Lloyd’s Open Form (LOF) that can be used for salvage project contracts should not be amended for the benefit of shipowners and insurers as it would put unfair risks on tug operators.
This was a key message in International Salvage Union (ISU) president Charo Coll’s address at a meeting on Monday 4 December. She stated that ISU supports the use of the LOF salvage contract in its un-amended form despite declines in its use over this decade.
An LOF enables salvors to rapidly react to casualties and be paid at the end of the project, based on value of the salvaged assets. Mrs Coll said the effect of amendments might cap the salved values or recalculate financial awards based on tariff rates.
“The salvor still carries the same amount of risk but for a reduced reward and that is not fair,” she stated. ISU would not support any amendments to LOF, but does recognise that other contracting processes can be agreed between parties.
ISU considers LOF to be the best contract in many emergency response situations. “It has such great benefits including speed and the key fact, often overlooked, that the salvor carries all of the financial risk and the owner and insurer pays nothing until the job is successfully done,” said Mrs Coll.
A decline in the use of LOF from around 100 per year at the start of this decade to 34 in 2016 is behind a slump in income for ISU members from emergency response and wreck removal work from US$717M in 2015 to US$380M in 2016. There is no information yet available on 2017 income, which may not be published until the middle of next year.
“Despite this difficult picture we think that the salvage sector is resilient and is still a vibrant industry ready to offer vital services to shipowners,” Mrs Coll said. She is also general manager of offshore and salvage at Boluda Towage and Salvage. This group operates fleets of tugs in Spain, France, Germany, Africa and South America.
Boluda was recently involved with Resolve Salvage & Fire in the towage of damaged fertiliser feed ship Cheshire from the Atlantic Ocean off the Canary Islands to Spain, Mrs Coll told Tug Technology & Business.
Panama-registered tug Red Sea Fos towed burnt-out 56,597 dwt bulk carrier to the port of Puerto Motril, in southern Spain. Disaster struck on Cheshire on 12 August when its fertiliser feed cargo caught fire before it was scheduled to stop in Las Palmas to take on bunkers. By 13 September Cheshire was in a safe harbour.