Business

North P&I Club: Beware the in-transit cargo loss clause

David Patterson and Simon Clarke of North P&I Club explain why it is in the shipowner’s best interests to avoid in-transit cargo loss clauses.

Published

4 years ago

March 1, 2022

Admin

It is common for charterers to make claims or apply deductions based on ‘in-transit loss clauses’ in the crude oil trade. North P&I Club’s David Patterson, Loss Prevention Executive, and Simon Clarke, Senior Claims Executive, explain why it is in the shipowner’s best interests to avoid this type of clause.

In-transit cargo loss clauses generally define an in-transit loss as the difference between the vessel’s gross observed volume (GOV) on completion of loading and before unloading at the discharge port. While this may seem a simple comparison, it is a fundamentally flawed measurement, reflecting a ‘paper shortage’ rather than any physical loss.

One of the main problems with these clauses is that Owners may not have the defences that would otherwise be available for an alleged shortage if the claim had been assessed with reference to, for instance, the Hague/Hague-Visby Rules. In addition to putting owners in a difficult position when trying to defend claims made by charterers referencing these clauses, this may adversely impact upon the scope of club cover available in respect of the claim.

Paper shortages

During measurement, the GOV is established by subtracting any free water and sediment from the total volume of fluids in the tank, providing the quantity of oil at the given temperature upon loading.

On the voyage to the discharge port, two factors can result in changes to the gross observed volume: a decrease in cargo temperature and an increase in free water.

Cargo temperature decrease

Cargo is likely to cool during the voyage, increasing in density and therefore reducing in volume while its mass remains the same. Even when cargo heating is employed, it is unlikely that tank temperatures at the discharge port will be same as they were at the load port during the tank survey. When the two gross volumes are compared – as required by in-transit loss clauses – this reduction in cargo volume will indicate a paper shortage.

Free water increase

The crude oil production process consists of separating fluids from an oil well into crude oil, gas and water/sediment. While this can be a highly efficient process, crude oil cargoes usually contain a small amount of water and some solids –known as the cargo’s ‘base sediment and water content’ (BS&W).

To put this into context, if a vessel loads 1 million barrels of crude oil with a BS&W of 0.3%, 997,000 barrels of the cargo will be crude oil while 3,000 barrels will contain water and some sediment. Free water is the term used to describe any water that has separated from the crude oil at the bottom of the cargo tank.

This can result in a difference in the reported amount of free water detected upon completion of loading and arrival at the discharge port. Typically, the tank survey at the load port will commence as soon as is practicable after the completion of loading. There is therefore minimal time for any water in the cargo to separate out, and the survey may detect only trace amounts of free water. Consequently, the GOV will be calculated as the entire volume of the cargo tank contents, including any water and sediment.

During the voyage, water and sediment contained in the cargo will have time to separate out, meaning that free water can be detected more readily in the discharge survey. This is done by establishing the interface between the water and oil. While the amount of sediment is not accounted for directly, it is included in the free water figure as the sediment will settle below the water.

When the GOV is re-calculated, free water and sediment is subtracted from the total contents of the tank, with the difference between the volume of free water and sediment detected at the load and discharge ports indicating a paper shortage.

Performing correct calculations

To account for variations in cargo temperature at the load and discharge ports, the cargo must be compared at a standard temperature. This is achieved by applying a volume correction factor to calculate the quantity of cargo at 15^oC or 60^oF. The term ‘gross standard volume’ (GSV) is used when the GOV is calculated at a standard temperature.

To ensure that any free water and sediment is accurately accounted for during the tank surveys, the total calculated volume of the cargo should be established. This is achieved by adding free water and sediment calculations to the GSV.

Checking cargo documents

The cargo documentation should provide details of the total volume of water and sediment for the cargo. This can be established by subtracting the gross and net quantities listed on the bill of lading or by the BS&W as stated on the Certificate of Quality.

Loss prevention

For Owners, it is better to avoid any in-transit loss clauses that may override clauses incorporating the Hague/Hague-Visby Rules, such as a Clause Paramount.

The standard pre-printed charterparty clauses are preferable from an Owner’s perspective. For example, the widely used Asbatankvoy voyage charterparty has a Clause Paramount (clause 20(b)(i)) that incorporates the Hague/Hague-Visby Rules, as does BIMCO.

