technical cargo surveying - lloyd's of london/media/technical-cargo-surveying... · 2021. 1....

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Technical Cargo

Surveying

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TECHNICAL CARGO SURVEYING MODULE - Table of contents 1. GENERAL

1.1. General knowledge

1.2. Appointments / procedures

1.2.1. Obtaining instructions 1.2.2. Confirming instructions 1.2.3. Address conflict of interest 1.2.4. Organizing survey 1.2.5. Practical issues / terminology for consideration

1.2.5.1. Loss mitigation 1.2.5.2. Duty of assured 1.2.5.3. Package limitation 1.2.5.4. Without prejudice

1.3. Basic knowledge of marine insurance

1.3.1. Insurable interest 1.3.2. Utmost good faith / disclosure 1.3.3. Suing and Labouring 1.3.4. Warranties 1.3.5. Included and Excluded Losses and the Cause of damage 1.3.6. Types of losses 1.3.7. Institute Cargo Clauses (ICC) 1.3.8. Insured Perils 1.3.9. Exclusions

1.3.9.1. Ordinary leakage/ordinary loss in weight/ordinary wear and tear

1.3.9.2. Insufficiency or unsuitability of packing etc 1.3.9.3. Inherent vice

1.4. Basic knowledge of Incoterms

1.5. Essential qualities of a cargo surveyor

1.6. Specimen Examination Questions

2. ETHICS

2.1. Integrity

2.2. Honesty

2.3. Impartiality

2.4. Conflict of interest


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3. LIABILITY 3.1. Skills & limitations

3.2. Knowledge, training and experience

3.3. Network support


4. THE PROFESSIONAL SURVEYOR

4.1. The role and importance of

4.1.1. Lloyd’s Agency Department 4.1.2. Lloyd’s Agents Network 4.1.3. The Noticeboard 4.1.4. Association with Professional Organisations

4.2. Additional resources

4.3. P.I. Insurance

4.4. File check list


5. TECHNICAL SURVEY INFORMATION

5.1. Containers

5.1.1 Introduction 5.1.2. The Convention for Safe Containers (CSC) 5.1.3 Container Components 5.1.4 Types of Containers and their Uses 5.1.5 Stuffing and Unstuffing 5.1.6 Stowage and Securing of Contents 5.1.7 Securing 5.1.8 Container Damage 5.1.9 Inspection of Containers for Damage and Repair

5.2. Hazardous cargoes 5.2.1 History 5.2.2 The IMDG Code

5.3. Project cargo / Heavy lifts 5.4. Specimen Examination Questions

6. TYPES OF SURVEYS

6.1. Loss / damage survey

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6.2. Pre-shipment survey

6.3. Outturn / condition survey

6.4. Quantity & quality survey

6.5. Investigation survey

6.6. Risk assessment survey

6.7. Warehouse/Property Risk Assessment Survey

6.8. General average survey


7. SURVEYS 7.1. Tools

7.2. Health and safety

7.3. On site check list

7.4. Nature of damage

7.4.1. Wet damage 7.4.2. Mechanical or impact damage 7.4.3. Shortages

7.5. Extent of the loss / damage

7.5.1. Salvage sale 7.5.2. Letter of Undertaking (LOU)

7.6. Cause of damage

7.7. Joint survey


8. SURVEY REPORT

8.1. Preliminary / intermediate reporting

8.2. Final report

8.2.1. Essential contents of survey reports 8.2.1.1. Loss / damage survey report 8.2.1.2. Pre-shipment / Outturn survey report 8.2.1.3. Other survey reports 8.2.1.4. No survey reporting

8.2.2. Documents required / documents obtained 8.2.3. Missing documents – Letter of Indemnity for Missing Documents

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8.3. Survey invoice

8.4. Subrogation Form

8.5. Archiving / Filing

8.6. Specimen Examination Questions APPENDIX ATTACHMENTS

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Chapter 1

General

1.1. General knowledge

1.2. Appointments / procedures

1.2.1. Obtaining instructions

1.2.2. Confirming instructions 1.2.3. Address conflict of interest

1.2.4. Organizing survey

1.2.5. Practical issues / terminology for consideration

1.2.5.1. Loss mitigation

1.2.5.2. Duty of assured

1.2.5.3. Package limitation

1.2.5.4. Without prejudice

Technical Cargo

Surveying

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1. GENERAL

1.1 General Knowledge

A cargo surveyor covers a very wide range of activities. The variety of cargoes transported worldwide is immense and, whilst many cargoes share common characteristics, the general diversity means that no surveyor can possibly know everything. Indeed no surveyor can (or indeed should) claim to be competent in all fields of cargo surveying and by default there will always be some degree of specialization. How such a specialization is developed is probably a function of background and experience, based on knowledge and skill built up through time. Documentation in the commercial sense plays an important part in the everyday work of dealing with damaged cargoes. Some working knowledge of import and export documentation is necessary to the surveyor so that he can understand the order of things in the conduct of the trade and the carriage of goods. He should be familiar with such documents as Bills of Lading, various types of invoices, certificates of origin and customs arrangements. In addition, the surveyor should have an understanding of the roles played by other parties to the survey, such as representatives of ship-owners and charterers together with receivers and shippers who often wish to have their interests protected at surveys. There are no precise rules for cargo surveying and all surveys require individual consideration. A surveyor must be prepared to assume some responsibilities and to make decisions, but he must make it clear that he acts “without prejudice” and that his presence does not constitute an admission of liability on behalf of his principals. However, the accurate reporting of facts relevant to the situation, the assessment of damage and the recommendations for minimizing the loss, together with possible recommendations for future loss prevention, are the main functions of a cargo surveyor.

1.2 Appointments / Procedures

1.2.1 Obtaining instructions

On this subject, reference is made to the first section of the Provisional Advice of Claim/Survey Request Guidance Notes, available on the Noticeboard under Forms and Schedules and copy of which is attached to this Module. Quote In the majority of cases, the Lloyd’s Agent will be contacted by one or more of the following parties requesting assistance / attendance to survey: - Shipper (Supplier) - Consignee (Recipient of the cargo) - Forwarder (on behalf of Shipper or Consignee) - Broker and / or Cargo Insurer

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Following receipt of any new instruction a Lloyd’s Agent is expected to acknowledge all survey requests, in writing, within 24 hours of receipt. Unquote When receiving instructions for a survey, the surveyor should be clear in his mind for whom he is acting and what exactly is required of him under his appointment. He needs to know if he is the sole surveyor or if a joint survey is to be held and, if so, to identify who the other surveyors are and whom they represent. It may be necessary, if refused by claimants, for the surveyor to contact possible liable parties directly and submit an invitation to attend joint survey. The “Lodging a Claim Against a Third party / Invitation to Attend for Joint Survey Guidance Notes” (Replacing Schedule L) is available on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules”, and copy of which can be found under Attachment no. 1 of this Module. If a cargo survey is required, he will need to know the type of cargo involved, its location and availability for inspection including any timescales, as well as any particular areas of concern. Establishing this in the beginning avoids problems later. Obtaining clear and complete instructions is absolutely essential and if the instructions raise any concerns then these should be addressed immediately, prior to undertaking the survey. The surveyor should keep notes of the conversations and the key points in his file for future reference.

1.2.2 Confirming instructions

Following the initial application and if possible and time allows to do so, the surveyor should confirm his understanding of the client's requirements, in writing, before starting any work. He should also draw attention to any terms and conditions of the contract that he might wish to impose. It is also important to establish who will pay for the service. Where appropriate, it may be necessary for the surveyor to provide a fee estimate for work to be undertaken. To ensure that this is accurate, clear instructions of exactly what is required should be obtained. Whilst it is sometimes difficult to give an estimate, an hourly/daily rate can be provided. In case the instructions for survey have been given by a Broker or a Cargo Insurer, reference is made to the second section of the “Provisional Advice of Claim/Survey Request Guidance Notes”, available on the Noticeboard.

Quote We would recommend that the initial Acknowledgement / Provisional Advice of Claim to the Broker and / or Cargo Insurer includes as much of the following information as possible:

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NAME OF APPLICANT FOR SURVEY NAME OF CONSIGNEE NAME OF SHIPPER POLICY NUMBER AND / OR CERTIFICATE NUMBER INSURED AND / OR INVOICE VALUE NAME OF VESSEL / AIRCRAFT / CONVEYANCE VOYAGE BILL OF LADING DETAILS AND DESCRIPTION OF GOODS NATURE OF LOSS / DAMAGE ESTIMATED LOSS AMOUNT DATE LOSS AND/OR DAMAGE REPORTED TO LLOYD’S AGENT NAME OF ATTENDING SURVEYOR LOCATION / DATE / TIME OF INSPECTION AN ESTIMATION OF THE SURVEY FEES (IF CONSIDERED APPROPRIATE) PROVISION FOR RECOVERY ACTION / GUARANTEE / LETTER OF UNDERTAKING (IF CONSIDERED APPROPRIATE) ANY ADDITIONAL INFORMATION CONSIDERED RELEVANT

Unquote

The “Provisional Advice of Claim/Survey Request Guidance Notes” (Replacing Schedule J) can be found on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules” and copy of which can be found under Attachment no. 2 of this Module.

1.2.3 Addressing conflict of interest

Should a surveyor find that he is appointed by more than one party to survey and he can carry out this duty without conflict of interest, he must ensure that all parties are immediately made aware for whom he is acting and that they are satisfied with this arrangement. Clients are, of course, quite within their rights to appoint another surveyor if they are not content with the situation.

1.2.4 Organizing Survey

Having received all necessary information and confirmation, the surveyor is now ready to move to the next stage; that of organising the survey. Whoever the instructing parties are, the requirements and procedures for organising a survey are the same as explained hereafter and further under chapter “7. Surveys”. In case the survey needs to be entrusted to an external surveyor, use should be made of the Form “Appointment of Sub-Contracted Surveyor by a Lloyd’s Agent”, which is

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readily available to be downloaded from the Noticeboard and copy of which can be found as Attachment no. 3 of this Module.

1.2.5 Practical issues / terminology for consideration

1.2.5.1 Loss Mitigation

It is a consignee’s contractual duty to mitigate any loss. Mitigation is usually achieved by removing any sources of continuing deterioration and then by repairing or reconditioning the goods. Loss mitigation action is preferably undertaken with the consent and under guidance of the cargo surveyor.

1.2.5.2 Duty of the Assured

It is the duty of the Assured, their delegates and/or (forwarding) agents:

to take all possible and reasonable measures in order to avoid or mitigate any loss or damage, and

to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised, all letters of protest duly and timely sent out, including invitation for joint survey (example of which can be found under Attachment no. 1 of this Module, the “Lodging a Claim Against a Third party / Invitation to Attend for Joint Survey Guidance Notes”)

Underwriters usually will, in addition to any loss recoverable as per insurance policy conditions, reimburse the Assured for any charges properly and reasonably in this respect. 1.2.5.3 Package Limitation

Consignees should also be made aware that a carrier’s liability under a contract of carriage may be subject to a ‘per package’ or a ‘per weight’ limitation and that therefore surveyors need all relevant information in this respect to be included in their survey report. Surveyors should therefore include method of packing and weights of the damaged cargo items in their survey reports for the purpose of possible future recovery action against the responsible carrier or third party.

1.2.5.4 Without Prejudice

Surveys are to be conducted ‘without prejudice” to the rights of the involved Insurer or Principal. This must be made clear during survey and needs to be confirmed in the survey report. A surveyor ascertains and reports FACTS only, without committing Insurers or Principals to be liable to settle.

1.3 Basic knowledge of Marine Insurance

Whether or not the loss or damage is covered by the policy is normally a matter for the underwriter and/or his claims adjuster. The surveyor’s job (unless otherwise instructed

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by his principal) is not to be concerned with the existence or terms of any insurance, but simply to examine and report on loss or damage. However, he is likely to be more effective in the way he reports if he has an understanding of the basic principles of marine insurance. 1.3.1 Insurable Interest To benefit under a marine policy, the claimant must have an insurable interest at the time of loss. To have an insurable interest, the assured under a cargo policy:

must be the owner of the goods, or

must have some legal or justifiable relationship with the goods. In other words, this generally means that he:

must stand to gain some financial advantage by the safe arrival of the goods or

must be at risk of suffering a financial loss if the goods are lost or damaged or

must be at risk of incurring some kind of liability in respect of the goods. 1.3.2. Utmost good faith / disclosure This means that both the insurer and the assured have a duty to conduct business fairly and honestly. If either party does not do that, then the other party is entitled to avoid the contract. 1.3.3. Suing and Labouring Sue and labour is a term that is still used in marine insurance, although it is a rather antiquated expression. Sue and labour expenses are those which are incurred specifically to avert or minimise a loss which would be recoverable under the policy. Example: A consignment of bagged cargo shows some of the bags are torn and leaking contents (caused by an insured peril). Expenses are incurred in repairing or replacing the bags to stop further loss of contents on the remainder of the voyage. When such expenses are properly and reasonably incurred, underwriters agree to reimburse them. They will even reimburse such charges in addition to paying for a total loss provided it was reasonable to incur those charges in attempting to avert the total loss. Modern Institute Cargo Clauses do not use the words Sue & Labour. They reproduce the relevant provisions of the MIA in the “Duty of Assured” Clause (Minimising Losses.) 1.3.4. Warranties Warranties in insurance contracts are very important. Breach of a warranty can have disastrous consequences for an assured.

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So, what is a warranty? In very simple terms it is either:

A promise to do something

An agreement not to do something Some typical examples are:

“warranted only new jute bags to be used”

“warranted loading and discharge to be supervised by competent surveyors”

“moisture content not to exceed 12% at time of loading” The most important implied warranties so far as cargo is concerned are:

that the ship shall be seaworthy at the commencement of the voyage

that the ship is reasonably fit to carry the goods to destination

that the adventure insured is a lawful one Where a warranty exists in the contract, the assured must comply with it exactly. If he does not do so, then the warranty is said to have been breached and the following shall apply:

underwriters are entitled to avoid the policy as from the moment the breach occurred;

underwriters would remain liable for any loss or damage which occurred before the breach happened, however….

they would not be liable for any loss or damage which occurred after the breach happened, even if the loss or damage was itself completely unconnected to the breach. If the surveyor is aware of a particular warranty in the policy, he should satisfy himself, as best he can, that the warranty has been complied with. 1.3.5. Included and Excluded Losses and the Cause of Damage As it is generally for the underwriter or his claims adjuster to decide whether the cause is one covered by the policy, the role of the surveyor is to:

Assess and quantify the loss, and

(where possible) to identify the cause or causes of the loss

When the losses are ascertained of a different nature, clearly specify and quantify which loss has been attributed to which cause of damage

It is further useful for the surveyor to know that certain types of losses are generally not covered (unless specifically mentioned in the policy) of which the most common ones are:

wilful misconduct

any loss caused by delay, even if the delay itself is caused by an insured peril

ordinary wear and tear

ordinary leakage and breakage

inherent vice or nature of the subject matter insured

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1.3.6. Types of Losses Two categories of loss exist: total loss and partial loss. A partial loss of goods will usually be dealt with in one or more of the following ways:

The surveyor will agree the amount of depreciation (usually expressed as a percentage of value)

The goods will be sold and a percentage depreciation determined by a comparison of sound market value and the salvage sale value.

The goods will be reconditioned or repaired and the claim will be based on the charges incurred in so doing.

A total loss is sub-divided into an actual total loss and a constructive total loss. An Actual Total Loss occurs when the property insured is:

Destroyed, or

So badly damaged that it ceases to be a thing of the kind insured. A Constructive Total Loss (CTL) occurs when the insured property cannot be repaired or reconditioned without an expenditure that would exceed its value when the expenditure would be incurred. 1.3.7. Institute Cargo Clauses (ICC) A cargo insurance policy generally covers only four things:

physical loss or damage to the insured cargo caused by an insured peril

the costs of repairing physical loss or damage to the insured cargo

the costs of minimising loss or damage to the cargo itself

the proportion of general average or salvage due in respect of the insured cargo At times, claimants assume that, as soon as a loss has occurred, they can claim for all losses and expenses that follow. It is therefore important to recognise certain types of loss, damage or expense that are NOT normally covered by a cargo policy, these being:

loss or damage to something else which is NOT the insured cargo (e.g. somebody else’s cargo which has become contaminated by leakage of the insured cargo)

consequential losses (e.g. the costs of cleaning contamination from the quayside, even though it was the insured cargo that caused the contamination)

purely economic losses, such as loss of market because the cargo is delivered late or loss in value caused by the fear of a loss which is not actually there

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enhanced normal charges i.e. the sort of charges which the assured would have paid even if the cargo had not been damaged but which are higher by reason of the damage (e.g. costs of discharging have increased by reason of the damage)

The reason these things are not normally covered is that they are not “loss or damage” or they are not loss or damage “to the subject-matter insured”. It is essential, therefore, that the survey report:

clearly describes the cause and extent of damage

contains clear details of the nature of any expenses being claimed This will help the underwriter to determine which charges fall within the policy and which do not. Although not specifically included above, there are certain expenses which are customarily paid by underwriters as part of a claim. These fall under the general category of “costs of proving claim” and include such things as the cost of separating damaged goods from sound for survey purposes, survey fees etc. 1.3.8. Insured Perils Insured or not insured perils, are subject to the Institute Cargo Clauses chosen cover, i.e. ICC (A), (B) or (C). ICC (A) cover all risks of loss or damage to the subject-matter insured, with exception of some specifically named excluded risks. ICC (B) and (C) cover only certain perils, specifically named and listed in the policy. Implications for surveyors: these differences in insurance covers are another important reason to clearly describe nature, cause and extent of the loss or damage in the survey report. 1.3.9. Exclusions Exclusion in a policy is effectively a type of loss that the underwriter refuses to pay for and usually relates to a type of loss:

that is inevitable or highly likely to happen, or

which is within the assured’s control to prevent. The most common exclusions are:

wilful misconduct of the Assured

ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear

insufficiency or unsuitability of packing or preparation of the subject-matter insured to withstand the ordinary incidents of the insured transit

inherent vice

delay, even though the delay be caused by a risk insured against

insolvency or financial default of the owners, managers, charterers or operators of the vessel, the Assured are aware or should be aware

deliberate damage to or deliberate destruction

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loss, damage or expense directly or indirectly caused by or arising from the use of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter Of these exclusions, surveyors may more frequently be confronted with: 1.3.9.1. Ordinary leakage/ordinary loss in weight/ordinary wear and tear

This relates to the type of loss that might be expected to happen to a particular cargo even though no peril has operated, say during a perfectly normal voyage without any incident. For example, certain goods will naturally lose a certain amount of weight through drying out or evaporation or so-called normal spillage of grains or fertilizers in bulk when loaded or discharged by grab. Underwriters do not pay for these “natural” or “normal” losses. To avoid disputes, the normal practice is for underwriters to agree to pay for losses above a certain percentage.

1.3.9.2. Insufficiency or unsuitability of packing etc.

The nature and adequacy of packing should be considered by the surveyor. A surveyor, however, needs to be reasonably certain of his opinion if he believes the loss was caused by the inadequacy of the packing. The comments about the suitability of packing should be extended to the condition of stowage, lashing and securing of cargo loads inside a container, including the condition of the container itself. The surveyor should be aware of the change in the Institute Cargo Clauses (A) 2009 where the following is stated under “Exclusions”:-

4.3 loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject-matter insured to withstand the ordinary incidents of the insured transit where such packing or preparation is carried out by the Assured or their employees or prior to the Attachment of this insurance (for the purpose of these Clauses "packing" shall be deemed to include stowage in a container and “employees” shall not include independent contractors.

With this in mind, it is therefore important to clarify which party carried out the packing/loading, on whose instructions. This information should be contained in the report.

1.3.9.3. Inherent Vice

The classic definition of Inherent Vice is as follows:-

“the risk of deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty”

Simply put, Inherent Vice is something which is in the cargo itself, some natural characteristic, which has the ability to cause loss or damage to the cargo without any accident or external force/fortuity of any kind operating. An example of Inherent Vice is as follows:-

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A containerised cargo of Cocoa Beans which when packed into bags had a moisture content that is higher than what is acceptable. During the voyage in container, the moisture contained in the beans results in sweating/condensation which causes the beans to become mouldy. Although the cargo had deteriorated during the insured transit period, there was no accident or external force/fortuity.

