you may consider appointing an independentsurveyor to check the barge and your tanks.

● If a dispute results in the barge master agreeing to pump somemore fuel to the ship make sure the drip sampling is continuedthroughout this period.

● Make sure the bulk drip sample is thoroughly mixed before andduring filling of sub sample bottles. Ensure this process iswitnessed by the barge master.

● Label and seal the sub samples and obtain the signature of thebarge master on all the sub samples.

● Do not sign labels of any samples issued by the supplier unlessyou are satisfied that they were taken and sub divided properly.

● Check that the bunker receipt only lists the seal numbers ofsamples that were taken properly by continuous drip. If thesupplier insists on recording seal numbers on the bunkerreceipt for samples that were not properly taken and witnessedthen issue a further letter of protest.

● Ensure you retain all records of measurements, sample data,letters of protest on file and inform your office of any problemsas soon as possible in writing.

● Complete a final tank measurement and calculation report andenter the records of tank contents before and after loading inthe oil record book and engine log book.

FUEL QUALITY

The fuel supplied to your ship should have been ordered on thebasis that it will be compliant with the International Standard,ISO:8217 and be suitable for consumption with respect toenvironmental regulations applicable within the intended tradingroute of the ship. However production and distribution errors canresult in supply of non-compliant fuel and this is unlikely to beobvious at the time of delivery. Owners should ensure that all fuelsare sampled and tested to check compliance. The followingchecks should be made.

Before the delivery● Agree with the barge master where and how his delivery

samples will be taken. Ideally this should be by continuous dripat the ship’s receiving manifold, however, continuous drip at thebarge discharge manifold should also be acceptable providingthe process can be observed by a member of the ship’s crew. Ifthe barge master does not intend to take reliable continuousdrip samples then issue a letter of protest and inform him thatyou will take delivery of samples he may issue later but you willrecord that they were not taken properly.

● Check the drip sampling device is fully operational and cleanand fit a clean collection bag.

● Always try to segregate new bunkers from pre-existing fuel.Loading into empty tanks will avoid incompatibility problems,make measurements easier, reduce the chance of spills and ifthe new fuel has a quality defect it will not contaminate otherfuel. Also you should be able to consume previous fuel duringthe period you are waiting on test results for the new fuel.

During the delivery● Ensure that a continuous drip sample is obtained throughout the

entire delivery. This should be approximately 5 litres.

On completion of the delivery● Fully mix the bulk drip sample. If the fuel is cold then warm it in

the engine room to make sure it can be properly shaken andmixed. The barge master should be invited to witness samplepreparations.

● Fill at least four 1 litre sample bottles, adding fuel to each bottlea little at a time and making multi-passes over the bottles. Thebulk sample container should be mixed or shaken several timesduring this process.

● Label and seal all the samples. Make sure the following isrecorded on the labels: Ship’s name, port, barge name, date,type of fuel (HFO/MDO), sampling method, sampling location,seal number. The chief engineer and barge master must signthe labels.

● Make a list of the samples and their seal numbers with remarkson how they were distributed e.g. Ship retained, barge retained,test laboratory. One sample should be issued to the barge and asigned receipt should be obtained.

● Check that the bunker delivery receipt records all the sealnumbers and distribution.

● If the barge master issues samples that were not taken underagreed witness conditions then sign for “receipt only - sourceunknown”. A letter of protest should also be issued.

NB: Marpol sample

It is the duty of the supplier to issue the ship with a Marpolsample and the seal number of this should be recorded on thebunker receipt. If the barge master and ship’s crew agreed ontaking only one set of samples, either at the barge manifold orship manifold then one of these may be designated the Marpolsample. A ship taken sample cannot be termed a Marpol sampleunless this is agreed with the barge master and the seal numberis recorded on the bunker receipt. If the bunker receipt lists anyseal numbers of samples that were not taken by the correctmethod then issue a letter of protest. There cannot be twoMarpol samples for one delivery.

