Rena cargo owners could be hit with massive bill

Schadenfreude is defined as pleasure derived from the misfortune of others. The Antipodean Mariner derives no pleasure from the misfortune that the owners of the cargo aboard the Rena now find themselves, but it is satisfying to have correctly predicted the General Average claim in this Blog ( Rena General Average, 15th November 2011).

In the span of a single TV story, the Salvors have been toppled from their pedestal as the saviours of little penguins to the pariah status of tow truck drivers of the sea. It's always a problem when the media creates and then destroys heroes, but the Salvors always knew what they were on the Rena to do even if the Press didn't.

The Salvors are there working day in, day out on the stinking, maggot infested, oil-soaked listing deck of the Rena to make money. Their livelihood depends on maritime casualties occuring and the Salvors being ready, willing and able to salvage property for just reward.

Tha Antipodean Mariner
30th November 2011

TVNZ - Rena cargo owners could be hit with massive bill

http://tvnz.co.nz/national-news/rena-cargo-owners-could-hit-massive-bill-4583115

The owners of cargo on board the Rena may have to pay huge sums of money just to get it back.

ONE News has learned they could be charged as much as 80% of the value of their possessions on the ship, which would be the highest charge in history to return shipwrecked goods.
The Rena ran aground on Astrolabe Reef off the Tauranga coast on October 5 and it has been understood the vessel's owners would foot the bill for the salvage operation.

Rena cargo owners could be hit with massive bill

The owners of cargo on board the Rena may have to pay huge sums of money just to get it back.

ONE News has learned they could be charged as much as 80% of the value of their possessions on the ship, which would be the highest charge in history to return shipwrecked goods.
The Rena ran aground on Astrolabe Reef off the Tauranga coast on October 5 and it has been understood the vessel's owners would foot the bill for the salvage operation.

But ONE News can now reveal that anyone with cargo in containers on board is likely to have to stump up.

Craig Fellows' household contents are stuck on the Rena and he may have to pay tens of thousands of dollars to get it back.

"You've paid a lot of money to get your goods from one point to another and then you get charged with almost the same again...that's just criminal," Fellows said.

Salvage crews working for Svitzer have retrieved 165 of the nearly 1300 containers stuck on the shipwreck and under maritime law the company has a right to claim whatever it salvages. It can then return the property to the original owners if they guarantee to pay a percentage of its value.

ONE News has learned from a number of sources that Svitzer plans to charge property owners 80 per cent which is said to be the highest rate ever charged on goods salvaged from a vessel. So far, the highest charge is 60% for cargo retrieved from the infamous Napoli shipwreck off the UK coast five years ago.

Svitzer would not directly answer questions about the 80% rate.

Mediterranean Shipping Company, which chartered the Rena, will also have to pay to retrieve its empty containers and while it declined to comment on camera it told ONE News "the rate is too high".

Maritime lawyer Philip Rzepecky said the rate is high. "It's almost the total value of the cargo, but it means that these salvors think that the degree of difficulty was extreme," he said.


Seagulls circle food products removed from Rena at the Truman Lane container processing site: Maritime NZ

If the claim goes to arbitration in London, Svitzer could end up charging less but an insurance insider told ONE News it may only drop by around 5%.

Svitzer is understood to be talking with the ship's owners and the negotiations are expected to wrap up this week.

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

Rena General Average

When Rena grounded on Astrolabe Reef in the early hours of 5th October, a complex legal process was set into motion which will likely last a decade or more. All around the world, lawyers, insurers, salvors and surveyors will have reached for an A4 lever arch file and written ‘Rena File No.1” on the spine. Many hundreds more A4 files will be filled in the months and years to come.

One of the truly ancient principles which will likely be applied to the Rena’s salvage is General Average. General Average is another maritime peculiarity dating back to early Greek times. Even now, every voyage by a cargo ship is termed a ‘maritime adventure’ to which the ship’s Owner, Cargo owners, Master and Crew are deemed participants.

When heavily laden sailing craft were plying the Mediterranean, storms and running aground were an accepted peril of the maritime adventure. In the teeth of a storm, it was common practice for the Captains to jettison part of the cargo thereby lightening the vessel so as to make it safely to port (less a few amphora of wine). When choosing which cargo to jettison, Captains and crews were often not too picky - self-preservation ruled.

Provided the vessel made it to port, the hapless cargo’s owner would be informed of the loss of their precious goods. One party had borne the loss of their goods in order to ensure the successful delivery of the other cargo and the preservation of the ship. The Greeks put their mind to this inequity of one party suffering loss for the collective benefit of the other participants to the maritime adventure.

The principle debated, and now enshrined in maritime commerce, was that the losses of one should be compensated by the collective beneficiaries of the successful voyage. There are a few rules though to maintain fair play in the unscrupulous, rough-and-tumble of shipping.

A General Average claim must, among other things, be voluntary, timely, reasonable and successful. When the Owners of the Rena were alerted to the vessel’s grounding, one of the first thoughts would have been ‘Can we declare General Average?’

After all, if their actions successfully save the majority of the containers but result in the loss of their ship on Astrolabe Reef, then aren’t they entitled to be compensated under the principles of General Average? A powerful incentive when you consider the combined value of the ship and 1,300 containers at the time of the grounding.














Crane Barge Smit Borneo under tow to the Rena salvage site from Singapore:
Kees Drent, Shipping News Clippings 13/11/11

If General Average is declared, every container successfully unloaded to the barge ST-60 will strengthen the Rena’s Owners case that their actions met the test of being voluntary, timely, reasonable and successful. Just imagine you are passenger in a taxi which T-bones another car and the taxi driver demands you contribute to the repair bill! General Average in a nutshell.

Interesting if the ‘cut and thrust’ of maritime commerce, law and salvage lights your fire. No mention yet of a dolphin, penguin or cormorant in this Blog, which I will leave to my reader from the Ministry of the Environment (you know who you are).

The Antipodean Mariner
15th November 2011