Does reality of occurrence change with the place : Piracy Off Benin.

Underwriting is the art of evaluating the various risk factors of the proposal and in deciding whether to accept the risk and if so, decide on the insuring terms and conditions and then on the rates.  The job of the Marine Underwriter is much more complicated as he is expected to know – the traits of the subject matters, the risk factors associated with it, the transport and the transporter, the package, the political and geographical conditions to where the goods are destined for, the voyage and risks thereof, of the happenings of the World and much more…… all in a short time and some of the aspects are ever changing… really challenging indeed !

When a cargo laden vessel is attacked and captured – can there be any difference to the victim based on the geography of the occurrence.  There appears something  -  it is thought that there is perceived difference between piracy off the West African coast and that off the north-east coast of Africa.

One need not be a Marine Insurer to know the regular occurrences of Piracy – now almost synonymous with Somalia and Gulf of Aden – but Piracy is not restricted to Somalia alone as the Listed areas of Joint War Committee includes Africa (Djbouti, Eritrea, Ivory Coast, Libya, Nigeria, Somalia); defined waters of Indian Ocean; Pakistan, Georgia, Indonesia / Malaysia (specified); parts of Middle East (Bahrain, Iran, Iraq, Israel, Lebanon, Qatar, Yemen, Saudi Arabia); South America (Venezuela) …. {Not the exhaustive list…}  If the Joint War Committee names a Country in their list, it shall include their coastal waters upto 12 nautical miles off shore….

The threat of piracy has been at its peak in the Gulf of Aden, one of the world's busiest shipping lanes, for several years, prompting world powers to send their navies to safeguard international trade. In a recent revision in Aug 2011, The London Joint War Committee (JWC)  added Benin in West Africa to its list, permitting insurers to charge more for cover if vessels travel through the waters off the country.  That was prompted by the surge in incidents of  piracy in the Bight of Benin in recent months.   Marine insurers extended a war-risk zone for Nigeria, Africa’s largest oil producer, and included waters off neighboring Benin for the first time as piracy attacks increase.  This declaration would allow the Underwriters to charge additional premium based on the value of ships entering the area. 

There have been suspicions that a particular group with focus on oil is operating in this area targetting especially tankers.  Benin otherwise may not be much in International news.  It is situated just to the west of Nigeria, the largest oil producer in that province. 

Republic of Benin, is a country in West Africa bordering Togo to the west, Nigeria to the east and Burkina Faso and Niger to the north. Its small southern coastline on the Bight of Benin is where a majority of the population is located. The capital of Benin is Porto-Novo, but the seat of government is located in the country's largest city of Cotonou.  Alongside Benin was added Gulf of Guinea but only the waters of Beninese and Nigerian EEZ north of Latitude 3°N. The Gulf of Guinea is the northeasternmost part of the tropical Atlantic Ocean between Cape Lopez in Gabon, north and west to Cape Palmas in Liberia.

There were incidents of Pirates (not the Somalis) but other groups active near Benin.  With increased incidence of such assaults, the  waters off the small nation of Benin appear to have become particularly risky due to the country’s weak enforcement capabilities..    On 14^th Sept 2011  00:17 UTC, the NORTHERN BELL was attacked and boarded by armed pirates during STS operations while drifting in approx position 05 40 34 N, 01 31 07 E, 67.4nm SW of Cotonou Port, Benin on bearing 053. The Tanker was engaged in STS operations when boarded by armed pirates. The Master activated their SSAS and the crew went into the engine room and contacted the CSO. A short time later the pirates abandoned the Northern Bell. 

 Vessel photo – courtesy : geolocations.ws

On the same day off the coast of Benin pirates attacked and captured  MT  Mattheos I laden with oil, during the transfer of its cargo to a Norwegian-flagged vessel. The Cyprus flagged tanker had 23 crew with  Filipino ratings and Spanish, Peruvian and Ukrainian officers.  Chemical tanker Mattheos I IMO 9281554, dwt 45557, built 2004, flag Cyprus, manager Songa Ship Management, UK.

