A LOSS PREVENTION ARTICLE
TRANSPORTATION
OF WHEAT
One of the most produced cerials in the world is also one of the most difficult and
dangerous to transport. In this comprehensive loss prevention article, we will cover
important topics such as vessel requirements and cargo handling as well as look at
some recent incidents in wheat transporation.
In 2011, the total production of wheat was over 700 million tones, making it one of the most produced cereals in the
world, and is now said to be grown on more land area than any other food. Compared to iron ore and coal, grain is
an agricultural commodity, seasonal in its trade and irregular in both volume and route. It’s difficult to optimize and
depends heavily on general purpose tonnage from the charter market.
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TYPES OF WHEAT
Over thousands of years of cultivation, numerous forms of wheat have evolved.
The table below lists the classification system used in the United States. Other countries may use other classification
systems.
TYPE
DETAILS
USED FOR
Durum
Very hard, translucent, light coloured
Flour for pasta and bulghur
Hard Red Spring
Hard, brownish, high protein wheat
Bread & hard baked goods
Hard Red Winter
Hard, brownish, mellow high-protein
Bread & hard baked goods
Soft Red Winter
Soft, low protein
Cakes, pie crust, muffin, biscuits
Hard White
Hard, light-coloured, opaque, medium protein
Bread & brewing
Soft White
Soft, light-coloured, very low protein
Pie crust & pastry
THE TYPICAL WHEAT SUPPLY CHAIN
Source: Maritime Economic, 3rd Edition, Chapter 11, Figure 11.2
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THE TOP EXPORTERS AND PRODUCERS OF WHEAT ARE:
TOP 5 PRODUCERS
TOP 5 EXPORTERS
TOP 5 IMPORTERS
China
USA
Egypt
India
France
Japan
USA
Canada
Brazil
France
Australia
Indonesia
Russia
Argentina
Mexico
As you can see from the list, wheat is often shipped over long distances. The supply chain is similar to the figure above.
It starts out on a farm, where wheat is harvested and stored locally, or transported by a truck to a storage elevator.
From the storage elevator the wheat is gravity fed onto a railcar and shipped to port where it is offloaded and then
reloaded to another storage elevator, usually by conveyor belts. Here, the grain is accumulated until there is sufficient
load for a merchant ship. At the other end of the voyage the process is reversed and the grain is offloaded from the ship
into a storage elevator (silo etc.), and then shipped to a flour mill or feed compounder for further storage. From the
storage it moves to a grinding facility via a conveyor or an air slide, and finally the finished products are packed for the
consumer market or shipped in bulk to other end users.
CHARTERPARTIES
In the grain trade the following types of voyage charter forms are generally used, although with some modifications to
suit local circumstances. The charter party forms can be very specialised to apply to certain loading areas.
NAME
CODENAME
COMMONLY USED IN
North American Grain C/P
NORGRAIN
USA & Canada
Baltimore Form C
BFC
USA & Canada
Continent Grain C/P
SYNACOMEX
European Continent
Australian Wheat C/P
AUSTWHEAT
Australia
Grain Trade Australia V/C
AUSGRAIN
Australia
Chamber of Shipping River Plate C/P
CENTROCON
South America
Norgrain South C/P
NORGRAIN S
South America
Standard Grain Voyage C/P
GRAINCON
General
VESSEL REQUIREMENTS
SOLAS regulation VI Part C (Regulation 9) (Requirements for cargo ships carrying grain) provides that a cargo ship
carrying grain must hold a Document of Authorization as required by the International Grain Code. A ship without a
Document of Authorization must not load grain until the master satisfies the Flag State Administration, or the SOLAS
Contracting Government of the port of loading, that the ship will comply with the requirements of the International
Grain Code in its proposed loaded condition. Without the certificate, the vessel will be refused entry into port to load
cargo.
BEFORE LOADING:
Before loading, the holds must be examined for potential defects such as rust scale, insect infestation, oil sludge, and
water. The ship must be substantially clean, dry, and ready to receive grain before the loading can begin. Almost all the
above charter parties have provisions for vessel inspection before/during loading. For example:
GRAINCON paragraph 3. Vessel Inspection:
The vessel shall pass the inspections of the relevant Port, State or National Authority and/or Grain Inspection Bureau
at the first or sole port or place of loading, certifying the Vessel’s readiness in all compartments to be loaded with the
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cargo covered by this Charter Party. If the vessel completes loading at a port in a different country than the first loading
port, she shall pass the inspections of such subsequent national and/or regulatory bodies as may be required. The
cost of such inspections shall be borne by the Owners and should the Vessel fail to pass inspections, the time from
such failure until the Vessel has been passed shall not count as laytime or time on demurrage. Unless the conditions
of Clause 18(b) apply the Master’s notice of readiness as the first or sole loading port, shall be accompanied by the
certificates issued in accordance with this Clause.
