NEWS

The following address was presented by Neil Baird, Director Baird Publications, at the AIMS Conference, Hobart.

"Captains, Chiefs, Ladies and Gentlemen and, particularly Captain Anne Rutherford who invited me to give you my views on this very important subject, thank you for listening to me today.

Historically, my first interaction with marine surveyors was not very promising. In the early seventies my brother and I were thinking about launching what would have been the first Australian sailing yacht charter business. We dutifully approached the Queensland Marine Department where we met a Glaswegian brick wall.

We proposed to base a fleet of 32 foot yachts in the Whitsundays. Well, our Glaswegian former chiefs demanded 4 inch propeller shafts; 5 watertight bulkheads; and, among other impossibilities, 2 huge buckets of sand to be kept on deck in case of fire. Our successors in the yacht charter game simply ignored the Department for years and largely got away with it.

We went on to bigger and better things in more realistic industries and, I have to say, found the Queensland Department much more positive and helpful in my dealings with them 20 years later.

Since then, I have come across numerous marine surveyors and have found them to be positive, interesting and informative people with usually a great love of the maritime industry and a willingness to explain what they are about – rather different from many professionals!

One in particular is Mike Wall from Hong Kong. Many of you will probably know him. Mike wrote a brilliant book “Running a Marine Survey Company” that was published by Petrospot earlier this year. I commend it to you as not only a marine surveying text but as probably the best guide to running a small business I’ve ever read.

Anyway, I’ll now focus on the subject which I will illustrate with a series of pictures to briefly remind you of where we have come from and where I think we are heading.

When Anne, the organiser of the conference, approached me to speak on The Future of Australian Shipbuilding my first thought was, “Does it have a future”? The answer to that came in a nano-second. Of course it does. Why else would my family persist with an Australian based maritime publishing company that focuses mainly on new ships and boats?

And, despite the best efforts of state and federal governments of both stripes as well as all the various unions that inflict their avaricious demands on the industry, we need it to survive and thrive. As an island continent with a massive maritime task, it is imperative that Australia maintains some sort of ship building capability.

Thinking a little further, I added the sub-title “An Historical Approach”. This was because I reviewed my fifty year connection with this industry and the changes I have seen over that half century. They have been dramatic. I suspect they will be equally dramatic over the next five decades. So, I am sure the industry has a future but that life in the industry will be quite different from what any of us have so far experienced.

While I can recall a strong interest in ship and boatbuilding from the age of five or six – Indeed, my father and I built a number of small sailing yachts throughout my teenage years – it was not until I gave up on Law at the University of Tasmania at the end of 1966 and went lobster fishing at Dongara in Western Australia, that I began to mix with real ship and boat designers and builders. I quickly realised I had found my true spiritual home with them.

It was there I met hard-driving pioneers like Michael Kailis and Fred Connell who both knew they needed faster, safer, more durable and larger boats. I also got to know a fellow university “drop out”, John Fitzhardinge, who has gone on to much bigger and better things in fishing, offshore oil and gas, naval architecture and ship building as well as civic and industry affairs. All three contributed enormously to fishing, ship building and education. “Fitzy” still is contributing and recently launched an impressive new pilot boat that was, very bravely, built on spec.

They were exciting times. A boom-bust-boom industry attracted a lot of energetic, imaginative and innovative people. It also inspired a thirty year burst of dramatic progress in vessel design and construction. I think it’s fair to claim that our fast ferry, crew boat, patrol boat and super yacht sectors all had their origins in the fishing industry, most particularly in the West Australian lobster fishery.

Two years after that, in April 1969, and still fascinated with the fishing industry, I secured a berth on the Northern prawn trawler ‘Karumba Norman’. She was a brand new, state-of-the-art vessel that taught me a lot about vessel design and construction as well as the fishing and shipbuilding industries. Later, I enjoyed  a brief voyage on the ‘Pathfinder K’ where I learnt something of the Michael Kailis approach to business. That is to keep it simple and cheap.

I joined the ‘Karumba Norman’ at the late and unlamented Bundeng Shipyard in Bundaberg. There, even to a twenty-one year old, it was obvious why the shipbuilding industry of the 1960s was on its deathbed. Inefficiently managed and irrationally union dominated, Bundeng, like practically all of its competitors, was doomed. Indeed, the ‘Karumba Norman’, which was a very good fishing machine, was the last vessel built there.

The old order was rapidly changing. While in the Gulf of Carpentaria, I got to know some of the people who would bring about that change. People like Sid Faithfull of Cairns and Tasmania’s own Robert Clifford. They could clearly see what was wrong with the old ways and where opportunities lay.

Of course, as you would all know well, over the next fifteen years to the mid-eighties, virtually all of the traditional steel cargo ship builders died out. While Bundeng was first, it was soon followed by the likes of Walkers, Evans Deakin, BHP, Adelaide, Carringtons, Williamstown, Newcastle State Dockyard and South Mole Slipway. All those traditional, subsidy dependent steel builders went the way of their counterparts on the Clyde, in Scandinavia and the United States. The only survivors of their ilk were NQEA and Ross Roberts’ Harwood Slipway. They survived by adapting to contemporary realities.

Alas, even NQEA is no longer with us as a shipbuilder. The land it was built on was worth too much and the boss,  Don Fry,  reached retirement age.

