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Presentation of Michael G. Roberts Marine Salvage Update Maritime Law Association / Instituto Iberoamericano de Derecho Maritimo Fajardo, Puerto Rico October.

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Presentation on theme: "Presentation of Michael G. Roberts Marine Salvage Update Maritime Law Association / Instituto Iberoamericano de Derecho Maritimo Fajardo, Puerto Rico October."— Presentation transcript:

1 Presentation of Michael G. Roberts Marine Salvage Update Maritime Law Association / Instituto Iberoamericano de Derecho Maritimo Fajardo, Puerto Rico October 31, 2013

2 Company Overview 2 Crowley was founded in 1892, when Thomas Crowley — grandfather of current chairman, president and CEO Thomas B. Crowley, Jr. — purchased an 18-foot Whitehall boat to provide transportation of personnel and supplies to ships anchored in San Francisco Bay. Crowley has since grown into a strong, diversified, service-oriented company with primary interests in marine solutions, transportation and logistics. Today, the company has more than $2 billion in annual revenues; more than 5,000 employees; and owns / operates a fleet of more than 250 vessels. Other assets include terminals, warehouses, tank farms, office buildings, trucks, trailers, containers, chassis, cranes and other specialized vehicles.

3 Principal Businesses 3 Container Shipping & Logistics  About 20 vessels in U.S. – C. America / Carib regional service  Warehouse, trucking, Customs brokerage, etc. Technical Services  Diversified menu of domestic & international services Petroleum Transportation  19 large tank vessels (17 ATBs) in domestic blue water trades; 4 MRs on order, plus options for 4 more. 5.5M bbls static capacity; average hull age less than 5 years. Petroleum Sales & Distribution  Tank farms, fuel supply network in Alaska

4 Crowley Solutions 4  World-class ocean towing and barge transportation  Vessel design and construction management  Resource development project management  Ship management (40+ vessels; MARAD, MSP, others)  Marine salvage, wreck removal, emergency response

5 Titan Maritime 5  Founded in 1980 by David Parrot  Acquired by Crowley Maritime in 2005  One of the very few organizations in the world doing marine salvage, emergency response and wreck removal as its core business  Member of the Int’l Salvage Union (ISU) and the American Salvage Association (ASA)  Depots in the US, UK, Singapore & Australia

6 Track Record

7 Now… Marine Salvage

8 1989 Salvage Convention – Codified traditional English and common law principles  Peril to marine property  Service not pursuant to pre-existing duty  Applies in absence of contract  General maritime duty to render assistance  Master / owner has contracting authority  Must cooperate with salvor to prevent / minimize environmental damage, and accept redelivery of vessel  Salvor has a duty of care, including to protect the environment; must seek / accept aid when needed Marine Salvage – Legal Foundation

9 Salvage Contracts and Statistics Lloyd’s Open Form (LOF)  No cure – No Pay  Full set of rules, including London arbitration  First LOF Contract 1892  11 Revisions culminating in LOF 2011  LOFs per Year  Since 1978 About $31 Billion Saved  Salvage Business = $400-$600 Million per Year  LOF with SCOPIC (Special Compensation Protection and Indemnity Clause) Other contract forms may be used

10 Criteria for the Award Classic / Common Law Factors  Nature & degree of risk or danger to vessel  Salved value  Risks assumed by salvors  Salvor’s skill, energy & promptitude  Salvor’s time & expense  State of readiness & efficiency of equipment More Recent Additions  Skill / effort / cost in preventing environmental damage  Degree of success

11 COSTA CONCORDIA Volume & Complexity of Cargo - APL Panama  Capacity 4,000 TEU  1,805 Containers Aboard  Largest Award in History

12 ISU: RECOVERY OF POLLUTANTS Salvage operations: 244 (256 in 2008) Pollutants recovered: 1,022,730 tonnes (667,497 tonnes in 2008) 15,976,297 tonnes of potential pollutants recovered Exxon Valdez Spill: 37,000 tonnes (1989)

13 Torrey Canyon 1967 Largest wreck of its time 120,000t crude oil spilled Outside UK waters $7.2M 3 rd Party Settlement $14.8M H&M Claim Limitation Liability 1851 Wreck Removal