The misfortune was relative… Somalis keep vessels for long time extending even a year and demand huge ransoms.. this Chemical tanker was released with Pirates making no demands for a ransom !  They however, ransacked the ship's crew quarters and robbed the crew of their possessions while also draining away some of the ship’s fuel oil.   That perhaps is the difference between piracy off the West African coast and that off the north-east coast of Africa. The motive appears to have been robbery and not piracy for purposes of ransoming the ship.  There are some theories that  the pirates or robbers came from Nigeria although the actual attack took place off Benin, which has been the scene of a number of attacks on ships in recent weeks.

So the good news is Spanish tanker Mattheos I was released without any payment of ransom and its crew reportedly is fine.  The ship reportedly is now sailing to the coasts of Nigeria.   Sure they sailors would have undergone great ordeal – that is part of their sailing life….

With regards

S. Sampathkumar.

when money takes precedence over National pride - T20 International Vs Champions League

Have you ever heard of - Garey Earl Mathurin ?   It does gives one an impish pleasure when something which one could not accomplish is done by somebody else !!

Garey Mathurin (Photo : cricinfo.com)

Curious are the ways of administrators – ICC, is the International governing body of cricket with foundations tracing back to more than a century ago.  It has 105 members – 10 full members who play official Test matches and is responsible for governance and organization of the game’s major international tournaments.  

0n 25^th Sept 2011 – there was the 208^th official International  T20 match played between England and West Indies.  England after such a thumping win over Indians in their recent tour was on top after restricting the West Indians to 113 in 20 overs for the loss of 5 wickets.  A very ordinary performance looking at the recent tall scores in T20s.  

Cricket is a funny game – England found that to be so in their chasing a paltry target against a very ordinary WI bowling line up.  They lost wickets steadily and were all out for 88 with a debutant slow left arm spinner returning figures of 4-0-9-3.  Yes the magic was that of the debutant  Garey Mathurin.  Remember that England are the reigning  champions in T20 and this was indeed a shock defeat – when you understand the other background well.  

There was another debutant Krishmar Santokie, a left arm seamer - gave the breakthrough by bowling  Alex Hales, then Mathurin took over.  There were 4 debutants in all in this match.   It was not a match that would have generated interest as most of the cricket spectators were keenly following the Champions League occurring elsewhere in India.  The spineless Boards could not control the timing of the game – two teams from England – Somerset and Leicestershire are playing the league – Trinidad and Tobago is battling it out.  Daren Ganga is leading the Trinidad & Tobago Team which has Samuel Badree, Adrian Barath, Darren Bravo, Sherwin Ganga, Denesh Ramdin, Ravi Rampaul, Lendl Simmons – some of whom will easily walk into the present WI line up for T20 or for a One dayer..   Besides the players of T&T,  T 20 greats – Chris Gayle, Kieron Pollard, Dwayne Bravo are all out there – away from their National Team playing for other clubs …………… and a seconds sting team is representing the Country. Shambolic would be an understatement on the state of affairs !

The Nokia Champions League T20 has already provided some gripping matches.  In the first match RCB scored 172 and yet lost to Warriors in a last ball finish.   Cape Cobras made short work of NSW.   Malinga took MI home from nowhere chasing CSK’s 158.  The ball that bowled Murali Vijay was a beauty and then he took the bat away from Raina with a sharp one. The bat’s  handle broke as the bat flew off the handle when Raina tried to dig out another Malinga crusher.   Warriors won by a whopping 50 run margin against Southern Redbacks.  KKR set up a challenging 161 with a one over 30 by Yusuf Pathan but the hysterics of Roelof Van der Merwe 73 off 40 balls saw Somerset through with 2 balls to spare.  So it all happening at Champions League taking the attention away from the International events.

With regards – S. Sampathkumar.

Remembering the Skylab - ‘UARS’ – about to fall…..

It is making more news than it did during its active life spanning 7317 days !  Do you know Henny Penny or the small town of Oaken Oaks where Zach Braff rings the school bell  ??     Decades back, there  was so much of hype  and every one started confounding theory that ‘what goes up must come down’ (why this never happens to spiralling gold price ?  Those objects in orbit  including Satellites experience drag as they move through the outer reaches of Earth's atmosphere.

