The standard defence put forward by a shipowner to a cargo shortage claim used to be that the loss was below or equal to 0.5% of the total cargo. This figure, which originally stemmed from the cargo insurance deductible, was used by shipowners and cargo insurers as a yardstick for in-transit losses for many years. However, a number of courts, particularly in the United States, have rejected the concept of an automatic ‘loss allowance’.
However, there is every indication that the same courts would allow a ±0.5% ‘measurement tolerance’. In-transit losses and their causes may be considered under four headings :
- The true in-transit losses during the voyage, where the ship’s gross volume at standard temperature on loading is compared with the ship’s gross volume at standard temperature prior to discharge theoretical in-transit losses, when the comparison of net volume on board at standard temperature on completion of loading is compared with the net volume on board prior to the commencement of discharge emptying and filling losses. This is particularly pertinent where a part discharge may take place into a lightering vessel or barge additional losses that may occur as a result of COW.
- The third and the fourth items become apparent when accounting for volumetric losses on outturn. The following factors may combine to cause a release of gases and an increase in pressure within the cargo tanks which, combined with the inert gas pressure, may cause venting through the pressure vent valves and consequent loss of product :
Reid vapour pressure
ambient temperature and general weather conditions.
Losses During Discharge
The largest volumetric losses are likely to occur when there is transfer from one container to another. This means that quite large losses can occur when pumping the cargo from the ship to the shore. Where lightering is involved, there will, inevitably, be a greater risk of volumetric losses between the oceancarrying ship and the shore tanks. Where COW is performed, the potential for volumetric losses is greater since the cargo is being formed into a highpressure spray and partially atomised.
The Shore Installation
When assessing a claim for short delivery of an oil cargo, the ship’s calculation and figures are scrutinised. It is of equal importance to examine the shore calculations at both the loading and discharge ports. The carrier’s liability does not extend beyond the ship’s manifold, and claims for apparent oil losses can sometimes be resolved by recalculation of the shore figures. The cargo interests should be asked to provide full details of the shore installation, including a plan showing all the storage tanks and the interconnecting pipelines as well as the position of isolating valves. They should be able to verify the maintenance of all their equipment and demonstrate that, for instance, all the isolating valves were tight and properly operating at the time of discharge. They should also be asked to demonstrate that the storage tanks were properly calibrated and show that the calibration was accurate. In some oil installations, the accuracy of the tank calibrations may be doubtful, particularly if they are of older construction or built on unstable sites. A small measurement inaccuracy may correspond to a substantial change in volume. Temperature measurements should also be closely considered as temperature gradients may exist when oil is stored in a large tank. In certain climatic conditions, there may be significant variations in the temperature within the tank. In a cold wind, there may be a horizontal temperature gradient as well as a vertical gradient. In many countries, the measurements taken at the time of custody transfer are witnessed by customs officials and, if appropriate, the official customs documents should be produced.
Oil Contamination Claims
Many oil shortage claims arise from the presence of excessive quantities of water that have settled out during the voyage and are found in crude oil cargoes at the discharge port. Oil contamination may occur in petroleum products, but a cross contamination between two grades of crude oil would, in most cases, not lead to a cargo claim. Crude oil cargoes are regularly blended before refining and, generally, for a cargo contamination to arise, a large cross contamination would need to take place.
This is not true of all grades of crude as there are some that have particular properties and must not be contaminated in any way. Many refineries designed for the reception of cargoes carried by sea have desalination facilities to protect the distillation columns and refinery equipment from excessive corrosion. Such facilities, however, do not always exist. The presence of water in certain crude oil cargoes may also cause emulsions to form with the hydrocarbons. This in turn may cause ROB volumes to be excessive and possible sludging of land tanks if efficient water draining is not carried out.
It is quite possible that any alleged contamination could have taken place ashore before loading. A prudent owner is, therefore, recommended to protect his interest by ensuring that ship’s staff take cargo samples from each tank after loading and at the ship’s manifold during loading, as a matter of routine, so that hard evidence is at hand to refute claims of this kind. Contamination claims are more likely to occur in the white oil trades, where it is common for a number of grades to be carried simultaneously. As many as eight or ten grades may be carried simultaneously and, on a purpose-built product carrier fitted with deep well pumps and dedicated loading lines, it may be possible to carry a different grade in each tank with complete segregation.
Precautions Before Loading
Every care should be exercised to ensure that proper tank cleaning procedures are rigorously carried out and that tank coatings are in a suitable condition for the intended cargo. Particular care should be taken to ensure that all traces of the previous cargo are removed in the cleaning process.
When carrying multigrade cargoes, effective segregation is of prime importance. When preparing the loading plan, allowances must also be made for trim and draught restrictions. It is common for multigrade cargoes to be loaded in more than one port and for several discharge ports to be involved. In some cases, additional cargo may be loaded during the voyage after the discharge of other products. Careful planning is advisable, taking into consideration the quantity of cargo to be loaded and discharged, draught, trim and stress considerations, as well as the consumption of water and fuel.