14 Key features of Wreck Removal  Wreck has no commercial value (CTL)  Risk Covered by P&I not H&M  Bid / award process vs. emergency response Nairobi Int’l Conv. Removal of Wrecks (2007)  Authorizes coastal states to act where danger to navigation, environment  BIMCO contract forms commonly used (WRECKHIRE (day rates); WRECKSTAGE (milestone payments); & WRECKFIX (single payment at completion)  Other contract forms – sometimes not suited to wreck removal projects – may also be used

15 Salvage – Wreck Removal Continuum  IG LCWG Found 3 Stages in Contracting Common  SCOPIC Often Presages Wreck Removal  Interim Contracts Usually for Fuel Removal While Tendering  Wreck Removal Typically Fixed or Staged  Delays in Switching or State Interference Forcing SCOPIC to Run Resulted in Cost Increases  Sharing of Risk – More Global View  Twenty largest projects included significant day rate components  Many other projects beyond the top 20 primarily lump sum

16 YearVessel nameTypeClubGT Containers On Board ROW/SCOPIC (US$) 2002TRICOLORRo Gard ,742, CP VALORContainerWoE ,553, HYUNDAI 105Car carrierUK ,664, SELENDANG AYU Bulk carrierSwedish ,118, TWIN STARBulk carrierJapan ,751, OCEAN VICTORY Bulk carrierWoE ,155, ROKIA DELMASContainerSwedish ,284, GIANT STEPOre carrierJapan ,887, CALIFORNIABulk carrierAmerican ,066, MSC NAPOLIContainerLondon534092,318135,301, NEW FLAMEBulk CarrierSwedish ,372, SEA DIAMONDPassengerWoE ,983, EASTERN BRIGHT Chemical tankerJapan171558,513, FEDRABulk carrierAmerican ,700, JOLLY AMARANTO Ro UK ,517, MSC CHITRAContainerStandard331131,219102,474, B OCEANIABulk CarrierSwedish ,080, RENAContainerSwedish372091,366243,972, COSTA CONCORDIA Cruise shipStandard ,636, BARELIContainerGard358811,39754,327,008 TOTAL2,098,103,236

17 COSTA CONCORDIA RENA  Capacity 3,350 TEU  1,366 Containers Aboard  US$244M & Counting – 2 nd Most Expensive Removal

18 COSTA CONCORDIA JOLLY AMARANTO – RoRo Breakbulk  10,500 mt Cargo  Including >100 mt Steel Wire

19 COSTA CONCORDIA OCEAN BREEZE - Bulk  36,000 mt Grain  Removed via Telepherique

20 Wreck Removal

21 Wreck Removal Cost Drivers  Technical & operational characteristics of the wreck & the site  Coastal state & stakeholders intervention  Media can drive unwarranted concerns / actions  Characteristics of fuel removal  Contractual arrangements  Effectiveness of contactors, salvage consultants & claims manager

22 Wreck Removal Cost Drivers

23 Issues Facing the Industry Responder Immunity  P&I or Salvors policy will cover loss; therefore, liability rules should drive best behaviors  Owners/public need responsive, professional responders  Responders need immunity from liability for ordinary negligence, not gross negligence or recklessness  Mechanisms to deter frivolous claims Performance Guaranty  Salvor agrees to cover cost of completion  Not suitable given uncertainties in bidding  No such clauses in standard BIMCO forms

24 COSTA CONCORDIA

25 COSTA CONCORDIA – A Perfect Storm  Characteristics of Wreck  45,000 mt lightship, Salvage weight 55,000 – 75,000 mt  Complex Heavily Damaged Structure  Capsized Upslope  Characteristics of Site  Environmentally & Cultural Sensitivity – Removal Intact  Complex Topography – Bridged Between Rock Ridges  Complex Geology  Casualty Occurred Winter 13 January

26 COSTA CONCORDIA – A Perfect Storm (Cont)  Fuel Removal – 71 Days Dead of Winter  Heavy State Oversight  Crime Scene – Prosecutorial Permissions for All Operations  Extraordinary Media Spotlight  Heavy Environmental Requirements  Meet of All Industrial Regulations  Salvage or Offshore Construction??

27 Platform PF-1

28 Sponson Installation

29 Blister Tanks

30 Ready

31 Commence Parbuckle

32

33 Upright – 1.5 Degrees Port

34

35 Starboard Side Damage

36 Crowley / Titan 36 Thank You!


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