Declining revenues, nurdles and icebergs

ISU considers wreck removal contracts are an area to be addressed. (Ardent) ISU considers wreck removal contracts are an area to be addressed. (Ardent)

The International Salvage Union's annual marine journalists' lunch brings news of a resilient and vibrant industry despite a fifty percent reduction in emergency response and wreck removal income for its members in 2016.

The event, held in London and attended by MJ provided an overview of the state of the salvage industry with ISU officials and representatives of the salvage industry on hand to answer questions and describe operational elements of an industry currently facing challenging times. There can perhaps be no better time than the present for the industry to be represented by the organisation that is the ISU.

Ms Charo Coll, general manager of the Offshore and Salvage Division of Spanish company Boluda Corporación Marítima and also ISU president reported on the lowest number of Lloyd’s Open Form cases for many years. Early signs suggest these will increase in 2017 adding that salvors will also be hoping the drop in revenue will be reversed.

ISU still considers LOF the best contract in many emergency response situations offering speed and the principle, often overlooked, that the salvor carries all the financial risk, the owner and insurer pays nothing until the job is complete.

Increased competition and oversupply of contractors at some locations are among the theories behind the decline in LOF use, the latter also including the large amount of capacity from the under-utilised offshore sector. This may result in salvors prepared to work on commercial terms to secure work. Ms Coll suggested there seems to be a determination by some ship owners and their hull underwriters to avoid LOF contracts, and if used, to require the use of ‘side letters’ and agreements.

This can result in a cap to salved values or agreements to calculate the award based on tariff rates. The salvor still carries the same risk but for a reduced award. ISU view this as unfair and therefore support LOF in its un-amended form. Also under consideration is making it compulsory for side agreements to be reported to Lloyd’s when notified of the LOF.

Other areas of ISU activity include improving relationships with P&I Clubs, and while the SCOPIC regime is working well, proposed changes that will leave the contractor worse off is an issue to be addressed. Unfair wreck removal contracts, container ship fire safety, salvor criminalisation and places of refuge are also on ISU’s list of subjects to be addressed.

Resolve Marine Group director, Captain Nicholas Sloane provided interesting examples of work Resolve are involved in. He introduced those present to the subject of nurdles and the recovery of billions of them from South African beaches. Nurdles are lentil-sized beads used in the production of plastics and when a container loaded with sacks containing nurdles was lost overboard possibly from a ship in Durban harbour during a storm the ensuing clean-up proved challenging.

Nurdles are virtually indestructible and, unlike oil, cannot be detected from the air by pollution detection technology, they also absorb pollutants and are thus a threat to marine wildlife. Modelling and simulations of the nurdles both within their sacks and released directly into the sea was carried out to assess where they would end up.

Nurdles, both loose and in sacks started washing up on stretches of Durban beaches and Resolve’s efforts to clean-up the spill have included using industrial vacuum cleaners. The ingenuity and diplomacy skills present in the salvage industry’s DNA were required; liaising with local tribal chiefs organising labour to assist in the operation.

Captain Sloane also touched on an idea not new to the industry, the towing of icebergs from Antarctica to South Africa, the Middle East and beyond to harvest their enormous quantities of very pure fresh water. He suggested two tugs of around 300tbp could be used to in effect steer the icebergs weighing perhaps a million tonnes driven by natural global currents. Clearly a ‘work in progress’ with enormous potential and a story to watch in the future.

By Peter Barker

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