UNDERPERFORMANCE AND OVERCONSUMPTION CLAIMS

UNDERPERFORMANCE AND OVERCONSUMPTION CLAIMS

Introduction

In time charter‑parties, a vessel is usually described as capable of steaming fully laden, under good weather conditions, at about 'x' knots on a consumption of about y' tons of fuel oil and 'z' tons of diesel oil. The owners' obligation is to ensure that at the time the charter is entered into and during the period of the charter the vessel complies with this description.

This chapter examines the following:‑

Evidence required from the Vessel in underperformance or over-consumption claims

Speed,

Consumption of fuel,

Checklist ‑

Basic data,

Factors affecting performance;

Evidence required from the Vessel in disputes arising in connection with the supply of substandard bunkers

Procedure at commencement of bunkering,

Procedure it suspected that substandard bunkers have been placed

on board,

Procedure if substandard bunkers are used and damage results.

In the appendix to this chapter, sample letters and a case history are provided.

Speed and Consumption of Fuel

Time charterers frequently bring claims against owners for under-performance, which means that the vessel is not complying with the speed specifications described in the charter‑party. Underperformance claims often go hand in hand with claims for over-consumption' which means that the vessel is using more fuel per day than specified in the charter‑party. In order to defend these claims, owners rely heavily on accurate and comprehensive data collected by the Master and the officers.

Speed

With regard to underperformance claims, the basic data required are listed in the checklist. This information is generally recorded in the deQ1k log book.

In order to check whether the vessel is performing as described in the charter‑party, the Master should use only information acquired under good weather periods as specified in the charter‑party. This type of information is not always easy to gather, and in practice the Masters may have to make allowances for such factors as a particular sea state, changes in course, slow steaming, stoppages, or the effect of tidal waters and currents.

The basic data, which are customarily gathered on a day to day basis, may be insufficient to determine accurately the vessel's performance. The Master may find it helpful to establish a more frequent method of collecting information, for example, on a watch by watch basis.

Consumption of Fuel

The basic evidence required to defend over-consumption claims is recorded in engine log books. As in the case of claims for underperformance, it is important to stress the necessity for accurate and frequent entries in engine log books. For example, the crew ideally should take flow rate meter readings for every watch. The Master should also keep careful records of periods when the vessel is instructed to proceed at an economical speed or when the vessel uses diesel oil in congested waters.

Many time charter‑parties state that 'domestic' consumption of fuel is for owners' account. Domestic consumption includes fuel used for heating, cooking, air conditioning, fresh water generating, and any other electrical power used solely by the officers and crew. In order to estimate the amount of domestic consumption of fuel, the vessel should maintain records of times when the air conditioning system, which is a major consumer of electricity, is in operation.

Checklist

Basic Data

Direction of wind and sea;

Beaufort wind force;

Swell;

Direction of predominant swell;

Height and length of waves;

Propeller revolutions per minute;

Noon position;

Observed speed ‑ if an accurate position fixing device is fitted;

Log speed;

Air and sea temperature;

Barometric pressure;

Vessel's course;

Fuel consumption ‑ flow rate meter readings;

Soundings of fuel tanks in port;

Periods when vessel proceeding at economical speed;

Periods when vessel uses diesel oil in congested waters;

Periods when air conditioning systems are in use;

NOTE: Ideally, data should be collected on a watch by watch basis.

Factors Affecting Performance

Alterations of course;

Speed reductions;

Heavy weather;

Restricted visibility;

Manoeuvring;

Hull or propeller damage;

Changes in trim or displacement;

Tank cleaning in progress,

Presence of ocean currents.

Bunker Quality Disputes

In recent years there has been a general deterioration in the quality of fuel supplied for bunkers. Substandard fuel is one major cause of loss of speed and overconsumption of fuel, and may also have a detrimental effect on the vessel's machinery. The Master should take care to ensure that the bunkers supplied match the specifications required by the vessel. If poor quality fuel has been supplied, the Master should follow the correct procedures, which are listed below in order to minimise damage. In case the fuel does cause engine damage and any subsequent expense and loss of time, it is important that the Master records all the relevant information listed below in order to establish the cause of the damage, particular attention being given to the retention and preservation of samples. Finally, in addition to thorough reporting procedures, the Master should promptly report the matter to owners.