NORGRAIN paragraph 3. Vessel Inspection:
Vessel is to load under inspection of National Cargo Bureau, Inc in USA ports or the Port Warden in Canadian ports.
Vessel is also to load under inspection of a Grain Inspector licensed/authorized by the United States Department of
Agriculture pursuant to the U.S. Grain Standards Act and/or of a Grain Inspector employed by the Canada Department
of Agriculture as required by the appropriate authorities. If vessel loads at other than U.S. or Canadian ports, she is to
load under inspection of such national and/or regulatory bodies as may be required. Vessel is to comply with the rules
of such authorities, and shall load cargo not exceeding what she can reasonably stow and carry over and above her
Cabin, Tackle, Apparel, Provisions, Fuel, Furniture and Water. Cost of such inspection shall be borne by the Owners.
AUSTWHEAT paragraph 10. Survey at loading port:
Before loading is commenced the Vessel shall pass the customary survey of an Australian Commonwealth Government
Marine Surveyor, and a recognized Marine Surveyor approved by the Shippers. Additionally, the Vessel shall pass any
survey/inspection required under State and/or Federal Legislation.
Charter parties may also state that representatives from the charterers, shippers, receivers and owners or their
respective agents shall have the right to be on board whilst loading and/or discharging for the purpose of inspecting the
cargo, checking the weight(s) and supervising their interests. Surveyors should monitor the loading closely, and take
samples at certain intervals.
HOLDS:
After the carriage of contaminating (coal, ores, cement, sulphur, etc.), odor-tainting or pest-infested cargoes, holds
must be cleaned, disinfected, deodorized and ventilated. An inspection certificate confirming fitness for loading should
be provided. The holds must be “Grain Clean”. Details of at least the three previous cargoes will be required. Before
loading, holds/containers should also be examined by an independent inspector for infestation by pests of any kind and
an appropriate certificate obtained. It is also very important to separate different types of grains if they are carried in
the same vessel. To avoid shifting of cargo, the grain surfaces must be reasonably trimmed. All non-working hatches of
the cargo spaces into which the cargo is loaded or to be loaded should be closed.
Most charter parties also list out rules for Cargo Spaces:
GRAINCON paragraph 12. Cargo Spaces:
Cargo shall be loaded in unobstructed main holds only, unless the Owners require, solely for trim and stability
purposes, cargo to be loaded into wing spaces, always provided the cargo can bleed into centre holds. Wing spaces are
to be spout trimmed; any further trimming in wing spaces and any additional expenses in loading or discharging to be
for the Owners’ account and additional time so used is not to count as laytime or time on demurrage.
Most charter parties also lay down rules and cost allocation for separation and securing the cargo.
Additionally, charter parties commonly list out provisions for fumigation of holds. For example:
SYNACOMEX 2000 paragraph 11:
Charterers have the liberty to fumigate the cargo on board at loading and discharging port(s) or places en route at their
risk and expense. Charterers are responsible for ensuring that Officers and Crew as well as other persons on board
the Vessel during and after the fumigation are not exposed to any health hazards whatsoever. Charterers undertake to
pay Owners all necessary expenses incurred because of the fumigation and time list thereby shall count as laytime or
time on demurrage. When fumigation has been effected at loading port and has been certified by proper survey or by
a competent authority, Bills of Lading shall not be claused by Master for reason of insects having been detected in the
cargo prior to such fumigation.
NORGRAIN paragraph 16:
If after loading has commenced, and at any time thereafter until the completion of discharge, the cargo is required to
be fumigated in vessel’s holds, the Owners are to permit same to take place at Charterer’s risk and expense, including
necessary expenses for accommodating and victualing vessel’s personnel ashore. The Charterers warrant that the
fumigants used will not expose the vessel’s personnel to any health hazards whatsoever, and will comply with IMO
regulations. Time lost for the vessel is to count at the demurrage rate.