Simultaneously, though, the designers and builders of high speed aluminium craft were establishing themselves. Robert Clifford, John Rothwell, Don Dunbar, Don Fry, Toby Richardson, Ron Devine,Mark Stothard, John Fitzhardinge, Phil Hercus, Phil Curran, Loch Crowther, John Szeto and Stuart Ballantyne and a number of others were coming to prominence as builders and designers. Indeed, they soon came to dominate the world market for fast aluminium vessels.

Having closely watched and studied the global shipbuilding industry for half a century I have observed some dramatic, unexpected and unprepared for changes. During that time I have visited more than 1,000 shipyards and talked with even more shipbuilders.

My travels have taken me from the traditional shipyards of north western Europe, Scandinavia and North America to Russia, Turkey, Italy, Spain, Greece and Croatia as well as my native Australia. I have visited dhow builders and modern shipyards around the Persian Gulf, junk builders in China and yards where Bugis “schooners” are still built in Sulawesi in Indonesia. I’ve toured naval and commercial shipyards in Argentina and Brazil and I have been to small shipyards in Papua New Guinea and New Zealand. Even Bangladesh, that prolific source of deadly ferries, has not escaped my eagle eye. As the sixties song title says: “I’ve been everywhere, man”.

During the latter half of that period, I have tended to concentrate more on Asia visiting many yards in Japan, South Korea, Taiwan, China, Vietnam, the Philippines, Indonesia, Singapore, Malaysia, Thailand and India. They have built both commercial and naval vessels.

Those shipbuilders have taught me a lot over the years and I thank them for their patience and interest. What I have particularly learnt is that the biggest, most established and most prominent operators get too close to government and so are rarely the most innovative, efficient or profitable. Indeed, apart from one or two notable examples such as the Damen Group and Japan’s Tsuneishi, the opposite usually applies.

My long “stretch” as a director of the Australian Shipbuilders Association convinced me of the evils of government subsidy or other “support” of the industry. I’ve seen it close to hand in the publishing and printing industries also. Any government involvement is simply a dead hand that gradually chokes out all innovation and enterprise from any industry. It corrupts both morally and financially.

For sixty years until the mid-eighties, the Australian shipbuilding industry was the “beneficiary” of considerable government support in many forms. Of those, the “Bounty” was the most notorious and most destructive. Because it effectively eliminated competition for most of that period, the local industry became bloated and lazy.

A remarkable change came over the industry when the Hawke Labor (read socialist) government amazingly abolished the Bounty and practically all other forms of assistance. The old protected ship builders such as BHP, Adelaide, Walkers, Bundeng, Carrington and Evans Deakin closed down. They simply weren’t viable without substantial government assistance. Even the government owned yards such as Cockatoo Island, Newcastle State Dockyards and South Mole Slipway faded away. They had essentially become “sheltered workshops” for some greedy, grasping unionists.

Simultaneously, though, a shipbuilding renaissance came over Australia. Essentially without government assistance, save for some very limited Export Market Development Grants, we saw the development of a whole new and world leading sector in aluminium fast vessels that developed out of the West Australian lobster fishing industry. The newer builders such as Incat, Austal, Richardson Devine Marine, Strategic and Geraldton Boat Builders quickly became the globally competitive leaders in their field. Innovation, enterprise and, even, profitability had arisen from the ashes.

At the same time, one or two of the smaller, less conspicuous builders like NQEA and Harwood Slipway kept their heads down, adapted and ploughed on into the new era.

Much the same thing happened in the UK, the Netherlands, Sweden, Denmark and Norway. It has taken longer in Germany, France, Italy and Spain where government support has been something of an art form. However, it is slowly happening and, apart from Navantia and Fincantieri, which are government owned sheltered workshops of the worst kind, the survivors are globally competitive. Indeed, some such as Dutch based Damen and the French group Piriou have successfully thrust into Asia.

Of the United States, however, the less said the better. Apart from a few smaller yards that are globally competitive, most are bedevilled by the Jones Act that protects them to death – and costs the American taxpayer zillions! The “Land of the Free” is far from free in a maritime sense and its citizens continue to suffer accordingly as Lobbying 101 prevails.

Inevitably, of course, as we are already seeing with Japan, even Asian countries will eventually become less competitive. While there will always be pockets of the world where ships can be built cheaper, I expect that in the long run, the iron law of comparative advantage will gradually become less relevant. The shipbuilding playing field will become almost level. Except, that is, for the United States where the Jones Act has become something of a state religion.

To me, as you have probably gathered, government support whether in the form of subsidy, bounty, protection, R&D grants, payroll assistance or whatever, is wasteful, counter-productive and often corrupting. From personal observation globally over the last fifty years, I am convinced that shipbuilding, like all industries, flourishes when real free enterprise prevails. Competition, particularly global competition, improves the breed. In the maritime industry that means better ships and boats at lower prices.

The world works much better when innovation, energy and enterprise are allowed to prevail. Thankfully, that is starting to happen.

In all the recent raucous debate over the future of Australia’s naval shipbuilding it is usually forgotten that Australia is home to a number of very capable and, most importantly, globally competitive commercial ship builders, designers and materials and equipment suppliers.

