Dearth of repair yards driving up claims costs - 22/04/2008

A worldwide repair yard capacity crunch is driving up the cost of hull claims, and one leading Greek consultancy says the shortage is now having repercussions in the eastern Mediterranean and Black Sea.

Greek consultants believe ‘on the ground’ experts can help hunt for berth space

A worldwide repair yard capacity crunch is driving up the cost of hull claims, and one leading Greek consultancy says the shortage is now having repercussions in the eastern Mediterranean and Black Sea.

Piraeus-headquartered Kalimbassieris Maritime, which has clients across the insurance and shipping sector including the Norwegian and London markets, says it is seeing reduced repair yard capacity in its region

Both the International Union of Marine Insurance and Nordic association Cefor are reporting a steep increase in the cost of hull claims, with Cefor reporting that costs have almost doubled this decade.

Christina Kalimbassieris, managing director of Kalimbassieris Maritime, said: “We have recently seen Greek repair yards booked for several months and there is reduced capacity in the Black Sea.”

For example, the Romanian yard Mangalia ceased repair activities at the beginning of this year to focus on newbuilding, and now the focus in the region is turning to Turkish yards to carry out work.

“While prices are generally lower in Turkey, expertise and reliability vary considerably”, she added.

With the price of shiprepair facilities in northern Europe now prohibitively high — and east Asian yards booked for newbuilds —finding yard space is difficult and requires specialist knowledge.

Ms Kalimbassieris says that the hike in costs call for a “hands on” approach and the use of the type of adviser her consultancy provides.

“Using an adviser with strong experience in working with shipyards will pay immediate dividends”, she said. “Good management of the tendering process offers underwriters the best opportunity to control the costs of a claim.”

According to Ms Kalimbassieris, the first stage in this process should always be a complete specification.

“Despite the need for speed, getting the specification right, rather than getting it fast, is always the best policy”, she added.

“Timing is crucial. There should be sufficient information available to draft a specification which should be as accurate and detailed as possible, avoiding the possibility for extra repair charges in the end.”

In an open tender, optimal results are achieved by having a thorough understanding of each of the yards in a geographic region, she added, as well as details such as their capability, capacity and pricing techniques.

“Although it is not always practical, tendering shipyards should attend onboard the vessel to carry out their own assessment of the damage”, she advised. “This generally results in clearer tenders and more competitive pricing.”

When it comes down to actually managing the repair of the vessel, there are a number of areas in which the Kalimbassieris boss believes a proactive approach can be very positive.

“For example, if prefabricated sections are almost complete when the vessel arrives at the shipyard then repair time can be kept down, a particular benefit to both the loss of hire underwriters and the owners,” she said.

Often it is not possible to accurately assess the damage to a vessel until it is drydocked, but if quotes have already been obtained during the tendering stage for a range of possible damage this will also streamline the repair process and prevent the yard charging exorbitant prices for additional repairs.

Ms Kalimbassieris added: “Much of this comes down to having the technical expertise to really understand the processes required, local practices and how particular shipyards work. A proactive and informed approach to managing the claims process can deliver genuine benefits in terms of controlling the cost of claims.”

As well as acting on direct instructions for leading London hull underwriters, Kalimbassieris is the average agent for the Norwegian hull market. It also represents the French market in Romania and Bulgaria, where it has offices in Constantza, Varna and Bourgas

Kalimbassieris Maritime has worked for protection and indemnity clubs since the early 1980s, and its Black Sea offices represent most of the International Group clubs. In Greece, it is correspondent for the likes of Gard, North of England and the Japan P&I Club.