Transit Insurance of Coal and Loss prevention

Coal is a mineral of organic origin, developed from the remains of vegetation which have, over the course of millions of years,been transformed to solid carbon fuel by the effect of heat and pressure from overlying rock or water. Coal is used as fuel. Coal covers a wide range of products with a corresponding range of properties. All classes of coal, including anthracite, are susceptible to Spontaneous Combustion.

Stowing

Whilst all classes of coal are susceptible toself-heating under appropriate conditions, some types of coal, particularly lower gradei.egeologically immature coals, have a particular propensity in this regard. The blending of different types of coal may also enhance the propensity of spontaneous combustion. Very little can be discerned about the potential properties of a cargo simply by visual inspection at the time of loading. Thus, given the wide variability in the properties of coal, it is essential for the Master of the vessel to obtain full details of the specific characteristics of cargo from the shipper prior to loading. If the Master is not satisfied that he has been provided with sufficient information concerning the properties of the cargo, or has reason for concern about the safe carriage of the cargo, he should seek expert advice before shipment of the cargo.

Precautions to be taken after loading  on to the  vessel

• Warning notices against smoking and the use of naked illuminationshould  be  posted at the entrance to cargo compartments and adjoining spaces where inflammable gases may accumulate.
• Warning notices against use of electrical circuits in cargo compartments, mast houses, deck houses and other spaces where gas may accumulate should be avoided.
• Torches specially  designed for safe use in potentially flammable environment should be carried on board.
• Consignment should not be allowed to be loaded on the vessel in slurry conditions. Coal shipped in wet condition will show at least 2 to 3% loss in weight.
• Since coal is susceptible to spontaneous combustion during long ocean voyage, temperature should be taken at the bottom of and at the ends of each coal carrying compartment and steps taken to monitor and record the rise of temperature, if any, during the entire sea voyage.

Ventilation

As the cargo is prone to self-heating, ventilation should be restricted  to an  absoluteminimum,  and  it is  essential that  the cargo is trimmed  as level as is reasonably possible. Any increase in temperature maycause self- heating. More so, nature of the cargo is such that a hot spotin the stow is unlikely to be detected in the early stages unless there  happens to be a temperature probe in  the right location. Since self heating is an oxidation process the oxygen concentration in the hold atmosphere under conditions of restricted ventilation is likely to become depleted. For cargoes which are liable to emit methane, the possibility of explosion is high. Henceprecautionsshould be taken  to avoid the accumulation of flammable atmosphere in the  holds although excessive ventilation, particularly into the body of the coal, may cause self – heating.

Contamination

Most    classes   of coal,  particularly  thoseused for coke making, suffer deterioration and depreciation  in value  due to contact  with salt water. However, quality, calorific  value apart,  coal  is seldom affected  due  to  contact with fresh water.  Hence, proper care should be taken  in arriving at depreciation or  loss  arising from spontaneous combustion,  heating, or  water  damage.The assistance of a qualified sampler/analyst  is essential   to determine  the degree  of  deterioration.

Spontaneous combustion

A commodity   having  relatively low ignition  temperature begins to releaseheat. It  may occur due to oxidation  by  moisture and air and, in some cases, bacterial fermentation generates heat. If heat is unable  to  escape, the temperature  of   some commodities  like hay, straw, peat etc. increases.

Withregardto coal ,  the  possibility  of   self- heating  decreases  with increasing rank of the coal.  Lignitecoal  is  more susceptible  than bituminous  coal,   but  the latter  is more  active than anthracite coal. It  is also  found  that  mined coal consumes  oxygen  more rapidly than weathered  coal and, therefore, mined coal  self-heats  to a greater extent than weathered coal.

When spontaneous combustion occurs, the temperature rises initiallybut  no  burning in the normal  sense takes place. This  stage  is  called  “heating”.  Apart from the increase in temperature, heatingmay  develop  from  the  gases produced  i.e.carbon  monoxide.   Since  the  gases  produced  tend  to increase  the possibility  of  spontaneous combustion in  a  remote location,  it is difficult   to locate  the place  of  heating.   The   heating   gradually   developsinto afire  unless  the  situation alters.

Marine underwriters   should   not   grant  cover  for spontaneous combustion during   storage  at  port even  in the ordinary  course of transit.  However,  cover  for  spontaneous  combustion may  be granted during  sea voyage and  the  loss,  if any,   due  to  spontaneous  combustion  may be admitted  if the Master  of the vessel  confirms the occurrence of spontaneous combustion.

