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BIMCO Proposes New T/C Clause to Prevent Crew Change Chaos

By Ben Merrell and Gurjeet Warya

While the COVID-19 pandemic has forced governments to enforce lockdowns worldwide the shipping industry — which transports more than 80 per cent of traded goods, has continued to supply countries with vital necessities like food and medical supplies. Consequently, since the imposition of lockdown orders, seafarers have continued working in order to maintain the supply chain for goods critical to COVID – 19 response and recovery.

However, the industry has still experienced its share of disruption. Since the start of the pandemic the International Labour Organization (ILO) which helps establish labour standards within the shipping industry, has received numerous reports that seafarers in need of medical attention have denied permission to disembark. Some seafarers ashore are stuck in limbo, deprived of their source of income, because travel restrictions have prevented them from meeting their ships while others are stuck at sea unable to be repatriated home.

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While much of the media focus these past six months has focused on port delays and the consequences for the global economy,  conflict was brewing between the International Transport Workers Federation (ITF), and shipowners as a result of this untenable situation.

Now the conflict appears to be boiling over. The ITF issued a press release on the 15th of June voicing their support for a potential work stoppage by seafarers who have been unable to be repatriated. The conflict ultimately stems from the fact that seafarers are not classified as “essential workers” by many governments and thus are not exempted from general travel restrictions.

How did we get here?

Under normal conditions, shipowners are responsible for ensuring that crew members are repatriated when their contracts are up and bear any associated transport expenses. In mid-may labor representatives agreed to a 30 day extension for shipowners to repatriate crewmembers.

On May 28th a group of international labour organizations as well as the International Maritime Organization (IMO) issued a call for governments to change their classification of seafarers so that they can be repatriated.

In early June, in a bid to increase pressure on governments and ensure that changeovers can safely take place Antonio Guterres, the Secretary-General of the United Nations, called on all countries to “formally designate seafarers and other marine personnel as ‘key workers’.

With these calls to action it seemed like the up-to-now unheralded seafarers were finally getting the attention of world. However, these calls apparently went unheeded and when the ITF’s crew change extension lapsed without progress being made the ITF issued their press release.

For Seafarers currently onboard cargo ships across the globe their limited prospects for returning home are frustrating and surely taking a toll on their mental health. In most cases, crewmembers have not been permitted to disembark since port restrictions were put in place in March and there has not been a clear timeframe for when and how they will be able to return to their families. The negative effects of  prolonged periods at sea are well documented and can give rise to depression and other conditions amongst seafarers forced by circumstances to accept contract extensions. The extent to which the crew aboard cargo transports have showed a willingness to sacrifice in the face of an unprecedented global crisis is admirable, however it appears that the situation is reaching a breaking point.

One can imagine the disruptions which could be wrought if even a small percentage of Captains chose to abandon their present voyages and sail for a port from which their crew could be repatriated.

In an effort to mediate between shipowners and labour, BIMCO, the association responsible for drafting the most widely used charter party forms, has proposed a new clause to be added to Time Charter Parties.

The “Covid-19 Crew Change Clause” stipulates that vessels have the liberty to deviate if the scheduled port of call will not allow crew changes due to COVID-19 restrictions. Depending on the terms agreed, the deviation would be considered as either off-hire with the cost of bunkers applied to the owner’s account, or be conducted basis a reduced hire rate with the cost of bunkers consumed split evenly between owner and charterer. All port charges and associated fees shall be on the owners account and the owner also bears the responsibility of notifying the charterers in writing at the earliest. See below the clause in full:

It remains to be seen whether any alternative solutions will be presented to tackle the challenges of executing a crew change during the pandemic. For the time being, BIMCO’s latest is the best middle-ground solution for this acute humanitarian crisis. Perhaps a permanent clause on charter parties representing a concerted effort by all stakeholders in the marine adventure to address crew changes in abnormal circumstances, with shared costs and responsibility, would serve better and avoid such unpleasant situations in the future. It remains to be seen what long-term repercussions the COVID-19 pandemic will have on the shipping industry.

The ongoing COVID-19 pandemic is presenting shipowners and operators with new and unprecedented dilemmas. TNM can help you anticipate and respond to charter party disputes. Feel free to contact us to inquire about our weather routing and performance monitoring services or for any other queries.