Unlike their notably inefficient, mostly foreign owned, and uncompetitive naval shipbuilding compatriots, our commercial ship builders are unsubsidised and generally avoid dealing with governments of any stripe or level. They have better things to do than to waste time dealing with bureaucrats and junior naval officers and completing the endless wasteful documentation that dealing with government currently entails.

If the whole process of naval ship purchasing were to be reformed to be more practical, economical and commercial, the Navy, taxpayers and Australian ship builders would all benefit. Even though it flies in the face of tradition and would undoubtedly make legions of public servants redundant, reforming the process would be simple and easy to achieve except, probably, politically.

The fact is that Australia does not manufacture diesel or gas turbine engines, propulsion systems, significant marine electronics, or weapon systems. So, our shipbuilding essentially involves design, fabrication of metal plate and installation of components manufactured overseas.

That said, however, there are a number of Australian companies that are world leaders in vessel design, construction and outfitting. Designers such as Incat Crowther, One2Three, AMD ( which designed the “platforms” for China’s large fleet of supersonic cruise missile attack boats), Sea Transport Solutions and Southerly Designs, among others, are all both experienced and competitive across a range of vessel types and construction materials.

There are a number, also, of Australian ship builders such as Incat, RDM, Austal, Evolution Commercial and Harwood Slipway that have competitively constructed a range of different sized and kinds of vessels of varying complexity. All could build naval vessels if they could be motivated to do so. All are globally recognised and, importantly, profitable without subsidy.

Australia also benefits from having numerous suppliers of materials and equipment that could easily adapt to naval requirements. Even our electronics manufacturers could do a lot more if it were worth their while to gear up to do so. To a large degree the Canberra “cultural cringe” discourages that.

The naval shipbuilding problem in Australia is not one of lack of capability. Rather, it is one of the “dead hand” of government ship purchasing processes discouraging our globally competitive ship builders and their suppliers from wanting to deal with government.

While many of the pioneers of the seventies and eighties, who I mentioned earlier, have retired or died, their children or people they trained have or are taking over from them. Those second generation companies are still leading the world in their field. And that, really, is the point. Australians are adaptable. They are innovative and they perform much better when not reliant on government handouts like the “Shipbuilding Bounty” on which our long gone steel shipbuilders were dangerously overly dependent.

So, now that it is a free, globally competitive industry with minimal interaction with government, the Australian shipbuilding industry, has, in my opinion, a very bright long-term future.

Thank you for your interest." 

 

*Neil Baird is one of the founders and the chairman of Baird Maritime. He is a director of the World Ocean Council and a joint Facilitator of the Federal Advisory Council of the Navy League of Australia and has held many other board positions in the global and Australian maritime industry. They include a very lengthy “stretch” as a director of the Australian Shipbuilders Association.

His almost fifty year career, mostly in international maritime publishing, has enabled him to visit and study more than 1,000 shipbuilders on all continents except Antarctica. He has reviewed more than 4,000 ships and boats and has experienced all known forms of propulsion from oars to nuclear and from paddles to waterjets.

In his “semi”-retirement he is undertaking a PhD on Passenger Vessel Accidents and How to Prevent Them.

Illustrations for The Future of Australian Shipbuilding Presentation.  August 13, 2015.

1.  A View of Sydney Cove, engraving by Francis Jukes, London, 1804, from a drawing by E. Dayes

2.  Replica of “William the Fourth’. First steamship built in Australia. Original built at Clarencetown, NSW in 1831 by Marshall & Lowe

3.  ‘Enterprise’, 19 metre ketch built Hobart 1902

4.  ‘Reemere’. Built in Hobart in 1909 as a steamship. Converted to diesel and still working after 106 years

5.  ‘Biloela’, naval collier built at Cockatoo Island. Completed 1920. First ship to be built of steel plates rolled in Australia by BHP

6.  ‘Iron Monarch’. Bulker. First ship built by BHP at Whyalla. Completed 1943

7.  HMAS ‘Albatross’. Austrlaia’s first aircraft carrier. Actually a seaplane tender. Built at Cockatoo Island. Completed 1928. Exchanged for the cruiser HMAS’Hobart’ in 1938

8.  HMAS’Pirie’. One of a series of four Bathurst Class Corvettes built at Whyalla by BHP during 1942

9.  HMAS ‘Arunta’ a Tribal class destroyer, one of three fast (36 knots) ships built at Cockatoo Island

10. A Kailis 20 metre tropical prawn trawler built in Fremantle by and for the M.G.Kailis Group. Simple and very effective. Some still working 40 years after launching.

11. ’John Sainsbury’ and ‘Denis O’Malley’. The final two ‘ships’ built by BHP at Whyalla. Completed 1978

12. ‘Accolade II’ a cement carrier built by Carrington Slipways, early 1980’s

13.HMAS ’Tobruk’. A Landing Ship Heavy built by Carrington in 1982. Decomissioned 2015

14. ’Wato’. One of a series of ‘modern’ tugs built in the early eighties by Carrington Slipways.

15. ’Sea Flyte’. One of the first of the fast ones. Designed by Phil Curran. Built by SBF Engineering in 1983. Still going strong in Singapore

16. HMAS ‘Anzac’. First of a class of 9. Built in Williamstown by Tenix. Completed 1996

17.’Munna’. First of a unique class of bulk ore carrier/ transhipment vessels designed by Stuart Ballantyne’s STS

18. ‘Tuhaa Pae IV’,  a truly multi-purpose ship- tanker, container and passenger – built by Ross Roberts’ Harwood Slipways at their Cebu, Philippines, yard.