Procedure at Commencement of Bunkering

The Chief Engineer should be responsible for supervising bunkering and should liaise closely

with the duty deck officer;

The flash point, viscosity and other characteristics of fuel supplied should be checked to

ensure that the fuel is suitable for the vessel

If the fuel fails to conform with the specifications required by the vessel, the Master should

notify in writing the bunker supplier and charterers' port agents (sample letters which should

be sent to bunker supplier and charterers' port agents are provided at pages 39 to 42); . 1

The Chief Engineer and Barge Master should check the security of the hose couplings on the

bunker barge and the receiving vessel, and should agree on the pumping rate ‑ Failure to

observe these precautions may lead to oil pollution and result in heavy fines and possibly even

the arrest of the vessel;

New bunkers should be segregated from old bunkers on board ‑

If bunkers are mixed, a mixed sample of the old and new fuels must be tested for compatibility;

New bunkers should be tested for the presence of water after loading ‑

The results should then be checked against engine manufacturer's specifications;

Representative samples, which should be marked and sealed, should be taken at the ship's manifold, and the Master should request in writing the supplier or the charterers' port agents to attend during sampling (a sample letter is provided at page 41) ‑

If the supplier or port agents fail to attend, the Master must make a protest in writing (a sample letter is provided at page 42).

Procedure if Suspected that Substandard Bunkers have been Placed on Board:

Records must be kept of which tanks the bunkers were placed in on delivery and whether or not

there was oil in the tanks prior to delivery, and if so, full details must be given;

The location of the tank in which the suspect bunkers have been kept must be recorded and full

details of all movement of bunkers between tanks must be noted;

Details of ullages must be noted and copies of bunker receipts for the new bunkers must be

preserved

All Notes of Protest and the engine and deck logs must be preserved;

The sealed sample taken during bunkering must be retained and samples from previous bunkers kept safe on board until specific instructions received from owners to dispose of the samples;

A note must be kept of the following ‑

a. the Chief Engineer and other crew members involved in the bunkering operation,

b. the names of those present at the time the bunker samples were taken,

c. the crew members involved in correcting any problems associated with substandard bunkers;

Owners must be notified promptly.

Procedure if Substandard Bunkers are Used and Damage Results:

The Master should keep records of the following ‑

a. when was fuel first burned,

b. what were the immediate manifestations of the problem,

C. what action was taken to reduce the problem,

d. was the action effective,

e. when were repairs carried out and under whose supervision,

f. what parts were overhauled or renewed,

g. when was contaminated fuel last burned,

h. disposition of contaminated fuel,

i. performance of engine once vessel had ceased to burn contaminated fuel;

If available, all contemporaneous reports of repairs from owners, charterers, engine manufacturers and underwriters' surveyors should be kept;

Any damaged machinery parts should be kept for future inspection;

Photographs should be taken of damaged parts when discovered.

SAMPLE LETTER 1

Notification by Master to charterers' port agents and bunker supplier that supplied fuel does not conform with specifications by required the vessel.

FROM.

COMPANY.

TO: DATE:

TIME:

AT.

Re: M. V.

Bunkers loaded at

I hereby give you notice that an analysis carried out on this vessel of a representative sample of the bunkers supplied by you indicates the deficiencies listed below. The fuel is therefore outside the specification of fuel suitable to the vessel's engines and auxiliary machinery, and has been submitted for further analysis.

Deficiencies were noted in. *

1. Density

2. Viscosity

3. Pour Point

4. Water content

5. Salt water

6. Compatibility

7. Catalytic fines

Owners await charterers' instructions, and until these are received, the vessel cannot proceed. In the meantime, the vessel's engineering staff will use their best endeavours to protect the vessel's engines (including the slowing and stopping of the ship's machinery when necessary). Owners hold charterers fully responsible for any damage, delays, poor performance, overconsumption or any other loss or expense arising as a direct or indirect consequence of your failure to supply

suitable fuel.

Yours faithfully,

Master

Make and Model of sampling equipment.‑

Make and Model of main engine:‑

SAMPLE LETTER 2

Notification by Master to charterers' port agents and bunker supplier that fuel supplied does not conform with specifications required by the vessel and is unusable.

FROM.

COMPANY.

TO: DATE:

TIME:

AT

Re: M. V.

Bunkers loaded at

I hereby give you notice that a shipboard analysis of a representative sample of the bunkers supplied by you to the vessel indicates that the fuel is wholly unsuitable for use in the vessel's machinery.

In the circumstances, I cannot jeopardise the safety of the vessel, crew, or cargo by accepting or using the bunkers supplied without first receiving express instructions to do so from you and owners.

