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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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Monday, 09 June 14
API 8 CFR SOUTH CHINA COAL SWAP Q3 14 DELIVERIES LOST 4.61% M-O-M
COALspot.com: API 8 CFR South China Coal swaps for average Q3 14 deliveries lost 4.61 percent month on month and closed at US$ 71.62 per mt a ...
Sunday, 08 June 14
DRY BULK MARKET RATES FOR PANAMXES TO REMAIN VOLATILE; NO IMPROVEMENTS SEEN OVER THE WEEK
COALspot.com: Cape index increase pushes BDI index to 989 points week on week. The BDI firmed up by 5.88 pct and closed at 989 points week ended 6 ...
Saturday, 07 June 14
EVERYTHING CHANGES, AND NOTHING ABIDES - HERACLITUS
A couple of weeks ago, and while everyone was focusing on the struggling freight market, Russia and China made history by signing a three-decade lo ...
Saturday, 07 June 14
FIRST BITE AT ANTI-CORRUPTION CLAUSE - BIMCO
In recent years a number of countries have introduced anti-corruption legislation which, unfortunately, fails to recognise the practical implicatio ...
Saturday, 07 June 14
U.S. MONTHLY COAL PRODUCTION SLIGHTLY HIGHER IN MAY 2014
COALspot.com – United States the world's second largest coal producer, produced approximately 19.2 million short tons (mmst) of coal in a ...
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- Makarim & Taira - Indonesia
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- Orica Mining Services - Indonesia
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- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
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- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- White Energy Company Limited
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- The University of Queensland
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- London Commodity Brokers - England
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- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
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- The Treasury - Australian Government
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- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
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- Medco Energi Mining Internasional
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- Planning Commission, India
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- Singapore Mercantile Exchange
- Parliament of New Zealand
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- Romanian Commodities Exchange
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- Mjunction Services Limited - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
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- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
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- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
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- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
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- Madhucon Powers Ltd - India
- Australian Coal Association
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
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- Indonesian Coal Mining Association
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- SN Aboitiz Power Inc, Philippines
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- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
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- Parry Sugars Refinery, India
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
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- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
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