1.4 Basic knowledge of Incoterms

Definition of Incoterms They are a set of standard terms published by the International Chamber of Commerce and are used extensively in international trade, in order to assist determining seller’s and buyer’s responsibilities in an international trading agreement or contract of sale. The Incoterms describe, amongst other things, where and when the risk in the cargo passes from seller to buyer and who is responsible for arranging the insurance. The terms usually appear in shipping documents, especially on the commercial invoice. A latest revision of Incoterms, called INCOTERMS 2010, came into force on 1 January 2011. The previous version, called Incoterms 2000, still exists but when used, it should be specifically mentioned on the commercial invoice or contract that the Incoterms 2000 are applicable. If no reference is made to “Incoterms”, it may be assumed that the latest version applies. Important knowledge to surveyors and claims adjusters They are relevant to marine insurance because the point at which the risk passes from seller to buyer can determine whether or not the claimant under a cargo policy had an insurable interest at the time of the loss. What is insurable interest? For the purposes of cargo insurance, insurable interest is where an assured has a direct financial interest in the cargo covered by the policy, such that he will suffer some financial disadvantage or prejudice if the goods become lost or damaged. This obviously includes the cargo owner, but can include other parties, such as the shipowner, who can insure against a liability he might incur if he fails to properly care for the cargo. However, Incoterms regulate the contract between cargo seller and cargo buyer so this document concentrates on what the new terms mean insofar as a standard cargo policy is concerned. For this reason, surveyors should always try to establish where and when any loss or damage occurred so that the underwriters can be satisfied that the claimant did have an insurable interest at the time of the loss. INCOTERMS 2010: EXW = Ex Works The seller makes the goods available at his premises and the buyer is responsible for collecting the goods and all transport and insurance arrangements thereafter. In these circumstances, the buyer will arrange the marine insurance and will have an insurable interest from the moment he collects the goods from the seller’s premises.

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FCA = Free Carrier The seller hands over the goods into the custody of the first carrier, which could be a rail, road, river or ocean carrier. Both the carrier and the place of delivery to that carrier will be named by the buyer. In these circumstances, the buyer will arrange the marine insurance and will have an insurable interest from the moment the goods are handed to the custody of his nominated carrier at the nominated place. FAS = Free Alongside Ship The seller delivers the goods alongside the ship at the port of loading. Both the ship and the place of loading will be named by the buyer. In these circumstances, the buyer will arrange the marine insurance and will have an insurable interest from the moment the goods arrive alongside the nominated ship at the nominated port. FOB = Free On Board The seller delivers the goods to the ship and arranges for them to be loaded to the ship. Both the ship and the place of loading will be named by the buyer. In these circumstances, the buyer will arrange the marine insurance and will have an insurable interest in the goods once they have been delivered on board and signed for by the captain. (Under previous Incoterms, delivery was considered to have taken place as soon as the cargo crossed the ship’s rail on loading.) CFR or CNF or C&F = Cost and Freight The seller arranges for the transportation to the port of discharge at destination and includes the cost of the ocean freight in the invoice. However, the risk in the goods passes from seller to buyer when the goods are delivered on board the ship at the port of loading, as under FOB. (Under previous Incoterms, it was when crossing the ship’s rail). In these circumstances, the buyer will arrange the marine insurance and will have an insurable interest in the goods once they have been delivered on board and signed for by the captain. CIF = Cost, Insurance and Freight The seller arranges for transportation to the port of discharge as well as marine insurance for the whole transit from seller’s warehouse to buyer’s warehouse and includes the cost of ocean freight and insurance premium in the invoice. The risk passes from seller to buyer once the goods are delivered on board. (Under previous Incoterms, it was when crossing the ship’s rail). CPT = Carriage Paid To This is the equivalent of CFR but for use with containerized / multimodal transportation. The seller arranges transportation through to the destination named by the buyer and includes the cost of this transportation in the invoice. However, the risk in the goods passes from seller to buyer on delivery of the goods to the first carrier, which is likely to be a freight forwarder or other inland carrier prior to the port of loading. In these circumstances, the buyer will arrange the insurance and will have an insurable interest from the moment the goods are delivered to the first carrier. CIP = Carried and Insurance Paid To This is the equivalent of CIF but for use with containerized / multimodal transportation. The seller arranges transportation through to the destination named by the buyer plus marine insurance for the whole transit and includes the transportation and insurance costs in the invoice. As with CPT, risk passes from buyer to seller on delivery of the goods to the first carrier. As with CIF, the insurance is assigned by the seller to the buyer

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so that the buyer is the party entitled to claim on the marine policy for a loss, regardless of where in the course of transit it happened. DAT – Delivered At Terminal (This replaces DEQ, which see below) The seller delivers the goods to a terminal named by the buyer at a place named by the buyer. The risk passes from seller to buyer when the goods have been unloaded from the arriving means of transport and placed at the buyer’s disposal at the named terminal at the named place. In these circumstances, the buyer will arrange the marine insurance and will have an insurable interest in the goods once they have been placed at his disposal at the named terminal at the named place. DAP = Delivery At Place (This replaces DAF, DES, DEQ and DDU, which see below) The seller pays for transportation to the place named by the buyer. Risk passes from seller to buyer as soon as the goods are delivered at that place. This term is suitable when goods are transported by road or rail but could also be used for marine transport. Where used for a marine transit, the risk passes from seller to buyer when the arriving vehicle is a ship, the place is the port of discharge and the goods have been unloaded there. In these circumstances, the buyer will arrange the marine insurance and will have an insurable interest in the goods once they have been placed at his disposal at the named place.

Comparison Incoterms 2010 versus Incoterms 2000 For easy reference, hereafter a table is inserted comparing both versions and stating in summary the basic differences.

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EXW = Ex Works INCOTERMS 2000

INCOTERMS 2010

Place of delivery at premises of the seller No change

Place transfer of risks at premises of the seller

Place transfer of Costs at premises of the seller

Custom clearance formalities

Export Buyer

Import Buyer

FCA = Free Carrier INCOTERMS 2000

INCOTERMS 2010

Place of delivery At seller’s + loading or elsewhere on trailer of buyer No change

Place transfer of risks Place of Delivery

Place transfer of Costs Place of Delivery


Export Seller

Import Buyer

FAS= Free Alongside Ship INCOTERMS 2000

INCOTERMS 2010

Place of delivery alongside ship, on quay, in barge No change

Place transfer of risks alongside ship, on quay, in barge

Place transfer of Costs alongside ship, on quay, in barge


Export Seller

Import Buyer

FOB = Free On Board INCOTERMS 2000 INCOTERMS 2010

Place of delivery ship’s rail change after delivery on board, captain’s signature

Place transfer of risks ship’s rail after delivery on board, captain’s signature

Place transfer of Costs ship’s rail after delivery on board, captain’s signature

Custom clearance formalities Export Seller Seller

Import Buyer Buyer

CFR = Cost and Freight INCOTERMS 2000

INCOTERMS 2010

Place of delivery at port of destination on board of the vessel change at port of destination on board of the vessel

Place transfer of risks ship’s rail port of departure after delivery on board, captain’s signature

Place transfer of Costs at port of delivery at port of delivery


Import Buyer Buyer

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CIF = Cost, insurance, Freight INCOTERMS 2000 INCOTERMS 2010

Place of delivery at port of destination change at port of destination

Place transfer of risks at port of departure, ship’s rail after delivery on board, captain’s signature

Place transfer of Costs at port of destination at port of destination


Import Buyer

Buyer

CPT = Carriage Paid To INCOTERMS 2000 INCOTERMS 2010

Place of delivery Country of destination No change Country of destination

Place transfer of risks delivery at the first carrier delivery at the first carrier

Place transfer of Costs delivery at the first carrier delivery at the first carrier


Import Buyer Buyer

CIP = Carriage and Insurance Paid

INCOTERMS 2000

INCOTERMS 2010

Place of delivery Destination No change Destination

Place transfer of risks delivery at first carrier delivery at first carrier

Place transfer of Costs place of destination place of destination


Import Buyer Buyer

DAF = Delivery at Frontier INCOTERMS 2000

INCOTERMS 2010 DAP = Delivery at Place

Place of delivery place of destination/frontier/country as per Inco term change Place mentioned in the Inco term

Place transfer of risks place of destination/frontier/country as per Inco term when cargo is on board of the ship, train, truck

Place transfer of Costs place of destination/frontier/country as per Inco term when cargo is on board of the ship, train, truck


Import Buyer Buyer

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DES = Delivery Ex Ship INCOTERMS 2000 INCOTERMS 2010

Place of delivery Port of Destination, not discharged change DAP = idem as above

Place transfer of risks Port of Destination, not discharged Place transfer of Costs Port of Destination, not discharged Custom clearance formalities

Export Seller Import Buyer

DEQ = Delivery Ex Quay INCOTERMS 2000

INCOTERMS 2010 DAT = Delivery At Terminal

Place of delivery On quay at Port of Destination change Terminal mentioned in the Inco term

Place transfer of risks On quay at Port of Destination after discharge of the cargo

Place transfer of Costs On quay at Port of Destination after discharge of the cargo


Import Buyer Buyer

DDU = Delivery Duty Unpaid INCOTERMS 2000 INCOTERMS 2010

DAP = idem as above

Place of delivery Place of destination in country of destination change

Place transfer of risks Place of destination in country of destination

Place transfer of Costs Place of destination in country of destination

Custom clearance formalities Export Seller Import Buyer

DDP = Delivery Duty Paid INCOTERMS 2000

INCOTERMS 2010

Place of delivery Place of destination No change

Place transfer of risks Place of destination

Place transfer of Costs Place of destination / discharge still for the buyer


Export Seller

Import Seller

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1.5 Essential qualities of a cargo surveyor

Similar to other professions, evidently also a (good) cargo surveyor needs to have a number of essential qualities and skills in order for him to perform as per today’s requirements of the global insurance markets, traders, manufacturers.

Knowledge Clearly, in order to be able to carry out a survey as a cargo surveyor, good general knowledge of ships, cargoes, cargo transport and stowage is essential. Such knowledge can be gained from formal or informal teaching, courses, reading, seminars, conferences or general experience drawn from working in the field of cargo transport, in a freight forwarder’s office or from years of experience at sea. In addition, some knowledge of wider issues that affect cargoes, such as the law, industry organisation, standards and information sources, is also of significant value. Qualifications and training A qualification is a measure or verification of how much knowledge a person has in relation to a specific standard. Therefore, the standard set to achieve the qualification is of the utmost importance. Qualifications require independent verification of an individual’s knowledge measured against a defined standard. However academic qualifications alone do not make a good surveyor. Many different areas of training will be relevant to the cargo surveyor and there is no one perfect course. Probably the most important rule is to learn as much as possible and to continue that process at all times whilst working as a cargo surveyor. This is the only way, not only for a cargo surveyor but for any professional, to keep pace with the fast, ever changing world we live in. Competence Traditionally, a person was judged to be competent to carry out any particular function provided he could do the job satisfactorily. Today, competence is measured by the individual’s knowledge, qualifications, experience and attitude. Experience Whilst knowledge, as measured by qualification, is an essential starting point in terms of competence, practical experience is also required. Within the cargo surveying industry there is no universally accepted standard of experience. Depending on the local circumstances and availabilities, gaining experience can vary from “trial and error”, which of course is not the preferred option, to senior surveyors training juniors in the same company or junior surveyors are sent to other Lloyd’s Agencies to acquire such experience. Next to theoretical competence and knowledge, experience is vital and essential to become a qualified and reliable cargo surveyor.

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1.6. SPECIMEN EXAMINATION QUESTIONS – Chapter 1 The following questions are similar in style to those that will be set in the actual exam. 1. When a consignee acts to minimise any loss to his cargo, are all costs recoverable

from insurers?

A. Yes B. Subject to the claim being recoverable under the policy conditions, all costs are recoverable

from Insurers C. Provided that the policy contains a ‘Sue and Labour’ clause and that the claim is

recoverable under insuring conditions, reasonable costs are recoverable from Insurers D. Under the ‘Sue and Labour’ clause, all costs incurred in sorting the goods are recoverable

from Insurers, whatever the circumstances 2. Whose job is it to preserve the time limit on claims against third parties?

A. The surveyor B. A solicitor is the only party who can request an extension of time C. The consignee until such time that their claim is paid by whoever accepts responsibility D. The shipowner 3. On receipt of instructions to survey, what should the surveyor do before attending

the survey?

A. Ensure that he understand precisely the properties of the product to be surveyed, as he must be an expert in the product

B. Make sure that the survey is arranged within normal working hours, whatever is convenient to the surveyor

C. He should familiarise himself with the product concerned. If unknown, appropriate research should be carried out

D. Obtain sight of all the shipping documents prior to proceeding any further with the instruction

4. What is Insurable Interest?

A. If the Assured has paid the premium the Insurers must pay the claim B. A cargo policy can only be taken out by a person or company which has some financial and

legal interest in cargo at the time of the loss. C. The Insurer will pay claims only to the shipper (the person who has paid the premium) D. If a person has possession of the policy, the Insurer is bound to pay the claim to that person

(whether he has paid the premium or not)

5. What effect on insurance do INCOTERMS have in respect of a sale contract between seller and buyer?

A. None B. They determine which party is responsible for insurance C. As Incoterms are compulsory by law then they override any sale contract provisions

regarding insurance D. Incoterms insist that the cargo insurance must be effected against All Risks

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Chapter 2

Ethics

2.1. Integrity 2.2. Honesty 2.3. Impartiality 2.4. Conflict of interest 2.5. Specimen Examination Questions

Technical Cargo

Surveying

25

2. ETHICS Introduction to areas of surveyor’s ethics

As a Lloyd’s Agent, the surveyor has a special reputation to maintain. The fact that the surveyor is presenting the Lloyd’s Agency shop window should always be remembered. A reputation for integrity will earn respect, which in turn may be a source for new survey applications, especially in areas where competitors are less professional. Because of the nature of a surveyor’s job, particularly when working on behalf of insurance interests, certain unscrupulous parties will endeavour to maximise their claims even to the extent of fraud. Such parties may seek to influence the surveyor’s report by various means, including straightforward attempted bribery.

Some organisations, of which surveyors may be members, have their formal code of ethics with which their members are expected to comply. For example, the members of FEMAS (The Federation of European Maritime Associations of Surveyors and Consultants) all agree to a code of ethics for their membership which will be basically similar to the following:

Every member shall order his conduct so as to uphold the reputation of his profession and association.

Every member shall order his conduct so as to safeguard the well-being of the society and the environment to the best of his knowledge and ability.

Every member shall exercise his professional integrity and skill to the best of his ability.

No member shall knowingly undertake work for which he has insufficient knowledge or ability.

Every member shall inform his instructing principal if he is also involved in any activity which may be contrary or harmful to their interests.

No member shall accept fees or other emoluments from parties other than his principles in relation to the case being handled on their behalf.

The sort of problems outlined in this chapter may arise in ‘real life surveying’. Sometimes practical problems and their resolution seem to conflict with the surveyor’s code of ethics in which impartiality is such an important aspect in the fulfilment of his function. The key areas in this respect are:

Integrity

Honesty

Impartiality

Conflict of interest

2.1 Integrity

Inducements: It has been mentioned previously and it cannot hurt to re-iterate the point, that a surveyor must never accept advantages or gifts which are intended to influence his judgement.

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Ethics for content of survey report There are no hard and fast rules in this area of a surveyor’s task.

A surveyor is required to report on the facts. Sometimes under a surveyor’s instructions from his principal, he may be required to give an opinion; some of it clearly based on fact which is relevant and well within his field of competence. Sometimes however a surveyor may act at the very limit of his expertise and here he should be very careful of any conclusions given in his report. It is not uncommon for a surveyor to provide his principal with a report and then to find that they take exception to the way that the surveyor has worded part of it, perhaps in expressing an opinion. With loss/damage surveys, discussions and conclusions with the consignee should be reflected in the surveyor’s report, especially where differences of opinion may have occurred when, for example, depreciations for loss were not agreed upon. On the issuance of the final report, these statements are not for further discussion between the client and the surveyor. Only when the principal provides comments, remarks, additional information to the surveyor, which bring other factual or circumstantial factors to light, the surveyor should reconsider his report. If considered appropriate, he should then modify it accordingly. The best way to do so is by issuing an addendum to the survey report, clearly outlining the circumstances of the change. Everyone makes mistakes from time to time and it is better, and certainly fairer, to admit to the possibility and to review the situation rather than refuse to reconsider the matter. Any opinions or potentially contentious comments which a surveyor considers important to share with his principal/Insurer, may be dealt with in separate, private and confidential letter. Prior to doing so and prior to issuing the survey report however, it is best to seek instructions from the Principal by phone or email.

2.2. Honesty

Trespass A surveyor has no ‘divine right’ of attendance at a survey. As most surveys are held on private property, he is only entitled to be there if so invited. Permission should therefore be sought to obtain authority to carry out his survey. If permission is not given without proper justification, this should be mentioned in the survey report.

Questioning

When questioning any party in relation to his survey, it must be made clear to that party the purpose of his enquiry and for whom he is acting. If answers were obtained by ‘trickery’, they would carry little weight in a case going to court and might well cause more damage to the case rather than benefit any party. It also does not do the surveyor’s reputation any good.

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Disposal of goods When handling salvage sales, the surveyor must make sure that in establishing the best price for the sale of goods he must preserve the confidentiality of any offers made and where bids are invited in a sale by tender, it is unethical to permit one party the opportunity of raising their bid further. With regard to handling or involvement in the disposal of damaged goods the surveyor must be cautious. Salvage buyers may occasionally try to apply pressure in various ways on surveyors to obtain useful information relating to price offers. Surveyors should be careful not to give in to this pressure and by doing so build up a solid reputation of integrity, which in the long run will not only have a positive effect on the results of salvage sale, which good results in turn will strengthen his relationship with his principals.

2.3. Impartiality Questionable information prior to survey: when appointed by a principal with whom the surveyor has a long standing association, it is not uncommon for pre-conceived information to be exchanged on a new appointment. However, the surveyor should approach each case with complete impartiality towards his client; he cannot do the job properly if any such pre-conceived ideas affect his actions. He must be particularly careful not to let this information affect his judgement and conclusions at the end.

2.4. Conflict of interest

As a general rule the surveyor should not represent more than one party. There are, however, occasions when this is unavoidable but it must be made clear, promptly, to all parties whom he is representing. They have the right to appoint another surveyor if they so wish.

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2.5. SPECIMEN EXAMINATION QUESTIONS – Chapter 2 The following questions are similar in style to those that will be set in the actual exam. 1. Can a surveyor represent more than one party on one incident?

A. Yes B. No C. Yes, subject to prompt notification to all parties whom the surveyor is representing D. Yes, but only a maximum of two parties can be represented at one time 2. When questioning a party in relation to the survey, what precautions must be

taken?

A. Give them an opportunity for a second person to be present whilst questioning B. Make sure that the surveyor has a witness with him to protect his interests C. Ensure that the party knows who the surveyor is and for whom he is acting D. None are necessary as the surveyor representing the cargo interest has full rights to

pursue any enquiries 3. At a joint survey, can it be seen for surveyors to work together?

A. No, a conflict of interest exists, therefore nothing should be discussed between parties

present B. Yes. If everyone agrees on all that is sighted by all parties, then only one report needs

to be submitted for all principals C. No. Each surveyor has to attend at different times in order to ensure their findings are

not discussed D. Yes. It is good if surveyors can agree on basic facts like the extent of damage, time and

place, but little else should be discussed 4. If, on receipt of instructions, it is identified that other surveyors may be involved,

what action should be taken?

A. The surveyor should contact the carriers and advise his involvement and that he will be making decisions for all attending parties

B. Ensure that the cargo owner has advised the other parties of a possible claim and arrange a joint survey with the other surveyor(s)

C. Decline to be involved any further D. Proceed immediately with his survey prior to others having the opportunity to sight the

goods, first opinion is always the best 5. What is the most import reason for a surveyor having standard terms and

conditions:- A. It sets out the requirements of the instructing principal B. It sets out the surveyor’s and principles’ responsibility and legal liability C. It sets out the carrier’s responsibility and legal liability D. It sets out the time limit on when the survey report must be issued

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Chapter 3

Liability

3.1. Skills & limitations 3.2. Knowledge, training and experience 3.3. Network support 3.4. Specimen Examination Questions

Technical Cargo

Surveying

30

3. LIABILITY

A surveyor has a responsibility to act with proper care and skill in performing his duties. The general rule is that the surveyor will not be liable if he has acted in accordance with the general and approved practice of his profession. He is expected to show a fair, reasonable and competent degree of skill. A surveyor would therefore be considered incompetent if he failed to act with the skill and expertise expected of a surveyor carrying out the particular type of work involved. It would not be a defence to say that the surveyor acted to the best of his skill if that fell below the standard expected.

3.1 Skills & Limitations

The standard of reasonable skill that a surveyor is expected to use is not legally defined and laid down. It is determined objectively. If he undertakes specialist work, then he would be expected to display the particular skill of such an expert. If he performs his role negligently, then he may be held liable for the consequences under contract to his appointing party. His duty is to fulfil the instructions he receives. To do this, he must be clear over the nature and extent of his instructions then complete them fully but not to exceed them. In the course of a survey, he should be careful on any advice he may give to others. They may act on this advice and if it could reasonably be expected that they might rely on the advice, the surveyor could be liable to them for any loss which results from any action taken. If negligent in either his duty to his principal, or in relation to a third party to whom he owes a duty of care, he may be held liable for any loss that is attributable to that negligence. If a surveyor was found to be negligent and his negligence was the cause of the loss, then damages would be awarded against him. This could of course be substantial, both financially and in loss of business resulting from damage to his reputation. Adequate professional indemnity insurance is therefore important.

