TT Talk - Lessons in logistics: 'MSC Flaminia'

Much can be learnt about the logistics industry – in terms of complexity, practices and expectations – from the ‘MSC Flaminia’ judgment analysing and establishing the responsibilities in this casualty.

As with almost all litigation, there are findings in the judgment of ‘MSC Flaminia’ handed down in New York in September 2018 that are specific to the particular facts, including, in this instance, the precise characteristics of the cargo in question. Of course, these findings are important in respect of that cargo and others that may similarly display hazards.

See the related article for an analysis of the legal aspects of this judgment.

Indeed, for the cargo divinylbenzene (DVB), classification under the International Maritime Dangerous Goods (IMDG) Code has been changed subsequently following the German Authority investigation. Now, rather than classifying such polymerizing commodities under a generic Class 9 UN 3082 representing that the goods do not present dangers covered by any of the other classes, DVB should be declared under Class 4.1, UN 3532. More than this, the latest amendment of the Code (38-19), entering mandatory force on 1 January 2020, will require transport in temperature controlled containers. TT Club has participated in good practice guidance that recommends strongly that this requirement is voluntarily implemented with immediate effect.

Understanding logistics
On a more generic level, however, the judgment provides a study in logistics practices. The judge outlines the processes followed through the booking request initiated by the shipper, through the NVOC and engaging with the carrier, describing the instructions given in relation to the sensitivities of the cargo, and the needs for particular stowage and monitoring. The consequent booking confirmation given by the carrier, and conveyed by the NVOC to the shipper inevitably has broader significance but seemingly centred on a cut-off date for documentation to be prepared. It is interesting to ponder the extent to which these processes might be dislocated, or could be remodelled to strengthen controls. Indeed, the bias towards the appropriate cut-off date on cursory view may be more aligned to verified gross mass (VGM) obligations than communication and control relevant to cargo handling requirements.

“In a world that is increasingly digitised there are considerable opportunities to add rigour to the way in which instructions and information are captured, communicated and used by the stakeholders”

In a world that is increasingly digitised – and potentially blockchained – there are considerable opportunities to add rigour to the way in which instructions and information are captured, communicated and used by the stakeholders. The court found multiple deficiencies in the underlying systems and processes, the reliance on them being complete and accurate, and apparent misconceptions about the significance of certain data that revealed gaps in training. One specific example that has broad relevance is the industry-wide reliance for dangerous goods shipments on the Dangerous Goods Declaration as the “locus of critical information and warnings” rather than the use of a bill of lading to “convey necessary and critical safety information”.

Fortune not enough
While, inevitably, the judge was seeking to dissect the actions of the various parties involved, by standing back from the specifics it is possible to recognise that incidents both small and large are uncomfortably close to occurring all too frequently. All that is required is an alignment of mistakes, oversights, failed controls. Attention is rightly focused on incidents, but behind each is a string of smaller issues that have come together to allow something to happen. As the judge in this case explained, disasters are only infrequent due to a “lack of a similar perfect storm of events, and simple good fortune”.

“Recognise that incidents both small and large are uncomfortably close to occurring all too frequently”

Many times the errors are detected and corrected before an incident occurs. This is both good and bad news; every time that an economic opportunity succeeds despite an error, it reinforces errant behaviours. The ideal would be that any one of the controls not only prevents an unsafe situation persisting but also leads to corrective action.

The complexity and diversity evident in the international freight supply chain cannot afford to be over-simplified. TT Club statistics indicate that as much as 66% of incidents related to cargo damage in the intermodal supply chain can be attributed in part to poor practice in the overall packing process, including not just load distribution and cargo securing, but also the workflow from classification and documentation through to declaration and effective data transfer.

As a result, the Club has initiated its #Fit4Freight campaign, collaborating with Global Shippers Forum, ICHCA and World Shipping Council to promote awareness and use of the Code of Practice for Packing of Cargo Transport Units (CTU Code).

Despite the broad on-going stakeholder involvement, including the UN agencies, government representatives and industry associations for those engaged in all modes of surface transport, four years after approval awareness globally is low. Critically, many low level incidents could be avoided by adherence to the principles set out in the Code and similarly positively impact the occurrence of major maritime casualties, such as ‘MSC Flaminia’. The overall economic cost to the industry is estimated to amount to billions of dollars each year. Furthermore, the human cost is substantial, with deaths and injuries regularly reported. Supply chain stakeholders are thus incurring a significant, largely avoidable burden.

We hope that you will have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested...

We look forward to hearing from you.

Peregrine Storrs-Fox
Risk Management Director, TT Club

Staff Author

TT Club