2010 International Food Aid & Development ConferenceAugust 2-4, 2010

Kansas City, MissouriSponsored by the USDA and USAID

Vessel Loading Observation Break-Out Session Presentation

byH. Keith Powell

Potomac Maritime LLC

- Ship Broker with offices in Washington DC and Houston, Texas

- Represents US flag and Non US Flag Ship Owners participating in the US Government food AID Programs

- Major Clients: Maersk Line, Maersk Line Limited and Sealift, Inc

What does a Ship Broker Do?

> Market Analysis

 > Contract Administration

> Prepare and Submit Freight Bids

> Keep various parties informed of Vessel positions

> Collect Freight Monies due to Carriers

> Logistical Support

> Problem Solve

Other Ship Brokers Participating in the Program:

Phoenix Chartering Euro America International Navigation Next Wave Potomac Shipping

Potomac Maritime Broker at Work!

Other Ship Brokers at Work!

Problem Solving: Load Port Challenges

Delayed Cargo Arrival / Off Grade Cargo:

Action Required:

> Swap Out Cargo Between Vessels or Programs

> Expedite Deliveries

> Flexibility from Cooperating Sponsors

> Quick Decisions from Decision Makers

Problem Solving: Load Port Challenges

Infestation of Cargo at Load Port:

 - Current Contract Terms Place Burden on Carrier

- Infestation Either Latent and in Cargo at Time of Delivery to Port or

- Cargo Becomes Infested While in the Load Port Warehouse

- Carrier is Responsible for Fumigating Cargo in Warehouse, on Board Vessel or in Containers

Problem Solving: Load Port Challenges

Infestation of Cargo at Load Port:

New Approach: US Government pays for any fumigation required at load port (in warehouse or on board vessel or in container)

Rational:

> Cheaper... ? Perhaps. USG already paying cost to Carriers

> USG can possibly negotiate better fumigation cost than individual Carriers

> More Proactive Approach to Issue

> Focus is on Delivering Cargo Free of Infestation

> Commercially Shipper Responsible for Fumigation of Cargo

Public Enemy Number 1

Problem Solving: Load Port Challenges

Rodent Infestation of Cargo at Load Port:

- Clear Understanding of Various Parties Responsibilities:Port Authority StevedoresSuppliers Ocean CarrierShipper US Government

- Contractually Cargo is in the care and custody of the Ocean Carrier

- Physically cargo in the Possession of the Stevedores

- Ocean Carrier does not have direct control of the Cargo - must work through Stevedores as it’s subcontractor

Problem Solving: Load Port Challenges

Rodent Infestation of Cargo at Load Port:

Ocean Carrier’s Main Concerns:

- Important that only clean cargo being loaded on vessel

- If a higher level inspection procedure is to be used - establish well in advance of vessel loading

- Any delay in handling the cargo and loading the vessel is minimized or eliminated altogether

Problem Solving: Load Port Challenges

Rodent Infestation of Cargo at Load Port:

Suggestions:

> USDA to establish standards for cleanliness and rodent remediation procedures for all terminals handling US Government Food Aid

> USDA to conduct regular terminal inspections to ensure compliance

> If there is a higher level of inspection required prior to loading – clearly spell out the procedure / protocol in the freight tender

 > This should help avoid problems developing at time of vessel loading which can result in expensive equipment and vessel delays

Problem Solving: Load Port Challenges

Cargo Claims at Load Port: 

Current Contract Terms holds Ocean Carrier responsible for cargo damage that occurs at the load port with zero tolerance for loss

Result:

> Carriers must increase their rates to cover potential for cargo claims yet they have no direct physical control over cargo

Cargo is in the possession of the stevedore / terminal operator who is subcontractor to cargo Suppliers for rail car unloading and Ocean Carrier for loading vessel or stuffing containers

Problem Solving: Load Port Challenges

Cargo Claims at Load Port: 

Suggestion: Make Terminal Operator directly responsible for any load port damage

Rational:

> Direct accountability > No free lunch – Freight rates currently include provisions for potential claims and if suggestion adopted stevedores rates will include provision for potential claims > BUT ... Holding the party responsible that is in direct control of the cargo, should promote more effective methods for minimizing cargo damage and loss > For Stevedores – Minimizing cargo claims can become a competitive advantage versus just a cost of doing business

Potomac Maritime LLC

Thank you for listening and enjoy the Conference