19. An Austal USA built littoral combat ship being launched from the company’s Alabama yard.

20. ‘FastCat’ a recent Stuart Ballantyne STS Ro-Pax catamaran ferry built in China for the Philippines.

21. A large, high speed catamaran crew/supply vessel built in the USA to Incat Crowther’s design.

22. ‘Lopez Mena’. The world’s fastest (58 knots) ship. Designed and built in Hobart by Incat.

23. ‘Muslim Magonlayev’. Another Incat masterpiece. A 78 metre fast, wave-piercing, crew/supply boat. Now operating in the Caspian Sea.

24. HMAS ‘Canberra’. Australia’s latest and biggest warship. Assembled in Australia by BAE et al from mostly Spanish components.

25. ‘Kilimanjaro V’. The fifth in a series of ferries built in Hobart for the Dar-es-Salaam to Zanzibar route by Richardson Devine Marine to Incat Crowther designs.

Paul Baxter, Partner DLA Piper, presented the following address in regard to Marine Insurance Disputes on behalf of MLAANZ at the AIMS Conference in Hobart.

"Good morning. My topic today is marine insurance disputes and the marine surveyor. I have chosen a series of cases and some recent decisions involving marine surveyor liability that indicates one of the most critical risk management weapons in your arsenal, limitation or refinement of your retainer or scope of works.  

The reality is, that you work in a competitive business environment where rolls royce standards or car must find a balance with VW prices. You are quite capable of providing an excellent and thorough and far reaching product or service if the client will pay the appropriate price, but when the client has a budget then what they can purchase from you is more limited. The trick is to make sure expectations match reality and that is best done through the contract of service. I am not talking about standard terms and conditions, although these are important. What I am talking about is agreeing precisely what you will and won't do and for what purpose and documenting this for evidentiary purposes.

Let us first look at some case history to lay down some basic principles.

The first principle is privity of contract. That is that 2 parties are free to contract with each other on whatever terms they chose and provided there is agreement and consideration passing then those 2 parties and those 2 parties alone can enforce the terms of the agreement against each other.

Often however a situation arises where an outsider to the contract (a third party) seeks to enforce a right based on the contractual dealings. My apologies that the initial cases have very little marine surveying flavour to them, but the basic principles apply across all service industries.

Bryan v Maloney a 1995 decision of the High Court threw a cat among the pigeons when it held a builder of house that had since been lived in and sold to a new owner, was liable to the new owner for cracks that began to appear in the walls and floor. There was no contract between the 2 parties but the new owner sued in negligence for poor construction of the foundations on the basis that harm to the subsequent owner was clearly foreseeable and sufficiently proximate to give rise to a duty of care.

Hill v Van Erp in 1997 extended the principle when a solicitor drew up a new will for a client and had it executed before witnesses. One of the witnesses was an intended beneficiary and under the relevant estate law was therefore precluded from receiving bequests in her favour. Naturally she was quite peeved and sued the solicitor who she had no contractual relationship with. Once again the Court found she was sufficiently proximate to the work at hand and vulnerable to negligence of the solicitor to be owed a duty of care which was breached.

The tide has been turned back a little by the cases of Woolcock Street Investments 2004 and Brookfield Multiplex 2014.  In each of these cases construction defects that have manifested to subsequent owners were not actionable. This was as a result of careful examination of the scope of the initial contractual engagements and the fact that the subsequent purchasers were in each case relatively sophisticated business entities capable of protecting themselves against the loss by performing their own enquiries and searches such that caveat emptor or buyer beware should be left in place.

So where does this leave the humble marine surveyor, who inspects and certifies a vessel as sound for one owner or its insurer and then some years later gets slapped with a lawsuit by a subsequent purchaser when defects appear?  In hot water and frantically scrambling back through documentation to see exactly what you were instructed to do and what advice you gave.

Two fairly recent cases offer some good insights into this type of situation.

Wicks v New Westcoaster Pty Ltd and Ors [2005] QSC 076

So good news for the surveyor there but after a long Court battle.  A little more clarity as to what was and was not part of the scope might have helped.

Marine & Civil Construction Company Pty Ltd v SGS Australia Pty Ltd [2013] FCAFC 46 

Kent Stewart, Executive Director, Maritime Engineers outlines Marine Warranty surveys at the AIMS Conference, Hobart.

DEFINITION

Marine Warranty is an undertaking or a warrant by an independent third party that a marine venture is a sound insurable insurable risk.

The Marine Warranty Surveyor provides an opinion on the level of risk that Underwriters are being exposed to. This opinion is based largely on the skill and experience of the surveyor, his knowledge of the rules and guidelines and his ability to make a valued judgement of the marine venture he is warranting.

Warranties can be express or implied.

Express warranties are written into contracts of insurance and are specific for a particular voyage. Implied warranties are becoming more prevalent, particular in the oil and gas industry where the client seeks the assurance that an experienced third party has closely examined his marine activity for risk.

RISK

Marine Warranty is all about risk assessment. Insurers or their clients want the assurance that an experienced third party has closely examined the proposed voyage and ensured that, outside normal Perils of the Sea, the venture is sound.