Those of us who are 40+ of age, would well remember the high drama, tension and sensation caused in July 1979.   In India, it captured first page in all vernacular dailies – all vying each other trying to predict when and where it would occur and how the World could be brought to an end, or at least how a Continent or a Nation or a City could be wiped out of the map forever.  People started fearing for their lives and started hoarding their most valuables in secretive places !!

-----   those were not the days of newschannels of 24X7 – still the demise of Skylab was a big International media event, with merchandising, wagering on the time and place of re-entry.   The San Francisco Examiner offered a $10,000 prize for the first piece of Skylab delivered to its offices; the competing Chronicle offered $200,000 if a subscriber suffered personal or property damage.   Special teams were readied to head to any country hit by debris and requesting help.  Now perhaps not much attention is paid to the fragment of  Skylab recovered after its re-entry through Earth's atmosphere, on display at the U.S. Space & Rocket Center.

Ground controllers adjusted Skylab's orientation for ideal re-entry dynamics at approximately 16:37 UTC 11 July 1979. They aimed the station at a spot 810 miles (1,300 km) south southeast of Cape Town, South Africa. The station did not burn up as fast as NASA expected; due  to a 4% calculation error, debris landed southeast of Perth, Western Australia.   The  Miss Universe pageant was  held a few days later, on 20 July 1979 in Perth and a large piece of Skylab debris was displayed on the stage.  Skylab was a space station launched and operated by NASA. Skylab orbited the Earth from 1973 to 1979, and included a workshop, a solar observatory, and other systems. Numerous scientific experiments were conducted aboard Skylab during its operational life, and crews were able to confirm the existence of coronal holes in the Sun. Thousands of photographs of Earth were taken, and records for human time spent in orbit were extended.

Now the World’s attention on UARS ‘Upper Atmosphere Research Satellite’ heading toward re-entry into Earth's atmosphere. The satellite was predicted to re-enter sometime on the afternoon of Friday, Sept. 23, 2011, but it hasn't been easy to precisely determine the path and pace of UARS despite the fact that scientists well understand how satellites move through space.

Artist impression of UARS – source NASA

UARS  is an orbital observatory whose mission was to study the Earth’s atmosphere, particularly the protective ozone layer. The 5,900-kilogram satellite was deployed from Space Shuttle Discovery during the STS-48 mission in September 1991. UARS entered orbit on 15 September 1991 at an operational altitude of 600 kilometers, with an orbital inclination of 57 degrees.  The original mission duration was to be only three years, but in June 2005, 14 years after the satellite's launch, six of its ten instruments were still operational. UARS was decommissioned in 2005, and a final orbit-lowering burn was performed, followed by the passivation of the satellite's systems, in early December 2005. On October 26, 2010, the International Space Station performed a debris-avoidance maneuver in response to a conjunction with UARS.    Currently, the satellite is expected to fall from orbit during the early morning of September 24, 2011, Eastern Daylight Time.

For our easier understanding, UARS / Skylab are not alone, there are many other objects on sky which could descend on you at any point of time !  

Known as Orbital debris, they are any man-made object in orbit about Earth which no longer serves a useful purpose.   This would include derelict  spacecraft and upper stages of launch vehicles, carriers for multiple payloads, debris intentionally released during spacecraft separation from its launch vehicle or during mission operations, debris created as a result of spacecraft or upper stage explosions or collisions, solid rocket motor effluents, and tiny flecks of paint released by thermal stress or small particle impacts.   According to NASA, more than  22,000 objects larger than 4 inches (10 cm) are currently tracked by the U.S. Space Surveillance Network. Only about 1,000 of these represent operational spacecraft; the rest are orbital debris.  Most orbital debris reside within 1,250 miles (2,000 km) of Earth's surface.   In low Earth orbit (below 1,250 miles, or 2,000 km), orbital debris circle the Earth at speeds of between 4 and 5 miles per second (7 to 8 km/s). However, the average impact speed of orbital debris with another space object will be approximately 6 miles per second (10 km/s). Consequently, collisions with even a small piece of debris will involve considerable energy.    The higher the altitude, the longer the orbital debris will typically remain in Earth orbit.