The surveyor should be fully aware of a potential liability in every survey undertaken. It is of course more likely to occur when he falls short of exercising the required duty of care and skill. A Lloyd’s Agent must be constantly aware of this especially when employing other staff surveyors. A surveyor can expose himself to potential liability for negligence if he holds himself out as being competent in fields in which he lacks expertise. The surveyor should be careful when accepting instructions for surveys in unfamiliar fields. Sometimes however, a more experienced surveyor is not available and the applicant may accept the surveyor’s limitations, especially if he is known to the applicant from previous appointments. In such cases, the surveyor must make it clear, both to his principal at the time of the original request, and in his report his lack of experience in the field. He will however confirm that his best judgement and care will be used in such a situation.

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A Surveyor’s report is often circulated to parties far beyond those to whom it was originally intended. If a statement in the report is relied upon to the detriment of third parties, a liability may attach to the surveyor. Care in compiling his report is essential. Sometimes a statement to his principal may be clear because he has had the opportunity to discuss and clarify any concerns/issues as they happen. Another party down the line however will not have had access to these ‘discussions’. If the written article lacks clarity, it could be very damaging. A delay in issuing a report can also today give grounds for possible negligence claims against a surveyor. It is important therefore to follow each case through as quickly as possible, to the extent of providing a preliminary report to his client should the circumstances so dictate. All allegations of negligence against a surveyor have to be proved. It is at the report stage that the surveyor has to take extra care, making sure that he does not unwittingly leave himself open to criticism.

3.2. Knowledge, training and experience A good general knowledge of ships, cargoes, cargo transport and stowage is essential. This knowledge might be drawn from working in the industry or it may be from many years of experience at sea. In addition, some knowledge of wider issues that affect cargoes, such as the law, industry organisation, standards and information sources, is also of significant value. Training can take many forms and the key feature of any training is that it will have exposed the trainee to a range of different topics in a variety of situations with the trainee often tested to determine the level of understanding of the subject matter. Many different areas of training will be relevant to the cargo surveyor and there is no one perfect course. Probably the most important rule is to learn as much as possible and to continue that process at all times whilst working as a cargo surveyor. Ideally it would be for a cargo surveyor to gain sufficient experience by working as a full time trainee surveyor under the active supervision of an experienced surveyor. Not only to get to know about different types of cargoes, how they are packed and transported, their particular characteristics and any problems associated with them or their carriage, but also how to write a proper survey report.

3.3. Network support

For all liability issues any Lloyd’s Agent or surveyor may be confronted with, it is imperative that immediate notice is given to the Lloyd’s Agency Department, London. It is not only an instruction included in the Service Level Agreement, but the sooner information is passed on, the better the London team can provide (legal) guidance to try and solve the issue earliest possible.

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3.4 SPECIMEN EXAMINATION QUESTIONS – Chapter 3 The following questions are similar in style to those that will be set in the actual exam.

1. How is a surveyor’s ‘duty’ defined?

A. To carry out the instruction from the client and to ensure that their requirements are met

in full and to their satisfaction B. To do whatever is necessary to ensure that his client’s requests are completed and be

ready to pursue further work as deemed necessary without further requests from his clients

C. To fulfil his instructions he receives, be clear over the nature and extent of his instructions, then complete them fully, but do not exceed them unless otherwise instructed to do so

D. To carry out the survey, complete his report and take no other action in assisting his client in any other way

2. Can a surveyor take on an appointment even though he is not an expert in the field

of request?

A. Yes. It makes no difference to the final report, the client will accept whatever the surveyor states

B. No. He must possess expertise/qualification in any field of work to be investigated C. Yes. Subject to the client being aware in the first instance of the surveyor’s limitation

and the surveyor also making this clear in his report D. Yes. Subject to at least two surveyors being present at the survey to verify the main

surveyor’s decisions 3. Are the ‘A’ clauses and the ‘B’ clauses the same? If the answer is NO, what makes them different? A. They are the same B. ‘B’ clauses cover only certain named risks whereas ‘A’ clauses covers all risks C. They are different because the ‘B’ clauses are 1982 clauses whereas ‘A’ clauses are

2009 D. They deem different but in reality they are the same because the ‘A’ clauses cover all

risks whereas the ‘B’ clauses spell out all risks with individual names for them 4. What does “without prejudice” mean in a survey report? A. That it is a privileged document B. That the surveyor will be held harmless in the event of a dispute C. That the content is not an admission of Underwriter’s liability D. That there is no blame on the assured 5. Unless otherwise agreed, Lloyd’s Agents are required to product their final reports A. When the claimant submits a claim to Underwriters B. As soon as possible when investigations are completed an no later than 7 days after

completion of quantification of the claim or on receipt of all supporting documents, where applicable

C. Only when a request to issue the report has been received

D. Within 7 days of a site visit

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Chapter 4

4. THE PROFESSIONAL SURVEYOR 4.1. The role and importance of 4.1.1. Lloyd’s Agency Department 4.1.2. Lloyd’s Agents Network 4.1.3. The Noticeboard 4.1.4. Association with Professional Organisations 4.2. Additional resources 4.3. P.I. Insurance 4.4. File check list 4.5. Specimen Examination Questions

Technical Cargo

Surveying

34

4. THE PROFESSIONAL SURVEYOR

Definition: A professional cargo surveyor is a person who uses his particular skill and expertise (based on established competence of cargoes, ships and the sea or any waterway) to look at and report on the factual condition of any cargo or thing appertaining to such goods and their respective environments.

4.1. The role and importance of the: 4.1.1. Lloyd’s Agency Department (LAD) Surveying can be a lonely profession as much of the time may be spent working alone. For anyone working alone who is busy, it is easy to become detached from developments within the industry. In such a diverse and challenging role it is important for the surveyor to keep fully up to date with all issues that may affect his activities or business, be they technical, legal, ethical or financial. It is here that the LAD may play a major role. 4.1.2. Lloyd’s Agents Network The capacity of skills and experience within the network is massive. If Agents recognize and see primarily the opportunities and not the competition, the network could become even a much more powerful organization than it is already. In principle, each Agent is to cover a certain area and should respect the areas of others. If requested to proceed to or organize a survey outside of his area, Agents should first look into the options to work together with the local Agent or surveyor to the maximum of the latter’s abilities. 4.1.3. Noticeboard A lot of valuable information, be it commercial, technical, reporting, is available on the Noticeboard. Each Agent therefore should very regularly log in, or should designate one or more of his team to do so, in order to consult and use the material presented and to keep track of all important changes and news bulletins. 4.1.4. Association with Professional Organizations Through the LAD, it is possible to cooperate with a number of organisations that have members who also work as cargo surveyors. A couple of examples in England, Italy and the USA are:

The International Institute of Marine Surveying (IIMS) based in Hampshire, England

The British Association of Cargo Surveyors (BACS) based in Essex, England

The Society of Accredited Marine Surveyors (SAMS) based in Jacksonville, Florida, USA

The National Association of Marine Surveyors (NAMS) based in Virginia, USA

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Associazione Italiana Periti Trasporti – the Italian Association of Marine Surveyors (A.I.P.E.R.T.) based in Rome, Italy, This option for cooperation with national and international organisations will increase the potential for training and general knowledge, filtered and monitored by the LAD specialists and made available to the network.

4.2 Additional Resources

Technical Resources Surveying is a technical profession. As such it demands a level of technical proficiency and understanding. Today, various tools and equipment exist to enhance the surveyor’s ability to find defects or problems affecting a particular cargo. Regardless of the available equipment, the results from any diagnostic tool are only ever as good as the understanding and skill of the operator, who needs to fully understand the equipment’s limitations and its proper use. Surveyors should be certain that they understand the use and limitation of all of the equipment that is available to them. Reference Materials Another valuable resource for the cargo surveyor is his reference library. This will include books, magazines and nowadays of course access to the large technical library available on the internet. Reference materials provide the surveyor with a source of information to which he can refer. Often the surveyor may be confronted with an instruction for cargo inspection or survey, on goods that he has not seen before. This is not unusual given the huge diversity of cargoes and potential problems. Similar to the technical resources, and especially with the intensive use of the Internet Libraries, it is very important for the surveyor to use reliable publications and only use the material after having fully understood its purposes. With the improved software available, it is very useful for a surveyor to build up his own database of information for his easy reference or to be shared with colleague surveyors in the same office. Please see the Appendix section at the end of this Module for more guidance and useful reference material. Network of Contacts The work of a cargo surveyor is extremely diverse and it is therefore impossible for anyone to know everything there is to know about all cargo. The surveyor should therefore develop a network of specialist contacts to assist him when needed e.g. technical or chemical laboratories, research teams of universities etc. Also here it is very useful for the surveyor or Agent to build up his own database of specialists’ contacts and reports made by them, for easy reference whenever he has to call on one of them.

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4.3 Professional Indemnity Insurance (PI) Professional Indemnity Insurance (PI) exists for financial protection and in many instances also for legal support, should the surveyor make a mistake. Surveyors do occasionally make mistakes. Good surveyors not only minimise the risk of making a mistake but also ensure that the impact of any mistake is limited. The best approach in case of any mistake is that the minute the surveyor recognizes the mistake or problem, he immediately contacts his principal to inform him, explains what happened and suggests already remedial action. PI is expensive. However, it has become generally accepted practice, not only in the UK and USA but in many parts of the world, for surveyors to have such insurance. More and more, some larger insurance companies cannot entrust survey or other claims related work to surveyors / Agents without proof of such insurance.

4.4 File Check List All surveying companies and surveyors should adopt a given procedure for the normal survey. Clear instructions enable a surveyor to know precisely the extent of his services so that he can provide exactly what is required. Instructions need to be as specific as possible and if given by telephone preferable to be confirmed by e-mail message soonest possible. If time allows, surveyor or his delegate should immediately confirm receipt of any new instruction by (return) e-mail. Having received instructions, the surveyor should immediately make arrangements with consignee / cargo owners / claimants or their delegates / freight forwarders to - agree on date, time and place for survey; - have responsible carrier / third party held responsible in writing and invited to attend joint survey; - have all necessary shipping documents and protest correspondence prepared and send or copied to surveyor; - have delivery receipts duly claused with respective remarks as to its damaged condition. Prior to undertaking his survey, a surveyor should familiarise himself with the cargo which he is about to inspect.

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SPECIMEN EXAMINATION QUESTIONS – Chapter 4 The following questions are similar in style to those that will be set in the actual exam. 1. Why should a surveyor take PI insurance?

A. To satisfy his principal that he will be reimbursed whenever he makes a mistake B. To demonstrate to his client that by taking PI insurance, it should be clear that he is an

approved competent surveyor C. To have financial protection and legal support if the surveyor should make a mistake D. PI insurance is expensive, but by taking it the surveyor can avoid the cost of training and

education.

2. Can a Lloyd’s Agent operate outside of his area?

A. Never B. Always C. Acceptable in certain circumstances only and in agreement with local Lloyd’s Agent. D. Must always pass the instructions to the local Lloyd’s Agent

3. What is the purpose of the Noticeboard?

A. For the surveyor to log in whenever he is in need of information or documentation B. To find a new template for his survey report C. To make sure that he has the latest information available and to keep track of all

important information and changes relating to his appointment D. All of the above 4. When would you use a short form survey report? A. As a template for an interim report B. For containerised cargo C. For non-containerised cargo e.g. bulk or break-bulk D. Always for any types of cargo

5. When will a subrogation form be issued?

A. When a Bill of Lading is issued B. When settlement of the claim is made and the insured assigns their right to the insurer C. When the cargo passes the ship’s rail D. When the Master encounters heavy weather during the voyage

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Chapter 5


5.1 Containers

5.1.1 Introduction

5.1.2. The Convention for Safe Containers (CSC) 5.1.3 Container Components 5.1.4 Types of Containers and their Uses 5.1.5 Stuffing and Unstuffing 5.1.6 Stowage and Securing of Contents 5.1.7 Securing 5.1.8 Container Damage 5.1.9 Inspection of Containers for Damage and Repair

5.2 Hazardous cargoes

5.2.1 History 5.2.2 The IMDG Code

5.3 Project cargo / Heavy lifts

Useful books / publications for further reading 5.4 Specimen Examination Questions

Technical Cargo

Surveying

39


5.1 CONTAINERS 5.1.1 Introduction Over the past 50 years, container shipping has been the key facilitator in the expansion of international trade. The majority of the world’s containers are owned by either shipping or leasing companies that specialise in container carriage. The most common Dry Van Containers are constructed to ensure a useful working life of 10 to 12 years, subject to regular inspection and maintenance. They will be lifted by cranes and loaded and unloaded by forklift trucks thousands of times during their lifetime. They will be exposed to the harsh and rigorous elements of the sea as well as the hazards of land based transport on rail and road, continuously transporting tonnes of cargo from fine crystal and electronic products to heavy machinery and scrap metal. Quality of construction, specific materials and design ensure a container will fulfil its requirements safely and efficiently. Containers are designed and constructed in accordance with prescribed specifications and internationally acceptable standards. They must also meet the requirements of a particular client. 5.1.2 The Convention for Safe Containers (CSC) IMO, in co-operation with the Economic Commission of Europe developed a draft Convention regulating the construction and use of containers. The CSC has two goals viz.: 1. The safety of human life in the transport and handling of containers by providing generally acceptable strength requirements and test procedures. 2. To facilitate the international transport of containers by providing uniform international safety regulations, applicable to all modes of surface transport, thereby preventing the proliferation of divergent national safety regulations. The approval, evidenced by the Safety Approval Plate granted by one contracting state will be recognised by other contracting states to the CSC. This principle of reciprocal acceptance of safety-approved containers is the cornerstone of the Convention; and once approved and plated, it is expected that containers will be able to cross international borders thereby facilitating international transportation with the minimum of safety control formalities.

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Container CSC plate The subsequent maintenance of a safety-approved container is the responsibility of the container owner, who is required to have the container periodically examined. The Convention specifically requires that the container be subjected to various tests, to comply with the safety requirements of both inland and maritime modes of transport. The Safety Approval Plate contains the following information:

CSC Safety Approval.

Customs Seal Approval.

Country of Approval and Approval reference.

Date (month/year) of manufacture.

Manufacturer’s container identification number.

Maximum Operating Gross Weight.

Allowable Stacking Weight.

Transverse racking test load value.

5.1.3 Container Components

The following diagram highlights the main components of a container and the terms used to refer to its various parts:

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A brief description of the main components follows below: Corner post Vertical frame components located at the corners of containers and integral with the corner castings and floor structures. Corner castings Fittings, located at the corner of the container, which provide the means for lifting, handling, stacking and securing. Header and sill In way of the door entrance: overhead horizontal header frame and similar floor level threshold sill. Front-end frame The structure at the front end of the container (opposite the door end) consisting of top and bottom rails attached to the front corner posts and other corner castings. Top rail Longitudinal structural members located at the top edge on either side of the container.

Bottom rail Longitudinal structural members located at the bottom edge on either side of the container.

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Cross-members A series of transverse beams pitched at approximately 12” attached to the bottom side rail and integral part of the floor frame support. Floor The floor may be hard (steel) or soft laminated wood, planks or plywood. Roof Steel general purpose containers will have corrugated or flat steel sheet roofs welded to the frame members. Aluminium containers have aluminium sheathing, bonded with adhesive to roof bows and riveted to the top rails and headers. Note: The roof is the part of the container most vulnerable to damage.

Sides and front GP containers will have corrugated steel panels. Aluminium containers have aluminium sheathing on the sides and front of the container. Doors Doors and closing devices nowadays available in steel, aluminium or various other materials. Security seal

Container security seal 5.1.4 Types of Containers and their Uses Initially, containers were constructed of steel and used for carrying general packaged cargoes but now there is a large and still growing variety, each designed for a specific type of cargo. All containers are internationally required to conform to ISO standards as well as the International Convention for Safe Containers (CSC) and the Customs Convention.

Used in conjunction with the locking mechanism in order to seal the containers for security purposes. These seals are numbered and are often colour coded and nowadays available in a large variety of types and qualities.

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The majority of containers used in world-wide trade today conform to the ISO standard with the predominant size being 20 and 40 foot with a height of 8 foot 6 inches (2.6 metres) generally referred to as a TEU which stands for 20 foot equivalent unit or FEU which is the 40 foot equivalent unit. Recently also 30 foot has become a common size, mainly tank containers and especially used for rail transport, as well as the “high cube”, with a height of 9 foot 6 inches (2.9 metres). For easy reference, some of the most common types of containers are listed below, but as indicated, this list is not complete and for more recent and more detailed technical info, the appropriate web sites or other valid documentation should be consulted.

The majority of containers are the standard general purpose 20 or 40-foot “box containers,” generally referred to as TEUs FEUs, which exists in a number of variations, such as “open top”, “ventilated”. Containers designed to carry abnormal loads or loads that are difficult to stow inside an enclosed general purpose container, can be accommodated in “flat racks” and on “platforms”. There are general purpose steel containers adapted for the carriage of “bulk” commodities, dry or liquid, with different types of inner liners and supporting constructions. Loading is made possible by man-hole lids fitted in the roof panel or valve system, mainly installed at the door side.

Container dry van “Flat racks” are designed with fixed or hinged end panels. The hinged end panels fold inwards and can be collapsed flat on the floor surface of the unit to allow multiple stacking of the collapsed units when empty. These flat rack units are provided with removable vertical side posts and in some cases, with removable topside rails. The flat rack unit’s top and sides can be covered with a tarpaulin. “Ventilated” containers are of general purpose design and exist in various forms, with different ventilation systems, mainly installed directly below the top side rails and/or directly above the bottom side rails. Other types of ventilated containers may be insulated or refrigerated containers.

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ventilated container (outside) ventilated container (inside) For cargoes susceptible to climatic change and temperature, there are “insulated” and “refrigerated” containers. Insulated containers are usually carried on specifically designed vessels so that the containers can connected to the vessel’s cooling system. Refrigerated containers are constructed using insulated panels and have integral refrigeration plants built in to the front end of the unit. There are variations of these types of units but some can provide set points for temperatures as low as –27°C as well as having de-humidification options.

Reefer container airflow Inside an integrated refrigerated container unit refrigerated air flows through and around the goods in the container. In the case of pre-cooled frozen goods, air only has to flow around the goods, since only the heat which penetrates the insulation from the outside of the unit has to be dissipated. However, when transporting fruit and vegetable products, the air flows through the goods since these products may generate respiration heat inside the container. The internal walls and panels of a container are usually marked at the top with a “load limit line”. When stowing a container, the goods should be stowed up to this limit in order to provide sufficient space at the top of the container to allow the air to circulate. “Tank” containers are designed for various types of liquid products including hazardous cargoes. They are found in 20 and 40-foot units. The tanks are generally manufactured of stainless or specially coated steel and provided with a manhole on the top for access and loading purposes with valves at the bottom of rear or front side to facilitate loading and discharge. The tanks can be clad externally with insulation material and be internally fitted with steam heating coils. There are other types of containers that have been specifically designed and constructed for a particular type of cargo.

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Recommendation: In view of the fast evolution in new types of containers being developed and different kinds of materials used for their construction, it is highly recommended to keep up with these changes by consulting the www-library at: www.imo.org www.tis-gdv.de A lot of reliable and updated information is available at both these web sites, some of it is freely available, some at a reasonable cost. For some important assignments, it may be wise to consult these sites either prior to undertaking the survey or prior to making the (final) survey report. 5.1.5 Stuffing and Unstuffing In the shipping industry the packing and unpacking of containers is called “stuffing” and “unstuffing”. Shipments of goods in containers fall into two basic categories which are abbreviated as FCL (“Full Container Load”) and/or LCL (“Less Than Container Load”), defined as follows: FCL: container stuffed or unstuffed at the risk of the shipper and/or consignee. LCL: container with multiple consignments, where the Carrier is responsible for packing and/or unpacking the container. Inspection prior to stuffing External check:

No obvious physical damage to the exterior panelling of the container or structure – i.e. no holes, cracks, tears or deformed structural components.

No adhesive labels referring to previous cargo carried – i.e. IMO hazardous cargo labels, etc.

All external container markings should be clearly visible as should the safety data plate.

Doors must operate satisfactorily with the rubber gaskets intact and in correct position. Door hinges, locking bars and door securing arrangements should operate satisfactorily.

Internal Checks:

Clean, dry and free from condensation; container floor area should be clear of any protrusions (i.e. nails, etc.), which may damage the cargo.

Odour free.

Watertight. Inspection after stuffing:

Cargo has to be evenly distributed throughout the floor.

Cargo should be clear of the door areas so no undue stress is placed on.

Cargo is to be adequately secured to minimise movement in any direction during the transit period.

Timber used for the packing or securing the cargo (e.g. pallet bases) has to comply with the quarantine regulations of the country of destination.

Doors securely closed and provided by a solid security seal.

Labels – hazardous cargo IMO labels, if appropriate, should be fixed to the external part of the container, as per IMO regulation.

http://www.tis-gdv.de/

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Inspection prior to Unstuffing

No obvious physical damage to the exterior panelling of the container or structure – i.e. no holes, cracks, tears or deformed structural components.

Prior to opening the container check doors properly and securely closed and the door seals (intact and correct, matching Bill of Lading).

Open the right hand door cautiously, as to guard against the risk of improperly secured cargo that may have fallen against the door which may cause personal injury when the door is opened.