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SAMPLING
By using a diverter-type (D/T) mechanical
sampler, a certain amount of the grain lot
is drawn out for sampling. Installed at the
end of the conveyor belt, it draws samples by
periodically moving a device through the entire
grain stream. After a primary sampler, the grain
flows into a secondary sampler to reduce the
size of the sample and from here it moves to a
collection box or bucket inside a laboratory under
the control of official personnel.
On completion of loading, the hatch covers
should be sealed. It is important to keep holds
weather tight. If wetting is caused by salt water,
drying out and reconditioning the cargo may not
be financially viable and a total loss could result.
INSPECTION PROCEDURES:
The inspector periodically examines the samples
collected to check for objectionable odors and
insects. The inspector sieves the entire sample
to perform a visual examination. After passing
preliminary tests, the sample is divided into two
portions of approx. 1350 grams each, one work
sample and one file sample. The work sample is
used to determine the moisture and all grading
factors. The file sample is maintained in a
moisture proof container at the laboratory, locked
in for 90 days after the inspection is completed.
The sample is available for review in the event of
any questions regarding its quality.
The sample may then be further broken down
to determine the quality of the wheat. It is also
important to check the cargo’s moisture content.
CARGO HANDLING
WEATHER:
In damp weather like rain or snow, the cargo must be protected from moisture, since wetting and extremely high
humidity may lead to mold growth, spoilage and self-heating due to increased respiratory activity. The cargo should not
be wetted at any stage. Do not simply give-in to stevedores assurances that the loading will be ok in such conditions.
BILLS OF LADING:
If the master is being pressured into signing a “clean” B/L you should contact the local P&I correspondent and issue
letters of protest. Remember unclean bills have consequences. Members should be aware that P&I cover can be
prejudiced if clean bills of lading are issued where the Master knows cargo is wet or damaged. Please refer to Skuld
Rule 5.2.5
A protest should be issued if the draft surveys are different from the shipper’s figures. Members may wish to place
charterers on notice of their potential liability for shortage claims. Inserting figures known or suspected to be
inaccurate may prejudice P&I cover. Please refer to Skuld Rule 5.2.5
RISK FACTORS:
When shipping wheat, there are a lot of factors that need to be taken into consideration. The use of surveyors and
inspections are essential.
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Angles of Repose
Wheat is predominantly transported as bulk cargo, but on some occasions transported in bags or even Containers.
Wheat/Grain is said to be one of the most difficult and dangerous cargoes to carry in bulk. Most cargoes have an
angle of repose (slip angle) of 20° from the horizontal, meaning that if the ship rolls more than 20° the cargo will shift.
Eventually the ship may capsize. Because grain cargoes are liable to shift, heavy emphasis is placed on the stability of
carrying ships and the proper trim of the cargo in the holds.
Temperature / Moisture / Water Content:
Safe wheat carriage requires certain temperature, humidity/moisture and ventilation conditions. There is no lower
temperature limit and the favorable travel temperature is around 20°C.
Molds reach optimum activity level in the range between 20° to 30°C. At temperatures over 25°C the metabolic
processes increase, leading to increased CO2 production and self-heating of the wheat.
Wheat can be classified by moisture content:
WATER CONTENT
Up to 15%
15-16%
16-17%
17-18%
DESIGNATION
Dry
Medium Dry
Moist
Wet
Moisture causes mold, mustiness and fermentation, agglomeration, self-heating and a risk of germination (premature
sprouting). If this happens, the product may no longer be suitable for milling into flour, but instead only for producing
spirits. Problems with moisture can be prevented by suitable pre-drying of the wheat.
Wheat with a moisture content of over 16-17% can rapidly produce an excessively damp atmosphere within the hold.
Individual clusters of damp wheat may cause considerable damage to the cargo. Wheat in such clusters has a tendency
to self-heat. Damp wheat then appears in boundary layers, allowing the process to continue further in the holds during
carriage at sea.
At moisture levels of over 17%, swelling occurs in addition to fermentation, mould, rot and self-heating. Seawater
damage may result in structural damage to the ship due to the swelling in the hold. Where such damage is suspected,
a sea water test should be carried out using the silver nitrate method.
