Star-crossed voyage…

HOW AGENTS COPED WITH ‘SIRIUS’ SAGA

Can you recall what you were doing on 9/11? There’s more than one reason why Roland Malins-Smith of Seafreight Agencies has vivid memories of that fateful time – it coincided with a ship grounding that tested his skills in crisis management to the very limit. Here is his account of those stressful days.

It was the week before 9/11. The working week at Seafreight Agencies began with a desperate search for a substitute vessel for our scheduled Friday 7th sailing as the regular one had broken down. Our shipbroker, Joe Vidal, produced what appeared to be a suitable vessel that Wednesday at Jacksonville, voicing amazement that luck seemed always to be on our side when it came to finding replacement tonnage at short notice. I looked over the surveyor’s emailed pictures of the ‘Sirius’, which seemed rather less presentable than I would have preferred, and made a mental note to visit the ship when it berthed at Port Everglades.

Fridays could be stressful at Seafreight Line. But this Friday brought a measure of satisfaction and mildly positive anticipation. The ship was in position, the bookings had been good, a disaster had been averted and the vacation was coming up. I made my way to the port that evening to meet with the master of the ‘Sirius’. Capt Claus Damm was a mild-mannered German who appeared to be quietly competent. We discussed the cargo list and the itinerary. He thought he had the necessary charts for the first stage of the voyage to Kingston, requested a number of charts for subsequent ports and asked me for a cash advance. I left him for an hour while the ship was being loaded, secured the cash and returned to spend a few minutes more with him. The charts would have to wait until he arrived at Kingston. When I left the ship that evening at around 11 pm I felt we were in good hands.

But, unknown to me, the clouds were gathering.

Our Capt Singh called on Sunday morning to give me the bad news. The ‘Sirius’ was aground on the north-east coast of Cuba. He had received a message from the ship at 04.00 advising him. It seemed that, in the early hours, with the vessel heading 163° SSE from Florida in the Old Bahamas Channel, a critical course change – required to enter the traffic separation pattern off the north coast of Cuba – was not made. Instead, the ship continued on its original course, making a beeline for Cuba as if in a vain attempt to cut the island in two. It was high and dry but intact.

Investigation

Someone appeared to have been asleep at the helm. Subsequent investigation would confirm that the lighthouse on Cayo Santa Maria was working, as were the two GPS units on the bridge. The watch was either playing dominoes or did not have the proper charts. We would never know. Owners would maintain that the grounding arose from a ‘nautical error’, taking refuge in the NYPE charter party standard Clause 16 exception of errors in navigation.

Capt Damm took the usual initial steps to free the vessel, powering her full astern, but to no effect. Soundings of bilges, ballast and fuel tanks were taken to confirm there was no water ingress. By 04.00 local time the master had notified his owners and our port captain.

Offered

We would need help. But this was in Cuban waters, at a time when the relationship between Havana and Washington – and, more to the point, Havana and Miami – was particularly bad. Our friends at Crowley, who had 48 of the 386 TEUs of cargo on board, offered to assist with one of their tugs. The Crowley tug was not far away in the Bahamas, but it quickly became clear that the Cubans would not allow anyone to enter their waters. Salvage master Capt Molina and six men arrived on board by 18.00 the following day, 10 September. They would all remain on board until the vessel sailed. Antillana de Salvamento would be the salvors and a Lloyd’s Open Form 2000 was duly signed by the master.

That evening, with the master, the Cubans set about calculating the requirements for refloating the ship and concluded they would need to discharge 1,600 tons of ballast and 300 to 400 tons of cargo onto a barge to get the job done. They estimated this would take 10 days because they had to wait for the tugs and barge from a Cuban port. We were very apprehensive of any discharge of the cargo as it was evident that the Cubans intended to take the cargo to Matanzas, 150 miles away, for reloading onto the vessel once floated.

The following morning the Cuban divers would begin an underwater survey to confirm there was no significant hull damage. Meanwhile, the German owners of the vessel requested us to urgently provide the manifests for all cargo on board “in order to investigate whether general average has to be declared or not…”. The threat of a general average declaration is a depressing prospect for any liner operator.

Tuesday, 11th September found us preoccupied with the news from Germany and the coast of Cuba, concerned about resuming the voyage quickly with minimum cost to our customers and the company. A salvage contract was in place, a general average announcement was pending and we busied ourselves with our insurance brokers in Miami, underwriters in London and shipowners in Germany through our Miami shipbrokers. In an effort to open a more direct line of communication with the Cubans, we asked our Venezuelan partner, Maritza Avilan, to fly to Havana from Caracas. Time was of the essence and good communication with the Cubans would be helpful, embargo or no embargo.

Mid-morning brought news of a plane flying into the World Trade Center. What appeared initially to be a fleeting distraction would come to dominate the news and every conversation by mid-afternoon and ultimately would change our lives in fundamental ways. But the full implications of that tragic day would not be evident immediately. The ship off the coast of Cuba was never far from our minds; it was a nagging worry, an embarrassment, a threat to our reputation and the confidence of our customers. In this competitive Caribbean liner trade, every misstep would be seized upon by our competitors to sow doubt and distrust of our services.