● One delivery sample should be sent for testing. This is bestarranged through a routine bunker testing service as this wouldprovide a fast turnaround of results.

● If possible do not use the new fuel until you have received thetest results.

● Check the laboratory test report and take into account anyrecommendations given by the laboratory such as heating anduse of purifiers. Record in the engine log book the use ofpurifiers and fuel temperatures.

● Always record, in the engine log book, every day the primarybunker tank being used for transfer to the settling tank.

● If you experience problems with fuel treatment or engineperformance then ensure that appropriate entries are made inthe engine log book.

● If you suspect that the new fuel has some quality defect, due tofilter, purifier or engine problems then take samples before andafter the purifier and before the engine, after the fine filters.Take great care with sampling hot fuel oil. Label and seal thesamples and ensure the labels contain all relevant informationon when, where and how the samples were taken. Send themto the laboratory as soon as possible.

● If the purifiers or filters are blocking, then obtain samples of thesludge for testing.

● Take photographs of purifiers and filters to demonstrate theproblem.

● If engine components sustain damage then preserve thedamaged parts as evidence.

● Keep your head office fully informed of problems as they willneed to communicate with the charterer and or fuel supplier andarrange for attendance of a surveyor.

Acknowledgements:Chris Fisher, Bunker Claims International a division of Brookes Bell

UK P&I CLUBIS MANAGEDBY THOMASMILLER

For further information please contact:

Loss Prevention Department, Thomas Miller P&I Ltd

Tel: +44 20 7204 2307. Fax +44 20 7283 6517

Email: karl.lumbers@thomasmiller.com

Bunkers: a guide to qualityand quantity claims

For further, more in depth reading,information can be obtained from theabove publication produced by theUK Defence Clubwww.ukdefence.com

Covering areas such as:

● Purchasing considerations

● Delivery procedures

- Pre-delivery checks

- Procedures during the delivery

- Post delivery procedures

● Compliance with Marpol Annex V1, EU sulphur regulations andother regional restrictions

● The preservation of evidence

● Sample evidence

● Notes of protest

● Charterparty considerations

- Property in the bunkers

- Quantity of bunkers

- Quality of bunkers

- Fit for purpose

- Causation

- Mitigation

- Bunker supply contracts

● Bunker claims and the role of the Association

● The Association’s experience

From: <operations@gencoshipping.com>

Date: 21/08/2014 9:35 PM

Subject: mv Cargo Discrepancies /Presentation

8/21/2014

To: Wallem

To: Anglo Eastern

To: V-Ships

To: Thome

Fm: Genco NY Ops

Dear Sirs,

Pls pass attached presentation for cargo discrepancies to below vessels:

mv Genco Spirit

mv Genco Beauty

mv Genco Leader

mv Genco Auvergne

mv Genco Claudius

mv Genco Carrier

mv Genco Normandy

mv Genco Avra

mv Genco Mare

mv Miletus

Best Regards

Christos Kyrkorianos

Operations Department

Genco Ship Management

(As agents only)

Office tel: 646.443.8521 (ext.) 8521

Cell: 917-825-2726

Email: operations@gencoshipping.com<mailto:operations@gencoshipping.com>

Cargo Quantity

Discrepancies

When Draft Survey differs from

Shore Weight (Shippers Weight)

Cargo Discrepancies

Most Mates Receipts and/or Bills of

Lading are provided showing the weight

of Shore Scale or Shippers Weight

Often, this differs from the quantity of

cargo loaded as determined by a draft

survey.

Cargo Discrepancies

A substantial difference between what

is determined as loaded on board the

vessel by draft survey, and the quantity

indicated on the Mates Receipt may

expose Owners to a substantial cargo

shortage claim.

Cargo Discrepancies

This applies in particular to High Value

cargo, such as:

Grains and Grain Products, Sugar, etc.

Fertilizers, such as Urea, etc.

Other refined and valuable products

such as Alumina, etc.

Cargo Discrepancies

Most Bills of Lading and/or Mates Receipts might indicate that:

Weight, Quantity and Quality Unknown, but this may not protect the vessel or Owners in all countries or jurisdictions.

