Dire straits

A commercial manager recently submitted a claim to ITIC after a routing oversight led to a significant financial loss on a coal voyage from Australia to Brazil.

The chartering manager fixed a voyage charter, calculating freight based on the ship transiting via Cape Horn, the shortest route. This assumption was based on prior experience with similar ships, most of which had no restrictions on Cape Horn transits. However, the time charter for the ship included a specific clause that only permitted Cape Horn or Magellan Strait transits between October and March. The planned voyage was scheduled for May/June, outside the permitted window.

The mistake was discovered shortly after subs were lifted. The manager immediately contacted the owners to request an exception for a Cape Horn or Magellan Strait routing. However, the owners declined due to safety concerns during the southern hemisphere winter.

With no alternative, the ship was compelled to avoid the Cape Horn and Magellan Straits, resulting in a longer voyage and increased costs. The additional distance led to a combined loss of US$100,000 in extra hire and bunker consumption.

It is important to review all charterparty clauses, especially where the charterparty is based on a previous one which may have irrelevant or different wordings that do not fit the proposed new charter. Assumptions can be costly if not verified. Ensure that routing permissions are explicitly confirmed, particularly when dealing with seasonal or geographically sensitive passages.