Lloyd’s Open Form (LOF) salvage contract awarded for bulker casualties saw a significant increase last year, new analysis shows.
A total of 16 LOF salvage contracts for dry cargo vessels were awarded last year, against five in 2019, according to figures compiled by Roose & Partners.
The law firm said that of those 16, salvage services were performed mostly to vessels carrying cargo, with only three of the bulkers being in ballast.
As it currently stands, there were 46 LOF salvage contracts signed last year — up slightly from the 43 LOF contracts agreed in 2019.
While bulkers saw the most LOF contract awards, tankers and general cargoships shared second place with eight LOF contracts awarded in each segment.
Roose & Partners said groundings were “up notably” from 2019, with 12 of the 16 bulker cases involving vessels that experienced such fate.
There was only one tanker grounding — the 16,000-dwt Nordic Wolverine (built 2006) — which ran aground close to the port of Barranquilla in Colombia.
The remaining tanker LOF contracts included five mechanical failures and two fires, with both of the fire cases likely to result in the vessels being declared as constructive total losses.
Roose & Partners said another notable fire case in 2020 was the blaze on board the 4,900-ceu Hoegh Xiamen (built 2010), the only vehicle carrier in the 2020 round-up.
Containerships were involved in only two LOFs, and there was a pair of ropaxes that were assisted on LOF terms having run aground.
Overall, there were 21 groundings last year, which is an increase of six from the 2019 figures; 18 engine breakdowns, which is up on 2019’s figure of 10; a reduction in fire cases from seven to four; and only two vessels suffered a loss of stability and required assistance compared to three in 2019.
The law firm said the special compensation P&I clause (Scopic) was invoked in only eight cases in 2020 compared to 18 in 2019, and all but the 203,130-dwt Wakashio (built 2007) were loaded with cargo.
“The 2020 figures show very clearly that there is still a much-needed place for the LOF salvage contract,” Roose & Partners said.
“It is also hard to argue for the most part that the LOF salvage contract has been used inappropriately during 2020 with so many of the services involving grounded vessels.
“Again, there is a clear move away from long ocean tows being performed under the LOF contract.”
Roose & Partners said 2020 has been an “incredibly difficult” year as people had to cope with the impact of the Covid-19 pandemic and at a time when the salvage industry was already facing challenges.
“Covid-19 has no doubt impacted and will continue to impact the sector for some time to come,” the law firm said.
“Many salvors were quick to respond to the challenges, establishing Covid-19 management teams, implementing clear rules and protocols for their staff and subcontractors to ensure they were able to demonstrate a commitment to safe working practices when asked to assist.”
