LPG SHORTAGE CLAIMS : SHORE TANKS MAY BE UNABLE TO RECEIVE THE FULL AMOUNT OF CARGO

Published: January 15, 2020

The Club has handled a case where a liquid petroleum gas (LPG) carrier was subject to a shortage claim at the discharge port despite the shore tanks being unable to receive further cargo.

LPG is carried at pressure as it is liable to evaporate quickly at normal atmospheric temperatures and pressures.  While it is under pressure, on board a ship, LPG is in liquid form but as the cargo is pumped out the cargo vaporises and turns into gas.  The full quantity of cargo is not always pumpable as there is usually a quantity remaining on board (ROB) in the form of gas, the amount of which is subject to the ambient temperature. This is unavoidable and both owners and charterers generally account for this in the charterparty contract.

In the case in question the receivers claimed for a shortage.  An investigation revealed that the ROB was slightly in excess of a normal margin but this was because the terminal had not allowed the ship to complete discharge of the vapour cargo because of the high pressure present in the shore tanks.  In other words, the shore tank could not accommodate any more of the cargo. The master issued a Letter of Protest (LOP) but failed to get the terminal’s cut off instruction in writing and did not manage to get a representative of the terminal to counter-sign his protest.   This made it difficult to refute a subsequent claim for short delivery because it could not be proved beyond doubt that the shortage was as a result of the terminal’s Inability to receive more cargo.

The club understands that it is common for a terminal to give STOP instructions verbally in this particular trade and it is almost impossible for the master to obtain written instruction from the terminal.  That said, the master should endeavour to obtain the instructions in writing.   If this is not possible, the Master or the chief officer should ensure that all instructions from the terminal are clearly recorded in the deck log books and, if possible, shoreside should be asked to sign the log book to indicate that it was them who refused to take further cargo.  Furthermore, the instructions from the terminal should also be clearly described on the time sheet or Note of Protest.  A clear note in the ship’s log book is likely to be stronger evidence than issuing an LOP alone.

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