In the oil and gas industry increasingly the implied risk marine warranty surveys are on the increase. This is a second or third tier of risk mitigation that the oil industry has introduced over and above the conventional acceptance criteria that a ship is “Classed”.

There is no question that the oil and gas industry is a high-risk activity. And innovation and the speed of development continually dazzle us. It also leaves underwriters struggling with the exposure on the risk they are covering.

And oil companies themselves want to mitigate risk and to that end they will engage a Marine Warranty Surveyor to examine their proposed project. Be float-over topside installations or multimillion dollar module cargoes, they can’t afford any delays to their programs from accidents. The cost penalties are massive.

There’s an old saying:

“If you think safety is expensive try having an accident”.

EXPOSURE

It’s all about cargo – its size, its value and strategic importance to a project. Usually its project cargo tows but sometimes it’s vessels that need Marine Warranty Surveys.

Disabled ships, low freeboard backhoe dredges, crane barges and pipe layers are all high risk tows.

Then there are the unusual – CALM buoys, SPARS and concrete substructures.

Certainly ocean towing is probably the most common activity that calls for Marine Warranty, particularly with the surge of towing the project cargoes in the oil and gas industry over the last 5 to 6 years.

But Marine Warranty is not only conducted on tows. They are conducted on high-value/high-volume heavy lifts, tows of disabled ships, relocation of oil industry plant (FPSO’s, MODU’s) and low freeboard tows.
 

THE SURVEYOR

So it’s a very diverse activity and the Marine Warranty Surveyor needs to be a person with special skills and a wide range of knowledge, experience and expertise. Qualifications alone don’t do it.

The nature of Marine Warranty work requires the Marine Warranty Surveyor to be extremely well organised and his preparation for the job is very detailed.

With the criticality of timing on cargo loadings and departures the Marine Warranty Surveyor’s timing must also be a skill he possesses.

Forwarding Towing Checklists to towing contractors is one method of ensuring that preparations have been properly made without any last-minute disruptions. And the reverse applies.

When working with heavy lift contractors is like Big Lift, SAL and Hansa, these professional heavy lift specialists will produce detailed Loading Manuals which the Marine Warranty Surveyor can review well before the ship arrives and allow him time to comment on them. This material forms part of all the forward planning that goes into a successful warranty survey.
  

APPOINTMENT

Marine Warranty Surveys are commissioned by the client be it the insurer or the assured himself. But he is there to safeguard the insurer’s interests. Often his fees are paid by the assured. So the Marine Warranty Surveyor has to have good interpersonal skills and can collaborate well with the marine contractor and the assured to achieve the best outcome.

The Marine Warranty Surveyor doesn’t have any contractual ties to the marine contractor nor does he have the authority to direct the contractor in any way. His obligation is to his clients who can then direct the contractor to make any changes necessary. We never want to get to a situation with a Certificate of Marine Warranty is withheld to achieve an outcome. So preparation and timing is critical to the success of the survey.

ON THE JOB

But on the job the Marine Warranty Surveyor needs to be armed with a vast range of knowledge, skills and Rules of Thumb.

Things like:

Even road transport can form part of a Marine Warranty Contract.

Not only does he come with these qualities, he comes armed with his standard tools of trade (camera, torch, tape, chalk, verniers, notebook etc.)

The professional warranty surveyor is examining every aspect of the marine venture from top to bottom including:

To name a few.

CLOSING

So the Marine Warranty Surveyor is a special type of surveyor who comes with a lot of experience and a lot of skills. By gaining the confidence of the marine contractor the Marine Warranty Surveyor can achieve far more for the underwriter and his assured client in the short time available if he is well is prepared beforehand.

So leading onto other discussions in this conference program: 

“Where does a Marine Warranty Surveyor gain these skills?”

The following address was delivered by Brian Peters, Senior Surveyor Briar Maritime Services at the AIMS Conference, Hobart.

In November 2014 the Guidelines for Packing Cargo Transport Units (CTU’s) were replaced and upgraded from guidelines to a code of practice. It is now commonly known as the CTU Code. The original guidelines were produced by three UN agencies; the International Maritime Organisation (IMO), the International Labour Organisation (ILO) and the United Nations Economic Commission for Europe (UNECE).

There has been increasing concern throughout the intermodal transport industry that containers are being packed many miles from the sea without consideration for the fact that the cargo must be properly secured for the entire transit, including the sea voyage. The shipper has the responsibility for declaring, packing and securing the cargo. The nature of the transport chain can mean that once the unit is packed and sealed, it may not be opened again until it reaches the consignee.

The new code sets out to reduce damage to cargo caused by poor packing and securing within the CTU, with the overall aim of making the supply chain safer. The Code provides advice about the basic principles of planning and packing of CTUs and then securing the cargo in accordance with the proposed transport plan. The Code also includes information about the potential causes of cargo damage, such as condensation and infestation.

Three UN agencies are involved (IMO, ILO and UNECE) as the Code covers the entire intermodal transport network and not just the maritime sector. The Code includes all types of CTU’s and is not confined to Container Safety Convention (CSC) plated International Organisation for Standardisation (ISO) containers.

The Code has been drafted by a single working group affiliated to all three UN agencies and is available on the UNECE and ILO websites. The previous guidelines were hard to locate, although they did appear in the supplement to IMDG Code. The intention of the UN working group was to produce a Code that would be comprehensive and freely available throughout the supply chain, in order to promote it's use.

