Lay up - The P&I View

1. Lay up - The P&I View Quality Shipping XII RS International Seminar St Petersburg 22nd October 2009 Capt K S Lumbers

2. What is P&I • P&I Insurance is:Insurance in respect of 3rd party liabilities • P&I Insurance is not:Hull and machinery insurance,

3. 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

4. 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

5. 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

6. 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

7. 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)

8. 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

9. 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

10. Has the risk profile of a laid up ship changed Claim expectations higher Media more active Authorities more aware Political pressures Environmental pressures • 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

11. What was normal practice Hull insurers required third party Mooring/Lay up approvals before giving returns

12. 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

13. 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

14. 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

15. How • A full risk assessment covering • Lay up site • Mooring arrangements • Security, safety, protection and environment • Preservation and maintenance • Inspections www.ukpandi.com

16. Lay up site • 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 • 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

17. 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

18. 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

19. 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

20. 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)

21. 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

22. What is happening today

23. Deliveries peak 2010 2010

24. Busy Anchorages

25. Dragged and hit 7 other vessels

26. 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 storms 17 Typhoons 8 Intense Typhoons

27. Rolling Damage of Hong Kong - September

28. Grounding Damage off Macau

29. Flooded Engine Room - August

30. Conclusion • Risks should be reduced • New issues to consider • Risk assessment needed

31. Lay up - The P&I View Quality Shipping XII RS International Seminar St Petersburg 22nd October 2009 Capt K S Lumbers