Find out more

Recommended clauses can be found on our website: North – Recommended Clauses (2021-2022)

North Members enjoy free access to our loss prevention guide: Shipboard Petroleum Surveys: A Guide to Good Practice

Published: 1 March, 2022

Mass Flowmeter

Hong Kong backs MFM adoption with voluntary scheme to boost bunkering competitiveness

Hong Kong’s Marine Department launched the Quality Bunker Operator Scheme to encourage bunker operators to install and use mass flow meter systems on their bunker vessels.

Published

4 hours ago

June 4, 2026

Admin

Hong Kong’s Marine Department (MD) on Wednesday (3 June) launched the Quality Bunker Operator Scheme to encourage bunker operators to install and use mass flow meter systems (MFM systems) on their bunker vessels.

MD said the scheme aims to enhance Hong Kong’s bunkering service quality and the competitiveness of Hong Kong ports, thereby further consolidating Hong Kong’s position as an international maritime centre and a major bunkering port.

Under the Scheme, bunker operators of traditional maritime fuel and biodiesel that install and use MFM systems on their bunker vessels, with the MFM systems inspected and certified by an accredited body in accordance with the International Organization for Standardization’s ISO 22192 Standard or equivalent requirements, can apply to the MD for inclusion in the scheme’s “List of Quality Bunker Vessels”, provided they meet the relevant technical and operational requirements.

Details of the bunker vessels successfully included in the List will be published on a dedicated page on the MD’s website for reference by shipping companies and relevant stakeholders.

Participation in the Scheme is voluntary. In addition to receiving recognition from the MD, participating bunker operators will benefit from enhanced corporate image and competitiveness through the adoption of MFM systems, thereby boosting customers’ confidence and helping to create new business opportunities.

A spokesman for the MD, said: “As an international maritime centre supported by our country, Hong Kong has a strategic location adjacent to major international fairways. Coupled with years of development in marine fuel bunkering, Hong Kong possesses rich experience and talent in the field. For many years, Hong Kong has consistently ranked as the seventh-largest bunkering port globally, the second-largest in our country, and the largest in the Greater Bay Area, providing reliable and competitive fuel bunkering services to ocean-going vessels from around the world.

“As the international shipping industry has an increasing demand for accuracy and transparency in bunkering services, service quality and measurement precision in bunkering operations have become important indicators of a bunkering port’s competitiveness. The Scheme will enhance bunkering accuracy and transparency, further enhancing the quality of Hong Kong’s bunkering services.

The spokesman added that comprehensive port services are one of Hong Kong’s key advantages as an international maritime centre.

“We will also mandate the use of MFM systems on all methanol bunker vessels this year to ensure that Hong Kong continues to provide high-quality bunkering services in the era of green maritime fuels.”

Note: The application form for the Scheme can be found on the MD’s website. Interested bunker operators can download the application form from the website or contact the MD’s Green Maritime Fuel Team via email ([email protected]) for details.

Photo credit: Manifold Times
Published: 4 June, 2026

Alternative Fuels

MPA and MSC ink MoU to support adoption of alternative bunker fuels

MPA and MSC will explore new routes and services to strengthen connectivity, support the adoption of alternative marine fuels such as bio-LNG, and advance technologies to improve vessel energy efficiency.

Published

4 hours ago

June 4, 2026

Admin

MPA and MSC ink MoU to support adoption of alternative bunker fuels

The Maritime and Port Authority of Singapore (MPA) on Wednesday (3 June) said it signed a Memorandum of Understanding (MoU) with MSC Mediterranean Shipping Company to strengthen collaboration in maritime decarbonisation, digitalisation, innovation, and manpower development.

The MoU was signed on 25 May 2026 by Mr Ang Wee Keong, Chief Executive of MPA, and Mr Soren Toft, Chief Executive Officer of MSC.

The MoU underscores the shared commitment of MPA and MSC to foster a sustainable, digital, and future-ready maritime sector, while enhancing MSC’s operational and business activities in Singapore. This year also marks the 30th anniversary of MSC establishing its Asia Regional Office and local office in Singapore.