Although the Code has more authority than it's predecessor guidelines, it is still not a mandatory document. That said, it may be adopted into local law by national governments. Should sufficient national governments adopt the Code, it could in time, become globally mandatory in the same way as the IMDG Code.

The Code has 13 chapters and 10 annexes. Much of the information collated in preparing the Code was considered to be too specific or likely to become out of date and therefore was not included in the Code. This information has been designated as ‘related material’, and can be updated by interested bodies in the future. It is not envisaged that the Code will be updated regularly in the same manner as the IMDG Code.

An overview of the structure of the CTU Code:

Chapter 1

Introduction

Scope, safety and security

Chapter 2

Definitions

Clarifying commonly used terms in the carriage of a CTU. This is intended to promote standardised vocabulary used in CTU packing.

Chapter 3

Key requirements

Simple concise guidance for those packing and securing cargo in CTUs.

Chapter 4

Responsibilities

Making it clear who is responsible for each aspect of the supply chain.

Chapter 5

Transport conditions

A summary of forces that each transport mode places on the cargo, including consideration of the extremes of temperature the CTU would be exposed to and the possibility of the formation of condensation in certain climatic conditions.

Chapter 6

CTU properties

The properties of freight containers, regional and domestic containers, swap bodies, road and rail vehicles.

Chapter 7

CTU suitability

The necessity of selecting the correct CTU type for differing cargoes and transport mode.

Conclusion

The Code will only become effective if it is implemented by all parties involved in the transport supply chain. It is most important that the Code is advertised to shippers and packers of cargo. The ILO, IMO and UNECE will promote the Code. In the meantime, the UN working group of experts felt that one of the best methods to achieve rapid and wide acceptance, is for the container carriers to promote the Code when accepting bookings. The ILO website link, which will give free access to the Code and Annexes, could be placed on booking confirmations in order to help promote the Code.

Paul Baxter, Head of Litigation & Regulatory Team and Partner at DLA Piper delivered the following address at the 2015 AIMS Conference held in Hobart.

"Thank you for inviting me to speak at your annual conference and for bringing me to this lovely town in such tropical conditions compared to my home state Queensland.

Today I have been asked to enlighten you on some of the more general and current hazards and pitfalls of business life, Bribery, Corruption and Money Laundering and the Ethical Issues that intertwine with these. 

Bribery and corruption are as old as history, money laundering is a relatively new phenomenon in the days of ease of funds transfer but closer financial oversight and tracking, but both are facing increasing scrutiny and regulatory involvement.  Australia is not leading the field in this area, but with strong links into the UK and Europe, especially some of the traditionally strong shipping nations, you may feel some indirect effects and we can be certain further reforms in our own region are not far away.

So Bribery and Corruption, let's look at the current state of play.  I think it is fairly generally accepted that graft is a drag or parasite on an efficient and productive economy.  It equates to a fouled hull with masses of barnacles and weed weighing and slowing down profitable business.  If you do profit from bribery then it is at the expense of a competitor or customer and the overall good of the community suffers.  So let's have a look at the current state of play.

This map shows the perceived levels of corruption throughout the world based on the research of Transparency International.  Australia does quite well, but we are by no means top of the tree.  The Scandinavians and New Zealand are ahead, followed by us, Canada, the Netherlands and Switzerland.  But there are certainly some surprising staistics here.  Britain, Germany, Japan and the United States, financial power houses all have some greasing of the wheels going on leaking productivity.  China has widespread corruption which they are now trying to target as their standard of living lifts.  The PIGS states of Europe are burdened by widespread corruption.  And then our northern neighbours PNG, Indonesia, the Philippines, all the SE Asian mainland countries and India (Malaysia being slightly better) have heavy levels of corruption as well as Russia, and most of  Africa and South America.  And of course corruption is rife in countries where effective government and policing has broken down such as Somalia, Sudan, Iraq, Syria and interestingly North Korea

There is a strong correlation between corruption levels and standard of living.  Many ask which is the chicken which is the egg and indeed in some of the more anarchistic States organised crime provides a substitute form of stability and security that the government is completely unable to offer due to lack of resources or will from their leadership.  But it is definitely an option of last resort prone to gross inefficiency and abuse.

So with the advancement of globalisation, countries like the UK are leading the charge in enforcing reform.  The Bribery Act 2010 applies primarily to British businesses, it also extends to multi-nationals with a close connection to the UK.  It is for this reason international organisations, like DLA Piper are finding themselves having to comply with the Act across all their global operations.  This will become more and more common.  The Act also extends to foreign companies that operate in the UK.  Marine Surveying by its nature has more of a cross border flavour and so this will be of particular relevance to your sector either now or very shortly.

The Bribery Act makes it an offence to bribe someone, to accept bribery in return for improper performance of a relevant function or activity and for an organisation to fail to prevent bribery.  Furthermore for a company to defend against bribery charges it must have adequate procedures in place to prevent bribery.  Otherwise a company is liable for the conduct of its agent or employee.

Penalties for individuals are jail terms of up to 10 years and potentially unlimited fines for corporations.

So what precisely is bribery?  Historically there has been a spectrum with a blurred line between proper and improper conduct.  From brown paper bag drops through facilitation payments, lavish gifts, extravagant hospitality down to the simple business lunch.  Where is the line drawn?

