North releases briefing paper on liquefaction

North P&I Club has released a briefing paper exploring the insurance implications when solid cargoes behave like fluids and presenting typical responses to claims arising from cases of liquefaction.

The paper, entitled A Most Dangerous Trade: The Problems of Liquefaction provides insight into the consequences of liquefaction, whereby solid bulk cargo behaves like a fluid, creating a free-surface effect that may, in certain cases, cause the vessel to capsize. The paper is written by David Richards, Director (Claims), North P&I Club.

Opening with an overview of the phenomenon in the maritime context, A Most Dangerous Trade describes how liquefaction risk might be overlooked initially and later identified during loading or mid-voyage – despite compliance with the International Maritime Solid Bulk Cargoes (IMSBC) Code. The paper goes on to investigate the insurance implications of liquefaction causing the loss of a ship – presenting typical claims responses from charterers and cargo interests – and outlines the role of P&I providers in covering such incidents.

David Richards wrote in the article that:

“The real challenges in the carriage of cargoes prone to liquefaction are practical, including lack of testing facilities; stockpile access; cargo surveyor availability; intimidation of seafarers and surveyors; fraud; and, a lack of understanding of the dangers inherent in carriage of solid bulk cargo by stakeholders. Charterers and cargo interests ought to appreciate that the costs arising from a serious incident involving liquefaction are likely to fall on them with only a modest discount to reflect the litigation risk in pursuing a recourse action.”