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Wednesday, 13 August 14
WHAT DOES PROJECT CARGO REALLY MEAN TO INSURERS?
 KNOWLEDGE TO ELEVATE
Richard Kamppari-Baker, claims manager of FP Marine Risks, explains the challenges of project cargo risk assessment from an insurer’s point of view.
Project cargo is the large, oversized, overweight heavy lift cargo or critical pieces of equipment that may be high value or time sensitive and sometimes both. Project cargo insurance covers against loss or damage in transit for critical components of large civil, production facility, infrastructure, and/or construction projects.
Considerations
In addition, there are considerations to be taken into account for Delay in Start up (DSU) and Advanced Loss of Profits (ALOP) against loss of income and profit arising from late or non-delivery of critical components due to an accidental occurrence in transit.
Failure of a shipment to arrive, or not arrive intact, can turn a USD10 million cargo loss into a claim ten times its value when factoring in the knock-on effects of one piece of equipment not being ready at a particular date, which then causes disastrous consequences to the project as a whole. Whilst failure of any cargo to arrive has an enormous impact on operations, for project cargo this has far reaching ramifications.
For this reason the assured look towards insurers to cover the additional economic cost when something goes wrong.
Evaluating risk
Insurers will only compensate the assured for the loss or put it back in the same position. So how does an underwriter even start to evaluate the risk when the consequences are not easily apparent? Project cargo is specifically dependent on transport logistics and tight timeframes, so missing any goal or target will have serious knock-on effects.
To begin a proper assessment of the exposure, a few crucial factors need to be considered. The time and costs for re-fabrication as well as for reshipping the item need to be calculated, which is not an easy task when the bespoke nature of these items is considered.
During this time, insurers will need to calculate the knock-on effects when other goals or targets cannot be met. This means they need to evaluate the loss of profit and/or other operational costs at each stage affected until the project is completed. This is by no means guesswork and there is a complex system involved in calculating each risk.
Appraising the exposure is only part of the problem to insurers because one must consider how to move such an item. Project cargo will most likely be out-of-gauge or exceed regular weight limits, so the question is how the transport is to be done. Moving pylons across muddy roads in India during monsoon season, or loading reactors onto vessels, need the highest level of expertise. The services of engineers, surveyors, mariners, naval architects, consultants and government officials will be required. Careful consideration is essential in deciding who to employ.
Relevant experience
A major factor is to ensure the right people with the relevant experience are chosen. A team of international experts may need to be flown out at each stage of the transit. A key role is an individual who will be in charge of coordinating all communications amongst the team, ensuring all members are properly informed whilst avoiding any misunderstanding whatsoever.
Once the determined route has been scrutinised, the next stage is to ensure all requirements are met. Inland transits often require special authorization or conditions and vessels might need special clearance from their P&I clubs or insurers.
Insurers are very reliant on the assured and other experts to advise on stowage and on whether an item is capable of withstanding the rigours of transit. Items that protrude or carry extreme weights present a huge problem while stationary, but these complications are magnified tenfold when combined with extreme forces of rolling and pitching while in transit.
Calculations need to be carried out by professionals, securing contractors to ensure correct fastenings, buttresses, and so on, are used. Stability during the voyage is essential, so great care is taken to ensure the centre of gravity is evenly distributed.
All the advice from the experts is only as good as Mother Nature permits. A final weather routing will often need to be agreed before the shipment can commence.
No matter how fastidious insurers, carriers, freight forwarders and shippers are, there is a chance that an accident will happen. Claims will of course arise when route surveys are not properly carried out of when stowage of fittings are not adequate.
There will always be unforeseen events that cannot be predicted. The role of the insurer is not to take a gamble on whether a shipment will arrive in time and good order, but to know the risks and eliminate the uncertainties. For project cargo this is critically important, given the high cargo values and the potentially enormous claims involved.
Source: FP Marine / Hellenic Shipping
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Friday, 18 July 14
3RD CHINA INTERNATIONAL SHALE GAS SUMMIT
Building on the massive success of the past 2 shale gas programs that has generated huge success by attracting 500+ industry players, and intrig ...
Friday, 18 July 14
US WEEKLY COAL PRODUCTION UP BY 1.4% TO 18.3 MMST
COALspot.com – United States the world's second largest coal producer, produced approximately 18.3 million short tons (mmst) of coal in a ...
Thursday, 17 July 14
PANAMAX : MARKET HAS COOLED DOWN AGAIN TO LOW AND DEPRESSED LEVELS
Handy
The supra market remains pretty flat in the Atlantic while for the smaller sizes there has been little reported with ships chasing business ...
Thursday, 17 July 14
INDIAN GOVERNMENT WISE TO TAKE ADVANTAGE OF CURRENTLY LOW THERMAL COAL PRICES AND SHIPPING RATES - JEFFREY LANDSBERG
With thermal coal import prices (and also shipping rates) very low at present, India's government would be very wise to take advantage of curre ...
Wednesday, 16 July 14
INDIA BUDGET HAS LIMITED SHORT TERM IMPACT ON POWER SECTOR - FITCH RATINGS
Fitch Ratings says that the measures announced relating to India's electricity sector in the budget for FY2015 are directionally correct but in ...
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- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Singapore Mercantile Exchange
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- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
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- LBH Netherlands Bv - Netherlands
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- The State Trading Corporation of India Ltd
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- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
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- Mjunction Services Limited - India
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- Thai Mozambique Logistica
- Planning Commission, India
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- Romanian Commodities Exchange
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- Africa Commodities Group - South Africa
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- VISA Power Limited - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
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- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
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- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
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- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
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- Alfred C Toepfer International GmbH - Germany
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- Gujarat Sidhee Cement - India
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- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
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- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
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- Aditya Birla Group - India
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
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- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- The University of Queensland
- Ambuja Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
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- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
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- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
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- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
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- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
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- Chamber of Mines of South Africa
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- CNBM International Corporation - China
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- Indian Oil Corporation Limited
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- Australian Coal Association
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- Intertek Mineral Services - Indonesia
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