Inspection after Unstuffing

Once the container has been emptied of cargo, and the condition of all goods contained has been noted, a thorough inspection should be carried out for

Cracks or holes in the roof or sides of the container; in case wet damage had been ascertained to the goods contained, to identify the cause of wet damage. During day-light, a simple and quick test is to enter the empty container, have someone close both doors and carefully look around: even small holes or cracks will show by the penetrating light.

Any damage or contamination caused to the container, which may give rise to claims, especially when acting on behalf of the container owner or lessor.

5.1.6 Stowage and Securing of Contents

Homogenous cargo

If the load consists of a homogenous type cargo (all cargo items of the same size), all of the space in the container should be utilised. Packaged cargoes involving e.g. cartons, cases, boxes, bags, drums, barrels, or rolls should be carefully stowed in order to maximise the use of the available space. This will then prevent cargo from shifting during transit and maximise freight capacity.

container poor stowage container correct stowage and securing

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Palletized cargo

Palletised cargoes normally expedite the stuffing and unstuffing operation of a container and when the right size of pallets has been chosen, they can be stowed to minimise wasted space and securing. The units are normally handled by forklifts. Bagged cargo

Bagged cargoes, when packed “as loose bags”, should be placed in an interlocking stow. Bags do tend to settle during transit and may cause pressure on the side panels of the container. The bags should be secured at the rear door end in order to minimise the possibility of undue pressure being placed on the doors thereby causing the bags to fall out when the doors are opened. Drums

It is normal practice to stow drums vertically on end with their “bung holes” facing upwards. Drums usually contain liquids or powders and thus it is essential to conduct a thorough pre-loading inspection to ensure that no damaged drums are shipped. If the drums are stowed in layers or tiers (vertically on end), it is necessary to place dunnage material in-between the layers.

Once the container is filled with drums, the door end area can be secured by placing several timber pallets between the face of the drum stow and the door. This will assist in restricting movement and ensure that the drums do not lean against the doors during the transit. Refrigerated cargo Prior to starting the stuffing operations, the shipper and/or the appointed surveyor should inspect the container and the refrigerating unit to verify that it is in operational condition and that the container is clean and odour free, entirely fit to receive the cargo intended. There are certain procedures that should be adhered to when stuffing a refrigerated container in order to ensure that the cargo is loaded efficiently and effectively for both refrigeration and transit. Air must be able to circulate around the cargo to absorb the small amount of heat that enters the container through the insulated walls, ceiling and floor. As a result it is imperative that the cargo is not loaded above the “load limit line”, which is marked on the inner wall surfaces of the container. Air must be allowed to flow between the door and the rear cargo stow and the entire stow should not extend beyond the end of the grating or T-section flooring. Shippers should provide the precise and complete commodity details and the container temperature set point in Celsius (°C). Prior to starting stuffing, it should be checked that the temperature set point is correct, that the temperature chart is correctly endorsed and that if pre-cooling is required, the container has been pre-cooled to the correct temperature. It should also be verified that the cargo is at the correct temperature prior to placing it into the container as well as packed in packaging that will protect the product throughout the transit. Always make sure that the cold chain (i.e. the set temperature the goods need to be and are stored and transported) is not interrupted during stuffing or unstuffing of refrigerated goods.

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5.1.7 Securing Cargo must be stowed and secured in containers with the purpose to minimise movement and shifting in any direction. Special attention should be drawn when stowing goods at the rear door end area so as to minimise the possibility of undue pressure being placed on the doors during handling and transit.

normal stow of tyres in container Although the container will provide some protection for the cargo when compared with break bulk type cargoes, it will still be subject to constant movement and stresses during transit. Also in this respect, it is highly recommended to consult The Code of Safe Practice for Cargo Stowage and Securing in freight containers published by the IMO. There are many different types of securing materials available including, but not restricted to:

Heavy gauge timber for bracing, chocking and tomming.

Plywood sheeting for separation as well as for securing.

Flat webbing belts (nylon woven type) with ratchet tensioners.

Polypropylene rope for light cargoes.

Wire rope lashings tensioned by turnbuckles for heavy cargoes and steel products.

Chain lashings with tensioners or turnbuckles for heavy cargoes.

Steel strapping bands of lashing quality.

Inflatable air bags.

Foam-rubber cushions – to reduce vibration. Summary check list for container stuffing

Select the most suitable container type to accommodate the particular cargo or mix of cargo items to be loaded.

Ensure that the payload limits of the container are not exceeded by the weight of the cargo.

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Distribute the weight of the cargo evenly over the floor of the area and avoid stowing heavy items in one section and lighter volume items in another.

Ensure that heavy items are not stowed on top of light goods.

Ensure that a tight stow is achieved and ensure that the cargo is adequately secured (as best as possible) in order to minimize movement within the container.

Observe all the handling instructions displayed on the individual cargo items, i.e. “DO NOT DROP”, “THIS SIDE UP”, “FRAGILE”, “KEEP DRY”, etc.

For mixed loads, place packages containing liquid substances on the bottom tiers with dry substances on top.

Ensure that no damaged items are packed into the container. If repaired ensure that this is recorded on the relevant packing list.

Avoid use of ‘green’ or new timber as dunnage: it could be damp and may itself cause wet damage (by condensation) to the goods.

Consult the IMDG Code with respect to hazardous cargo ensuring that packaging and segregation is carried out correctly and that the appropriate labels are displayed on both the items stowed within the container as well as the labels being adhered to the external surfaces of the container to highlight the specific type and class of hazardous cargo.

If a container is to be packed with a mixed load of cargo which includes certain items of hazardous cargo, then ensure that there are no cargo incompatibilities and that the IMDG Code is adhered to. The hazardous cargo items should be packed close to the door end in order to be accessible.

Record the security seal number and the container number on all shipping documentation.

Example of container stowage and securing

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5.1.8 Container Damage

Common types of container damage are listed below.

Holes in containers: are the most common kinds of damage. Roof damage is often caused whilst handled by lifting spreaders and by material such as corner castings, twistlocks and other lashing gear being thrown down on top. Holes, dents or cracks in container walls can be caused by handling, stuffing or unstuffing and during transport. Holes in containers can be easily detected by interior inspection with the doors closed and noting any light entering the container. This can also reveal faulty door seal gaskets and is extremely important check to be made.

container roof damage (from outside)

container roof damage (from inside)

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Interior Contamination: Container floors become seriously contaminated by certain

cargoes such as wet hides or by spillage of liquids from damaged packages.

container with flooding traces flooding damage inside container

Racking: is the twisting of the structural shell of the container due to static or dynamic forces as may happen during a sea voyage.

Toppling: can occur when containers are subjected to extreme rolling motions on board of a ship or standing in a stack, exposed to high winds.

Container collapse (corner-post compression): results from exceeding allowable loads on the container corner posts due to exceeding weight and stacking limits.

Local structural failure: is the separation of structural components of a container such as side-wall separation from top and bottom rails and separation of the corner castings from the side rails, mainly as a result of poor maintenance and/or overloading.

5.1.9 Inspection of Containers for Damage and Repair The inspector should establish an inspection procedure which will include the examination of all areas and components of the container, outside and inside, including cleanliness. The cleanliness inspection should include a check for remnants, debris, odour, contamination or infestation originating from previously carried cargo, especially if it relates to hazardous cargo. Also when carrying out a container inspection, the surveyor should make sure having received clear instructions as to any specific requirement or restriction to the inspection to be undertaken. Particular attention should in any event be paid to making a clear distinction between damage, normal wear and tear or wear of an unusual nature which may prevent the unit from safely carrying cargo in accordance with international requirements. The inspector should always bear in mind that containers are categorised as standard units and that the carriers of such units (be they ships or land based transport – trucks / trailers and rail rolling stock) have been specifically designed to carry them. If the container does not comply with the prescribed internationally accepted dimensions including any margin of tolerance, then the unit should be repaired and reinstated to meet the required tolerance (ISO).

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Example checklist for the inspection of standard general purpose steel containers: Front End:

Front panels, including corrugations.

Front header (top rail).

Front sill (bottom rail).

Front corner posts.

Upper and lower front corner fittings including Attachments.

Markings.

Left and Right Sides:

Top rail.

Side panels, including corrugations.

Bottom rail and forklift pocket entrances.

Front and rear corner posts.

Upper and lower corner fittings and Attachments.

Ventilators.

Markings.

Door End:

Door header (top rail), including cam retainers (keepers).

Door sill (bottom rail), including cam retainers (keepers).

Door panels.

Locking bars (rods), including brackets, guides and cams.

Hinge components.

Door gaskets and retaining strips.

Rear corner posts.

Upper and lower corner fittings and Attachments.

Rain gutter.

Door handles, handle catches and retainers.

Markings labels and plates.

Correct operation of doors, including closure and door-locking mechanisms.

Roof:

Panels, including corrugations.

Header extension plate.

Corner fittings and Attachments.

Markings.

Interior:

Roof panels.

Floor.

Side and front panels.

Door panels and frame.

Threshold plate.

Lashing fittings.

Corner posts and corner fittings.

Ventilators.

Markings.

Light / leak test – to check on holes, cracks, defective / damaged door gaskets.

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Under Structure:

Cross members.

Bottom side and sills.

Floor boards, panels or planks.

Tunnel recess.

Forklift pockets and straps.

Undercoating. General:

Cleanliness.

Paint condition and colour.

Certification and identification markings.

General structural integrity and preservation of dimensions within ISO tolerances.

Any repairs carried out to the container considered to be non-conforming. When dealing with container inspections in possible need of repair, useful information and guidance can be found on the website www.imo.org. In the container inspection report, distinction needs to be made between:

Acceptable damage, which does not require repair and has no effect on the safety and cargo worthiness of the container.

Non-acceptable damage, which needs to be repaired prior to its next use.

Wear and Tear, which is considered normal deterioration as a result of normal operation use of containers.

Manufacturing defects, which need to be reported to the client for further consultation with manufacturers.

5.2 HAZARDOUS CARGOES

5.2.1 HISTORY During the 1929 International Conference for Safety of Life at Sea (SOLAS) it was recognised that international rules were needed in order to regulate the transportation of dangerous goods. Since then there have been numerous Conventions, Conferences and amendments to create what is today known as the International Maritime Dangerous Goods Code (IMDG Code). Some of the milestones along the way include the:

1956 United Nations Committee of Experts’ report on the minimum requirements for the transportation of dangerous goods by all modes of transport. In 1959 the first meeting of the Inter-Governmental Maritime Consultative Organization (IMCO) occurred, which subsequently became the International Maritime Organization (IMO) in 1982. The purpose of the Organization was and continues to be: "to provide the machinery for co-operation among Governments in the field of governmental regulation and practices relating to technical matters of all kinds affecting shipping engaged in international trade; to encourage and facilitate the general adoption of the highest

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practicable standards in matters concerning maritime safety, efficiency of navigation and prevention and control of marine pollution from ships".

In 1960 the SOLAS Conference recommended a uniform international code for the transportation of goods by sea. One of the resolutions adopted at this conference proposed that the code should cover matters relating to packing, stowage, segregation and containers.

In 1965 the IMDG Code was adopted by the IMO Assembly and since then the IMDG Code has undergone numerous changes, both in appearance and content to keep up to date with the ever-changing needs of industry.

The IMDG Code is revised every two years and the latest version always comes into force as from the 1st January of the next period. (Example: the 2010 version incorporating amendments 35-10 came into force on 1 January 2012). The IMDG CODE is still published in 3 volumes, but an electronic subscription is now also available (either via CD, downloadable in pdf format or via web access)

The regulations for the safe transportation of dangerous goods at sea are necessary in order to prevent, without unnecessarily impeding daily commercial activity:

injury to persons,

damage to ships and other ancillary modes of transportation and

damage to the environment,

Today the IMO estimates that more than 50% of packaged goods and bulk cargoes transported by sea can be regarded as dangerous or hazardous from either a safety point of view and / or as being potentially harmful to the environment. This includes commodities such as solid or liquid chemicals and other materials, gases and products from the oil industry, and or waste products. Substances and articles classified as dangerous goods or marine pollutants under the IMDG Code may not necessarily be classified as dangerous goods for carriage by domestic road or rail transport regulations. However, if the dangerous goods are to be transported by sea, the IMDG Code classification and rules must be followed. The IMO is responsible not only for the IMDG Code, but also for a number of other Codes dealing with dangerous goods and noxious substances which are useful sources of information. (As mentioned above, please also consult the website www.imo.org.) These other codes include:

The Code of Safe Practice for Solid Bulk Cargoes (BC Code).

The International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk (IBC Code). (For vessels constructed after 1986.)

The Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk (BCH Code). (For vessels constructed before 1986.)

The International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC Code).

The International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) which came into force in 1983. These regulations are aimed at preventing and minimizing pollution from ships - both accidental pollution and that from routine operations.

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5.2.2 THE IMDG CODE The purpose of the IMDG Code is to: (a) list all goods transported by sea, which may pose a danger to people and/or the

method of transportation and/or the environment and (b) to specify the type of danger posed by a particular substance or commodity.

There are a series of UN-specified standard tests described in Part 2 of the IMDG Code which determine whether a substance or article presents risks that make it dangerous to transport. If any dangerous properties are detected, the substance is classified as “dangerous goods”.

The information which follows provides only a brief synopsis of the Code. This chapter does not attempt to provide comprehensive information on either the IMDG Code or the shipment of dangerous goods which requires specialist training. Furthermore, the Code itself should always be consulted before conducting any work involving the transportation or survey of dangerous goods. (www.imo .org.) An Example of an electronic page of the IMDG Code is as follows :

http://www.imo/

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Substance Details - UN 1922

(1) UNNo: 1922 (2) PSN: PYRROLIDINE

(3) Class: 3 (4) Subsidiary Risks: 8 (5) Packing Group: II (16) Stowage Category: B

(6) Special Provisions: - (7a) Limited Quantities: 1 L (7b) Excepted Quantities: E2

(17) Flashpoint: 3°C c.c. (15) Emergency Schedule: F-E,S-C

Instructions Provisions

Packing

(8) P001 (9) -

IBCs

(10) IBC02 (11) -

Tanks

(13)T7 (14) TP1

(16) Stowage and Segregation

Clear of living quarters. 'Separated from' acids.

(17) Properties and Observations

Colourless to pale yellow liquid with an ammoniacal odour. Reacts violently with acids. Flashpoint: 3°C c.c. Miscible with water. Harmful by inhalation. Causes burns to skin, eyes and mucous membranes.

Labels/Marks/Signs:

For further information on the use of labels, marks and signs, see part 5 of the IMDG Code.

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Each substance is assigned the following information.

1. UN Number 2. Proper Shipping Name (PSN) 3. Class or Division 4. Subsidiary Risk(s) 5. Packing Group 6. Special Provisions 7. Limited Quantities 8. Packing Instructions 9. Packing Provisions 10. IBC Instructions 11. IBC Provisions 12. Tank Instructions 13. Tank Provisions 14. Emergency Schedule (EmS) 15. Stowage and Segregation 16. Properties and Observations

1. UN Number The UN Number found in the Dangerous Goods List (DGL) is extremely important in identifying the substance concerned. This number should always be quoted for proper referencing within the Code as it is the international identifier of the commodity or goods concerned. Over the years some UN Numbers have been allowed to expire as it became clear that the substance described was not sufficiently different from others of the same behaviour to deserve its own number. Where this has occurred the old number no longer has international validity and should not be used. Always therefore refer to an up to date copy of the IMDG Code. When dangerous goods are transported it is essential that they are correctly identified using their Proper Shipping Name (see section below) and with the correct UN number so that the necessary care and precautions can be taken. 2. Proper Shipping Name (PSN) Goods should be described using their Proper Shipping Name (PSN), which is also the correct technical name. Be aware that products may have more than one name or that the name may have been abbreviated. Trade names should not be used. Substances listed under their chemical name are technically pure, or are mixtures or solutions of listed substances that although not technically pure have the same hazard characteristics as the pure substance when subjected to standard tests. Sometimes it is convenient to use a generic name for a type of product that has a common hazard, but can be composed of a range of different but similar chemicals which all present the same hazard, e.g. “Adhesives containing flammable liquid”.

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As substances can be combined in an infinite variety of mixtures and solutions, it is not possible to include in the DGL every potential combination of chemical components. Combining or diluting chemicals will affect the hazard characteristics of the substance. To deal with this, some goods are classified as N.O.S. (Not Otherwise Specified). Products or articles that are not specifically listed by name in the DGL are classified as N.O.S. N.O.S. names for mixtures and solutions are established by taking the generic description of the hazard e.g. flammable liquid and supplementing it with the name(s) of the hazardous component as identified by the shipper. The chemical name of the hazardous component is added in brackets after the description of the hazard. If there is more than one hazardous component, only the names of the two most hazardous components need to be identified.

For example: an 80% solution of methanol (flammable liquid) in water would not have the same characteristics as pure methanol so it would be classified as “UN 1993 flammable liquid N.O.S. (contains methanol)”. For pure substances the UN Number and PSN can stand alone e.g. “UN 1230 Methanol”.

However for N.O.S. substances where the product is classified according to its nature rather than by its actual chemical description the UN Number becomes part of the PSN. Chemicals which exist in many slightly different forms with a different technical name but which have almost identical hazards may be grouped under N.O.S. generic names which require the addition of the name of the active ingredient to complete the PSN. 3. Class or Division

The IMDG Code requires that dangerous goods are classified into one of 9 main hazard classes depending upon the kind of danger posed by the substance concerned. Some classes are sub-divided so as to categorize the risks in more detail. Other risks may be present in a product, which are known as subsidiary risks, sub-risks or secondary risks, whilst the main risk is referred to as the class risk. Each class or sub-division has a diamond-shaped label assigned to it which is universally accepted by all transport authorities. The classes and sub-divisions of dangerous goods are: Class 1 Explosives 1.1 Mass explosion hazard 1.2 Projection hazard but no mass explosion hazard

1.3 Fire hazard but no mass explosion hazard 1.4 No significant hazard 1.5 Very insensitive substances with mass explosion hazard 1.6 Extremely insensitive articles with no mass explosion hazard

2 Gases 2.1 Flammable gases 2.2 Non-flammable, non-toxic gases 2.3 Toxic gases 3 Flammable liquids

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4 Other flammable substances 4.1 Flammable solids 4.2 Substances liable to spontaneous combustion 4.3 Dangerous when wet

5 Oxidizing substances (Agents) and organic peroxides 5.1 Oxidizing substances (agents) 5.2 Organic peroxides 6 Toxic and infectious substances 6.1 Toxic substances 6.2 Infectious substances 7 Radioactive material 8 Corrosive substances 9 Miscellaneous dangerous substances and articles and

Marine Pollutants

The numerical order of the classes and divisions is not that of the degree of danger. For further details and information, we wish to refer to the latest version of the IMDG Code. Documentation and Labels Before dangerous goods can be accepted for shipment by sea, they need to be classified in accordance with the IMDG Code. The shipper has a duty to either establish or obtain formal classification of the goods as dangerous by establishing the hazards presented by a particular substance. The shipper must present a signed dangerous goods declaration containing accurate descriptions and details of the dangerous goods. This declaration constitutes a binding agreement with the shipping line. All dangerous cargo has to be appropriately marked and labelled showing the PSN, UN Number, Marine pollutant mark (if applicable to the substance) and Class using the appropriate hazard class label for each class and sub-risk. All marks and labels must:

be clearly visible and readable

be displayed against a background of contrasting colour

be capable of surviving at least 3 months immersed in sea water

conform to the size, shape and colour standards as laid down in part 5 - chapter 5.2 of the IMDG Code, and if the package has a volume which exceeds 450 litres then two such marks must be displayed on opposite ends of the package. [Refer to figure on following page].

Some substances such as gasses also require a label showing the ‘right way up’ whilst others may require a keep dry label which is the umbrella sign. There are additional labelling requirements for particular substances as specified in IMDG 5.2.

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When packages of dangerous cargo are stowed in a container, trailer, tank, railway wagon, not only must each package be labelled and marked but also the outside of the container or trailer or tank or railway wagon as follows:

Containers, trailers and portable tanks must be labelled on each side and each end.

Railway wagons must be labelled on each side.

When more than one hazardous or dangerous cargo is carried in a container then the appropriate label for the type of hazardous or dangerous cargo must be fixed on the outside of the container on the other side of the location of the goods inside the container.

The labels on the goods in the container must face the door and be visible from outside the container when the doors are open.

As it is essential to quickly identify dangerous substances involved in an incident such as fire or spillage, the dangerous goods manifest and the stowage plan required under SOLAS should always state the UN Number and PSN as although the package itself will also have this information on it, the information may not be visible at the time of an incident. Marks and labels can be found on the respective pages of the IMDG Code, Part 5 – Chapter 5.2. 4. Subsidiary Risk(s)

Goods may fall into more than one Class with the lesser risk listed as the subsidiary risk. For example, copper-based pesticide UN 2776 is Class 3 (flammable) and has a subsidiary risk of Class 6.1 (toxic) whilst also being a marine pollutant. When describing dangerous goods in any document, any applicable sub-risks must be included in brackets after the class e.g. Class 3 (6.1). 5. Packing Group

All dangerous and hazardous cargo must be packed in good quality packaging which is strong enough to withstand the rigours of handling and transportation and of a type approved under the UN package testing scheme. The shipper has a legal duty to select packages suitable for his product i.e. packages that will safely contain the product, not react with the product and withstand the normal rigours of carriage by sea. Dangerous goods which are presented in packages which are not UN type approved are not acceptable for shipment by sea with one exception viz. when” limited quantities” are involved. (See section on “limited quantities” below). Substances fall into three distinct groups depending on the degree of danger they present.

