Following the Rena dollar

The Bay of Plenty is experiencing a ‘blow’, Sea Tow 60 has returned to the shelter of the port of Tauranga and ‘GO Canopus’ is back in position with her towing bridle hooked up to Rena’s stern standing by for the worst eventuality.

Toady posting ‘follows the dollar’ as Rena slowly disintegrates on Astrolabe Reef. For followers unfamiliar with the area, I have reproduced this graphic of the reef (circled in red) in relation to Motiti Island from the Vorb.org.nz. Though the reef is unmarked by a beacon or buoy, it is accurately charted in the approaches to the port of Tauranga.













http://www.vorb.org.nz/

So who’s hanging in the wind and for how much? Rena is beneficially owned by Costamare Shipping, a Greek family-controlled business who own and operate container ships. Rena was time-chartered to Mediterranean Shipping Co (MSC), which means that the ship was hired with crew to be deployed where MSC required her. MSC, with Denmark’s Maersk Line, are the two largest container lines in the world. MSC own and operate their own ships, but hire in other container ships to cope with growth or new routes in their trade network.

MSC will have paid hire in advance to Costamare for Rena and provided the fuel in her bunker tanks – just over $1 million worth when she ran aground. MSC markets and sells container shipping services globally, using their own and chartered container ships like Rena. MSC sells the service and collects money (freight) form the companies sending or receiving cargo carried on their network.

Costamare have declared ‘General Average’ on the ship and cargo – a concept explained in an earlier posting. MSC will have some, but not all, of the freight collected on the containers shipped aboard Rena. For the containers (full and empty) removed by the Salvors and taken to Tauranga, MSC will have to quarantine them until the General Average claim progresses. Practically, the owners of the cargo have to post a bond or bank guarantee as security if the General Average is successful.

So who owes who?

Costamare have declared Rena to be a ‘Constructive Total Loss’, maritime speak for a write off, and will be claiming on the vessel’s Insurers for the value of the ship and the cost of the salvage. They will have to repay any mortgage on the ship with the proceeds of the insurance claim. Costamare will also owe MSC pre-paid hire and for the fuel.

MSC have some of the freight but are also liable for the loss of the cargo in their care. Another maritime convention limits their liability as a carrier to a nominal (low) amount, and the owners of the cargo will be claiming on their own insurance policies. They may also have to contribute to the General Average claim – hence the bond put up by the individual cargo owners.

Maritime NZ has about 1,300 tonnes of emulsified fuel oil, diesel, hydraulic oil and lubricants all mixed together in Tauranga and aboard the bunker barge Awanuia. The Antipodean Mariner has no idea how this, or the rotting contents of the refrigerated containers, will be divided up!

To wrap this posting up, there are going to be hundreds of individual claims, from the owners of the cargo to the Rena’s crew for the loss of their personal possession in cabins on the ship. No one is likely to come out ahead of the game with the possible exception of the Rena’s owners, Costamare. Ships are insured for an indemnity value, or agreed value and if Rena’s insurers pay out, it will be for the insured and not market value. Like they say, every cloud has a silver lining.

The Antipodean Mariner
24th November 2011