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MarEx Mailbag: Reader Response to Last Weeks MarEx Editorial and one Other

Published Jan 11, 2011 2:36 PM by The Maritime Executive

MarEx reader weighs in on last week’s editorial, entitled “When ‘Heel’ IS Cargo as Opposed to When it is Not: Court ruling begs for clarification and examples of when “heel” certainly is cargo; MarEx Managing Editor gladly obliges.” USCG responds to remarks regard NAVIC 04-08

In last week’s edition of the MarEx e-newsletter, our lead editorial addressed a recent court ruling about “heel” volumes on board merchant vessels. In this case, it concerned LNG ships, but we had another perspective, as well. Cargo quantities, or “Remaining on Board” (ROB) volumes, often end up as points of contention. That can happen because they should have been discharged. When these volumes are not, someone’s bottom line is affected. Read last week’s editorial by clicking HERE. You can also see what some of our readers thought about the article, and a letter to the editor from last week’s e-newsletter, below:

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Joe:

Great article! Boy did that bring back memories!

Another sea story, whilst working for a famous-but-defunct Jones Act carrier. We loaded 4 oil (a/k/a wax) including in the ballast tanks, which – of course – have NO heading coils for delivery in Astoria, Noo Yawk. Yes, it was winter; of course it was winter! Southbound, we got into the Gulf Stream and started stripping back into the (surprise!) bunkers. Then we found out that the company had signed a contract to lift a clean cargo.

Y’know, come to think of it, there are times when I don’t miss shipping at all.

R. G. McFadden

MarEx Editor’s remarks: It’s always good to hear from Rod. I am quite certain that there are a hundred similar stories – all of them valid and equally entertaining. Thanks for weighing in. Here’s another:

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Joe:

I like your stories about tankers, barges and ROB.

Having started out in 1964 aboard tankers and finishing in 1993, I like you always referred to leftover cargo as ROB. Didn’t make much difference in the early days of small ships but as size and the cost of a barrel of oil both increased so did the “value” of that ROB. In the early days….remember this was before calculators…..we did cargo figures by “rounding” to the nearest inch, consulting the strapping tables and then Saybolt or Charles Martin tables. We then used log tables to reduce the cargo to the net quantity on board at 60 degrees. If you were good you could load flat so there was no wedge and calculate 30 tanks in about 20 minutes. Phew…that was a job.

Now the first time I heard about “heel” was in 1970 when we were trading between Drift River Alaska and Long Beach California. The second of the Italian LNG ships trading from Nikiski to Japan had just arrived in Nikiski and it was about two weeks to cool her down and load. She was back from the maiden voyage in a couple of weeks but had a problem because the sloshing of the “heel” had cracked the tank liner and that had to be fixed. In those early days of LNG transport, not much was known about the cargo.

Anyway, this “heel” was a designated quantity of cargo not sold or traded but set aside for the express purpose of boiling off (hence as physics will tell you, when it expands the surroundings cool down) and keeping the tanks cold for the next load. Of course, the end product is a gas which in fact can be burned in the ship’s boilers. As they got more sophisticated and with more trading under their keels they became very good at minimizing “heel” on board to just what was needed to keep the ship cold. So in the real world, ROB is left over cargo in tanks and “heel” is cargo purposely left aboard to maintain the -259 degree temperature. Believe me, both the shipper, transporter and receiver are all very aware of the quantity involved and any charter party would have the details and specifics included.

There are ships being delivered now that have reliquification plants on board and they reliquify the boil off. BUT, they still have to keep the ship cold during the ballast leg so “heel” is still vital. It is interesting to note that the U.S. has been EXPORTING LNG since 1969. Also the two original Italian ships were retired after about 25 years and replaced by two new and bigger ones. However, their useful life (LNG ships don’t rust inside with inconel, stainless and inerted double hulls) was extended and they were sold to the Russians (GasProm, I believe) and are still trading in the Russian field in the NorthEast adjacent to the Bering Sea. Approaching 40 years old…….