Packing Group I: Substances presenting HIGH danger

Packing Group II: Substances presenting MEDIUM danger

Packing Group III: Substances presenting LOW danger

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Whatever is used to transport dangerous substances it must be manufactured, re-conditioned, tested and marked with a code to indicate the physical nature of the product for which it is suitable, and whether the package is suitable for dangerous goods of packing group I, II, or III, in accordance with the UN type approval scheme for the carriage of dangerous goods. Packaging intended for use according to the IMDG Code must be marked with the following United Nations packaging symbol:

The Codes are usually stamped into metal or plastic drums and IBC’s and are printed on boxes and bags. The packing group must be included in the cargo booking form and in the shipper’s dangerous goods declaration but does not need to be displayed on the packages. The IMDG Code specifies the method needed to close or seal the receptacle containing the goods using the following terms as examples:

Effectively closed, means a liquid tight closure such as the lid on a paint tin.

Hermetically sealed means a vapour tight closure such as a tin of baked beans, and

Securely closed is the minimum acceptable securing arrangement so that dry contents will not escape during handling e.g. as used with bags of fertilizer.

The importance of proper packing cannot be over-stressed and the IMDG Code devotes two entire chapters to this, namely volume one, chapter 4 and another chapter in the supplement. Furthermore any empty package or container used to contain a dangerous or hazardous substance should be treated as hazardous until it has been properly cleaned (and ventilated if necessary), to remove any residue of the previous substance. Many empty uncleaned dangerous goods tanks are shipped as non-hazardous in contravention of the IMDG Code. Such tanks should be labelled and documented in the same way as a full tank, except for being declared as “empty uncleaned” or “residue last contained.” As such tanks can contain up to 500 litres of residue they constitute a real risk to life and property. 6. Special Provisions

Special provisions as found in the DGL are only applicable to certain substances, materials or articles. Special provisions are conditions, limitations, clarifications or additional requirements for particular substances, or types of substances. Each special provision is listed numerically and explained in full in IMDG 3.3. As of June 2012, there were 964 provisions listed.

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An interesting example, with which many surveyors may be frequently confronted with is a fumigated unit (class 9, UN 3359). Special provision 910 highlights the hazards of fumigation. It states: “A FUMIGATED UNIT” is a closed cargo transport unit loaded with cargoes under fumigation. The fumigant gases used are either poisonous or asphyxiant. The gases are usually evolved from solid or liquid preparations distributed within the unit. Fumigated units are subject to the following provisions: (see IMDG Code 5.5.2) 1. Cargo transport units shall be fumigated and handled taking into account the

provisions of the IMO publication Recommendations on the Safe Use of Pesticides in Ships, as amended.

2. Only cargo transport units that can be closed in such a way that the escape of

gas is reduced to a minimum shall be used for the transport of fumigated cargo. 3. Class 9 placards shall not be affixed to a fumigated unit, except as required for

other class 9 substances or articles packed therein (see 5.3.1). 4. Fumigated units shall be marked with a warning sign affixed to the access

door(s) identifying the type and amount of fumigant used and the date and time of the fumigation (see 5.3.2).

5. The transport document for a fumigated unit shall show the type and amount of

fumigant used and the date and time of fumigation. In addition, instructions for disposal for any residual fumigant, including fumigation devices if used, shall be provided.

6. A closed cargo transport unit that has been fumigated is not subject to the

provisions of this Code if it has been completely ventilated either by opening the doors of the unit or by mechanical ventilation after fumigation to ensure that no harmful concentration of gas remains. When completely ventilated, the fumigation warning sign(s) shall be removed.

7. When fumigated units are stowed under deck, equipment for detecting fumigant

gas(es) shall be carried on the ship with instructions for their use. 8. Fumigants shall not be applied to the contents of a cargo transport unit once it

has been loaded aboard the ship. Many containers, not necessarily carrying hazardous cargo are fumigated while in transit to eliminate vermin in the cargo and/or to comply with phytosanitary control regulations on timber packaging Fumigation is done by introducing solid or liquid materials (often methyl bromide or phosphine), into the container and then sealing it. These substances produce toxic gas, making the container dangerous to enter and in some types of ship dangerous to stow below deck because of the risk of some of the gas escaping from the container into occupied parts of the ship.

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Warning labels must be placed on the outside of the container doors identifying the type of fumigant used and the date and time of application. A fumigated unit is subject to the IMDG Code until it has been ventilated by either opening the doors or mechanical extraction until no gas remains when the warning label may then be removed. 7. Limited Quantities

Some dangerous goods can only be transported when packed in limited quantities. This limit can be found, in Kilos or Litres, in the DGL. Goods classified as “limited quantities” are subject to fewer restrictions during road and sea transport. At sea the rules for strict segregation between different types of dangerous goods may not apply for limited quantities so that packages of different types of dangerous goods shipped in limited quantities, that would normally have to be kept apart and shipped in separate shipping containers, may be shipped in the same shipping container, in separate packages. However if the dangerous goods are classified as incompatible then they must not be packed into the same outer package even in limited quantities.

The principal behind limited quantities is that by replacing a large package e.g. a 200 litre drum with a number of very small packages such as 200, 1 litre bottles, and then placing the small packages into a strong outer packaging and adding absorbent material to contain any leak, not only does this involve double-packaging but it also considerably reduces the potential hazard risk.

The IMDG Code requirements for packaging, marking, labelling and documentation differs for limited quantities but there are strict conditions for allowing goods to be classified as such. 8. to 13. Packing Instructions and Provisions

These are extensively mentioned and commented on in Parts 4 and 5 of the IMDG Code. In view of the rapid changing world we live in, it is imperative in case of any doubt to always consult the latest version of the IMDG Code. 14. Emergency Schedule (EMS) Emergency procedures are, extremely important when dealing with any hazardous substance. The safety and health of personnel is paramount as is the safety of the vessel and cargo. References in this section of the DGL will refer the crew to the appropriate guide in the supplement of the IMDG Code for the emergency response procedures for ships carrying dangerous goods on what to do in the event of fire and spillage. When dealing with any emergency it is vital to know the substance involved, hence the importance of accurate marking and labelling. Some substances may react not only with each other but also to the water or the fire-fighting medium in use.

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Many substances that are involved in a fire and/or spillage may produce toxic fumes and / or be harmful on contact. If injuries do occur the Medical First Aid Guide (MFAG) in the IMDG Code Supplement should be consulted. It covers what to do in situations such as:

Skin exposure to chemicals

Eye exposure to chemicals

Ingestion of chemicals

Shock

Rescue

Pain relief Every vessel that carries dangerous cargo should have in place an Emergency Response Plan. Surveyors who may be in attendance at the time of an incident, should always follow the instructions of the ship’s officers, and should NOT:

Enter an enclosed space without first (a) identifying the substance, (b) having been trained to do so and (c) wearing the appropriate protective clothing and breathing apparatus.

Walk through spilled substances

Attempt to rescue anybody unless you are trained to do so, or

Get in the way of professional and properly trained personnel.

15. Stowage and Segregation The DGL specifies the stowage and segregation requirements of all classes of dangerous goods so as to prevent substances from reacting with each other. Many substances react with others to create a potentially dangerous or hazardous situation. To prevent ‘accidental’ contact, with each other, the IMDG Code lists specific types of segregation for the 9 classes of dangerous goods contained in the Code. In practice there are 4 types of segregation in addition to special segregation for some substances such as explosives in Class 1. The four types of segregation are: 1. Away from 2. Separated from 3. Separated by a complete compartment or hold from, and 4. separated longitudinally by an intervening complete compartment or hold from Let’s consider these in more detail.

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1. Away from:

This form of segregation is defined as: “Effectively segregated so that the incompatible cannot interact dangerously in the event of an accident but may be transported in the same compartment or hold or on deck, provided a minimum horizontal separation of 3 metres, projected vertically, is obtained. 2. Separated from:

In different compartments or holds when stowed under deck. Provided the intervening deck is resistant to fire and liquid, a vertical separation, i.e. in different compartments may be accepted as equivalent to this segregation. For on deck stowage, this segregation means a separation by a distance of at least 6 metres horizontally.

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3. Separated by a complete compartment or hold from:

NOTE: One of the two decks must be resistant to fire and to liquid. Either a vertical or a horizontal separation. If the intervening decks are not resistant to fire and liquid, then only a longitudinal separation, i.e. by an intervening complete compartment or hold, is acceptable. For on deck stowage, this segregation means a separation by a distance of at least 12 metres horizontally. The same distance has to be applied if one package is stowed on deck and the other one in an upper compartment. 4. Separated longitudinally by an intervening complete compartment or hold

from:

Vertical separation alone does not meet this requirement. Between a package under deck and one on deck, a minimum distance of 24 metres, including a complete compartment, must be maintained longitudinally. For on deck stowage, this segregation means a separation by a distance of at least 24 metres longitudinally.

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The table showing the general provisions for segregation between the various classes of dangerous goods can be found in the IMDG Code on Chapter 7.2.1.16. To determine the appropriate segregation for freight containers on board container ships, consult section 7.2.3 of the IMDG Code and the different tables and drawings listed. Dangerous goods that must be segregated i.e. incompatible classes of dangerous goods must not be packed in the same shipping container. Some substances of the same class may inter-react dangerously so they too must not be packed in the same shipping container. The party stuffing the container must check that mixed hazard loads are permitted by the IMDG segregation rules which they will need to verify by signature on the packing certificate. Appropriate training is therefore essential. Although a chapter of this manual is devoted to the subject of containers, it is worthwhile re-emphasizing some of the basic rules involved in stuffing a container particularly when dangerous substances are involved. Basic Rules:

Fill it or secure it, using dunnage or retainers if necessary.

Block it out, leaving no void spaces or loose packages.

Smooth metal-to-metal contact should be avoided as this causes a slippery surface.

Avoid direct pressure on doors and if necessary use a proper fence or gate to prevent the cargo from spilling out when the doors are opened.

Ensure that the goods stowed in the container are compatible with each other.

Check that dangerous substance marks and labels, if required, have been applied to the packages or items concerned and to the exterior of the container.

Check that ‘old’ marks and labels on the outside of the container have been removed.

Finally, secure the doors and lock and seal them. Note the seal numbers for insertion on the Bill of Lading and any other relevant documentation.

Conclusion:

Dangerous or hazardous goods can be transported safely, provided the somewhat complex regulations contained in the IMDG Code, are fully understood and adhered to. This requires both specialist training and access to an up to date copy of the IMDG Code.

Further information on the IMDG Code can be found at www.imo.org .

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5.3 PROJECT CARGO / HEAVY LIFTS Introduction This chapter focuses on the movement of heavy lifts and project cargoes by sea, road or rail and the specialist equipment required to do so. With the ever-increasing size and weights involved in heavy lift and project cargo, it is essential that safe handling practices are maintained. Every lift and movement will be different, and throughout the operation safety must be paramount. Detailed risk assessments and contingencies should be considered for each stage and each movement and the extent of these will vary depending on circumstances. Project planning down to the last detail will go a long way to having a smooth trouble free operation. Heavy lift cargo involves a single lift of over around 50mt with some lifts in excess of 14,000mt whereas project cargo involves a combination of small regular lifts, heavy lifts and oversize lifts which combined form part of a project such as a factory being moved from one location to another. Clearly heavy lift cargo may form part of a project cargo but project cargoes do not necessarily always involve heavy lift cargoes. Both types of cargo though require the same planning care and attention. (This does not of course mean that special care and attention does not need to be taken for a lift under 50mt). The function of the surveyor requested to conduct a supervisory or risk assessment survey on heavy lift or project cargo is to: 1. assess and advise on whether the transport system and handling equipment

proposed are suitable for the safe movement and correct delivery of the load. 2. monitor the movement of the load and record any irregularities or damages that

may take place. 3. keep the client advised of the situation before, during and after transportation. It is not the surveyor’s role to interfere with the actual operations unless expressly instructed to do so. The movement must be planned for all stages of the journey. Where public roadways are used the police need to be advised, of the heavy and/or wide and/or long load. The weather conditions for the marine passage need to be monitored before and during transit as weather will undoubtedly affect the choice of time, routing and means of transportation. Road and rail routes must be inspected and cleared as far as possible. Appropriate ground handling transport needs to be allocated and placed on stand-by in ample time. If lighters or barges are to be used on inland waterways, their suitability needs to be assessed. Throughout, suitable operational planning will keep costs and risks to a minimum.

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The transport process There are a variable number of phases to consider when planning the movement of heavy lifts and project cargoes and these principals apply to any cargo. The surveyor’s involvement may be requested for all phases of the entire transport process from the manufacturing place (place of departure) up to the delivery at the final destination where goods need to be assembled.

1. Manufacturing / Departure place

2. Dismantling / Packaging

3. Loading handling for Rail – Road – Barge transport

4. Crane handling – discharge / loading or direct transhipment

5. Sea Vessel transport

6. Crane handling at discharge port


8. Delivery final destination – discharge handling At each phase of the transport process, special attention needs to be given to packing and protection, handling and transport equipment, routing and timing.

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Project cargo – poor stow

For handling, at most of the phases the points of attention are identical or very similar. The arrangements for lashing may differ, as for example for road transport different parameters will apply than for a sea transport. Depending on the instructions given, the appointed surveyor may need to check and comment at the different phases of the transport process: 1. Manufacturing / Departure place

Inspection on external condition and check on all provisions to be made from the point of manufacturing up to the delivery to the final destination.

2. Dismantling / Packaging

Unpacked material: to be provided by adequate lifting and lashing points, with clear indication of sizes, weight and point of gravity. Packed material: Solid packing, able to sustain all handling and transport until final delivery at the place of destination. Marking to be provided for of all necessary information, as per IMO regulations.


Suitability and capacity of all lifting equipment. Adequacy and suitability of all inland transportation. Routing. Timing.

4. Crane handling – discharge / loading or direct transhipment

Suitability and lifting capacity. Capability of crane driver.

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5. Sea Vessel transport

Suitability and condition of the chosen vessel, included the space allocated to load the subject cargo, including: - the cargo securing manual (must be approved by the maritime administration of the ship’s flag state and must be carried on board the ship) - lashing points and material - stability

6. Crane handling at discharge port

Similar to 4. 7. Loading handling for Rail – Road – Barge transport

Similar to 3. 8. Delivery final destination – discharge handling

In addition to all above that is also applicable here, check on the condition of the cargo delivered.

Final remark: In view of the high values and risks at stake, surveyors involved in this field must be suitably qualified and experienced and if in doubt they should decline the work or ensure that they are suitably supervised or assisted by specialists. You may wish to refer to this useful website www.informaprofessional.com

With as most commonly known publications the - Illustrated Dictionary of Cargo Handling by Peter R. Brodle - Steel Carriage by Sea by Arthur Sparks Books available in shops or reliable websites:

- Thomas’ Stowage, The Properties and Stowage of Cargoes by Capt. Thomas (choose latest edition) - The Marine Encyclopaedic Dictionary by Eric Sullivan

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5.4 SPECIMEN EXAMINATION QUESTIONS – Chapter 5 The following questions are similar in style to those that will be set in the actual exam. 1. Would you consider entering an area filled with inert gas?

A. Yes, because it is totally safe B. Yes, with the appropriate breathing apparatus and permission C. No, not under any circumstances D. Yes, but only with someone else

2. Which of the following points apply when consideration is given with regard to entering an enclosed area having previously contained hazardous cargo?

1. No dangers exist if the cargo is present 2. Areas could still be slippery under foot 3. Check atmosphere of the space before entering 4. Cargoes like fermenting grain could have produced carbon dioxide, whilst rotting

vegetation could have given off methane gas

A. Points 1, 2, 3 and 4 B. Points 1, 3 and 4 C. Points 1, 2 and 4 D. Points 2, 3 and 4 3. Who is responsible for the maintenance of a safety approved container?

A. The manufacturer whose name is indicated on the CSC Safety Approval Plate B. The user of the container C. The owner of the container D. The carrier

4. What is the purpose of the IMDG Code:

A. To make an inventory of all dangerous goods B. To list all dangerous goods transported and specify the type of danger posed C. To give the chemical composition of all dangerous goods listed D. To define the colour of the labels to be applied for transport 5. What is the function of a surveyor involved in a risk assessment survey on

project cargo?

A. To check the quantity of items shipped with the packing list supplied B. To verify if the marks and numbers are matching the shipping documents C. To monitor the movement of the cargo, record any irregularity or damage and assess

and advise on the packing, transport system and handling equipment to be used D. To review the project as a whole and give any specific instructions for packing, handling

and transport

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Chapter 6

6. TYPES OF SURVEYS

6.1 Loss / damage survey

6.2 Pre-shipment survey

6.3 Outturn / condition survey

6.4 Quantity & quality survey

6.5 Investigation survey

6.6 Risk assessment survey

6.7 Warehouse/Property Risk Assessment Survey

6.8 General average survey

6.9 Specimen Examination Questions

Technical Cargo

Surveying

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6. TYPES OF SURVEYS

This section will consider different types of survey. It is important to recognise though that a particular type of survey may be called something else in another country. The important message is for the surveyor to ensure that he fully understands the client’s requirements i.e. the type of survey required and what is wanted from the survey.

6.1 Loss / Damage Survey This is the most common type of survey. The objective is to investigate the nature and extent of the loss or damage and to establish the possible cause(s). Provided that the cause of the loss is an insured peril under the insurance policy, the insurer will normally pay for the loss incurred. Assuming that the claim is valid, the insurer will also need to know the details of the extent of the loss as well as of all extra expenses incurred in connection to the loss. To accept or deny a claim, an insurer will need to be certain of the facts upon which he relies. This is why surveyors must provide factually accurate and complete reports rather than expressions of opinion which may subsequently prove to be unfounded. It is very important to stress here that it is the insurer’s job to determine whether or not the policy covers the item being claimed for, and not the surveyor’s. The surveyor needs to provide sufficient facts to enable the insurer to decide whether or not the claim is valid.

6.2 Pre-shipment Survey This type of survey aims to report on the condition or particular aspects of a cargo or the condition of the ship or both, prior to the cargo being loaded. Accuracy and attention to detail is vital for this type of work. The objective of the pre-shipment survey is to provide an independent record of the condition of the cargo at the time of shipping so that in the event of a claim the liability for the damage can be accurately apportioned. With pre-shipment inspections of cargoes, all observable defects need to be recorded and, if appropriate and requested, samples taken. For ship inspections, the suitability or otherwise of the ship for the intended cargo and voyage needs to be determined. This not only involves hold cleanliness but may include considering the method of lifting the cargo from the shore into the ship, how it will be supported and secured during transport and hold ventilation (if appropriate). For container loads, similar aspects need to be looked at: suitability, cleanliness and seaworthiness of the container in respect of the cargo to be loaded. When inspecting the cargo, next to the (external) condition of the goods themselves, special attention should be paid to the external condition and suitability of the packing.

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Such surveys carry additional risks for surveyors should they get it wrong, and great care is required to make certain that all aspects that are relevant to the particular cargo and the means of handling and transportation have been evaluated. The actual requirements of the survey to be performed should be very clear at the initial stage of the surveyor’s instruction. It must be very clear what the surveyor is required to perform and it is for him to meet these requirements and not exceed these instructions. For example, if a pre-shipment inspection is undertaken on a second-hand machine, clear instructions as to exactly what is required need to be obtained. It is important to ascertain if only an outward physical inspection is required or whether Insurers wish the surveyor to ascertain whether the machine is functioning. It is also important to know whether Insurers require the surveyor to be present during the loading/securing of the machine for transit and to comment on the suitability thereof. The “Pre-Shipment Survey Report (Goods)” (replacing former Schedules CP and FS) is available on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules”, and copy of which can be found under Attachment no. 4 of this Module. This type of survey should not be confused with ship condition surveys, commonly conducted for P & I Clubs, which focuses exclusively on the condition of the ship, its personnel and management. In many instances, such a survey is requested in order to verify suitability of the vessel to take the intended cargo and includes inspection of condition of hatches and holds, with regard to cleanliness but also to verify water infiltration. To do so, surveyor could be requested to do so by means of a hose test, which test is more and more being replaced by an ultrasonic test. Nowadays, the ultrasonic test is, whilst still not 100% accurate, considered to be more reliable than the hose test and has of course the big advantage that it can be done, even with cargo remaining in the hold.

6.3 Outturn / Condition Survey It is quite common for parties concerned to call for an outturn survey, particularly where bulk cargoes or large shipments of steel cargoes have been shipped. If the survey is to conclude at the ship’s rail or quayside then any reference to quantum of loss should be very guarded. If, indeed, there is apparently a considerable loss, then in many cases the outturn survey may turn in to a damage survey for which procedures are as described sub. 5.1.