Not all of them pose danger to Earth and humans.  A significant amount of debris does not survive the severe heating which occurs during re-entry. Components which do survive are most likely to fall into the oceans or other bodies of water or onto sparsely populated regions like the Canadian Tundra, the Australian Outback, or Siberia in the Russian Federation. During the past 50 years an average of one cataloged, or tracked, piece of debris fell back to Earth each day. No serious injury or significant property damage caused by re-entering debris has been confirmed.   There are official policies of United States and Space agencies of other countries to minimize the creation of new orbital debris.

Now the official time of falling of the satellite  is 12:45 a.m., Sept. 24, Eastern Daylight Time (3:45 a.m. to 4:45 a.m. GMT) whence UARS will be passing over Canada and Africa, as well as vast areas of the Pacific, Atlantic and Indian oceans. The risk to public safety is very remote.

As you walk or drive down on the street, be aware and look to the skies for the falling satellite !!!!!!

Chicken Little is a 2005 computer-animated science fiction family comedy film produced by Walt Disney,  loosely based on the fable The Sky Is Falling.    Henny Penny, also known as Chicken Licken or Chicken Little, is a fable in the form of a cumulative tale about a chicken who believes the world is coming to an end. The phrase The sky is falling! features prominently in the story, and has passed into the English language as a common idiom indicating a hysterical or mistaken belief that disaster is imminent.

In the small town of Oakey Oaks, Chicken Little (Zach Braff) rings the school bell and cries for everyone to run for their lives. This sends the whole town into a frenzied panic. Eventually they calm down enough to ask him what's wrong, and Chicken Little explains that a piece of the sky shaped like a stop sign had fallen on his head when he was sitting under the big Oak tree in the town square. However, he's unable to find the piece. His father, Buck Cluck, assumes that this "piece of sky" was just an acorn that had fallen off the tree and had hit him on the head. Chicken Little becomes the laughing stock of the town………………………………….

With regards – S. Sampathkumar.

the extra cost of War - Pentagon saddled with detention fee !!

The one common unkind comment against Insurers is that ‘the policy has terms and conditions in fine print and the exclusions would be drawn to be used against the claimant’.  The Policy wording – terms, conditions, exceptions and exclusions are standardized and are neatly printed on the standard policy form.  Also mostly they are available in word document or pdf, if only some wishes to read, search or analyse.  Is it not they duty of a Policy holder to read the conditions to which the contract entered into by one is subjected to ?

Most of you sure would have sure seen copies of Bill of Lading and Airway Bill.  The AWB by the nature of its document and composition would make it too difficult and strain for the eyes to read; whilst Bill of Lading would be in small prints with multi reference to statues and cross references.  Sometimes they only direct you elsewhere stating that the terms and conditions are available at www…… dot.com – why nobody is complaining ??

The field of Logistics and Transportation is very big.  When goods are sent from one place to another costs are necessarily incurred.  To a lay man, the sale contract incorporates the price which is determined the cost upgraded to price which would include the handling expenses and more importantly the cost of transportation, if the seller were to bear that.  The cost of transportation is the freight, paid to the transporter.

In a Modern World, it is much more complex.  Freight generally denotes Ocean freight; there could be inland transportation, multiple handling, storage, customs clearance and then the cost of packing material – from the primary packing to containerization.  As one observes most of the cargo is moved in containers – TEU (Twenty foot equivalent Unit) is a common word.  From the times when Malcolm McLean invented cost effective alternative for moving cargo speedily and safely, the World is dependent on ISO containers for movement of cargo.   There are specialized container carrying ships and trucks are modified to cater to movement of containers.  Millions of TEUs are moved every day and the container industry is a big money spinner.