As an example, this would not be applicable in the United States or in China.

Cargo Discrepancies

Shippers description of goods…..

Weight, measure, quality, quantity,

condition, contents and value unknown

These reservations will be effective under

English Law if the Master has no means of

knowing the quantity shipped, but, if there is a

draft survey or a tally shows the shippers

figures are inaccurate, this will not protect the

vessel.

Cargo Discrepancies

P&I Coverage

P&I will NOT cover the shortage for a Mates Receipt or Bill of Lading, when it is signed, knowing that the information is not correct.

This leaves the Owner unprotected for shortage claims when it is known there is a substantial difference between what the Shore Weight is (on the Mates Receipt), and the cargo as determined by the vessel (by draft survey)

Cargo Discrepancies

There is sometimes the indication that an “allowance” of 0.3 percent or 0.5 percent is permitted as an allowable difference in the weight of the cargo. You should not be persuaded by this claim.

This is not always the case in many countries, and is not applied by many receivers in many situations. (i.e. North African Countries like Algeria, etc.)

Cargo Discrepancies

P&I Coverage

Without P&I coverage, the Owner is left

exposed to substantial short landing

claims.

What can the Master of the vessel do in

such a situation?

Cargo Discrepancies

P&I Coverage

Accurate Draft Surveys

If the Draft Survey differs from the Mates Receipt.

Is the Draft Survey correct?

Has it been properly done?

Is there calm water, or is there Waves or Swell?

Is the water salinity properly accounted for?

Is there current, or are readings done in a river which may cause SQUAT?

Draft Survey

If the Draft Survey

differs from the

Mates Receipt.

Has the Master

checked the

calculations?

Is there a P&I

surveyor doing his

own draft survey?

Is the Shipper or

Receiver doing a

draft survey also?

Draft Survey

If the Draft Survey

differs from the

Mates Receipt.

Do the draft surveys

of all parties agree

substantially?

Master and Chief

Officer should check

again the accuracy

and reliability of the

draft survey.

Draft Survey

If the Draft Survey

differs from the

Mates Receipt.

Have you checked

the Constants?

Are your constants

reasonable?

Is the ballast and

fuel quantity correct?

What is the

experience factor of

the vessel?

Draft Survey-Correct Readings

Vessels which are lying at a river berth or in tidal conditions when strong currents are running. Under these conditions the draught marks should ideally be read over periods of slack water (provided that at a low water slack there is sufficient under-keel clearance).

Currents of appreciable strengths are likely to cause the vessel to change trim or pitch slightly and/or sink bodily into the water from her static draught (‘squat’). This phenomenon becomes more pronounced in shallow waters (shallow water effect).

Strong currents will result in raised water levels against the leading edge of a stationary vessel lying in flowing water. This is especially true when the flow is in the direction of a vessel’s bulbous bow.

Draft Surveys: - Density of the water in which the vessel

is floating

It is prudent to obtain samples of water in

which the vessel is floating at, or very close to,

the time at which the draught marks are read.

This is particularly relevant when the vessel is

lying at a estuarial or river berth when

density of the water may be changing, due

to the ebb or flow of the tide.

Why does the vessel draft survey

have to be correct?

If the Master clauses the Bill of Lading for a quantity much less than is actually carried, then Owners may be responsible for claims from Shippers/Charterers for Loss of Freight from that Shipment.

If the Bill of Lading is for LESS cargo than is actually on board, (Ships figures are more than Mates Receipt,) then in some countries (Brazil & Argentina) there will be Customs Fines for discharge of more cargo than declared.

The Draft survey will be the evidence with which Owners rely in perhaps delaying the vessel.

P&I Cover for Cargo Claims

Exceptions

5. CARGO LIABILITY

5.1 Cover The standard insurance shall cover the member's liability for cargo loss, shortage,

damage, delay or other responsibility occurring in relation to the carriage of cargo

on the entered vessel.