Before loading, all concerned should have a clear knowledge of the intended loading plan, and the pipelines and valves must all be carefully set and doublechecked. Because product cargoes generally have a low specific gravity, it is likely that the ship may not be loaded down to her marks even with all cargo tanks filled to the maximum permissible. When loading for a voyage that entails passing through areas where higher sea temperatures are expected to be encountered, it is advisable to take into account the expansion of the cargo that will occur as a result of those higher temperatures.
During the loading of sensitive products, it is common for ‘foot samples’ to be loaded and for samples to be taken and analysed before the rest of the product is taken on board. When carrying multigrades, it is good practice to take as many samples of the cargo as possible at various stages of the loading and discharge, including samples from the shorelines. If claims for contamination arise, the analysis of such samples will often identify the source of the problem and may assist the shipowner in rejecting liability.
Glossary of measurement terms
API = API Gravity
Petroleum industry expression for density of petroleum liquid expressed in API units. API gravity is obtained by means of simultaneous hydrometer/ temperature readings, equated to and generally expressed at 15°C (60°F). The relative density to API gravity relation is :
Relative density 15°C (60°F).
A device installed for indicating the level of product from a location remote to the manual gauge site.
Petroleum industry measurement unit equal to 42 US gallons.
The oil that remains adhered to the inner surface and structure of a tank after it has been emptied.
Crude Oil Washing (COW)
The technique of washing cargo tanks of oil tankers during the discharge of crude oil cargoes, using the crude oil cargo itself.
The mass per unit volume at a specified temperature used to determine weight for a volume at a standard temperature.
Depth of liquid. American expression: gauge.
Water within a container that is not entrained in the cargo.
Gauge reference height
The distance from the tank’s strike point to the bench mark or reference point.
Gross Observed Volume (GOV)
The total volume of all petroleum liquids, including sediment and water (S&W), but excluding free water, at observed temperature and pressure.
Gross Standard Volume (GSV)
The total volume of all petroleum liquids and S&W, corrected by the appropriate temperature correction factor (Ct1) for the observed temperature and API gravity, relative density or density to a standard temperature such as 60°F or 15°C and also corrected by the applicable pressure correction factor.
Load on Top (LOT)
The procedure of allowing hydrocarbon material recovered during tank washing to be commingled with the next cargo.
Onboard quantity (OBQ) less free water in cargo, slop tanks and lines, and water in suspension in slop tanks.
Net Observed Volume (NOV)
The total volume of all petroleum liquids, excluding S&W, and free water at observed temperature and pressure.
Onboard Quantity (OBQ)
Cargo tank quantities of any material on board a ship after deballasting immediately prior to loading. Can include oil, oil/water emulsions, water, nonliquid hydrocarbons and slops.
Remaining On Board (ROB)
Cargo or residues remaining on board the ship after discharge.
Sediment and Water (S&W)
Non-hydrocarbon materials that are entrained in oil. Material may include sand, clay, rust, unidentified particulates and immiscible water.
Ship’s composite sample
A sample comprised of proportional portions from running samples drawn from each tank on the ship.
Stated volume extracted from ship’s calibration tables based on measurements taken from cargo tanks.
A tank into which the tank washings (slops) are collected for the separation of the hydrocarbon material and water, the recovery most often becoming LOT (load on top).
Total Calculated Volume (TCV)
The total volume of the petroleum liquids and S&W, corrected by the appropriate temperature correction factor (Ct1) for the observed temperature and API gravity, relative density or density to a standard temperature such as 60°F or 15°C and also corrected by the applicable pressure factor and all free water measured at observed temperature and pressure (Gross Standard Volume plus free water).
Total delivered volume (ship)
The Total Calculated Volume less ROB.
Total Observed Volume (TOV)
The total measured volume of all petroleum liquids, S&W and free water at observed temperature and pressure.
Total received volume (ship)
The Total Calculated Volume less OBQ.
Ullage (outage gauge)
Measurement of the distance from the datum point at the top of a tank to the surface of the liquid cargo.
Volume Correction Factor (VCF)
The coefficient of expansion for petroleum liquids at a given temperature and density. The product of the petroleum liquid volume and the volume correction factor equals the liquid volume at a standard temperature of either 60°F or
Water (dip) gauge
a) The depth of water found above the strike point, or
b) To gauge for water.
Water finding paste
A paste applied to a bob or rule to indicate the water/product interface by a change in colour at the cut.
An adjustment made to the measurement of a wedge-shaped volume of oil, so as to allow for the vessel’s trim.
Weight Conversion Factor (WCF)
A variable factor related to density for use when converting volume at standard temperature to weight.