If one were to transport goods by stowing them in a container – he either owns a container or obtains a container on lease or for a particular voyage from Shipping Lines.  Thus there would be container charges and then freight paid to Shipping Lines / Ship owners.  Of course this is applicable for FCL cargo and not for LCL cargo.  Well, that is not all.  Here are some of the fees that a shipper (a consignor of cargo) might incur for movement of cargo from one country to another: ------------------------------------

AMF (Transport Document Amendment Fee – the fee when any transport document is amended at the request of the shipper / consignee or their agents)

BAF (Bunker Adjustment Factor – surcharge associated with vessel fuel cost)

CAF (Currency Adjustment Factor -  charge associated with fluctuations in exchange rates)

CAS ( Controlled Atmosphere Gas Regulation Charge  - the charge associated with providing special refrigerated containers that regulate the mixture of gases)

CCL ( Container Cleaning – the  charge associated with cleaning the container by request of the shipper)

CDD ( Submission of Cargo Declaration Data Fee   -  fee assessed for submitting cargo declarations electronically )

CNS (Container Nomination Service Fee  - the fee assessed when customer nominate containers with special characteristics, e.g. age of container, material of container, or specific depot for pick-up, etc. )

Don’t get overawed.  These are only few of the vast extras that a shipper might have to bear.  Some could be expected whilst some are brought about by circumstances (Congestion charges when there is heavy traffic in Port, demurrage, detention, emergency bunkering etc.,)     There is something known as DTS (Detention / demurrage charges) charged when there is delay on the part of consignee or their agent in releasing the container beyond the allowed free time.   It is very important that the goods are unloaded and containers released within the specified time known as free time.  After the expiry of this time,  retaining the container there is called detention and costs are payable.  Containers are for transportation and not for storage.  The costs that the Shipping Lines charge for storage of laden containers in their care in a Port / CFS / feeder terminal, ICD, container yard is known as demurrage.  Detention charges are those charged when the containers are lying in the consignee / receiver’s premises.

Detention charges are applied for the storage or holding of containers whilst in our customers’ care outside a port, rail terminal, feeder terminal, inland depot or container yard. Detention is applied after a designated free time.  There are various types of detention such as Merchant Haulage -  when customers do their own trucking and have to return the container back to the Shipping line; Carrier Haulage – where container is placed at the facility of consignor for loading / unloading.  There could also be the driver of the shipping line waiting to take back the container and delay makes one pay fee.

Shipping Lines vary their ‘free time’ – again there could be different deadlines for different customers and might be from a week to ten days.   The count starts once the container is made available on the wharf.  If it is bemusing for a common man, understandable -------      but to Pentagon could not understand or manage it properly -   !!!!!!

Pentagon is the headquarters of the United States Department of Defense, located in Arlington County, Virginia. Designed by the American architect George Bergstrom and built by Philadelphia, Pennsylvania, general contractor John McShain, the building was dedicated on January 15, 1943.   It is the World’s largest office building by floor area.

Photo of pengaton (courtesy space imaging.com / global security.org)

Now there are interesting reports that the Pentagon spent over $30 billion on contracts and grants in Iraq and Afghanistan and a big part of around $720 million was in fact the penal fee paid for failure to return the shipping containers in time.   The huge waste has emerged from a report to be submitted to Congress today by the Commission on Wartime Contracting in Iraq and Afghanistan.  It is reported that shipping companies charged up to $2,200 each time a container failed to arrive back at their depot on time.  These are some of the figures based on data since 2001. 

When US waged war outside in Iraq and Afghan, the troops used these containers for storage, shelter and building material.  The amount perhaps represents a thin slice of the Pentagon's $553 billion budget. Yet military spending is under intense scrutiny as the Defense Department has been ordered to trim $350billion in spending over the next 10 years and could face steeper reductions from budget cutters.   Those costs perhaps were aggravated by the mistaken belief that  the wars in Afghanistan and Iraq would be brief and late fees would be minimal.

Reports further state that the  military also has improved its ability to identify containers it wants to keep so it can buy them before paying the maximum in late fees.   Whether these should be classified as ‘marine transport related costs’ or ‘war related’ is also a moot Q

Regards – S. Sampathkumar.