5.2 Exceptions However the standard insurance shall not cover liabilities, costs and expenses arising

out of any of the following,

5.2.1 failure to arrive or late arrival of the vessel at the port of loading, other than any

such liabilities, costs and expenses arising under a bill of lading already issued.

5.2.2 loss, shortage, damage or delay occurring prior to loading, except insofar as loss,

shortage or damage occurs in the port of loading within 21 days of the date on

which loading of the cargo on the vessel commences or should commence,

5.2.3 loss, shortage, damage or delay occurring whilst the cargo is in the custody of

another carrier or during lightering operations, except insofar as lightering is

approved by the Association, or occurs in port and is customary,

5.2.4 failure to load or delay in loading any particular cargo in the vessel, except insofar

as liabilities, costs and expenses arising under a bill of lading already issued,

5.2.5 the issue of a bill of lading, waybill or other document containing or evidencing the contract of carriage which

a) is antedated or postdated,

b) contains a description of the cargo or its quantity or condition which the member or an officer of the vessel knows is incorrect, or

c) should be claused to show that the cargo is carried on deck and is not so claused,

If there is a Discrepancy between Shore figures and

Draft Survey at the Loadport

Compare your Draft Survey figures with the other surveyors: (Have you accompanied the other surveyors to ensure ballast and Fuel soundings are accurate?)

(P&I Surveyor) and/or Shippers-Receivers Surveyors

Determine if there is significant discrepancy with the Shippers/Elevator figures

If you are in agreement with others, then tell the agent that you will clause the Mates Receipt/Bill of Lading with the Draft Survey figures

What is a Significant Discrepancy?

There is a reasonable expectation that the draft survey

may differ to a certain degree as a consequence of the

uncertainties described previously, swells or waves,

etc.

A significant discrepancy would be one that can not be

accounted for by the uncertainties of a draft survey.

What is a significant discrepancy?

If the difference is minor, for instance, a

difference of 30-50 MT on a parcel of 45,000

MT (i.e. 0.1%), this may not be considered a

significant discrepancy.

(TPC of a Handymax vessel is about 48)

A Significant discrepancy might be over 70 or

80 MT depending on the cargo size (0.2%)

If there is a minor (Not Significant)

difference in Ship to Shore figures

Check with your vessel operator

If this is the whole cargo, the operator may instruct you to issue a Letter of Protest of the difference between ships figures and shore figures, provided that the Mates Receipt/Bill of Lading has “Weight Unknown” included in the wording.

If the discrepancy is on only a parcel of cargo, then you should follow the operators instructions,

(i.e. do not sign the Mates Receipt until further instructions)

If there is a minor (Not Significant)

difference in Ship to Shore figures

If the discrepancy is, for instance 50 MT on a parcel of 15,000 MT, then any additional parcels, may accumulate to a significant discrepancy.

3 parcels of 15,000 MT each having a discrepancy of 50 MT would equal 150 MT on the whole cargo, which would be Significant.

If there is a Significant Discrepancy between Shore

figures and Draft Survey at the Loadport

If your draft survey figures differ significantly from the Shore figures or P&I/Shippers/Receivers draft survey figures, contact your Technical Managers for guidance and assistance to ensure the accuracy of your draft survey figures.

If you are sure of your draft survey figures (remember that a significant difference should trigger the Master to recheck all the variables and calculations, and not rely only on the figures given to him by a junior officer.)

If a P&I surveyor has not been attending to do a draft survey, you should contact the local P&I to get a surveyor to attend to verify your figures.

If there is a Significant Discrepancy between Shore

figures and Draft Survey at the Loadport

-Actual Case-

A Handy Size Bulk Carrier Captain called to report a discrepancy between elevator and ships draft survey of 400 MT (1.5%) on a cargo of 27,000 MT of wheat loaded in Houston (a river port)

Owners were ready to order the vessel to a layberth as Owners could not accept such a high discrepancy.

After much discussion with the Master, it seems the draft survey was not prepared or checked by him, and the Salinity of the Water was not accounted for.