Loss  of Weight

Coal  or coke  shipped  in wet condition  may be  subject to loss of weight  due to drainage during the voyage  or by evaporation  up   to,  say  3%,  depending on the quantity  shipped. However, loading and unloading  in heavy rain  may  result  in an increase in discharged  weight  over shipped weight.  Apart from the physical weighing of the commodity  on loading and discharging, an approximate check of the lost  or added weight can be  made  by using  the immersion scale of the vessel   or by comparison  of moisture analysis  of cargo  samples taken professionally  during loading and  discharging.  Cargo weights  are,  in  certain cases ,ascertained  at points  remote  from  ship’s rail   and alternatively  at the time the cargo is  put into stock on quay  or in barge.  In such cases, variation between the weight indicated asshipped  andthat actually  loaded  will occur.Since  coal absorbs  water, it is always traded  on a dry weight  basis i.e.moisture  content  at both ends  should be considered  when  payment is  made  to the seller.

The  loading, transportation   and discharge  of coke  results   in  some degree  of breakage,  leading  to   a  small  average size   of  lumps   and a greater  content  of  fine material,  breeze  and dust.  Hence, careful samplingand testing  according to acceptable procedure  are necessary   to  determine  the extent  of   such  changes.

How to deal   with  difference in weight  during voyage/transit

• There will be no dispute if the total quantity of consignment loaded on to the vessel has arrived without any shortage.
• If draught survey at discharge port shows excess cargo when compared to the quantity loaded at load port, the same may have been caused due to absorption of moisture or because more cargo was loaded than intended.
• If cargo is short landed, the receivers of cargoshould file claim on the carriers.
• If the cargo is loaded in one port and discharged in another port, the difference in quantity without any valid reasons may be a paper loss but if the cargo is discharged at several ports, then surveyors representing different receivers should be called in to estimate the quantities based on figures obtained by draught surveys, etc.
• Since cargo stored in open prior to loading on to the vessel is exposed to rain and the moisture remains in cargo for many weeks prior to loading, excessive weight i.e. in excess of 100tonnes on a 4 weeks voyage may be discharged.
• Itmay be noted that when moisture drains out during prolonged voyage, the cargo contains moisture which may accumulate at the bottom of the cargo hold and drain towards the hold bilges. This may also happen due to leakage into the cargo holds through hatch covers or from other openings. Hence, a cargo of coal containing up to 1% of its weight as moisture, may settle in the bilges tank. Unless, proper sounding of bilges tank is taken during draught survey, such accumulation in bilge tank will be undiscovered. The cargo receiver will receive shortage of cargo but draught survey at disport will not show any difference in quantity as from load port since quantity of cargo settled in the bilge tank will appear in the disport draught survey.

Risk factors

The common hazards related to coal during its shipment are as under:

• Self- heating/Spontaneous combustion.
• Entry of sea water into the vesselwhich  may  cause  contamination of cargo.
• Washing out of cargo during storage  in open  at   the  Port of loading anddischarge due to cyclonic storm.
• Unexplained shortage,  loss of calorific value, moisture loss, multiple  handling losses, blowing out  of  consignment ( especially   dust  particles)  during  mid-stream discharge/loading,lighterageand   transportation  of  cargo  by barges.
• Theft, pilferage, rain andsea  water damage , non- delivery of  cargo during storage in open   and  transportation by open wagon/vehicle.

Underwriting   Considerations

While accepting   the risk, the following conditions should   be strictly adhered to:

• The risk under the policy will  commence as  per  Incoterms 2010.
• Thepolicy shall  be subject to supervised loading and discharge of cargo  by  the surveyors  nominated  by the underwriters.
• The cover   excludes  midstream loading/discharge, lighterage  and transportation of goods by barges. However, if thecover is granted, the same shall berestricted to ICC ( C) only.   The cover for spontaneouscombustion duringoceanvoyage may begranted but subjecttoan  excess  of at least 1.5%  on the value of the whole consignment.   The cover for spontaneous combustion during transportation by barges and inland vessel/conveyance should not be granted.
• The cover  excludes  rain, sea water  damage,  theft and pilferage  during  storage in open  and during transportation by open wagon  even in the ordinary course of transit.
• The cover excludes moisture loss, loss of calorific value, deterioration, contaminationand unexplained shortage.The cover also  excludes  payment of  ransom  arising  out of PA/GA.
• The policy shall be  subject  to  Co-mingled  clause, Institute Classification Clause and ISM endorsement and Sanction Limitation and Exclusion Clause.

Conclusion

AnISO  container  may be stuffed  for  carriage of  bagged coal.   If Open top, half-height, or closed box containers are used for bulk, the containers should be properly lined against abrasive damage and dirt by lining the whole container with plastic sheet or similar kind of articles.Explosives are not permitted tobe put in a hold carrying  coal in any compartment to avoid  explosion. Coals of all types may be carried safely if they are handled, loaded and stowed properly with due regard to their particular properties.

Author :  Sumon Ganguly (Dy  Manager- National Insurance  Co Ltd.)