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In those instances Insurers and/or other parties concerned have the important advantage that their surveyor is already on the spot before and during the discharge operations. Depending on the value of the loss and the circumstances, the surveyor can assist in negotiating and obtaining a guarantee (of payment) from the ship and/or the P & I Club. Where the surveyor is only involved in the outturn survey, his survey report should refer only to the external condition of the goods inspected. Further participation, such as assisting the surveyor appointed by cargo insurance or P and I Club, should be the subject of a new instruction or an extension of the original instruction.

6.4 Quantity & Quality Survey Quality surveys are normally very specific in nature. They determine whether or not a specific cargo meets a specific requirement and should only be conducted by suitably qualified personnel. This may in many cases involve the collection and documenting of samples for laboratory analysis. Quantity surveys may involve tallying or draft surveys. Often sample-taking for quality purposes and tallying to determine quantities are considered the role of a tally clerk or inspection company and may be referred to as “an inspection” rather than a survey. The person doing the work may also be referred to as “an inspector” rather than a surveyor.

Checking plate thickness / tolerance

6.5 Investigation Survey Accident or incident investigation is a specialised field. An accident or incident investigation survey may form part of a cargo survey where the loss or damage has arisen cause of which is not immediately apparent, or it may be an entirely separate survey particularly after an incident involving injury or death to personnel. The role of the survey is to document properly all of the factors and influences that led to the incident. Generally such a survey will be considerably wider in scope than a damage survey and will include not only site investigation, collating of respective documents but also the various human factors involved.

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Once again it is the surveyor’s role to establish the facts, including taking witness statements and try to obtain as much supporting evidence as possible.

6.6 Risk Assessment Survey Risk assessment surveys identify the level of risk associated with a particular cargo which may be either high value or high risk. They may range from a request for a simple opinion (which should be expressed as such) to an advanced analytical evaluation. In order to carry out a risk assessment it is important to understand what is meant by a risk. To many people a risk is the danger of something happening and to some extent this is correct. However, for risk assessment work, the term risk has a very specific meaning and begins with the identification of a hazard. A hazard is a situation and/or event that is a potential source of danger, damage, accident or harm. Once a hazard has been identified it can then be assessed in terms of risk. To do this one needs to consider the probability and frequency of the occurrence and its potential consequences. Examples of Risk/Hazards are flooding, fire, explosion etc. It is the combination of probability and frequency of occurrence combined with the seriousness of the outcome, which together, determine the level of risk. Various standard grading scales exist for probability of occurrence and outcome. Risk assessments are commonplace in Health and Safety Regulations and in the oil and nuclear industries. However, the value of risk assessment to manage hazards is now being recognised as a useful business tool in virtually all sectors of commerce and industry, and as a technique it is gradually becoming more accepted in the general surveying world. Instructions to proceed to risk assessment survey may come from Insurers as well as their Corporate Clients or from both concurrently. The knowledge and experience of the surveyor required to undertake this type of survey should be fairly wide and ranging from being very familiar with the subject cargo or range of cargoes concerned, to methods of packaging, handling equipment, means of transportation, choice of warehouses, method of storage and logistic partners. A sample of a “Pre-Shipment Survey Report (Goods)” (replacing former Schedules CP and FS) can be found on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules” and copy of which can be found under Attachment no.4 of this Module.

6.7 Warehouse/Property Risk Assessment Survey

The Lloyd’s Agent Department is currently working with the London Market on a Warehouse Initiative. At the time of going to print, full details of this initiative cannot be disclosed however please check the Noticeboard for future updates.

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6.8 General Average Survey “General average” has its origins in ancient law of the sea and is founded on equity. A simple definition is “that which is given or sacrificed in time of peril for the sake of all shall be replaced by a general contribution from all those, whose property has been brought to safety”. Usually, it is the shipowner who declares general average, as the result of an accident or incident, wherein one or more voluntary sacrifices and / or extra expenses were incurred for the safety of the ship and the protection of its cargo. To ascertain how much each party to the adventure must contribute, the shipowner employs an average adjuster, who is an expert familiar with the law of general average, with the onus of proof on the party claiming in general average to show that the loss or expense is properly allowable as general average. Either the shipowner or the average adjuster may appoint a surveyor to act in the “general average interests” i.e. to ascertain the nature and extent of any general average losses. The appointed surveyor must have a basic knowledge of the concept of general average as well as the York-Antwerp rules, so that he is capable of preparing a survey report which the average adjuster can rely upon to prepare an accurate general average adjustment. When general average is declared on a container vessel or on a general cargo vessel, the surveyor appointed is confronted with what amounts to, in many instances, several hundred surveys. This activity involves segregating the general average loss from particular average loss (if any), and advising on how best to protect the cargo until released to the cargo owner. The surveyor may also be asked to arrange the sale of cargo to minimize loss. The surveyor should, if at all possible, carry out surveys jointly with any surveyor(s) appointed on behalf of cargo owners and / or underwriters and if possible they should try to agree whether or not damage should be classified as either particular or general average. However, the general average surveyor should not express an opinion on whether or not a loss is allowable or to be made good in general average as such decisions are at the prerogative of the average adjuster.

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SPECIMEN EXAMINATION QUESTIONS – Chapter 6 The following questions are similar in style to those that will be set in the actual exam. 1. With a pre-shipment inspection, what is the main intention of the survey?

A. To ensure that the cargo is in good condition and the quantity is correct B. To ensure that the exact condition of the cargo on loading is as specified on the

documents C. To ensure that the transit container or conveyance is suitable for the movement of the

cargo D. All of the above

2. Which is the purpose of a damage survey?

A. To report on the facts and provide insurers with sufficient information to decide if the claim is covered

B. To investigate nature, extent and cause of damage C. To take sufficient photographs to demonstrate the damage noted D. All of the above

3. Who would usually declare a General Average:- A. Ship-owner B. Charterer C. Cargo Owner D. Surveyor 4. What should a surveyor do at a loss prevention survey? A. Check the suitability of packaging, stowage and vessel B. Investigate the cause of damage after a loss has happened C. Patrol the dock area during loading to make sure nothing is stolen D. Check that the cargo meets the quality stated in the shipping documents 5. When producing a pre-shipment report, the surveyor should … A. Make sure that copies are given to the shippers, consignees and ship-owners B. Include full details of the terms and conditions of the insurance C. Provide an initial assesment on their findings and detail next steps D. Comment on anything which may have prevented them from carrying out a full

inspection

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Chapter 7

7. SURVEYS 7.1 Tools 7.2 Health and safety 7.3 On site check list 7.4 Nature of damage 7.4.1 Wet damage 7.4.2 Mechanical or impact damage 7.4.3 Shortages

7.5 Extent of the loss / damage 7.5.1 Salvage sale 7.5.2 Letter of Undertaking (LOU)

7.6 Cause of damage 7.7 Joint survey 7.8 Specimen Examination Questions

Technical Cargo

Surveying

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7. SURVEYS

7.1 Tools Over the years experienced surveyors build up a range of tools to help with all eventualities normally encountered during a survey. It is recommended that surveyors buy, use and maintain tools calibrated to an acceptable standard for the required task. Next to the basic equipment, which includes amongst other things: - protective clothing and gloves - safety helmet and shoes - notebook and pens - measuring tapes (different lengths and types) - silver-nitrate solution in a dropper bottle - digital camera

silver-nitrate solution testing kit

Other more dedicated types of equipment that are more and more expected for a good cargo surveyor to have readily available are : Thermometers: A large variety of contact, probe, infrared and mainly digital thermometers can nowadays be purchased. Hygrometers: Also for measuring humidity levels, an increasing variety of equipment is available and a good pre-study is highly recommended in order to make sure you buy the right tool at the correct price for the specific task that needs to be undertaken.

thermometer + hygrometer hydrometer

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With regard to digital photographs, the use of which has indeed become general practice for all surveyors, some basic principles and rules should be adhered to and followed: - It should be clearly mentioned when and by whom photographs are taken; - When photographs are not taken by a surveyor, it should be clearly mentioned at

any use, from whom the photographs have been received and with clear reserves as to their authenticity.

It is important for a surveyor - to understand exactly what is expected from him when accepting a new assignment;

- to make the right choice of equipment, he needs in order be able to undertake the

survey;

- to know exactly how to use the equipment and to draw the right conclusions from findings and readings;

- to make sure that the equipment used is duly calibrated and certified.

7.2 Health and Safety

Health and safety is everybody's concern. Individuals should not deliberately put themselves or others in danger. This applies particularly to the cargo surveyor who may often find himself working in an environment that presents particular hazards. It is therefore important that appropriate consideration is given to personal protection and safety, to the protection of others and to preservation of the environment. Much of what may follow involves common sense and situations will of course differ, but on every occasion before setting off to conduct a survey, the surveyor should consider the following: Survey preparation Safety preparation is essential. The type of survey to be undertaken will to a large extent dictate what needs to be considered but some factors are common but remain important: - The weather conditions, especially extreme high or low temperatures and rain, snow

or sand storms. - The location of the survey may be crucial to safety. - Lighting conditions, if poor, all torches or electrical equipment should be properly

tested on safety and functionality. - All tools and equipment to be used should be in good condition and properly

maintained. - Ventilation can also be vitally important.

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Safety equipment and safety awareness The correct type of protective clothing is important. Relatively clean closely fitting overalls in good condition together with appropriate footwear are essential. In cold weather appropriate cold weather clothing, preferably with high visibility, and in summer appropriate sun protection, are vital. If working on some docksides there may be particular safety requirements such as hard hats. The surveyor should check on this before starting work. Other protective equipment includes some form of ear-plugs and eye protection e.g. if working on a cargo that is close to other working areas. At all times the surveyor should be aware of his surroundings and what is happening in the local area. Before boarding any vehicle, ship or craft he should make certain that it is safe to do so and be familiar with any specific regulations on safe access. Some means of portable access may be required to proceed with the inspection, such as a ladder, which should be fit for use, properly positioned and secured or a temporary staging, which must be properly rigged and secured. Location and communications A surveyor should always be aware that he is working on someone else's property. On arrival at the dock or warehouse he should report to the yard office so they know that he is there. If on board a ship the surveyor should make his presence known to either the ship’s captain or the chief officer. If working in remote and lonely locations the surveyor should make certain that someone is aware of exactly where he is and have a positive reporting system for his safe return, in case of accident or injury. The more remote the location, the greater the risk to the surveyor. Enclosed spaces A number of people, both seamen and surveyors, lose their lives every year as a result of suffocation, gassing or injury in enclosed spaces. Some likely causes of an unsafe atmosphere in enclosed spaces aboard a ship are:

Fumes from oil and chemical cargoes.

Compartments can be filled with inert gas, either deliberately or by accident.

The fermenting of vegetable matter, such as grain, may produce carbon dioxide gas causing suffocation. Rotting vegetation will give off explosive methane gas.

The gas used for fumigation of ships and certain cargoes.

New paint will absorb oxygen and may give off flammable toxic solvents.

It is difficult to name ‘every possible source of danger’ to the air breathed in enclosed spaces. The only safe approach is to assume that there is a hazard, and take necessary precautions.

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What the surveyor must never do is to enter any enclosed space without authority from a responsible person and always wait until the safety checks have been effected.

It is the responsibility of a ship’s master or senior warehouse keeper to ensure that the space has been thoroughly ventilated by either natural or forced means. It is necessary also to ensure that the atmosphere of the space at various levels is tested for oxygen deficiency and other toxic vapours, showing the space to be acceptable to support human life. Further, it is necessary to ensure that breathing apparatus is available for use where there is any possibility or doubt as to the adequacy of ventilation or testing.

A note of warning! Where it is known that the atmosphere is possibly unsafe, the space should be entered only when it is essential or in an emergency. All safety checks should be carried out before entry, and breathing apparatus should be worn. It is important that anyone entering space wears suitable clothing and makes use of protective equipment which may be provided for their safety.

Final Comment: It is commonly known that where people are daily operating in a risky environment, the danger is no longer recognized as such and becomes “normal”. At that point, labourers, surveyors, seamen are used to working in a dangerous environment and tend to become negligent and by doing so, the danger factor increases and accidents are likely to happen. It is therefore imperative for all, warehouse managers, captains, surveyors, safety officers to monitor the situation and remind or educate labourers and visitors of the imminent potential danger.

7.3 On Site Check List

The role of a checklist is to provide the surveyor with two things. The first is a straight-forward reminder of everything that needs to be checked for any particular type of survey. The second is for quality control so that before the surveyor leaves the site he knows, positively, that everything he should check has been checked because all the relevant sections of the checklist have been completed. There is no standard cargo survey check list though some clients have "in house" forms or other documents which include different check lists for different situations. Below is a suggested surveyor’s check list. Each company/surveyor may wish to amend this to suit their particular circumstances. It may be that the most efficient use of such a list is to carry it at all times where site work is involved. It may even be worthwhile to photocopy or otherwise to produce copies so that it may be filled in or ticked off as the survey progresses. Suggested on site check list 1) Location and date of survey 2) Vessel’s name and configuration

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3) Parties attending: who and whom do they represent

4) Produce for inspection: marks, numbers, etc 5) Identity of goods seen: as applicable to documentation 6) Stowage: where applicable 7) Hatches and vessel’s general condition or container general condition

8) Receipts given - Clausing of delivery notes 9) Documents: Bill of Lading, Air Waybill, Invoices, Packing Lists, Inventories,

Condition reports 10) Description of the loss/damage and exceptions noted 11) Photographs 12) Saline tests - (how many and where) 13) Sampling, if applicable the method 14) Measurement - how taken, method and identity of equipment used

15) Action to resolve the problem

Notebook Surveyors should keep detailed legible notes from which a colleague surveyor would be able to obtain essential information in the event of it being required at a later date. This can occur when a surveyor has moved on to another company, or is just not available for whatever reason. The surveyor’s notebook is his record of the survey, first hand, and apart from its later use by others, it may be required by the surveyor himself to answer questions which are not clarified in his final report. Should a surveyor be required to attend court in connection with a past survey, his note book, if completed correctly, can be a great memory jogger and also he would usually be permitted to use this in court. He may even find that his notebook will be discoverable in litigation, so again accurate and legible notes are important from the onset.

7.4 Nature of Damage Having established that the surveyor is looking at the right goods, the next immediate aspect is examination of the packing material and the way such packaging is constructed. In the case of close boarded cases or open slatted crates, the dimensions of the timbers used should be noted and a view formed as to the adequacy of such packages to withstand the rigours of the voyage in question.

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Here, of course, consideration must be given to whether the goods were in containers or in normal hold stowage. Also to be considered is whether or not the packaging as afforded was normal for the subject goods. After having the packing properly scrutinised and noted, the surveyor has to expose the goods themselves for inspection. Dependent upon the number of items involved and their nature, the surveyor must decide how many items he should examine to satisfy himself as to the nature of the complaint. The type of damage must be ascertained, with particular regard to its effect on the cargo. 7.4.1 Wet Damage Damage by water can be caused by: - Seawater (infiltration by / exposure to wetting during sea or ocean voyage) - Brackish water (occurred in the dock area or river part of a sea port)

- Fresh water (atmospheric by exposure to rain, snow, hail …)

- Sweat and condensation.

In a marine transit, a policy of insurance usually includes periods of time when the cargo is not in the care of the carrying vessel or container e.g. where warehouse to warehouse cover is granted. There are two basic causes of damage and they are;

atmospheric moisture in the form of rain, snow, sleet, hail, etc.

damage by seawater. Most frequently, the surveyor will be confronted with a consignee claiming, because of contact with water, that the cargo has depreciated in value. This damage may take the form of staining, discoloration, swelling, and oxidation. There are other problems associated with water damage of which the most common is mildew. This wetting damage is common with goods in transit and the nature of it may be very relevant to the remedial treatment required and to any liability under the policy or of third parties. The surveyor therefore needs to do his utmost to determine the origin of the wetting. Silver nitrate solution test This comprises the dropping of a solution of distilled water, silver nitrate and nitric acid onto the subject area. The solution is usually made up as follows:

2 parts Silver Nitrate

2 parts Nitric Acid (chlorine free)

96 parts distilled water.

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It is normal to use an ‘eye dropper’ bottle, preferably of brown glass, for performing this test. The test is well known as a simple one to determine whether chlorides are present or not and, if they are absent, this can eliminate the possibility of salt water. The positive reaction to the test does not prove that seawater is involved as there are many chemical substances that may react, some even in the commodity itself. This simple test can be made somewhat more reliable by taking small representative samples of suspect contaminated packaging or of the goods, soaking these samples for about five to fifteen minutes in (warm) distilled water so that any salts are absorbed by the water. After having removed the samples from the distilled water, the surveyor can then make a test by adding a few drops of the silver nitrate solution to the water to detect the presence of chlorides. For good comparison, a similar test is also required for samples of packaging and goods that had apparently remained dry, intact and not contaminated, so as to provide a check test. If the previously clear or reasonably clear water has had a few drops of the silver nitrate solution added, there will then be an almost immediate reaction in which the water becomes cloudy white if chlorides are present. The extent of the presence of chlorides will determine the degree of discoloration. Where they are present in relatively large quantities, as will normally be the case with sea water, the cloudiness will be very marked and the water will take on the appearance of milk. Lesser concentrations will merely cause some milky discoloration. This may give a first indication if the wet damage may be relating to seawater, brackish water or fresh water contamination. It should be noted that this test is entirely inappropriate for any galvanised product or indeed any product containing zinc or lead as the most probably result obtained will be a black deposit. If seawater is suspected, and the value of the expected claim justifies doing so, a sample of the wetted packing or goods could be submitted to a chemical analyst who should be able to identify the contaminant to be salt or even seawater. Comparative samples of an uncontaminated part of the packing or goods may speed up and simplify the analysis. Unless a surveyor has obtained an analyst’s report which specifically confirms the presence of seawater, the surveyor from his own test should state only that a silver nitrate test was carried out and that the result was positive, or negative. A negative result however does indicate the absence of sea water and this can sometimes be all the information that a surveyor requires to assist his further investigation into the cause of the damage. Container Transport: Even if the survey is effected inland, at the final destination and not in a sea port, with the still growing use of containers to ship goods from the Shipper’s warehouse to the premises of the final Consignee, it is essential for the surveyor in case of wet damage to cargo to each time perform a test with a silver-nitrate solution. This may be very valuable information to determine the cause of damage and to assist the Insurer to judge if the claimed loss is an insured risk under the policy.

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Sweat and Condensation There are two forms of sweat:

Cargo sweat occurs when warm air is introduced into a hold and its ambient humidity is cooled below its dew point. This most commonly occurs when a vessel is on passage from a colder to a warmer climate and warm moist air, being introduced into the holds, condenses onto the colder surface of the cargo. Example: steel cargo loaded at -30° C, carried by sea to Africa where the noon temperature is +30° C. The air humidity will extensively condense onto the steel surface, resulting in entire wetting of the steel and subsequent corrosion.

Ship’s sweat on the other hand is formed when the air within the hold is cooled beneath its dew point by the hold steelwork. This mainly occurs when a vessel loads in a warm climate and proceeds to a colder climate. The cooling effect by the seawater and external temperature to the steelwork up to beneath the dew point of the warm moist air in the hold, results in condensation of sweat on the hold surfaces and is subsequently dripping down onto the loaded cargo.

One aspect which must be borne in mind is how condensation arises, whether it would be in the form of cargo or ship’s sweat or a general wetting. A very simple but clear example to demonstrate the basic principles of condensation: the surveyor places in his refrigerator a bottle or a can containing water, soft drink or beer, and leaves it in the refrigerator for about 12 hours or more. When they are taken out, particularly in a very warm atmosphere, condensation will be more or less instantaneous and by wiping the can/bottle with his hand, it will be wet. This may demonstrate how rust spotting of paper labels glued to cans can arise. Where ship’s sweat is concerned, airborne moisture condenses onto a ship’s structure, either the overhead hatch beams, the ship’s shell plates and/or frames, and water tends to run down to a lower point where it cumulates until such time as it forms sufficient bulk to drip onto the underlying cargo. Ventilation The golden rule for airborne moisture to condense is that the surface on which it condenses is colder than the ambient air. One of the most common errors made by vessel operators and, indeed, by many surveyors, is in believing that ventilation always prevents condensation and sweating. This is not so. The purpose of ventilation is usually to avoid ship’s sweat and therefore ventilation should take into account the ambient air temperature and the atmospheric humidity through which the vessel is passing prior to deciding whether or not it would be beneficial for the cargo to ventilate.

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In this respect, distinction should be made between hygroscopic and non-hygroscopic cargoes. We may have a situation where in hold or container conditions, the cargo itself is giving off moisture. It is desirable in this situation for this moisture to be removed from the ship’s hold or container and naturally, other than in exceptional circumstances, such vigorous ventilation should be undertaken. Cargo sweat, which, apart from being harmful to other adjacent cargo, could also be equally harmful to the cargo that is producing the sweat inasmuch as such moisture may stain the cargo, e.g. timber. Some ventilation guidelines:

Knowledge about the properties of the cargo carried. When in doubt, contact shippers or suppliers to obtain the required information.

In general, no ventilation with high atmospheric humidity such as dew, fog, rain or heavy snowfall.

Observe condition and temperature of cargo during loading.