Under the MoU, MPA and MSC will explore new routes and services to strengthen connectivity, support the adoption of alternative marine fuels such as bio-LNG, and advance technologies to improve vessel energy efficiency and operational performance.

MPA and MSC will also collaborate on maritime digitalisation initiatives to improve operational efficiency, including streamlining vessel arrivals and port operations.

On manpower development, MSC will support internship and scholarship opportunities through Singapore Maritime Foundation’s Maritime Outreach Network (MaritimeONE) platform, an industry-led tripartite partnership comprising industry, government and institutes of higher learning that aims to raise awareness of the maritime industry and attract quality talent into the maritime sector.

Mr Ang Wee Keong, Chief Executive of MPA, said: “This partnership reflects the strong collaboration between MPA and MSC in driving sustainability and digitalisation in the maritime sector. By working together on decarbonisation, operational efficiency and talent development, we aim to strengthen Maritime Singapore’s position as a trusted and future-ready global maritime hub.”

Mr Soren Toft, Chief Executive Officer of MSC, said: “Singapore is a strategically important hub for MSC and a key gateway to the broader Asia region. As we mark 30 years in Singapore, this MOU reinforces our long-term commitment to strengthening our presence here. MSC and Singapore are closely aligned on the priorities shaping the future of global shipping, and we look forward to deepening this partnership to drive the continued growth and resilience of the maritime industry.”

Photo credit: Maritime and Port Authority of Singapore
Published: 4 June, 2026

Emissions reporting

StormGeo and OceanScore link emissions data, compliance workflows

Cooperation combines StormGeo’s expertise in operational vessel and emissions data with OceanScore’s expertise in emissions compliance workflows across EU ETS, FuelEU Maritime and UK ETS requirements.

Published

4 hours ago

June 4, 2026

Admin

StormGeo and OceanScore link emissions data, compliance workflows

Weather intelligence and decision support solutions provider StormGeo and Hamburg-based technology platform OceanScore on Wednesday (3 June) said they have deepened their ongoing cooperation through the signing of a collaboration agreement during Posidonia 2026 in Athens on 2 June.

The cooperation combines StormGeo’s expertise in operational vessel and emissions data with OceanScore’s expertise in emissions compliance workflows across EU ETS, FuelEU Maritime and upcoming UK ETS requirements.

Together, the companies aim to help shipping companies seamlessly navigate increasing regulatory complexity more efficiently — from emissions reporting and data validation to compliance exposure management, pooling and financial settlement.

As emissions regulation becomes an increasingly important part of commercial shipping operations, the need for reliable operational data and streamlined compliance processes continues to grow. The cooperation between StormGeo and OceanScore is designed to support shipping companies with more connected, transparent and actionable processes across operational and commercial teams.

“From the outside, companies like StormGeo and OceanScore may sometimes be perceived as competitors because both operate around emissions and compliance workflows,” said Albrecht Grell, Managing Director at OceanScore.

“But in reality, the industry increasingly needs both perspectives working together: trusted operational emissions data on one side and commercial compliance execution on the other. Our cooperation reflects that shipping companies are no longer looking for isolated solutions — they need connected processes, automated across different systems and reliable decision-making throughout the full compliance chain.”

By connecting validated operational emissions data with commercial compliance management, the cooperation supports workflows across:

emissions reporting and validation
compliance management across EU ETS, FuelEU Maritime and upcoming UK ETS requirements
exposure visibility and cost transparency
pooling, settlement and financial processes

The cooperation also aims to improve commercial transparency and coordination across operational and commercial stakeholders.

“StormGeo plays a central role in helping shipping companies turn operational vessel and emissions data into trusted, decision-ready insights,” said Espen Martinsen, Chief Commercial Officer at StormGeo.

“As emissions regulations become more complex, this data is essential for transparent and efficient compliance management. By working with OceanScore, we can help customers connect StormGeo’s validated operational data with commercial compliance processes, creating a more integrated and practical approach to emissions management.”

The signing ceremony took place at the StormGeo booth during Posidonia 2026 in Athens and was attended by representatives from both companies.

Both companies expect the cooperation to continue evolving alongside upcoming regulatory developments, including FuelEU Maritime, EU ETS, the upcoming UK ETS and future emissions-related frameworks affecting global shipping.

Photo credit: StormGeo
Published: 4 June, 2026