In the meantime, owners hold charterers wholly responsible for all damages and delays and other loss and expense arising as a direct or indirect consequence from your failure to supply suitable fuel.

Yours faithfully,

Master

Make and Model of sampling equipment:

Make and Model of main engine:

SAMPLE LETTER  3

Request from Master to charterers' port agents and bunker supplier to attend

during representative sampling.

FROM:

COMPANY.

TO: DATE:

TIME:

AT:

Re: M. V.

Samples of Bunkers

[In accordance with charter‑party conditions I hereby request you to ensure that representative samples of the bunkers to be supplied to the vessel will be taken and sealed in the presence of competent and authotised representatives of charterers and the vessel, such samples to be taken during bunkering at the vessel's manifold. The vessel will require two samples.

It will be of assistance to you to know that the vessel has facility for drawing continuous samples at the manifold. If no joint samples are taken during bunkering by a satisfactory alternative system, only those samples drawn at the manifold by the vessel's representatives will be regarded as representative samples.

I shall be grateful if you will advise me as soon as possible what arrangements have been made by you or the bunker supplier in respect of bunkering and sampling.

Yours faithfully,

Master

Vessel's authorised personnel:

Make and Model of sampling equipment:

Make and Model of main engine:

SAMPLE LETTER 4

'Protest by Master for failure of charterers' port agents or bunker supplier to

attend during representative sampling.

FROM.

COMPANY.

TO:‑ DATE:

TIME:

AT.

Re M. V.

Samples of Bunkers

I hereby make a format protest that you and the bunker supplier have failed to participate in the roper obtaining and sealing during bunkering time of representative samples of the bunkers supplied to the vessel.

In particular:‑

No samples have been drawn by you and supplied [ ]

Ready sealed samples have been supplied [ ]

Samples were drawn in a method which is unsatisfactory [ ]

and susceptible to gross error 

I hereby give you notice that the vessel has taken her own samples during the bunkering operation [which were seated in the presence of charterers or bunker supplier's representative] [in the absence of a response to my invitation to attend joint sampling], and only these samples will be regarded as representative. Two sealed samples drawn by the vessel are available to you on request

Yours faithfully,

Master

Make and Model of sampling equipment

Make and Model of main engine:

APPENDIX

Case History concerning Main Engine Damage due to Substandard Fuel

The subject vessel, a bulk carrier (1 17,95OMT DWT; LOA:264m; Beam:40m; Main Engine B&W 9K 8 4EF), was let on an NYPE Form time charter. She bunkered at Rio de Janeiro, with fuel stemmed by charterers. The crew members followed routine bunkering procedure which included the following on board tests: specific gravity, viscosity, compatibility, water, and pour point. The test results were all within acceptable limits. The crew also sent by air courier a sample for laboratory analysis.

The vessel continued her voyage and proceeded for loading at Tubarao for Burnside, and then proceeded to Norfolk for loading. At Norfolk, excessive cylinder liner/piston ring and fuel pump wear was discovered in,all cylinders. The vessel was off‑hire for one day while repairs were carried out.

After some delay caused by incorrect shipment by the agent at Rio, the laboratory analysis of the bunker sample was received. The results indicated sediment and catalytic fine contamination (Sample 1: 36PPM silicon; Sample 2: 77P1PM; Sample 3: 67P1PM). Further analyses of the sludge from the scavenge space and lubricating oil purifier confirmed.this conclusion.

The time charterers were put on notice. The vessel was ordered not to exceed 50% MCR on the main engine to allow for maximum purification. However, the maximum purification was not effective and resulted in a further reduction of speed on the vessel's next voyage to Sepetiba, Brazil. The vessel was ordered to stop using contaminated fuel and complete the voyage on diesel oil.

512MT of contaminated fuel was segregated for pumping ashore at a later date. Time charterers were informed of owners' action, and were asked to increase the next stem. Owners arranged for the fuel to be pumped ashore at a port in Brazil, but the oil company refused to accept the fuel at a reasonable price. The fuel, finally, was pumped ashore at a later port, but by this time had caused a loss of DWT capacity

for charterers.

Although owners held charterers responsible for the consequences of using the contaminated fuel, the time charterers argued successfully that the bunkers supplied conformed with International Specifications' and the charter‑party terms. The charter‑party contained no bunker specifications other than calling for 180 CST fuel oil. Furthermore, details of the engine were not provided in the charter‑party

description clause.