For North Atlantic voyages, a moisture content of 13% is the optimum value and the grain is dry for shipment. During
the lower temperatures in the winter, 15% is possible. At low moisture content, the intensity of respiration is low at
all temperatures. Even at 25°C, the respiration intensity is low at moisture levels up to 13%. If the moisture content is
above 15% and elevated temperatures also occur, respiration becomes more intense.
Prior to loading, the moisture content should be checked by an independent inspector and a certificate provided. The
certificates should state not only that appropriate measures have been carried out but also how and with what they
were carried out and at what level of success. Lumber used for grain bulkheads must be air dry, and moisture content
must not be over 15%.
Ventilation:
Ventilation of grain depends on the mositure content. Cargo with moisture content under 14% may not need
extensive ventilation. Up to a moisture content of 15%, surface ventilation is recommended. Wheat releases water
vapour constantly, which needs to be dissipated by ventilation. Special care should be taken on voyages from hot to
cold regions. In the case of damage only to a proportion of the cargo, an indicative rule might be that the damaged
proportion has been stored in a dead air zone with inadequate ventilation. Ventilation is essential until the cargo has
been unloaded from the ship, and should not be turned off while the ship is waiting to berth.
For the purpose of defending against cargo claims, having accurate ventilation records on the vessel will be essential.
It is important to record both periods of ventilation and periods when ventilation is not possible or suitable (and why, eg:
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bad weather).
Self-heating:
Especially in freshly harvested grains with average moisture contents of 14%, there is a risk of self-heating, given the
differing stages of ripeness of the individual grains; some of them have higher moisture contents. They are the starting
points for moist spots which expand continuously and finally encompass the entire cargo of grains with a major rise in
temperature.
Gases:
Metabolic processes continue after harvesting the wheat. The wheat absorbs oxygen (O2) and excretes carbon dioxide
(CO2). Respiration may cause life-threatening CO2 concentrations or O2 shortages in the holds. Ventilation and gas
measurements must be carried out before anyone enters the hold. It is important to find out what type of grain is about
to be carried and if it gives off any dangerous gases.
Strict rules for entering enclosed spaces on vessels must be followed.
Odour:
Gasses and aroma substances are readily absorbed by the grains. For this reason, holds must be completely odour-free
and deodorization must not be carried out until immediately before loading.
Insect infestation:
Wheat may be infested by cereal pests during storage and transport. Inadequately cleaned warehouses and holds
are usually the root cause of insect infestation. Infestation may result in self-heating which ultimately gives rise to
depreciation or even total loss.
Cargoes will need to be fumigated, and in case significant delays occur at any stage in the voyage thought would have to
be given to checking and possibly re-fumigating the cargo as insect populations and other pests can multiply rapidly in
a cargo hold of wheat.
After discharge:
It is common to analyse the cargoes for bacteria, etc. In case of concern, discharge sampling and surveying should be
carried out on behalf of the vessel, for both quality and quantity issues.
RECENT INCIDENTS
Over the years the Association has seen many claims arising out of the transportation of wheat/grain cargoes:
RAIN DURING LOADING OPERATION:
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The Captain told local stevedores to stop loading and close the hatches as he feared it was going to rain.
Stevedores ignored his request and continued loading.
Due to heavy passing rain showers, cargo in two of the holds were wetted.
Surveyor attended the vessel, and in addition to some wetted cargo, he found a significant amount of threads/
garbage mixed with the loaded cargo.
CARGO DAMAGED BY SEA WATER:
During discharge at the Aden Gulf Terminal, a shipment from Argentina was found to be partially damaged because of sea water leaking into the holds.
´´ Owners were held responsible for the damage.
´´ Another vessel loaded in India and discharged in Jebel Ali, UAE.
´´ The captain signed a clean bill of lading for 2500MT of wheat in hold 2.
´´ At discharge, they found 65MT of the cargo discoloured, mouldy and smelly due to seawater leaking in to the cargo hold.
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The vessel was arrested and not released until the Club issued a LOU, and later the case was settled commercially between the parties.
CARGO DAMAGED BY HEAT:
´´ During discharge in Chittagong, 150MT was found damaged due to overheating.
´´ The cargo was discoloured, burned, and emitted a burning smell.
´´ A fuel oil tank used for heating HFO was situated right below the affected cargo holds.
CARGO SHORTAGE:
´´ Cargo receiver claimed a shortage of 200MT of wheat when the vessel discharged in Tunis.
´´ He also threatened to arrest the vessel and required a bank guarantee, which was put up by the Club.