Make a clear distinction between hygroscopic and non-hygroscopic cargoes. As a general guidance: only provide air ventilation when air temperature is at least 3°C (for non-hygroscopic) to 5°C (for hygroscopic cargo) colder than cargo temperature.

7.4.2 Mechanical or Impact Damage

Impact damage arises from one or more of several causes, in most instances relating to “handling”. In non-containerised items, damage often results from either the items, or the packages containing them, being struck by fork hoists or, whilst in stow, by other cargo striking them in the course of loading and discharging. Similarly, the items or their packages will often come into contact with other cargo or the ship’s structure whilst they are being handled. Cardboard, in association with some internal material such as polystyrene, is often used as packaging. The latter is very effective ‘cushioning’ and if an impact is over a large area neither the cardboard nor the polystyrene may show obvious external evidence of damage. The surveyor, alerted to the knowledge that there is damage to the contents, will often have to search first for evidence of impact damage internally, and then in many instances find minor traces of the impact also on the packaging which at first glance remained undetected. Impact damage can be attributable to negligence of the cargo handler or to some kind of mechanical disorder. This includes the tearing of bags which may in turn permit the escape of part contents or all contents.

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impact damage (rail transport – no securing)

A common cause of impact damage, particularly on road or rail carriage, is the result of rapid deceleration. The most common cause of deceleration is, of course, an emergency stop. Deceleration, unless accompanied by derailment or similar, is considered a lesser problem by rail transport. In rail transit, the major hazard is in the shunting yards when one or two wagons are being moved at a time and coupled to their wagons which are stationary. Where the moving wagon hits the stationary wagons there may be, depending on the speed of the wagon being moved, considerable shock. Again, whilst not strictly impact in the accepted sense of the word, the use of cargo hooks on bagged cargo can cause tearing and subsequent loss of bagged contents. The use of such hooks is becoming rarer with the widespread dependence on palletisation and forklift trucks. The most common cause of impact damage is handling at any stage or stages of the transit. However, in many instances it is quite possible for the external packaging not to show any form of damage, whereas on opening, severe damage may be sighted.

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Impact damage (road transport – poor stow) This is the result of kinetic energy imparting a shock to the contents of the package or piece. For high value equipment, it is highly recommended to apply shock indicators inside and outside the packaging, and these can often assist a surveyor in his investigations. Where damage by impact is the cause of claim, the surveyor, in the absence of any specific evidence as to where and how the damage occurred, should give consideration to all possibilities before arriving at a conclusion. The surveyor may then at a later date be in a position to defend his judgement and to uphold any decision reached by principals on the basis of his report.

too soft dunnage

damage in stow (too soft dunnage)

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7.4.3. Shortage Theft, Pilferage and Non-Delivery Where theft, pilferage and non-delivery are concerned, it is important to be clear in the definition of each occurrence due to specific inclusions or exclusions of such risks which may exist in certain insurance policies.

Theft is the forcible taking of entire package(s) or unit(s) or of part contents of the cargo.

Pilferage is the taking of packages or units of cargo without necessarily breaking the packages open. It means to steal in small quantities, commonly done at one of the stages of the transit.

Non-delivery is the shortage of cargo, i.e. an entire package, at its destination In order to minimise the loss of goods from these occurrences, the use of new, well-constructed packaging could help. Exposure of the packages’ contents invites possible pilferage. The use of clear codes and labels will minimise the risk of mis-routing and non-delivery. Unitising and palletising of cargo will also keep the consignment together and thus reduce possible pilferage. Cargo could, of course, just simply disappear without trace or explanation. In relation to cargo which has not been delivered at its proper destination or which has mysteriously disappeared, it is necessary in each case to explore the possibility of jettison, theft and mis-delivery as causes of loss. A wrong delivery by accident, mistake or negligence is clearly not theft, and the mere fact that the goods are not delivered, or are delivered to the wrong person, will not, as such, support a claim for theft.

normal loss in transit by grab transhipment

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7.5 Extent of the Loss / Damage The surveyor, having already inspected the outer packing/outward condition of the cargo now has to expose the goods themselves for inspection. Dependent upon the number of items involved and their nature, the surveyor must decide how many items he should examine to satisfy himself as to the extent and nature of the complaint. The type of damage must be ascertained, with particular regard to its effect on the cargo. The surveyor should be aware that where marine insurance is involved, the policy of insurance usually relates only to physical damage and loss of the cargo. There is no automatic cover in marine insurance for compensation. The surveyor’s duty is to establish the loss. When goods are damaged (whether or not they may become the subject of a claim) the extent of the loss has to be determined. This is usually done in one of two ways:

By considering the reasonable cost of repairs, refurbishing and generally reinstating them to sound condition.

By considering their loss of value, i.e., depreciation. The former method is straightforward and generally these costs, if reasonable, will be recoverable from Insurers, subject to the claim being recoverable under the insuring conditions. Depreciation may be more difficult to determine, but it is basically the loss in value between what the goods would have been sold for, at a given time, in a sound condition, and what they will sell for in a damaged condition, assuming that the market value has not fluctuated in the intervening period. Where major items are concerned, for example machinery, establishing the loss quite often will be to ascertain repair costs. However, in establishing a repair cost, the surveyor must be certain in his own mind that after repair the goods will have been restored to their original state. It is also important that, where applicable, any warranties are maintained by the original manufacturer. It may well be that a receiver, whilst agreeing to a repair, will consider that the repaired items are, in effect, depreciated by reason of repair. Where such a claim is put forward, the surveyor must satisfy himself that in fact the goods are not in accordance with the original specification and this is particularly important where the original manufacturer withdraws warranty by reason of damage. It is for the surveyor to determine whether or not such claims are justified and, where applicable, to grant an allowance. The best way to deal with such a claim is having taken all aspects into account of repair costs and subsequent claims, etc., to consolidate and to agree a depreciation to cover such costs, etc. without prejudice to liability.

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Where such an agreement is made, then the surveyor should explain the reasons for as well as the way of calculating such depreciation in his report. 7.5.1 Salvage Sale Occasionally, goods will arrive so badly damaged that the consignee has no further commercial use for them. Consignee may then expect to abandon them to Insurers and to look to them to take over the responsibility for the goods. Whilst the consignee may have a legitimate claim under the policy, Insurers are under no obligation to take over the goods on abandonment and generally will not do so. If there is any value in the goods, the Insurers will generally expect the consignee to agree to have the damaged goods sold for salvage. The surveyor may do this but strictly “on behalf of whom it may concern” and if properly authorized to do so by the consignee. A word of caution! If instructed to do so, the surveyor must clearly state that his involvement does not imply that insurers accept abandonment and that he is not taking over the goods on Insurer’s behalf. Practical issues with regard to arranging salvage sales: The general practice of salvage sales is varying in the different parts of the world: where in some parts it has become a generally accepted common practice, in other parts it is a rather exceptional situation. Nowadays, compliance makes it for some large corporate companies very difficult to have their - even heavily damaged – products sold for salvage. Some basic arguments as to why the cargo insurance surveyor and not the consignee should dispose of heavily damaged goods, which have lost their normal intended commercial purpose, are as follows. Although a consignee is evidently best placed to sell his goods, this is generally only the case for intact goods and not for heavily damaged ones, which have a totally different clientele with whom most of the consignees are not so familiar with. It would appear strange to have consignees, who initially confirm having no further use of damaged goods, arrange to sell these goods anyway. Surely from Cargo Insurers’ side it may be difficult to accept that in those circumstances the quoted salvage values are the best obtainable. Also in the different continents, the handling of salvage sales varies: some prefer to arrange salvage sales by auction (mainly in the USA and Canada), others prefer sending out tenders and collecting all bids at a certain date and time and simply allot to the highest bidder (such as most European countries). Pros and cons exist for both systems. From the surveyor’s point of view, the latter may have more advantages: the surveyor has more control on time frames, on the offers made and furthermore will gradually build up a database of contacts for future salvage sales. The experience gathered here could assist the surveyor to mitigate losses.

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Liability of the surveyor: Salvage sales need to be organized in such a way that the liability of the cargo surveyor is not at stake: - Prior to starting arranging any salvage sale, the cargo owner (in most instances the

consignee) has to give the cargo surveyor a written authorization to proceed with the salvage sale “for account of whom it may concern” and “without prejudice as to Insurers’ liabilities”, as explained above.

- Having obtained such a duly formulated authority to proceed, the surveyor will issue a tender or circular letter, by facsimile or e-mail message or by ordinary mail.

- This document should clearly specify all information re the damaged goods to be

sold, transit regime, location, quantity and weight, damage description and terms of sale.

- All bids need to be evaluated and goods allotted to the highest bidder.

- Invoicing may be done by either the cargo surveyor or the cargo owners.

- Goods only to be released after having received the funds from the salvage buyer

and issuing a delivery receipt or the like, authorizing the salvage buyer to collect the goods.

Financial arrangements: It has become customary that a cargo surveyor may charge a fee for the time and trouble spent on the salvage sale or a commission. The most common commission rate is 3% on the gross proceeds of salvage sale, excluding of any taxes. Evidently, excessively high commissions should be avoided. Such a commission should remain within a reasonable proportion to the efforts and time spent to realise the salvage sale. Branded goods: Occasionally, the surveyor may not be able to sell damaged goods to recover their residual value and to establish a loss if the goods bear a brand name that cannot be removed. Similarly the surveyor may be restricted if the goods are otherwise identifiable as being manufactured by a particular firm which specialises in such products. In such cases, firms will usually have the goods destroyed rather than have them appear on the market in a sub-standard condition. This would not constitute grounds for claiming a total loss unless, as sometimes occurs, there is an appropriate clause within the insurance contract. To assist Insurers in their evaluation of the loss, a surveyor should indicate in his report an estimated price that the goods would have sold for in their damaged condition or, if circumstances dictate, determine a damage depreciation of the goods.

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7.5.2 Letter of Undertaking (LOU) Where, as an example, a vessel is discharging bulk cargo and damage/loss is identified during discharge or whilst the cargo is still on board the vessel, a surveyor may be asked to obtain a signed “Letter of Undertaking” from the Ship Owners/P&I Club. The Letter of Undertaking may provide not only security but an express agreement to the claim being decided in a particular Court or Tribunal and a Letter of Undertaking should also be drafted so as to cover the award of interest and any legal costs to the cargo claimant in addition to the principal claim amount. Without security there is a real prospect that a claim will not be paid by Insurers and so the prospect of obtaining security must be considered at an early stage.

If the potential value of the claim is substantial, Insurers may appoint a recovery agent to assist however a surveyor must be aware that he may be required to recommend that a “Letter of Undertaking” should be obtained and also assist if necessary. For further information/guidance, please contact a member of the Survey Claims Management Team in the Lloyd’s Agency Department.

7.6 Investigating the Cause of Damage Next to describing the exact nature and calculating the extent of the damage or loss, it is equally very important for the surveyor to investigate its origin or cause(s). This is not only essential for the Insurer or Adjuster to evaluate if the loss agreed upon is covered, but also very useful for the future recovery action against the responsible third parties. Wet damage The surveyor needs to verify if it concerns fresh or salt water damage. In this context, it is imperative for the surveyor at all times to have his dropper bottle of silver-nitrate solution with him to make a first test at the place of survey. For salt water damage, especially when confronted with larger claims, where and when possible an inspection should be arranged on board of the vessel to check the condition of hatch panels and other closing devices by either arranging a hose test or ultrasonic test. For fresh water damage, a further investigation needs to be undertaken to distinguish atmospheric wetting (rain, snow etc.) or wetting by sweat or condensation. Similar for salt water nature, if sufficient information is available the surveyor should indicate whether it concerns damage by seawater or salt water of another (chemical) origin.

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wet damage (bulk cargo) hatch cover sealing in poor condition → leakage

Mechanical or impact damage Especially in cases of combined transport (e.g. subsequently road, sea, rail and road transport) the surveyor needs to investige where and when the damage occurred. Just considering these as “transit damage” without any further comment or description is not sufficient. Based on his inspection of packing and contents and of his enquiry, the surveyor should form his opinion if it is handling or impact damage. In case of handling, based on the documents and information to hand, refer to which phase of the transit may be applicable. Heavy weather damage. One of the most common causes of damage, be it seawater or mechanical damage, where sea transport is involved is heavy weather. In the case of an incoming vessel, the Master will enter a “sea protest” fearing damage to cargo and/or vessel on account of heavy weather encountered during the voyage. The surveyor should try to establish the normal weather to be expected for the voyage under review. If, for example, a vessel crossing the Atlantic in February encounters winds of Force 10 on the Beaufort Scale, this would not necessarily be a normal event and neither would it necessarily be accepted as a defence. It is, of course, the master’s responsibility to stow his vessel, where practical and possible, to minimise the effect of weather conditions which might reasonably be anticipated during the voyage. It may be clear that a ship has encountered heavy weather during the voyage, and a surveyor would be correct in adding this statement to his report. However, it should be made clear that a surveyor should not attribute loss or damage to cargo as ‘due to heavy weather damage’. When permitted to do so by the Master, the surveyor should inspect the stowage, lashing and securing conditions on board the vessel

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The result of this inspection, together with the weather information obtained from the logbook, compared with the official meteorological report obtained from the nearest station, will enable the surveyor to give his expert opinion about the cause of the damage. When confronted with infiltration of seawater, not only the weather information from the logbook is important, but also the inspection of hatch panels and closing devices. An ultra-sonic test or a hose test could supply very useful additional information in this respect. It goes without saying that such an investigation needs to be carried out by a qualified and competent surveyor. If the cargo surveyor lacks sufficient knowledge and expertise, he should seek specialist expert assistance. In many cases, when (alleged) heavy weather is encountered, the cause may well be a combination of elements (problem with packing, stowage, securing, speed, course, routing etc.), whereby one of the contributory elements may well be heavy weather. It is very seldom that heavy weather is the only cause of damage. If a “sea protest” is entered, the surveyor should endeavour to obtain a copy of this document. A formal written request to the Ship’s Agent should be made, a copy of which, together with any reply to be included in the report. Shortage It is the task of the surveyor to investigate and clearly describe the loss thus suffered and make a clear and substantiated distinction between partial shortage, theft, pilferage, non-delivery, short delivery or short landing.

7.7 Joint Survey Whenever damage is reported, the cargo surveyor should liaise with the claimant to identify potential third party liabilities. Immediately, letters of protest have to be issued to keep these third parties liable in due time and form. When organizing the survey, all parties that may be involved in the damage claim file, should be duly put on notice and also invited to attend the survey, jointly with the cargo insurance surveyor, if only to avoid any future dispute with regard to the nature, extent and/or cause of damage or loss. When concluding the joint survey, there should at least be a common agreement between the attending surveyors with regard to the nature and extent of the loss. It would be ideal of course, if surveyors could also agree on the cause of damage, but this is less common to happen. Surveys are undertaken on a “without prejudice” basis what concerns surveyors’ respective principals’ liabilities and thus, in most instances, each surveyor will report his expert opinion towards his principal. In this context it is important for surveyors not to divulge any sensitive information to opponent surveyors without having consulted with and received instructions from their principal to do so.

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In case of high value claims, it may serve its purpose, either for establishing the fact if a loss is covered under the ruling policy or not, or – and this is more frequently the case – to strengthen the prospects of future recovery towards carriers and/or other responsible third parties.

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7.8 SPECIMEN EXAMINATION QUESTIONS – Chapter 7 The following questions are similar in style to those that will be set in the actual exam. 1. Which of the following statements is considered important with regard to

Occupational Health and Safety?

1) Never enter enclosed spaces without authority from a responsible person and also ensuring that it is gas free, well lit and ventilated

2) Always wear suitable clothing and equipment when conducting any surveys 3) Never enter enclosed spaces on your own and also make sure someone is waiting

outside with whom you can communicate 4) Be fully aware of hazardous materials and procedures for working with them

A. Points 1, 2 and 3 B. Points 2, 3 and 4 C. Points 1, 2, 3 and 4 D. Points 1, 2 and 4 2. For condensation to exist, what must be present?

A. Plenty of fresh or sea air in the hold of a ship B. Presence of sea water C. Airborne moisture of the same temperature as the hold or container D. Airborne moisture and a temperature variance

3. Which is the correct interpretation of ‘theft and pilferage’?

A. Theft is the loss of an entire package, pilferage is the breaking into a package and

partial theft of its contents B. Theft is the taking of part of the consignment , pilferage is the removing of the entire

consignment C. Theft and pilferage is the forcible taking of cargo D. Theft and pilferage is the failure to deliver the entire consignment

4. What is meant by mechanical or impact damage?

A. The result of cargo having experienced a heavy storm B. The exposure to seawater infiltration in the hold of the vessel C. The wrong temperature setting for frozen or chilled goods D. Damage resulting from handling, collisions, severe shocks 5. What is expected from a surveyor when confronted with wet damage?

A. To verify if the wet damage is restricted to packing only B. To test if it concerns damage by fresh or salt water C. To check on the condition of hatch panels D. All of the above

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Chapter 8

8. SURVEY REPORT

8.1 Preliminary / intermediate reporting

8.2 Final report 8.2.1 Essential contents of survey reports

8.2.1.1 Loss / damage survey report 8.2.1.2 Pre-shipment / Outturn survey report 8.2.1.3 Other survey reports 8.2.1.4 No survey reporting

8.2.2 Documents required / documents obtained

8.2.3 Missing documents – Letter of Indemnity for Missing Documents

8.3 Survey invoice

8.4 Subrogation Form

8.5 Archiving / Filing

8.6 Specimen Examination Questions

Technical Cargo

Surveying

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8. SURVEY REPORT

Any survey report should be factual, clear and concise but completed, in a logical and chronological order. Depending on the complexity or size of a case, varying from a one visit inspection on completion of which a final report can be immediately written after the surveyor has returned to his office, up to a complex matter, necessitating a series of inspections spread over a considerable period of time. For the latter case, the surveyor has to report on completion of each visit or investigation, commencing with a preliminary loss advice to intermediate reporting after each inspection, investigation or meeting up to the final survey report. For the preliminary and intermediate reporting, use can be made – if only as a check list – of the “Provisional Advice of Claim/Survey Request Guidance Notes”.

8.1. Preliminary / Intermediate / Interim reporting Each survey report that is issued must clearly state whether it is a preliminary report or an intermediate/interim/final report. When more than one intermediate report is issued, the reports should be clearly numbered. All reporting should also include the issuing date. A preliminary report provides essential information to the Insurer or Claims Adjuster to look into the merits of a claim and to enable a proper loss reserve. For complex/high value claims, regular updates should be provided. Surveyors should agree with their Principals as to the regularity of the reporting.

In addition to the specific information to be reported, each preliminary or intermediate report should mention for easy reference:

- File and report number - Cargo inspected / subject of survey - Applicant - Date and place of survey.

Further guidance for preliminary or intermediate reporting is given by the form “Provisional Advice of Claim/Survey Request Guidance Notes” (replacing the former Schedule J), which can be found on the Noticeboard under Forms and Schedules. A copy is also included under Attachment no. 2 of this Module. It is essential that there is good communication throughout the entire process. Principals must be regularly updated. Regular updates will not only keep all parties aware of the status of the matter but can also assist in obtaining any outstanding documents that are needed to finalize the report. This can also prevent unnecessary delays. Any update request should be responded to timeously even if just to advise that documents/information is still awaited.

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8.2. Final Report Surveyors are paid to establish the facts and report on them. Surveyors should therefore not render an opinion unless requested to do so by the client. The surveyor's job is to look at, and report on, what he finds. Observations made by a surveyor fall into two distinct categories viz. facts and conclusions. If the facts support only one conclusion then the conclusion may be expressed by the surveyor and does not constitute an opinion. This is because the facts have led the surveyor to an inevitable conclusion which any other honest surveyor faced with the same facts would reach. However if there are insufficient facts to support the conclusion, then the conclusion amounts to no more than conjecture and is therefore unacceptable. If asked to express an opinion then the surveyor should do so. He must however clearly differentiate in his report what is fact and what is opinion so as to avoid any misunderstanding. Unfortunately all too frequently surveyors’ express opinions such as "the cargo was loaded wet" or "the ship did everything possible to prevent this damage from occurring". Such blanket statements are extremely dangerous. To be certain whether or not the cargo was or was not loaded wet, the surveyor would need to have been present himself at the time of loading. Equally, whilst the surveyor might think the ship did everything possible to prevent the damage, can he truly support such a statement with facts, under cross-examination. Remember, the surveyor’s primary purpose when conducting a cargo damage survey is to establish the cause, nature and extent of any loss or damage. In those instances where the Lloyd’s Agent has instructed an external surveyor to proceed with the survey, when issuing the final survey report, the Agent should make use of the new form “Appointment of Sub –Contracted Surveyor by a Lloyd’s Agent” (Attachment no. 3) to which Schedule the surveyor’s report is to be attached. Recording information: Effective report writing requires effective information gathering. Surveyors should not rely on memory alone when gathering information during a survey as this can be forgetful, inaccurate and selective. The following are useful ways of recording information: On paper: A well written notebook is not only a useful method to record information but can also be kept as an archive document in case it is needed at a later date to support a statement or report. It is good practice to adopt a standard basic check list format for information gathered.