The actual difference was only about 60-80 MT when the proper draft survey was done.

This caused delay to the vessel, and possibly great expense and embarrassment to the Owners.

Significant difference between Ship’s

Figures and Shippers Figures

If you are in agreement with other draft surveyors, then tell the agent that you will Clause the Mates Receipt/Bill of Lading with the Draft Survey figures.

If the Agent (as is likely) will not accept the Ships Draft Survey Figures, ask to add the Ships Figures alongside the Shippers/Elevator figures Mates Receipt/Bill of Lading.

For example:Shippers Weight – 30,000 MT

Ships Figures – 28,980 MT

Clausing the Mates Receipt and/or

Bill of Lading

If the agent/shipper agrees to clause the

Mates Receipt, or to include the Ships

Figures onto the Mates Receipt, or Bill of

Lading, confirm this with your Vessel

Operator and Technical Manager.

But be careful of the following

caution:

Significant Difference in the Quantity

The Master may not be able to rely on the reservation where he knows the shippers’ figures are incorrect.

Where the discrepancy is so great the Bill of Lading is obviously wrong, it may not be safe to rely on this reservation.

For instance a 1% discrepancy (450 MT difference on a 45,000 MT parcel).

In this case, contact your vessel operator immediately.

What to do?

If the Agents/Shippers do not accept any clausing of the Mates Receipt/Bills of Lading, you must contact your vessel operator immediately for instructions.

As we all have experienced, these problems do not happen at a convenient time and place, and the agents are pressuring you to sign and sail the vessel, so if you have knowledge that a problem may arise, (by doing intermediate draft surveys) advise your vessel operator in advance.

What to do?

Your vessel operator will decide if conditions of the draft survey on which you rely are sustainable and the difference is minor, and may instruct that an appropriate Letter of Protest be issued, or

He or She may decide the discrepancy is enough to contact the Charterers to advise them of the problem, and request they instruct the Shippers to allow clausing of Mates Receipts.

What to do?

In many circumstances, the Charterers can

not, or will not, agree to clausing of the Mates

Receipts/Bills of Lading and your operator will

request that the Charterers issue to Owners a

Letter of Indemnity,

where there is a true dispute about the

quantity of the cargo loaded, and for the

Master to then sign the Mates Receipts as

presented.

Why the Letter of Indemnity

As stated earlier, P&I may not provide cover for cargo shortages when the Member (Owner) or ship is aware that the figure on the Mates Receipt/Bill of Lading is incorrect.

In that case, at the Owners discretion, he will request the Charterers to Indemnify the Owners, through a Letter of Indemnity for any cargo shortage that is attributable to the discrepancy at the loadport, otherwise the Owner will have to pay for the entire shortage.

Actual Case

A Genco Panamax vessel loading a cargo of grain in New Orleans had a P&I surveyor attend to do a draft survey, and seal the cargo holds.

There came a discrepancy of almost 300 MT, and the P&I surveyor told the Master to sign the Mates Receipts and sail, and he would issue a Letter of Protest the next day on behalf of the vessel.

Actual Case

Neither the Master, nor the P&I surveyor, contacted

the Owners about this, and the Owners found out only

from the Master’s sailing message from Southwest

Pass (some 12 hours after sailing the loading berth, on

a holiday weekend).

The Owners advised their P&I immediately about this,

BUT

The vessel’s P&I informed Owners they would not

cover for cargo shortage under their rules.

P&I refusal of cover

Even though Owners pointed out to the P&I Club that:

1) Owners appointed a P&I surveyor to do a draft survey and seal the cargo holds.

2) This P&I surveyor they had appointed had instructed the vessel to sail,

Yet, the P&I Club continued to deny cover, because the Master did not contact Owners before signing the Mates Receipt, despite the surveyors instructions.