It would be three more days before the Cubans assembled two tugs and a barge at the site. By midnight on Friday 14th the tug ‘Mermaid Salvor’ had made fast the towing wire to the stern deck bollard of the ‘Sirius’ and the vessel began deballasting. At 06.00 next morning, with the arrival of high tide and with deballasting complete, the tug began its work and within an hour the vessel was refloated and taken to a safe anchorage. In the end there was no need to discharge any cargo. A week had gone by since the grounding, but the ordeal had hardly begun.

Principle

For those of us unfamiliar with the term, general average as a maritime principle dates back to 1000 BC, having its roots in Rhodian law. A ship’s voyage is regarded as a maritime adventure undertaken by the vessel’s owner and the owners of the cargo, each of whom has value at risk. If a common sacrifice is made, such as an unusual expenditure to refloat a grounded vessel, each party to the voyage must contribute proportionately as their value relates to the total value at risk. In today’s world, the value at risk on a time-chartered containership would obviously include the value of the ship, for which the owner is responsible, the value of fuel, prepaid charter hire, owned containers and freight charges for which the charterer is responsible, the value of leased containers on board belonging to various container leasing companies and the value of each cargo consignment on board and loaded into those containers.

Adjuster

The administration of a general average is conducted by an appointed average adjuster, who determines the total value at risk and the percentage contribution that each party should pay and seeks to secure the contributions before the cargo is released. The salvor, or party engaged to save or refloat the ship, earns a lien on the vessel and all of its contents so as to recover his salvage fee, once he is engaged under the salvage contract. With several hundred bills of lading issued for the voyage to six ports, the impact of this general average would be far-reaching.

During that first week the Cuban salvors would appoint a legal representative in London, Richard Butler, and the German owners appointed an adjuster, Schlimme & Partner, of Hamburg, both mandated to pursue the collection of moneys from the parties to the mishap. The Cubans said the salvage would cost about US$ 650,000 which they would seek to recover from all parties. Owners followed up on Friday 14th with a declaration of general average. To protect charterers’ interest, we retained the services of Holman Fenwick Willan in London.

The United States licked its wounds during the subsequent weeks of September. The TV channels inundated us with news about the tragedy and the air was heavy with incredulity, grief, anger and resolve. Against the background of this emotional outpouring, we found ourselves preoccupied with our immediate crisis, working long hours to advise and console restless customers with cargo delayed on board the ‘Sirius’ and pressing underwriters, salvors and the owner to complete the formalities and have the vessel moving again.

Our charterers liability underwriters and container equipment underwriters posted bonds for charterer’s interest in the voyage, owners hull and machinery underwriters did the same, but neither of these underwriters concluded their formal submissions before 19 September. It also took time to notify, educate and guide the shippers and consignees. We determined that 77 per cent of the shipments were covered by open cargo insurance policies and these clients would be required to sign Lloyd’s average bonds and alert their underwriters, who would in turn provide general average guarantees to Lloyd’s Salvage Arbitration Branch. Uninsured cargo had to be secured by a cash deposit, initially 12 per cent, subsequently reduced to 6.5 per cent, to be collected by the destination agent and remitted to Lloyd’s before release of the cargo at destination. But the Cubans were not prepared to wait until the cargo was discharged to secure their interest in the cargo. They wanted all of the security on every piece of the cargo to be in place before release of the vessel from Cuban waters.

Security

Neither could we wait for all of the cargo interests to submit their security. Eleven days had already gone by. We felt strongly that we were wronged by owners and we demanded they put up bridging security on behalf of the cargo interests in order to have the vessel sail from Cuba. We quickly realized that this effort would be fruitless and instead provided salvors’ legal representatives with a letter of credit on 19 September, undertaking to secure the cargo interests. It took another six days of discussion between the banks and London lawyers involved before the wording of the security document was finally acceptable to the salvors.

The ‘Sirius’ was finally allowed to sail from Cuba at 14.00 on Tuesday, 25 September, fully 17 days from the date it ran aground. We felt strongly that someone needed to pay for this debacle, this damage to our reputation, and we arranged for a surveyor to meet the vessel at Kingston, her first call from Cuba. Errors in navigation were not actionable under the terms of the charter party, but negligence could be an issue; absence of relevant charts would call into question the seaworthiness of the vessel. The owners were aware of the risk, however, and anticipated us.

On the morning of 27 September the ‘Sirius’ berthed at Kingston, some 18 days late on her scheduled arrival. Our appointed surveyor, Ralph Sugden, met the vessel upon arrival. Boarding the vessel with him was Capt John Reid of the London firm Clyde & Co, representatives of the owner’s P&I Club. Capt Reid asked our surveyor to return in three hours, insisting he must interview the master first. Upon return, our surveyor was never given an opportunity to question the master or review the vessel’s logs and other documents. The P&I representative provided him with whatever information he was able to gather that day. Owners had successfully prevented us from bringing a case against them for negligence by denying us access to the master and the ship’s records.

Five years later, on 13 October 2013, while on a Mediterranean cruise, my wife Loretta and I arrived in Barcelona for the day on board the ‘Costa Fortuna’. I went up to the 14th deck that morning for breakfast and, surveying the harbor, laid eyes on the ‘Sirius’ berthed a few hundred feet away. A flood of unpleasant memories followed. A fresh coat of paint made her look rather more presentable – scrubbed, it seemed, of a humiliating episode.