The Bribery Act codifies what was previously a nebulous common law concept.

A bribe is the giving, offering or promising of an advantage with the intention of persuading the recipient to act improperly. They can be made directly or indirectly by someone on your behalf. the recipient might not be the ultimate doer of the act but has some influence. The bribe need not always be financial, just a benefit. The 2 key elements are the offer of advantage and the intention to influence.

So let's look at some scenarios. Corporate hospitality. The Act does not seek to restrict this as a legitimate business activity however it does draw the line where the intent is to influence the recipient to act improperly.  Showing that intent will of course be very difficult and reliance is placed on how the activity is viewed objectively and ultimately what a jury would make of the activity.

This is a vexed question because at its core corporate hospitality is designed to derive a benefit, the critical question is whether it induces improper behaviour.  Therefore it needs to be demonstrably proportionate and with at least arguable wholesome intentions.  A lunch to provide a relaxed setting to improve personal relationships is perfectly legitimate, however where the type of lunch become so lavish that it is remarkable, then the risk of impropriety rises.  However if you have a high wealth client a higher standard might be required to secure acceptance or the desired legitimate response to the hospitality.  The question you must ask is would someone viewing this hospitality from one side consider there was reasonable expectation of it influencing a decision relevant to the business.

So keep you bottles of wine commensurate with the setting and your guest and the extent of your relationship and do not try to impress by over extravagance.  It is a difficult line to walk but common sense will be a strong guide.

Facilitation Payments  

In Australia these are unheard of but in developing and 3rd world nations they are common.  They are payments to government employees or the like to speed up an administrative process where the outcome is predetermined.  "Grease payments" are permitted by many countries and organisations, notably the USA.  Whilst there is some logic to permitting these on the other hand they blur the lines and the British government has decide to take a hard line.  The payments by the AWB for shipments into Iraq, is a high profile example of a facilitation payment gone wrong.  In many cases it is almost essential to viable business operations and competitiveness in a region, yet it is now unlawful under the UK Bribery Act.  It will be interesting to see what becomes of this competitive inequality and whether market forces will get behind the UK high moral ground.

Corporate culture and enforcement.  Noting the corporate offence of failing to prevent bribery organisation will now need to demonstrate what measure they took to stamp out the practice.  A corporation can defend a charge if it shows it had adequate procedures in place designed to prevent bribery.  These measures will vary depending upon geography and culture, type of industry and susceptibility to bribery activities.

Some steps that can be taken.

 In Australia Commonwealth Criminal Code bribery offences limited to public officials.  Various state laws make it an offence to accept or give rewards to influence behaviour.

Money Laundering 

Probably not a high risk situation for Marine Surveyors but important to be mindful of the factors.

It is designed to obscure the criminal source of income so that it can be used in the mainstream economy without retribution.  Terrorist and organised crime are the targets.  Rose to prominence after 9/11 and the recognition of the increasing financial resources of disruptive illegal organisations.  Currently in Australia, legislative requirements are limited to the financial sector and gambling operators and bullion dealers.  But this is expanding.  Once again the UK leads the way with more widespread regulations extending through various professional bodies such as the Law Society.  Requirements of the regulations are to:

For lawyers, a common money laundering ploy is the receipt of random offshore instructions to pursue an outstanding debt.  Soon after instructions are received the debt is miraculously paid with little fight.  The money passes through the lawyers trust account and is laundered.  be on the lookout for transactions or requests that don't smell right or are too good to be true, especially where you do not know the entities involved.  In a Marine Surveying context the opportunities for money laundering are less obvious.  Be wary of transactions where payments or values just don't seem right. For example, the purchase of a vessel for what seems an exorbitantly excessive price where you may be asked to perform a valuation or survey.  it is wise to keep clear of these transaction or report them to the Australian Federal Police.

Integrity and Ethics

The last point raises an interesting issue, what is your obligation to positively do anything where you know of or suspect improper conduct?  The answer is, absent aiding or abetting a crime or being an accessory after the fact, you do not have a positive legal obligation to report suspect behaviour. However if you feel a moral obligation, then there is nothing to stop you from reporting suspected unlawful behaviour to the authorities provided this is not malicious or vindictive.  

There are always issues of confidentiality and possible defamation to be mindful of.  Sensitive information that comes into your possession may have express or implied confidentiality attaching to it the breach of which could expose you to civil liability in damages.  Similarly, publication of allegations damaging to someone's reputation can give rise to civil liability in defamation.  However communication to a relevant enforcement authority in good faith will usually be protected from suit.

So that is a brief overview of some topical issues in the world of global business that may impact upon you all.  Good luck in negotiating the minefield.  If you have any doubts, call a good lawyer.

 Thankyou."

Nominations are now open for the 2015 Lloyd's List Australia, Australian Shipping & Maritime Industry Awards.

The prestigious awards will be presented on 19 November in Sydney at the 20th Australian Shipping & Maritime Industry Awards gala dinner.

The 11 award categories open for nomination are:

Environmental Transport Award

Safe Transport Award

Freight Forwarder of the Year Award

Project Cargo Award

Seafarers Welfare Award

Customs Broker of the Year Award

Maritime Services Award

Supply Chain Excellence Award 

Port or Terminal of the Year

New Generation Award

Australian Maritime Hall of Fame

Nomination is easy with no set form or template. A short description of the person or your business, initiative, site, technology or product in your own words is all that's required. Supporting photographs and/or testimonials are also welcome. 

