Liquid cargo contamination can be very costly


By Gard P&I Club Senior Claims Executives Satoru Yamashita and Cheryl Acker who present the following best practices in order to avoid liquid cargo contamination claims.


Be aware: Costly liquid cargo contamination can arise when the last cargo onboard was coconut oil, palm oil, or other edible oils.


Gard has handled a number of liquid cargo contamination claims arising from previous cargo residues. These claims can be significant, not only entailing loss of value to the cargo, but also the cost of lost time and other related expenses. A review of just two recent claims illustrates the need for particular caution when the last cargo was edible oils, residues of which can be more difficult to remove before loading the next cargo due to a high melting point. Cargoes with high melting points are more likely to solidify at ambient/cold temperatures if not properly cared for.


Contamination of


gasoline additive A product tanker was fully loaded in the US with gasoline additives valued at around USD 40 million. Prior to this, the vessel had carried previous cargoes of coconut and palm oil species, with melting points for some parcels at 24 degrees Celsius. Before loading the new cargo, tank cleaning was conducted using hot seawater and recirculation of alkaline cleaning chemicals which was in line with industry recommendations.


When arriving at the discharge port in the Far East, however, the full cargo was rejected by the consignee due to an alleged contamination. Expert investigation and sample analysis led to the conclusion


that the most likely source of contamination was residues of the previous cargoes of coconut and palm oils. The contaminant was especially problematic for the consignee given the intended use for automotive fuel. After many months of testing and deliberation, this high-value full cargo was sold to salvage buyers in Southeast Asia. This involved a ship-to-ship transfer with another vessel and a filtering exercise to remove the contaminant.


In addition to the consignee’s claim for the depreciated cargo value, significant costs were incurred by the shipowners in storing the contaminated cargo while evaluating the best mitigation options and in arranging the transshipment and filtering. The total amount of cargo claim and costs exceeded USD 10 million.


Contamination


of caustic soda Another case became even more costly. A product tanker was fully loaded with caustic soda valued in excess of USD 5 million. Prior to the subject voyage, the vessel had carried a previous cargo of vegetable oils. Tank cleaning before loading and heating of some tanks during the voyage were conducted in accordance with charterer’s instructions.


When the vessel arrived at the discharge port in North America, however, particulate matter was found in all cargo tanks, except the few which had not been heated. The cargo in non-heated tanks was found to be on specification. Part of the contaminated cargo was discharged


96 | ISSUE 107 | MAR 2024 | THE REPORT


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