Lay up - The P&I View

St Petersburg22nd October

2009

Quality Shipping XII RS International Seminar

Capt K S Lumbers

What is P&I

• P&I Insurance is:

Insurance in respect of 3rd party liabilities

• P&I Insurance is not:

Hull and machinery insurance,

What Risks are covered under P&I

• Liability to persons other than seamen• Injury /Illness and death – seamen• Repatriation and substitution expenses• Loss of and damage to the effects of seamen and others• Stowaways and refugees• Life salvage• Collision with other ships• Loss or damage to property• Pollution risks• Liability arising out of towage of or by an entered ship• Wreck liabilities• Quarantine expenses• Cargo liabilities• Unrecoverable general average contributions• Ship's proportion of general average• Special compensation to salvor• Fines

What Risks are covered under P&I

• Liability to persons other than seamen - Watchman• Injury /Illness and death – seamen – Maintenance, modification, upgrading, structural work (HOT)• Repatriation and substitution expenses• Loss of and damage to the effects of seamen and others• Stowaways and refugees• Life salvage• Collision with other ships –Breaking loose, dragging, shifting• Loss or damage to property – Breaking loose, dragging, shifting• Pollution risks – Grounding, corrosion, valve leakage, garbage, emissions, anti fouling, sewage• Liability arising out of towage of or by an entered ship• Wreck liabilities – Sinkings, fires• Quarantine expenses• Cargo liabilities• Unrecoverable general average contributions• Ship's proportion of general average• Special compensation to salvor• Fines

So what is the Club’s interest in laid up ships

• Return of premium• Hot lay up 50% return• Cold lay up 90% return

A properly laid up ship should reduce risk

Definition Cold Lay up - 90% return

• In P&I insurance terms• No cargo on board• 30 day minimum• No seamen on board• Ships with seamen intermittently on board will NOT qualify for Cold Lay up

Definition Hot Lay up - 50% return

• In P&I insurance terms• No cargo on board

• “goods under a bill of lading”– Car carrier (floating garages )(No)– Tankers waiting for market to rise (No)– Gas ships with heel (No)

• If a ship has seamen on board• “seamen are defined in the Club Rules as those under contract to serve

on the ship, whether or not on board• Minimum 30 days• Generally less than half the manning level required under the flag state

minimum safe manning certificate (if more no return)

What risks are we concerned with

• Groundings• Damage to underwater cables, aquaculture, beaches, reefs, pleasure craft etc• Sinkings• Fires• Pollutions

• Bunkers• Deck run off• Garbage• Emissions• Antifouling

• Collisions• Confined areas • Bigger ships• Adequate fendering

• Wreck removals

Cold Lay up

What risks are we concerned with

• Groundings• Damage to underwater cables, aquaculture, beaches, reefs, pleasure craft etc• Sinkings• Fires• Pollutions

• Bunkers• Deck run off• Garbage• Emissions• Anti fouling

• Collisions• Confined areas (ER Notice)• Bigger ships

• Wreck removals• Personal Injury

• Heavy maintenance work• Possible greater risks than normal

Hot Lay up

Has the risk profile of a laid up ship changed

• Ships bigger• Draft• Freeboard

• More sophisticated• Cost lay up• Cost re activation• Skill level requirement higher• Complicated Systems

• Button batteries• Cooling fans• Software updates• Engines kept warm

• Computer control

• More value• Equipment more sophisticated/valuable

• Theft

• World more environmentally unforgiving• Wreck removal• Pollution

• Claim expectations higher• Media more active• Authorities more aware

• Political pressures• Environmental pressures

What was normal practice

Hull insurers required third party Mooring/Lay up approvals before giving returns

What is happening at the moment - what is different

• Owners do not seem to be obtaining third party Mooring/Lay up approvals

• Hull underwriters not giving returns• Hull underwriters more diverse• Old lay up areas possibly not suitable for today’s larger ships

What does P&I need to evidence safe lay up

The managers cannot approve technical aspects of lay ups for Members. In assessing call returns, the Club will therefore rely on Class or Salvage Association or other third party technical advisors instructed by Members

We would expect …….

