Rhine spillage hits ship owners and industry

Acid tanker Waldhof owned by ship owner Lehnkering ran in trouble on the Rhine on January 13. The authorities temporarily closed the Rhine completely to inspect the damage. Now, two weeks later, ships can finally sail up the Rhine again, but downriver it is still closed. The closure was tough on seafarers and companies alike. Chemical giant BASF reported delays in delivery of important commodities. Engine producer MAN Diesel & Turbo has been waiting for days to transport large ship engines from Heilbronn to the port of Rotterdam. “These engines are too large to transport them over a longer distance by truck,” said spokesman Manuel Hiermeyer. About 200 million tonnes of commodities are transported annually on the Rhine. The stoppage could cost operators and companies millions in reduced sales. Ship owners in particular have been affected. hide“The combination of a difficult market situation with low rates, ice and floods and now the week long closing are especially hard on the industry,” said Gunther Jaegers, Head of the industry’s association Bundesverband der Deutschen Binnenwirtschaft. There are very few insurance policies that cover losses caused by road or waterway closures. "Shipowners who have suffered losses due to closure of the Rhine as a result of the casualty are in general seeking compensation from the party responsible,” said Olaf Fölsch, shipping expert at broker Aon. But it is unlikely that liability insurers will have to pay up. “I do not know any law case where a shipowner ever succeeded in getting compensation for such a claim from the party responsible,” he said. Katrin Seubert, spokeswoman of industrial insurer HDI-Gerling said: “As a general rule, ship owners will be stuck with the costs.” Some companies that cannot deliver goods in time due to the closure have been trying to find alternatives. BASF have already reacted. “We have a lot of experience with situations like this,“ said spokeswoman Friederike Segeberg. “Floods, low tides–the closure of the Rhine is nothing new to us.” The company has developed special measures to avoid the waterways and to use alternatives such as road or rail. “The additional costs are within our budget,” said Ms Segeberg. Companies that have experienced business interruptions because they have not received commodities on time also have no chance of obtaining compensation from the Waldhof owner Lehnkering or it’s liability insurer. "The casualty is considered to be too remote to be directly associated with possible losses suffered by factories and their producing plants,” said Mr Fölsch. But business interruption policies may pay, provided that buyers have paid an extra premium to include business interruption coverage without damage to their own property. Similarly, ship owners may be granted compensation from their loss-of-hire-insurance. The damage to the ship is likely to be paid by the ship owner’s hull cover, provided that the owner has bought such cover. In contrast to motor insurance, such cover, as well as liability insurance, is not mandatory for ships. Lehnkering was not prepared to specify the extent of its cover. “As long as the cause of the accident has not been ascertained, we cannot comment on this topic,“ the company said. To date experts do not know why the tanker turned over. “At first glance, it looks like an accident covered under the common wording of a respective hull & machinery insurance policy,” Mr Fölsch said. Liability insurance may pay if there is environmental pollution due to acid leaking from the barge’s hull.

Rhine spillage hits ship owners and industry

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