P&I refusal of cover

IT IS THEREFORE IMPERATIVE TO CONTACT

YOUR VESSEL OPERATOR FOR INSTRUCTIONS

WHEN THERE IS A DISCREPANCY IN THE CARGO

FIGURES BEFORE YOU SIGN THE DOCUMENTS,

DESPITE THE ADVICE OF ANY P&I SURVEYOR ON

BOARD, TO PREVENT DENIAL OF P&I COVER

IT IS UP TO THE OWNERS TO GIVE

INSTRUCTIONS, NOT THE SURVEYOR

THE SUVEYOR IS THERE TO ADVISE AND

ASSIST.

What to do?

In these circumstance the operator will instruct

you if and when you should sign the Mates

Receipt, or whether to issue a Letter of

Authority to the agents to sign the Bill of

Lading in accordance with the Mates Receipts.

If possible, do not sign the Letter of

Authority on arrival at the Loadport, but

wait until all cargo has been loaded and

you are in agreement with the figures.

Dealing with the Charterers for

Letters of Indemnity

As vessels are often in a long Chartering Chain, with

Owners, Managers, and each sub Charterer often in

different parts of the world, resolving these issues can

take much time, and getting LOI’s may take even

longer.

When you will be loading in an area notorious for

cargo discrepancies, particularly with High Value

Cargo, it is often prudent not to automatically issue

the Letter of Authority to sign Bills of Lading until the

completion of loading, as this might give the vessel

and Owners some leverage.

Dealing with the Charterers for Letters of

Indemnity

When you are aware that you may have a problem with the quantity, let your Owners and managers know immediately, so a P&I surveyor may be appointed as soon as possible.

Owners will then likely advise the Charterers in advance, that in the circumstance of a significant discrepancy, the Master will clause the Mates Receipts, and if that is not allowed, the Master will not issue a Bill of Lading unless an appropriate Letter of Indemnity is received and approved by Owners from the Head Charterers before the Master is allowed to sign the Mates Receipt and sail.

Dealing with the Charterers for Letters of

Indemnity

Considering the long Charter Chains, it is

important for the vessel to notify the Owners

as soon as possible, if they suspect there will

be a difference between ship and shore

figures.

Owners may suggest to Charterers that they

appoint their own surveyors to verify the Ship’s

figures.

Other factors in cargo quantity disputes

If you note spillage of cargo from loaders, grabs, cranes, etc. onto the deck or wharf, protest this with a written protest to Stevedores, Charterers and Agents, and document it with plenty photos and statements.

A picture (or diagram is worth a thousand words).

In such a circumstance contact your P&I and Managers and Owners immediately, not on completion of cargo operations.

A Picture is worth a thousand words

Spillage from Shore

Grabs would cause

loading discrepancy,

or shortage claim at

discharge.

Other factors in cargo quantity disputes

In some circumstances, Shippers or Receivers surveyors ask the vessel to sign an Initial Draft Survey document with the figures from the initial draft survey.

These forms have 2 columns, one for initial survey and one for final survey.

These surveyors then fill in their own numbers for the final draft survey, and use the Master’s signature on this document as evidence to justify a shortage claim.

If you are required to sign such a form, remark “FOR INITIAL SURVEY ONLY”, then you can re-sign and stamp on completion and acceptance of the FINAL SURVEY.

Pressure from the Agents/Charterers

Do not succumb to pressure from the agents that you Must Sign the Mates Receipts or Bills of Lading as presented, if there is a dispute.

If you receive such pressure, summon your P&I representative immediately, and contact your Managers and Owners.

You are not required to sign a inaccurate Bill of Lading.

This also comes into play for inaccurate description of the cargo.

Sometimes the pressure will come from Charterers to sign and sail the vessel to avoid delays. Contact your Owners for instructions

There is some legal authority that delays because of quantity disputes should not fall on the vessel. Let your Owners decide.

Summary

• Always have an ACCURATE draft survey for each loading and discharge.

• If there is a discrepancy, especially significant discrepancy, contact your vessel operator, manager and P&I immediately for instructions before signing any documents.

• Never succumb to pressure from agents or Charterers to issue inaccurate documents without instructions from the Owners.