Preparing for the unexpected
In this article we review a recent claim regarding a collapsed crane. The incident highlights that critical equipment can also include offloading machinery.
A ship delivering production materials for a metal manufacturing company recently experienced a significant incident when failure of the ship unloader boom occurred during unloading.
As the large manufacturing plant produces very high volumes of products, with operations running 24/7 – 365 days a year, the impact of the incident went beyond the challenges of unloading the remaining raw materials. Additionally, the incident also had the potential to affect production at the plant, as it directly impacted the planned and continuous discharge of two 70 000 ton ships per month through one single designated berth in the port.
This berth was customised with two ship unloaders and a conveyor system in a public harbour.
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Following the failure of the ship unloader, the unloader’s boom effectively locked the ship to the berth. This made the unloading berth and the unloading facilities, as well as the adjacent loading berth inaccessible. As a result, the only berth with shore-based mechanical unloading capacity was blocked.
Working together, the ship owner, the client and contractors, set clear objectives to stabilise the situation and remove the ship unloader. As a priority, the crew aimed to mitigate any further damage to the ship unloader, which was unstable and constantly under pressure, and with its structural integrity deteriorating further due to the tidal movement of the ship. Support was established to help remove the loader boom and the bucket elevator.
The ensuing operation was done with two heavy lift salvage vessels to first free the vessel and berth, and then to dismantle the damaged ship unloader. This project featured multiple challenges, and beyond the difficult and time-consuming work that lay ahead, it was also an expensive operation, which included multiple risks, not least of which was the potential total collapse of the unloading boom and ship unloader. Adding to the challenges, weather conditions were not ideal, with persistent heavy rain and high winds impacting operations. In addition, the boom collapse happened in the middle of the COVID-19 pandemic.
Throughout the entire operation, root cause analysis (RCA) monitoring was also both required and implemented.
Facing a risk of massive business interruption loss, mitigating actions were quickly required. This involved the chartering of alternative vessels to deliver raw material for the duration of the salvage operation. Furthermore, alternative berths were needed to prevent any further negative impacts occurring due to the incident.
The damaged ship unloader proved to be a total loss and the replacement of the unloader was estimated to take approximately two years. A second original and undamaged ship unloader was available once the berth was accessible, however with insufficient capacity to replace the damaged unloader. To resolve the issue, the parties involved decided to install a mobile harbour crane and hopper.
A highly challenging logistics operation was initiated, which included the search for available and suitable vessels, as well as the enabling of access to other parts of the busy harbour. Other considerations included the slower speed of the operations and reduced volume of material, as well as the added complexity in transferring materials from the harbour to the plant, not to mention the further added costs that were the result of the revised logistical procedures (such as demurrage).
Success requires trust
Despite the costs involved in the operation, actual production loss would have generated significantly higher business interruption losses. In this case, the client saw only a minimal impact on production. This case highlights the importance of business continuity planning and how being thorough in evaluating potential risks will help prepare for the unexpected.
Understanding that a crane might collapse by the jetty might not be the first consideration for clients, but the possibility of such, and the complexity involved, should not be underestimated. There may be legislation involved that limits what can and cannot be done, varying language barriers with e.g. contractors. Frequent meetings with all interested parties including re-insurers are necessary to keep everyone involved.
When a vital part of an industrial process line falls out of operation, it is important to have ongoing, constant and good communication between insurers and the client/broker, as this is absolutely key to successful loss mitigation activities and RCA.
Some other learnings include the importance of having an experienced loss adjuster, as well as the possibility to deliver “remote” claim handling services, for example, as witnessed often during the pandemic. Although challenging, this proved to be a feasible alternative when frequent meetings and flexible decision-making are required to support an ongoing salvage and loss mitigation operation. With systematic progress monitoring, to track activities, these types of projects can be run more effectively.