Name withheld

MarEx Editor’s Remarks: We didn’t have permission to use this individual’s name at the time we pulled the trigger for this week, hence we omitted his details. Nevertheless, I like being schooled about the LNG game, never having been assigned to one of these vessels. I attended loadings and discharge operations on one or two, however, when my client actually loaded a clear naphtha (or similar light cargo). Apparently, there weren’t any other suitable vessels around and these ships were looking for anything they could get. I disliked the experience, primarily because (a.) the ships had no experience factors (comparative ship-to-shore volumetric history, and (b.) you were forced to use the automatic, digitized gauging systems. You couldn’t open the tanks and pretty much had to take the Chief Mate’s word for every thing. The outturn volumes (or Bill of Ladings, in the case of the liftings) seemed to match up Okay. From a loss control standpoint, however, you were completed exposed without much recourse. Great letter – thanks for weighing in. Here’s another on this topic:
 

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To MarEx:

From my family's long generational history in shipping, the rule was any unclaimed Heel or ROB after unloading and cargo manifest (liquids or solids) and weights verified, became property of the ship owner. Rare that it happened as my uncles made sure what went on board as cargo, came off as such.

Gregory

MarEx: The writer often writes in to MarEx and is a member of the Coast Guard auxiliary. I will say that I’m glad that his relatives usually stripped out well, because it is my experience that – unless the liquid cargo has been deemed unreachable ship’s equipment – it is anything but the ship’s property. They may well end up keeping it, but they will probably also end up having to pay for it in the form of reduced freight or the value of the cargo itself, in the event of a claim from the charterer or cargo owner.
 

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Good day,

I have just read your article about heel and frankly, I'm amazed.

Firstly, let me introduce myself. I am a master on LNG ships which have traded all over the world, including the US.

LNG is generally traded using ship's outturn figures as the delivery figure. Bills of lading have until very recently meant very little on LNG ships because once the cargo was loaded it was starting to evaporate, and the quantity on board on departure was never going to be the same as the cargo on board on arrival at the discharge port. The bill of lading signed in the loading port was little more than a "mate's receipt." On arrival in the discharge port the cargo is gauged using the ship's measuring equipment only and gauged again on completion of discharge, with the ship (or the time charterer) having decided at what level the discharge should be completed. The receiver pays for only what has been received based on the volume and temperature and the calorific value of the cargo, they are not charged for the heel or for the "lost" cargo of the loaded passage. Freight is not paid on quantity loaded as a conventional tanker.

This heel generally belongs to the time charterer not the receiver, as the time charterer is normally the LNG supplier as well.

I do not understand the basis of the original court action but in my experience of discharging in the US, custody transfer arrangements are no different to anywhere else in the world and it would appear someone was just out to make trouble. On a standard 138,000 cubic metre LNG ship the maximum heel I would expect to retain is 3000 cubic metres depending on the voyage to be made. If it was back to the Caribbean it would be
less than that, perhaps 800-1200 cubic metres, or less than 1%.

But this may all change with the latest generation of ships with reliquefaction units on board. The bill of lading may finally become title to the cargo as on conventional or LPG tankers. At the moment this hasn't happened and these ships too have the freight charged on outturn only.

In the meantime, US terminals I am sure will continue following the LNG convention and pay for outturn and the heel is no one's business but the ship's and charterer's.

Regards

Bryan Mitchell

MarEx: Not much I can add to that. A nice primer for those of us not in the LNG game. Thanks for weighing in.

We had another letter referencing a different article this week, specifically our (Okay – MY) September 25th editorial referencing, among other things, the Coast Guard’s new medical NVIC. In that piece, entitled, Wakeup Call: The Road to STCW Compliance Starts to Get Bumpy…, I somewhat lightheartedly summed the situation as I saw it, in the wake of the NMS TWIC Advisory and the latest NVIC (04-08) on medical standards. The editorial addressed many points – and Captain M.L. Blair of the Coast Guard made a few of his own, in response.

 

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MarEx Editor’s Remarks: Captain Blair personally invited me to visit the National Maritime Center to “obtain a closer look at the process.” As one of the few journalists to bother to actually visit NMC as it was standing up – and write a detailed article about it – I’d be glad to come up again to see what is cooking. The metrics claimed in Captain Blair’s letter are indeed encouraging and he goes on to explain the merits of the Coast Guard’s new medical standards. At a time when the shortage of qualified mariners is only getting worse and not better, policies borne from standards such as NAVC (04-08) deserve scrutiny. We’ll continue to provide that scrutiny, perhaps, as Captain Blair suggests, after another visit to rural West Virginia.