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On tape: Dictaphones are good evidence of who said what and when. For a busy surveyor it is an invaluable tool, particularly if it can be passed to a secretary for typing. Regularly check battery and operating status, to make sure that all information is on record. Have the tapes typed out as soon as possible in order to avoid incomplete reports. On film: Any report will be enhanced by photographs. A photograph can save unnecessary description and is helpful evidence. Even if the photos are not actually used in the final report they serve as a useful reference source for the surveyor when writing his report. They are easy to store and contain a wealth of information which may not even have been initially apparent. Research and preparation: The more background research undertaken, of course only necessary when dealing with complex and/or high value claim cases, the better prepared the surveyor will be when writing the report but care should be taken to only include information relevant to the survey. All evidence, be it photographs, videos, documents or other materials should be clearly labelled and filed or stored so as to be easily retrievable. All material, including field notes, documents and photographs should ideally be stored together and separated from any items relating to any other matter. If face to face interviews are required questions should be well prepared and the background thoroughly researched prior to the meeting. Organising notes and materials is essential particularly if the surveyor is not able to return directly to the office and special care should be taken to separate the documents and materials relating to one survey, from another. Good file keeping is imperative. When compiling the report he should consider whether the data should be embodied in the body of the report or whether it should be included as an appendix as background reference material or omitted entirely. When reporting on an incident, it is useful to draw up a chronology of events. This helps identify any gaps in the information or conflicting/contradictory information. Prior to drafting his report, the surveyor should consider the overall purpose of the report and its specific objectives bearing in mind who might read the document and the consequences. It is essential that the reader understands what has been written and why it has been written and that the style and presentation of the report makes a good impression. A golden rule for the surveyor is that when writing his report, he must always bear in mind that it is destined for a person, mainly an insurer or claims adjuster, who has not seen the damage and has to rely entirely on the contents of the survey report to make his judgement. Although the marine transportation industry uses English as the standard language of communication, it also has its own vocabulary which can be confusing to the reader especially to someone inexperienced in shipping jargon. Technical language, expressions and jargon should therefore be either avoided or clearly explained.

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The contents of the report must be relevant to the client’s instructions. A survey report is a record of what a surveyor saw or measured. Occasionally, for a damage or condition survey, the surveyor's opinion or assessment will be required. However, the first rule of survey work is to report the bare facts. The report should be completed within a set time frame in accordance with the client’s instructions or service level requirements. Failure to do so is unprofessional and will damage the surveyor’s reputation. Lloyd’s Agents are required to submit their final reports at the latest within 30 days of completing the survey in the absence of express agreement from the client to delay the publication of the report in circumstances where e.g. the client may prefer to wait for additional documentation to become available. When writing a report the following should be considered: Content: Ensure you know exactly what you want to write about and that it meets the client’s criteria. Ensure that all information is accurate and don’t make any mistakes. Clarity: The main issues should be clear and not buried in a sea of unnecessary text. Style: Be concise, but clear and complete. The whole document should bear the report reference and page number. Language: Use simple English and avoid if possible, complex technical words or expressions. If English is not your first language ensure that nothing has been “lost in translation” and remember that English may not be the reader’s first language either. Be precise about the meaning of words when describing technical terms. Use the same word for the same meaning throughout the report. Allow time for editing, proof reading and printing as well as of course planning and writing the report. When available, for more complex reports have a second pair of eyes look into it. 8.2.1. Essential contents of survey reports As already repeatedly explained, a survey report should be complete and contain all dates and data, depending on the requirements as set out by the applicant or principal. Some elements, however, are extremely important for most of the survey reports to be issued and deserve special attention. Packing is most certainly one of them, in most if not all survey reports. Packing may be a very complicated and complex area in a surveyor’s duties. The object of packing is to protect goods from damage of whatsoever nature during the course of movement or, in certain circumstances, storage. It is perfectly possible to pack nearly all goods in such a way that damage is virtually impossible, but also economy needs to be considered. Therefore, packing must be relative to the sensitivity of the product and its cost.

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In some instances packaging may be well conceived but poorly carried out. The way the goods are packed as well as the design of the packaging should be of concern to the surveyor. Other aspects are the marking of the package to give guidance to those handling it. These markings should be clear, give dimensions and weight. The packages should also be marked where applicable with the appropriate ‘International marks and symbols’ indicating the contents, e.g. the wine glass sign for delicate and breakable contents. In many instances, particularly with larger packages and where the contents are unevenly distributed as to weight, then it may be necessary for the centre of gravity to be indicated. It is obvious that if a package is marked ‘this way up’ and delivered upside down, then there is a strong probability of damage. The protection afforded to goods will vary considerably with the method of transportation. There is a very significant difference when dealing with sea, road, rail or air transport; containerized or not. The question of packing is paramount in the attribution of cause of damage. The liability of Insurers or Carriers respectively may well be in question if the goods are not suitably packed. A note of caution! If, in the surveyor’s opinion, the packing was not adequate for the transit, he should include appropriate remarks and argumentation in his report to this effect. In these circumstances the surveyor should be totally satisfied with his opinion; however, he may anticipate that his views could be strongly contested. It is recommended that should the surveyor take such a view, i.e. inadequate packing, then he advises the Assured accordingly. The Assured may seek the support of the surveyor to enter the claim against the supplier as opposed to Insurers/carriers and/or may insist on packing improvements / loss mitigating measures for future shipments. Important parties to be mentioned are:

- Applicant - Claimant - Consignee - Shipper - Carriers - Surveyors

Important dates to be included in the report are those confirming the:

- Departure - Transhipment(s) - Arrival - Discharge - Final delivery

as these dates may include valuable information with regard to transfer of ownership or custody of the goods concerned.

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The other important paragraphs of the survey report may vary and are dependent on the type of survey done; some of the most common ones are explained hereafter.

8.2.1.1 Loss / Damage Survey Report The surveyor should always bear in mind the fact that his report must reflect all he has seen, heard and found out during his inspection and investigation. When writing his report, he has to include all information to enable the Insurer or claims adjuster to make a correct conclusion whether or not all or part of the claim is covered by the respective insurance policy / certificate, the extent of the loss has been correctly calculated and also if a recovery claim can be introduced with responsible third party. The contents and quality of the report should give the same result as if the reader of the report actually was present during survey. Of prime importance is of course, a clear, complete but concise description of the nature, cause and extent of the damage.

The nature of the damage should give a clear description of the condition of the goods submitted for survey. The description should accurately cover as well the external condition, with reference to the condition and quality of the packaging in relation to the damage sustained, as the condition of the goods themselves. The extent of the loss section of the survey report should clearly project the calculation of the loss per type of damage. In chapter 7.5 on pages 91 to 93, it is explained how at the time of the survey, the surveyor should calculate and agree on the loss / damage sustained. This calculation or depreciation should form a part of the report. The mention of a loss figure therefore is surely insufficient. The basis of any calculation of loss or damage, including specification of all extra expenses considered at the time of the survey, must be clearly mentioned and explained in the report. The cause of damage is of course not only valuable for the insurer to determine if a loss or damage is covered under the existing policy, but also to evaluate the possibility of a recovery claim against responsible third party or parties. In this respect, reference is made to chapter 7.6 on pages 93-95 of this Module. Recovery When establishing the cause, nature and extent of loss or damage at the time of survey, the surveyor should bear in mind that the Underwriter will also be interested in the prospects for recovery (or the prospects for defending the claim if the principal is a P & I Club.) Information is much more easily gathered at the time of inspection and investigation immediately following the loss than later. The Lloyds Standard Form of Survey Report does prompt the surveyor for information likely to be useful in any subsequent recovery action as well as recording what actions the claimant has taken to hold the carrier or third party liable.

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The surveyor should however confine his report to facts and findings. Any opinions or potentially contentious comments which might be detrimental to the prospects of recovery are best dealt with in separate correspondence to the Principal. If the carrier is clearly at fault or the surveyor has knowledge of the local carrier deemed to be at fault, dependant on the experience within the Agent’s office, you may consider offering your services in pursuing recovery action on behalf of the Principals. For any questions/support in this regard please contact a member of the Survey & Claims Management Team in the Lloyd’s Agency Department. The best and complete check list when issuing a survey report is the “Standard Survey Report (Goods) for use by LLOYD’S AGENTS and SUB-AGENTS only” (replacing the former Schedule C), which form can be found on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules” and copy of which can be found under Attachment no. 5 of this Module.

8.2.1.2 Pre-shipment Survey Report The reporting will depend a lot on the specific instructions received before undertaking this kind of surveys. The focus of the inspection and therefore also of the report is mainly on:

- the identification of goods inspected and time and place of inspection; - packing and its suitability; - stowage, lashing and securing; - handling during loading; - storage conditions.

The “Pre-Shipment Survey Report (Goods)”(replacing CP and FS) is available on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules”, and copy of which can be found under Attachment no. 4 of this Module. 8.2.1.3 Other Survey Reports In view of the fact that a large variety of survey requests may be received, the survey reports need to be adapted accordingly. It is impossible to supply report templates for each and every one of them. However, as always, from the moment of receiving a request for survey, clear instructions should be asked prior to proceeding to survey and such instructions will determine the contents of the survey report. If none of the above forms or schedules are applicable, the “Short Form Survey Report” (replacing Schedule CC) may be of assistance and could be adapted according to the ruling requirements for the specific survey undertaken. A copy can be found under Attachment no. 6 of this Module.

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8.2.1.4 No Survey Reporting For reporting on all claims for which it had been agreed that no survey was to be held by the Lloyd’s Agents, use can be made of the “No Survey Information Form”, (which form is replacing the former Schedule K) and can be found at the Noticeboard under Forms and Schedules and a copy is also attached under Annexure 7 of this Module. This form contains the essential fields capturing the necessary data as well as a narrative section on the second page. This section can be expanded depending on the volume of information the agent needs to incorporate in this report and allows the report to become multi-page instead of only a two page document. It should be explained that this report is primarily suitable for shortage/theft/non-delivery or where a physical inspection is not economically viable. In the event that a substantial claim is submitted, we would not recommend that this form is used however we would suggest that the “Short Form Survey Report” is used even if no physical survey can be held. An example of where this report would be used is in the event that cargo arrives short and the packing material is no longer available for inspection. A physical inspection cannot therefore take place and the report will be limited to documentation/information received from the claimant. Important Remark: Once the report is completed, you should re-read it and consider the following:

Have you checked for factual mistakes?

Have you contradicted yourself?

Is the summary really a summary, or does it introduce new material?

Can clients find what they want quickly?

Does the report contain all information clients / insurers need to know?

For more complex cases or reports, it is highly recommended to have someone else, preferably with the same or more experience and background, proof-read the report before having it sent out to the principal. 8.2.2 Documents required / Documents obtained Especially with Loss / Damage survey reports, but also for most of the other survey reports, it is good practice to seek copies of the shipping documents, prior to actually effecting inspection and if copies are not available then surely at the time of writing the report. The reason for obtaining documentary evidence is important, as without such documentation the identity of the cargo is not proven and such proof is absolutely essential in order that parties concerned may be certain that they have an interest in the goods being surveyed.

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All obtained documents or copies that are relevant should be attached to the survey report and a list of all attached documents to be mentioned in the report. For Loss / Damage Survey Reports, the most commonly expected attached documents are:

Certificates of Insurance

Bills of lading / Air Waybills / Waybills

Packing lists

Shipping or Commercial Invoices

Signed delivery receipts

Protest correspondence

Log Book extracts

Analysis reports

Prints of digital photographs For Pre-shipment / Outturn Survey Reports, following documents or copies could also be attached:

Mates receipt

Tally reports

Cargo and/or ship’s manifest

Cargo plans

Weather reports

Master’s Note of Protest For investigation or other reports could also be attached:

Witness statements

Technical reports The above listed documents are indicative and surely not restrictive. 8.2.3 Missing Documents Occasionally, some original documents are either not available or have been genuinely misplaced or lost. In these cases a ‘Letter of Indemnity’ signed by the consignee identifying the missing documents may be accepted by Insurers in lieu of the missing document. It is important for the Lloyd’s Agent to obtain Insurers’ approval prior to have the letter of indemnity signed by claimants. The “Form S Indemnity for Missing Documents can be found on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules” and copy of which can be found under Attachment no. 8 of this Module. A further important remark: late supply of documents should not be a reason for delaying the issuing and sending of the survey report. In case the set of documents to be sent with the report is not complete, this should be mentioned in an accompanying letter explaining which documents are not received and the reason why.

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A letter of indemnity can always be arranged for at a later date. The first priority is for the final report to be completed and sent earliest possible after a survey has been concluded.

8.3 Survey Invoice Once the report is finished, an invoice needs to be prepared. The invoice should reflect the work that has been carried out and should include an itemised breakdown (for survey fees, travel cost and all other expenses rightfully incurred) of the total amount being charged. The invoice should be made according to local legislation, including local taxes when applicable, adding clear information as to how payment should be made with full banking details. Payment terms on the invoice should always reflect what was initially agreed with the applicant or principal. Attention should be paid to whom the invoice should be addressed: to the Applicant, Insurer or Broker, according to agreement made or instructions received. The “Invoicing Guidance Notes” can be found on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules” and copy of which can be found under Attachment no. 9 of this Module.

8.4 Subrogation Form It is usually the Assured/Claimant in the first instance who is the party entitled to claim against the third party wrong-doer. The situation changes as soon as the Insurer pays a claim under the policy in respect of the loss which is the subject of the claim against the third party. The passing to an Insurer of the right to claim compensation from a responsible third party is known as subrogation. On payment of the claim under the policy, it is standard practice for the Insurers to obtain a signed Subrogation Form from the assured. The signed form is the Insurer’s evidence that he has paid the claim and become legally entitled to pursue the recovery. A surveyor may be asked to obtain a signed Subrogation Form from the Assured. If instructed, Insurers will usually provide a standard Subrogation Form to be used. If not, a sample of a “Subrogation Form” can be found on the Noticeboard of the Lloyd’s Agency website under “Forms and Schedules” and copy of which can be found under Attachment no.10 of this Module. It is important to note that a signed Subrogation Form should only be requested if instructed to do so by Insurers.

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8.5 Archiving / Filing Finally, with the job done, the surveyor will need to develop some means of storing or archiving his file records. For the new surveyor this will not be too much of a problem as boxes or filing cabinets are a ready means of storage. However, as a surveyor builds up his business, the volume of paperwork that he needs to store can become problematic. Before considering even archiving, an efficient file management system should be in place. Depending on the size of the company and the volume of files handled, the system could vary from a simple but effective ledger where all files are entered manually or a computerized system that may vary from a stand-alone to a server based one. The basic file information, for whichever system is used, should be similar for all systems used and should include, for example:

File number

Date of application

Applicant

Applicant’s reference

Insurer

Policy or Certificate number

Vessel name / Conveyance

Carriers

Description of goods

Date of survey

Place of survey

File closing date Other optional but useful information that could be included in a file management system could be:

Surveyor’s name

Opponent surveyors names

Vessel / conveyance arrival date

Goods discharge date

Name of opponent surveyors

Survey invoice number

Survey invoice date

Survey invoice payment date These lists are only indicative and surely not restrictive. All will depend on the Agents’ needs and in some countries also as per local requirements. With regard to the archiving itself, a number of different issues need to be considered. The first is the length of time survey records need to be kept, in case of a possible legal dispute. Generally, under English law, contractual disputes become time barred 6 years after the date of breach of contract. Records should therefore be kept for a minimum of 6 years. However this time period will vary from country to country and even so important from Principal to Principal. For some Insurers, a period of 7 years may be sufficient, others may require up to 10 years and for litigation cases even indefinitely.

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Legal considerations are not the only reason to keep survey reports. Having a source of reference material, preferably including photographs, on particular items or file cases and maintaining a database of old reports may eventually build up into a significant reference library. Finally, the surveyor will need to develop some means by which he can find information that is stored away. There is nothing worse than knowing that there is a relevant document "somewhere" and not being able to find it. Therefore, with any archiving system there needs to be some form of record to enable retrieval without too much difficulty. Nowadays, a lot of archiving can be done electronically. The systems have improved enormously and have become a lot more reliable and also cheaper.

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8.6 SPECIMEN EXAMINATION QUESTIONS – Chapter 8 1 When are preliminary survey reports necessary?

A. Never B. When large or complex losses are surveyed and the final report may not be available

immediately due to further visits being needed etc. C. Only when specialists are appointed by the surveyor for their reports to be conveyed to

the clients D. Only if requested by the surveyor’s client irrespective of the possible size or complexity

of the consignment

2. Which of the following points should be given particular emphasis within the surveyor’s report? 1) dates relevant to the movement of the cargo 2) condition of cargo at various points of exchange 3) accurate description of the packaging 4) efforts made to mitigate the loss 5) a fully descriptive list of all documents available in respect of the cargo involved

A. All the points listed B. Points 2, 3, 4 and 5 only C. Points 1, 2, 3 and 4 only D. None of these deserve special attention

3. Why is a complete description of packaging so important when investigating

damaged goods?

A. Packing has to meet internationally agreed standards B. Comments on packaging are passed to the International Packaging

Standards Agency (IPSA) C. Damage resulting from unsuitability of packing may be excluded from

insurance coverage D. If surveyor’s comments are proved correct, the carrier might sue him for negligence

4. If the Insurer asks the claimant to sign a letter of indemnity before paying the

claim, what is this most likely to mean?

A. That the loss was probably caused by wilful misconduct of the assured B. That neither the claimant nor the insurer agrees with the surveyor’s findings C. That some important documents were missing or could not be produced D. That the insurance was assigned to a third party after the insured transit commenced

5. Which of the following should NOT be included in the survey report?

A. Clear description of the nature of damage B. Accurate description of the packaging C. All findings relating to the cause of damage D. Surveyor’s opinion about the cause of damage, if not supported by clear facts or

findings

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Appendix 1 Answers to sample questions: Chapter 1 Question 1 - C Question 2 - C Question 3 - C Question 4 - B Question 5 - B Chapter 2 Question 1 - C Question 2 - C Question 3 - D Question 4 - B Question 5 - B Chapter 3 Question 1 - C Question 2 - C Question 3 - B Question 4 - C Question 5 - B Chapter 4 Question 1 - C Question 2 - C Question 3 - D Question 4 - C Question 5 - B Chapter 5 Question 1 - C Question 2 - D Question 3 - C Question 4 - B Question 5 - D Chapter 6 Question 1 - D Question 2 - D Question 3 - A Question 4 - A Question 5 - D

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Chapter 7 Question 1 - C Question 2 - D Question 3 - A Question 4 - D Question 5 - D Chapter 8 Question 1 - B Question 2 - A Question 3 - C Question 4 - C Question 5 - D

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Appendix 2 Useful books / publications / reference material There are numerous publications available, in books, magazines or on the internet, covering all aspects of marine cargo surveying. Some of the more valuable sites and books are listed below. Publications by the IMO (International Maritime Organization) - www.imo.org All can be found under the heading “Publications”. Some of these publications are freely downloadable, mainly in PDF-format, some can be ordered in either book or electronic format. The IMO covers a very wide range of valuable and reliable information; not only concerning the transport of dangerous goods (IMDG Code) but also on general transport issues (e.g. Cargo Stowage and Securing). In view of the fact that obviously, the transport of cargo is a rapid changing environment, this information needs and is also regularly updated. Publications by The Nautical Institute – www.nautinst.org Also here, all can be found under the heading “Publications”. Some are only available in book, others also in electronic format. A few examples: - Hatch Cover Inspections by W. Vervloesem - Ship Survey and Audit Companion by W. Vervloesem - Lashing and Securing of Deck Cargoes by John R. Knott Transport Information Service – www.tis-gdv.de Cargo loss prevention information from German Marine Insurers. A lot of practical information is available in German and English language. United Nations Economic Commission for Europe – www.unece.org Again under “Publications”, a lot of information is available and for surveyors, the most useful ones are: - Transport or Dangerous Goods - Classification and Labelling of Chemicals - ADR 2011 – International Carriage of Dangerous Goods by Road - ADR 2011 – International Carriage of Dangerous Goods by Inland Waterways - ATP = Agreement re Transport and Perishable Foodstuffs This website also refers to: - www.ilo.org = International Labour Organization

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- www.cen.eu = Comité Européen de Normalisation / European Committee for Standardization. The Institute of International Container Lessors – www.iicl.org Under “Education/Training” and “Publication and Tools” technical and practical information is obtainable of a wide range of types of containers. For some information or examination, registration may be required or requested.

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Attachments Forms

1 Lodging a Claims Against a Third Party / Invitation to Attend for Joint Survey Guidance Notes – Replacing Schedule L

2 Provisional Advice of Claim/Survey Request Guidance Notes - Replacing Schedule J

3 Appointment of Sub-Contracted Surveyor by a Lloyd’s Agent - Replacing Schedule B

4 Pre-Shipment Survey Report (Goods) + Supporting Guidance Notes – Replacing Schedule CP (and FS)

5 Standard Survey Report (Goods) – Replacing Schedule C

6 Short Form Survey Report (Goods) – Replacing Schedule CC

7 No Survey Information Form - Replacing Schedule K

8 Indemnity for Missing Documents Guidance Notes – Replacing Form S

9 Invoicing Guidance Notes – Replacing Schedule I

10 Subrogation Form – Replacing Form V