How we support members to mitigate the risk of carrying containers on bulk carriers

As highlighted in our September article, the shipping industry is currently seeing a boom in the container trade. As a result, more and more members are asking about the possibility of carrying containers on vessels not specifically designed for the purpose – and what effect this may have on their cover.

At Standard Club, we believe in a proactive and flexible approach to underwriting. Wherever possible, we aim to support members to expand into new, commercially attractive trades and activities, while reducing the risks.

Generally, transporting containerised cargo in ships not made for them may constitute a ‘material change of risk’ to a policy – given the potential impact on the safety of the crew, ship, and cargo. This means that without prior approval, members could find their insurance invalidated in the event of an incident – with devastating results.

However, the good news is that many journeys of this type can still be covered if members notify and seek approval from both Standard Club, and the ship’s Flag State and Classification Society (Class), well in advance.

While approval by Class and Flag alone can be sufficient, the approach can differ widely between various Class and Flag organisations.

Our loss prevention team can consider potential operations on a case-by-case basis. The team will assess the potential technical and operational risks involved, and the measures used to mitigate them to assist the member in finding solutions and ensure continued cover.

To help members think about their needs, our September article listed a number of possible, recommendations. The following suggestions can also help members carry out their own risk assessment:

• Are the crew familiar and/or expert in the carriage of containerised cargoes?
  • Consider if they need additional training to ensure they are familiar with the risks.
     
• Is there a risk of ‘misdeclaration of goods’?
  • Ensure there is  a detailed ‘know your customer’ (KYC) process in place to vet the shipper and the declared cargoes. See our ‘Better Box Booking’ publication for additional guidance.
     
• A number of major incidents in the North Pacific last winter saw containers lost overboard.
  • Consider using a weather routing service during the voyage.
  • Consider including the maximum safe wave height and permissible weather conditions into the passage plan.

This list and the suggestions in the previous article referred to above, are, of course, non-exhaustive. To find out more about this topic, or if you would like specific support, please contact your Standard Club representative or our loss prevention department.

Categories: Cargo, Loss Prevention