Archives for April 2021

International freight transport and logistics insurer, TT Club alerts supply chain operators to the consequential impact of disruption stemming from recent blockage in the Suez Canal and urges a greater emphasis on resilience.

London, 12^th April, 2021

Global supply chains already strained by the disruption caused by the pandemic have been further challenged recently by the blockage of the Suez Canal, an artery that carries 30% of the world’s container cargo each year.  Happily, the Canal is now functioning normally again, but a reported 300 ships have been delayed awaiting transit, many others were re-routed via the longer passage around South Africa’s Cape of Good Hope.

In its advisory capacity as a mitigator of risk and loss in the supply chain TT Club is warning of the consequences of these recent events.  Mike Yarwood, TT’s Managing Director, Loss Prevention comments, “Beyond the delay to cargo on board those ships affected, there will inevitably be a knock-on impact for those involved in discharging the containers at destination ports when they finally arrive, as well as the final mile delivery carriers. While the immediate impact may be a lack of cargo arriving when expected, presenting market supply challenges, it is when the cargo does start to turn-up that further potential risks emerge.”

The arrival of large volumes of laden containers, coupled with the requirements for hinterland distribution, will create disruption at ports and terminals, straining throughput and yard capacities, and creating accumulation of cargo. This is a complex risk and one that will not only affect destination hubs.

The situation will also aggravate an already widely reported imbalance of container equipment especially on the East to West trade routes as laden containers are tied up and consequently empty availability to reposition to shipment areas worsens.

Yarwood further stresses, “The risk of theft at ports and freight depots in this scenario is heightened and a greater focus on security is required. Whether it simply be at an overspill holding or storage area, or temporary warehousing, wherever and whenever cargo is not moving, it is more likely to be stolen. Those active in the supply chain should be mindful of these security risks.  Due diligence, undertaken to ensure that any third party provider of storage is adequately resourced to meet these demands, is a prudent step to take in these circumstances.”  

Particularly in Europe, driver shortages are already expected to soar through 2021, as highlighted by a recent International Road Transport Union (IRU) survey.  This will exacerbate the difficulties in delivering import cargoes and picking-up consignments for export. The overall lack of capacity to move containers has the potential to create additional challenges. Those seeking to secure road haulage capacity should be mindful of the associated security risks outlined in the recent TT Club/BSI joint cargo theft report, and take the advised steps in mitigating the threat of theft.

Yarwood concludes, “The last decade has witnessed many in the supply chain drive towards streamlining and operational efficiencies. Such measures have included reducing the number of suppliers and introducing ‘just in time’ principles to lessen the burden of unnecessary inventory costs. Experiences over the last twelve months through the pandemic, the Brexit transition and more recently the Suez Canal blockage, bring into question this bias towards efficiency and cost reduction.  If such are achieved at the expense of resilience, is this policy the correct one? The new normal might see many stakeholders increase their focus on contingencies and adopt more a ‘just in case’ philosophy than a ‘just in time’ one.”

 ENDS

About TT Club

TT Club is the established market-leading independent provider of mutual insurance and related risk management services to the international transport and logistics industry. TT Club’s primary objective is to help make the industry safer and more secure. Founded in 1968, the Club has more than 1100 Members, spanning container owners and operators, ports and terminals, and logistics companies, working across maritime, road, rail, and air. TT Club is renowned for its high-quality service, in-depth industry knowledge and enduring Member loyalty. It retains more than 93% of its Members with a third of its entire membership having chosen to insure with the Club for 20 years or more.

www.ttclub.com

In its continued campaign to reduce the risk and consequences of container ship fires, TT Club turns its focus to the plight of fire damaged ships and their often prolonged search for a place of refuge.

London & Dubai, 6^th April, 2021

A detailed review of some of the more serious container ship fires of recent years highlights concerning features of the aftermath in terms of safety to crew, the stricken ship and its cargo, and the maritime and coastal environment. 

Speaking at the Middle East Transport and Logistics Summit recently, TT Club’s Abdul Fahl pointed to the substantial delays in finding damaged ships a place of refuge (usually an existing port), illustrated by the examples of ‘MSC Flaminia’, ‘Maersk Honam’ and ‘Yantian Express’. These heavily damaged, fire-stricken ships took at worst almost three months to be granted refuge and a further period approaching six months elapsed before their cargo could be safely and securely discharged.

Fahl explained, “A place of refuge – typically a port – is where a ship in need of assistance can take shelter to enable it to stabilise its condition and reduce the hazards to navigation and protect human life and the environment.” He goes on, “There are no international conventions or mandatory regulations directly compelling a State to provide refuge.  IMO resolutions promote preparedness and the need for coastal States to take responsibility to avoid compounding issues faced by ships in distress. Equally, EU member States are required to draw up and implement plans to take ships in distress requesting refuge under their authority. However, the relevant Directive stops short of imposing a legal obligation on the coastal States to provide such refuge.”

The International Maritime Organization (IMO) guidelines state ‘when a request for an access to a place of refuge is made, there is no obligation for the coastal State to grant it, but the coastal State should weight all the factors and risks in a balanced manner and give shelter whenever reasonably possible.”

Despite such ‘requirements’ and ‘guidelines’, the fire-crippled ‘MSC Flaminia’, on which three crew members died, was denied access to a number of ports in Europe for eleven weeks before berthing in Wilhelmshaven, Germany.  Even then, a further twenty plus weeks elapsed before her remaining containers were discharged in Romania.  The ‘Maersk Honam’ was even more seriously damaged in the Arabian Sea, with five crew losing their lives.  The severely destabilised ship was eventually allowed into Jebel Ali, Dubai some eleven weeks later.

Such delays endanger crews and salvors, increase the risk of further fire and damage, augment the possibility of maritime pollution and environmental damage of the coasts, and enlarge the losses of unaffected containers and cargo due their extended transit times to their final destinations.  While clearly each incident presents multifaceted issues and diverse interests, the balance in favour of coastal State sovereignty, economy and environment may restrict the readiness to provide assistance to ships in distress.

As a result, TT Club urges all stakeholders, port administrations, coastal States and the regulatory authorities to consider carefully their responsibilities to be proactive in setting up and testing emergency plans in regard to places of refuge on safety, environmental and moral grounds.

ENDS

About TT Club

TT Club is the established market-leading independent provider of mutual insurance and related risk management services to the international transport and logistics industry. TT Club’s primary objective is to help make the industry safer and more secure. Founded in 1968, the Club has more than 1100 Members, spanning container owners and operators, ports and terminals, and logistics companies, working across maritime, road, rail, and air. TT Club is renowned for its high-quality service, in-depth industry knowledge and enduring Member loyalty. It retains more than 93% of its Members with a third of its entire membership having chosen to insure with the Club for 20 years or more.

www.ttclub.com