Simply click here to nominate online or send your nomination via email to 
Ronda.McCallum@informa.com.au.

To discuss a nomination, call Ronda McCallum on 02 9080 4354.

NSW Ports has appointed Marika Calfas as acting CEO following the resignation of Stephen Cleary, effective 13 August. 
 Mr Clearly was responsible for the ownership transition process from a publicly owned operation to a private lease two years ago.  

"Through the appointment of Stephen Clearly, we found the the qualities and drive required to achieved the objectives," NSW Ports chairman Paul McClintock said in a statement. 

"Stephen's leadership and successes have been reinforced by the highly capable executive team that he has managed."

Ms Calfas is currently NSW Ports executive general manager - strategy, planning and infrastructure and will undertake the role while the NSW Ports' Board undertakes a targeted search process for the CEO role. 

AMSA's Navigation Safety and International Relations General Manager Brad Groves has been elected as Chairman of the International Maritime Organization’s Maritime Safety Committee for 2016.

The election was conducted on 11 June, 2015 during the 95th session of MSC at the IMO’s headquarters in London.

The Maritime Safety Committee (MSC) is the International Maritime Organisation’s (IMO) senior technical body on safety-related matters, and the appointment is a major achievement in the maritime industry.

Mr Groves has been working at AMSA since 1998, and he was appointed General Manager of the then Maritime Standards Division at AMSA in 2010, before heading up Navigation Safety and International Relations.

His current role has responsibility over a number of maritime safety matters, aids to navigation, the management of vessel tracking, coastal pilotage plus government and international coordination matters.

Mr Groves first became involved with the IMO in 2001. He has previously chaired the IMO sub-committee on Human Element, Training and Watch keeping, and prior to becoming MSC Chairman, Mr Groves headed up Australia’s delegation to the MSC and supported AMSA’s Chief Executive Officer at IMO Council.

He has also been responsible for Australia’s involvement in regional arrangements such as the Asia Pacific Heads of Maritime Safety Agencies (APHoMSA).

Mr Groves said he was honoured and humbled to be elected as chairman of the Maritime Safety Committee, and was looking forward to delivering appropriate outcomes for the maritime community.

“Shipping is one of the world’s great industries but it does have its hazards. It’s long been clear that the best way of improving safety at sea is by developing international regulations that are followed by all shipping nations. This remains at the core of the work of the Maritime Safety Committee and the IMO overall,” Mr Groves said.

“I have seen many issues discussed since I was first involved in MSC discussions. Despite the progress we have made, we still have large responsibilities ahead and I look forward to progressing this important work,” he said.

Mr Groves also expressed his appreciation for the work of previous MSC Chairman, Christian Breinholt, Deputy Director-General of the Danish Maritime Authority.

The Australian Maritime Safety Authority has prosecuted two shipping companies and their masters for two separate marine pollution incidents within the Great Barrier Reef.

Tokyo based Perses Maritima Ltd and the master of its Japan registered vehicle carrier Asteria Leader were found guilty on May 18 in the Brisbane Magistrates Court on one charge each of illegally discharging garbage under the Protection of the Sea (Prevention of Pollution from Ships) Act 1983.

A routine Port State Control inspection conducted by an AMSA marine surveyor at Fisherman Island in the Port of Brisbane revealed a record of the discharge of 0.03m3 of food waste within the Great Barrier Reef on October 8, 2014.

Perses Maritima Ltd was fined $5000 for the illegal discharge and the master of the ship was fined $500.

Hong Kong based company Seaspan Corporation and the master of its Hong Kong registered container ship CSCL Brisbane were found guilty of illegally discharging garbage on August 6 last year within the Great Barrier Reef Marine Park.

The illegal discharge was also discovered by an AMSA marine surveyor during a routine PSC inspection at Fisherman Island.

It was also found that the ship’s passage plan did not take into account the required marine environmental protection measures as per the safety of navigation requirements prescribed by the Safety of Life at Sea (SOLAS) international convention.

Seaspan Corporation was fined $6000 for the illegal discharge and the master was fined $600.

AMSA Chief Executive Officer Mick Kinley said it was disappointing ships were failing to adhere to the measures in place to protect sensitive marine areas, such as the Great Barrier Reef.

But the discovery of the illegal discharges showed Australia’s PSC regime was both rigorous and effective, Mr Kinley said.

“Australia has a robust PSC regime, which is designed to ensure ship owners and their masters are adhering to the rules and regulations to prevent marine areas from being polluted,” Mr Kinley said.

“These prosecutions highlight to the shipping community if they flout the regulations they can be caught and subsequently prosecuted.” 

The Standard Club and ICS have launched a ‘Spot the Hazard’ competition open to any seafarer worldwide to help those working at sea identify hazards and promote accident prevention.

There are five different opportunities to win by spotting 10 hazards.

For each picture, a US$2,000 prize will be awarded to the seafarer who, in addition to correctly identifying all 10 hazards, also provides (in the opinion of the judges) the best safety idea. 

Further details are available at http://www.hazard-competition.com.

 Please submit your entries to  submissions@hazard-competition.com before 28 August 2015.

 The results will be announced within 120 days of the closing date.