Wednesday, 15 February 2012

Squaring Away

Squaring away is an old sailing ship term to describe the crew's final task at the end of the voyage, squaring up the yard arms on the masts and making ready to pay off. Squaring away in the context of the Rena will be the final reckoning of costs.

A recent report in the NZ media put the Rena's salvage bill at $130 million, of which about $28 million was on the Government's tab. With the sole tangible assets of the salvage to date being the container discharged off the deck - many of these empties owned or leased by MSC - the Antipodean Mariner wonders when the Insurers will say enough is enough!

Let's recap the layers of insurance and who has their hand out, by way of insurable interest.

The ship was beneficially owned by Costamare, and now that she is resting on Astrolabe Reef in two parts it is incontrovertable that she has become a Constructive Total Loss. It is therefore probable that Costamare have been paid the insured value under the Hull and Machinery Policy. As nothing was salved from the hull, the Insurers have nothing of value and effectively own the hulk along with the responsibility for wreck removal if this is successfully enforced (under the Resource Management Act?)

MSC lost equipment, in the empty and full containers both lost overboard and salvaged and now held as security by the Salvors at several container parks in Tauranga. They also 'lost' the bunkers that they, as Time Charters, had provided to the Rena. These will form the basis of a claim by MSC on their own insurance, and if the bunkers, lubricants and hydraulic oils can be re-refined there may be a small financial clawback for MSC's insurers.

The Protection and Indemnity insurance cover for oil recovery, pollution prevention has a way to run at over $1 billion, but the Swedish Club is obliged to act reasonably and in the best interests of the self-insuring Members who are paying the bills.

What the AM questions is the effort being expended salvaging water-damaged bags of milk powder off the bow section of Rena, and flying it ashore by helicopter to its inevitable end in a landfill. If the cost of recovery exceeds the (nil) salved value, who is paying for the fleet of maritime and aviation assets to engaged in the ever diminishing exercise?

The point must be fast approaching when the Insurers tell the Salvors and NZ Government that they have satisfied their obligations and that Rena poses no risk that further salvage can mitigate. While the AM is sure that the well intentioned  agencies of Government will settle for nothing less than every trace of the ship and her cargo being removed from Astrolabe Reef, this is not practically achievable. The wreck poses no long term threat to Astrolabe Reef or navigation into the port of Tauranga, and is no doubt being populated by fish.

How the agencies of the NZ Government deal with 'expectations management', when the Smit Borneo is towed over the horizon, will make for an interesting space to watch.

The 'pot of gold' involved no digital alteration, just the photo-stitching of the fortuitous placement of Rena and the tug Singapore.



  1. Very informative summary. And who doesn't like rainbows? :-)

  2. AM very interesting and informative as ever. If the NZ Government pushes the clean up the environment issue, which they have to date and asks the Swedish Club to pay out of their pollution prevention $1B indemnity (your figure) and they refuse we may have a legal fight on our hands about the complete salvage of the vessel. What is the courts precedent for this to expect complete wreck removal?