• Members to

• Maintain the security, safety and protection of the vessel, crew and the environment

• Preserve and maintain the structure and machinery by providing protection against corrosion and static seizure

How

• A full risk assessment covering• Lay up site• Mooring arrangements• Security, safety, protection and environment• Preservation and maintenance• Inspections

www.ukpandi.com

Lay up site

• Degree of shelter• Method of mooring• Availability of spare mooring equipment• Availability of weather information• Local currents, tides• Tidal range• Holding ground• Availability tugs, firefighting, medical & safety services

• Proximity to obstructions• Likelihood of fouling• Proximity of effluent, corrosive discharges• Proximity of passing traffic, other moored vessels• Proximity to aquaculture• Proximity to underwater cables, wrecks etc• Security of location• Availability of fresh water, waste water disposal shore power, repairers

Mooring arrangements

• Sufficient to hold against severest wind from most unfavourable direction

• Ensure anchors are well pulled in, chains straight and stretched tight

• Bouys in position to mark anchors if slipped• If wires used to buoys, wires to be under

even tension and taut• Position of links to be varied where against

hawse pipe etc to prevent uneven wear• Suitable fendering and safe gangways with

good lighting• Adequate ballast taken to reduce windage• Due allowance made for high sided vessels,

vessels with container stacks• Final lay up drafts to be emphasised with

white paint markings• Emergency tow lines fore and aft• Alongside no more than 3 abreast• In rafts no more than 6 a breast

Security, safety, protection and environment

• Sufficient crew to maintain full time fire, leakage, mooring and safety watch (Hot lay up)• Independently powered fire and and flooding alarms fitted for machinery spaces, bilges etc (Cold lay

up)• Minimisation of fire risk by removal of flammable material plus gas freeing• Safe containment and frequent removal of garbage and sewage• Maintain evacuation facility lifeboats/liferafts• Protection of compartments/machinery by sealing air intakes and exhausts• Secure vessel by limiting access, sealing doors, provision of suitable alarm systems with remote

monitoring• Oil tanks drained cleaned and maintained in gas free condition

Preservation and maintenance (H&M)

• Sealing of accommodation/ER spaces• Controlled dehumidification of internal air spaces• Regular turning of rotating machinery• Application of preservatives• Hull/tank cathodic protection

Eradicate accelerated corrosion and seizure

Inspections• Frequent checks of mooring and fendering arrangements• Frequent checks of embarkation lighting and other safety systems• Frequent checks on communications systems• Regular bilge and other soundings• Regular checks of emergency equipment and apparatus, fire, leakage, and security systems and

alarms• Visual checks on controlled space sealing arrangements• Measurement checks on relative humidity levels• Visual checks on protective coatings• Visual checks on oil levels• Visual check for system leaks, hydraulics, fuel, lubrication oil, air conditioning, water• Visual checks battery systems• Live tests emergency fire pump• Measurement checks electrical insulation continuity• Visual check storage tank levels• Periodic underwater survey• Measurement checks on hull potential (cathodic protection system)

Other new issues

• Re activation surveys• If not thorough

• Systems failures• Engine failures

• Groundings, Collisions, damage to berths, pollutions, injury to people• Damage to cargoes – through valve failures, etc ? • Delays in delivery

What is happening today

Deliveries peak 2010

2010

Busy Anchorages

Dragged and hit 7 other vessels

North West Pacific Typhoon Tracks 2009

Most of business nowadays in the Asia area owners reluctant

to lay up too far away but at what risk ?

A lot of good salesmen in that area

Average per Year in area

27 Tropical storms17 Typhoons

8 Intense Typhoons

Rolling Damage of Hong Kong - September

Grounding Damage off Macau

Flooded Engine Room - August

Conclusion

• Risks should be reducedRisks should be reduced• New issues to considerNew issues to consider• Risk assessment neededRisk assessment needed

Lay up - The P&I View

St Petersburg22nd October

2009

Quality Shipping XII RS International Seminar

Capt K S Lumbers