Bulk carriers – the less glamorous but vital shipping sector
WHEN the Ever Given went aground and blocked the Suez Canal for a few days in March 2021, the world suddenly noticed how dependent it was on container shipping. Greater awareness of the vital role of liner shipping to global supply chains became perhaps a temporary phenomenon. For a while, though, the lack of popular items on shelves was a major talking point.
Bulk carriers are even less well-known to the public than container ships, but their role in feeding the world has been highlighted by Russia’s invasion of Ukraine. In the months following the invasion, it became shockingly apparent just how much the world, and especially developing countries, depended on grain from Ukraine. That grain has to exported by ship – bulk carriers – and the flow out of the Black Sea was abruptly halted. A large number of grain ships were stuck in Ukrainian ports and unable to sail.
The first priority was to evacuate the crews of those ships and get them to safety. That was difficult and took some time, but it was achieved.
What was remarkable, however, was that by Jul 22, 2022, an agreement, arranged by the United Nations and Turkey, was in place to allow safe passage of grain ships in and out of three Ukrainian ports (Chornomorsk, Odesa and Yuzhny/Pivdennyi). In the following 12 months, the Black Sea Grain Initiative allowed more than 1,000 ships to carry grain and other foodstuffs out of Ukraine.
Sadly, this month Russia decided to pull out of the deal that had seen about 33 million tonnes exported from Ukraine. An European Union document noted that over 50 per cent of the cargo was maize, the grain most affected by blockages in Ukrainian granaries at the beginning of the war. It had to be moved quickly to make space for wheat from the summer harvest.
It also observed that 65 per cent of the wheat exported through the Black Sea Grain Initiative reached developing countries. Maize was exported almost equally to developed and developing countries.
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The UN World Food Programme also shipped wheat from Black Sea ports. As at July 2023, the programme had bought 80 per cent of its grain stock from Ukraine, up from 50 per cent before the war. Over 725,000 tonnes of wheat left Ukrainian ports for Ethiopia, Yemen, Afghanistan, Sudan, Somalia, Kenya and Djibouti during the implementation of the initiative.
So what happens now? It is difficult to say, but it is reasonable to assume diplomatic efforts are under way to restart the initiative.
However, the situation in the Black Sea is somewhat different a year on. Russia no longer has the unfettered command of the sea it initially enjoyed. Ukraine has set up its own maritime corridor and, according to reports, it seems at least two ships have left Ukraine using it. Meanwhile, great effort is being put into exporting grain via barges on the Danube.
It is be hoped, of course, that an agreement can again be reached to allow free movement of these vital cargoes. However, this disruption of the logistics chain that literally keeps many people alive yet again serves to underline how dependent we are on shipping, and in this context, bulk carriers.
Coincidentally, marine insurer Swedish Club has just issued a new publication, Bulker Focus: Carriage of Grains and Soya Beans. It aims to provide ship operators with an understanding of the common issues experienced during the carriage of these cargoes in addition to ways to avoid them. It is also for ships’ officers, and examines the various challenges facing them when loading, carrying and discharging grain.
The publication is available online and should be read by anybody who wants an insight into how this part of the bulk carrier sector works.
Swedish Club is, of course, concerned about the claims that it has to pay out relating to grain cargoes. So the publication explores the most common causes of cargo damage, and how to prevent them. It also looks at fumigation and ventilation in detail.
In doing so, it shows how shipping and its insurers have to put up with being the fall guy for any perceived financial losses by the other parties in the transaction. In particular, idiosyncratic and sometimes apparently unreasonable bureaucracy comes into play when cargoes are discharged.
In the last five years, Swedish Club’s statistics show that shortage was the most common type of claim for bulkers carrying grains, contributing to 63 per cent of all claims. The insurer said that about 70 per cent of these shortage claims occur due to discrepancies between the vessel’s figures and shore figures, with most claims arising in North Africa over the five-year period as a whole.
The Swedish Club’s director of the claims department, Johan Kahlmeter, explains: “In Argentina and many North African countries, it is not unusual for there to be discrepancies between the shipper’s figures based on shore scales, and draft surveys.”
“Each country has its own rationale for this, but the bottom line is that the operator can find themselves seriously out of pocket through no fault of their own. Indeed, in some North African countries draft surveys are not recognised at all. Although each shortage claim averages to about only US$35,000 there are so many of them that they make up nearly half (44 per cent) of the Club’s claims costs for bulkers carrying grain,” he added.
In the publication, the insurer provides a checklist of advice to help operators protect themselves from these claims, including the use of surveyors, taking care with record-keeping, and getting the Club involved when asked by third parties to sign statements.
Well, good luck with that. The reality has always been that alleged cargo shortages are regarded as an easy target for lucrative claims. The insurer said that average claims are “only” about US$35,000. That is actually a lot of money in grain discharge ports. Changing that will not be easy. It is just one of the many things that bulk carrier owners have to cope with.
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