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Mediterranean shipowners, charterers dispute coronavirus laytime clauses

Charterers and shipowners are in disagreement about potential liability costs in the event of vessels being quarantined due to the coronavirus, causing uncertainty in Mediterranean tanker markets.

Some shipowners have taken a pre-emptive stance on the impact that the coronavirus outbreak will have on vessel operations at both loading and discharge ports, through drafting a yet-to-be agreed clause that they presented to charterers. The clause states that all costs incurred through delays in laycan, including both sanitary inspections of vessel and crews and the potential quarantining of a vessel, will be placed on charterers accounts as a laytime increment, exempting shipowners of any liabilities for potential disruption to shipments.

This has been disputed by charterers however, and a lack of agreement on which parties will bear any costs of disrupted and delayed shipments has unsettled some market participants, who are now observing developments from the sidelines.

“This has been a case-by-case dialog between shipowners and charterers, but they have largely ended up in disagreements on the whole, despite determination from shipowners to pass the costs on,” a shipbroker said.

One shipowner pushed for the clause, highlighting that should more Med ports adopt a sterner stance on quarantining vessels then it would cut a significant amount of viable tonnage out of the market: “We have to do what we can to protect ourselves. So far it seems that Novorossisk has a quarantine in place but the situation can change very quickly”, a shipowner said.

Turkey and Greece maintain protocols
A number of ports in both Turkey and Greece have protocols in place for vessel and crew inspection, according to reports. Vessels loading in Turkish ports such as Izmit that have previously called at China, Thailand, Singapore, Italy, South Korea and Iran in the past 30 days will be required to undergo routine sanitary inspection of the crew before calling at the port.

Any suspicion of crew members in ill health could lead to the rejection of the free pratique – the license given to a ship to enter port on assurance from the captain it is free from contagious disease – and the vessel could be ordered to leave port limits. Similar stances are currently being adopted in Agioi Theodoroi in Greece, where all vessels from overseas voyages are subject to an inspection from a medical examiner, delaying laycan periods until inspections are completed.

Changing protocols have yet to affect clean tanker Med rates for Handysize vessels. Freight indications for Handysize cross Med shipments basis 30,000 mt have remained at w175 for the past week, with market participants expressing uncertainty as to what direction markets could take should more stringent measures be employed by ports in the near term.
Source: Platts

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