´´ After completion of discharge the total shortage was found to be only ¼ of the originally claimed shortage, 50MT.
´´ Bank guarantee charges are very high. In some cases, consideration should be given to whether the claim can be settled quickly.
CARGO INFESTED BY INSECTS:
´´ The vessel sailed from Paranagua, Brazil to the Philippines with a cargo of 44500MT feed wheat.
´´ During discharge in Subic Bay, when opening the hatch covers, the cargo surveyor found live crawling insects in the cargo.
´´ It was found that during fumigation at the load port, the fumigants was not evenly scattered/ thoroughly mixed with the cargo.
´´ As fumigation is usually a charterer’s responsibility, care should be taken to pursue charterers for an indemnity.
´´ In this respect, members need to review before entering into their charters that charterers are financially secure.
CONTAMINATION CLAIMS:
´´ In recent years, there have been some cargo claims made on grain cargoes in Iran.
´´ During discharge, the receivers claimed that cargo in one hold was contaminated with the e-coli bacteria.
´´ After three positive tests by a local authority laboratory, the owner had the cargo tested in the UK, and the test was negative.
´´ Ensuring pre-shipment tests and certificates is vital when trading to countries that have rigorous local regulations on food quality.
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HOT TIPS
BEFORE FIXING
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Is your charterer financially sound?
Does your charterer have P&I cover with an IG club?
Is your charter party such that it protects your interests?
Who has liability in the charter party for loading, fumigation, ensuring proper certificates and discharge?
VESSEL
´´ Vessel and holds must meet requirement in the Grain Code
´´ The hatch covers are to be in weather-tight condition
´´ Necessary hatch cover sealing materials are to be carried on board / used to prevent water ingress to the cargo holds during voyage
BEFORE LOADING
´´ Inspection of holds to ensure they are dry, clean and free of insects
´´ Inspection of wheat’s moisture content
´´ Obtain cargo quality certificate
´´ Obtaining necessary cargo information / instruction of carriage by sea from the shipper
DURING LOADING
´´ Monitor weather
´´ Sample cargo and check its condition regularly
´´ Call a P&I surveyor for assistance, if necessary
AFTER LOADING
´´ Conduct draft surveys before and after cargo loading
´´ Seal the hatches properly
´´ Get a fumigation certificate / instruction from the authority
´´ Clause B/L in conformity with M/R to protect carriers in case of discrepancies in quantity, damage / shortage / con
tamination etc.
DURING VOYAGE
´´ Follow the fumigation instruction strictly
´´ Check the cargo hold bilge, cargo temperature and humidity regularly
´´ Maintain accurate records
´´ Ventilate the cargo holds as necessary
´´ Prevent over-heating to the fuel oil tanks next to the cargo spaces
´´ Follow the Enclosed Space Entry Procedure strictly
DISCHARGE
´´ Always be careful when entering holds due to increased CO2 and decreased O2 levels
´´ Discourage discharge operations in bad weather. If the cargo receivers insist, demand an LOI from them
´´ Monitor the cargo hold bilge level during the ballasting operation concurrent with the discharge operation
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CASE STUDY: THE “GIANNIS NK” [1998] 1 LLOYD’S REP. 337
FACTS:
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A cargo of wheat and ground-nut pellets were being transported from Senegal to the Dominican Republic
Under a B/L incorporating the Hague Rules
On arriving at the port of discharge, an infestation was discovered
Following unsuccessful fumigation, all the cargo had to be dumped into the sea
The vessel then had to undergo fumigation that caused a 2 ½ month delay
The carriers claimed damages against the shippers for the loss caused by the delay and the fumigation expenses
LEGAL PRINCIPLES:
Article IV, r.6 of the Hague Rules states that the shipper must bear all damages and expenses that arise directly out
of the shipment of ‘dangerous goods to which the carrier has not knowingly consented
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House of Lords decision
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The House of Lords found in favour of the carrier
The term ‘dangerous’ was not held to be confined to goods of an inflammable or explosive nature
It was also not restricted to goods that cause direct or indirect physical damage to the vessel or to other goods
Therefore, the cargo in this case was considered to be dangerous because they were infested and could give rise to the loss of other cargo loaded in the same vessel
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CREDITS
BY: RACHEL WONG
CLAIMS EXECUTIVE
HONG KONG SYNDICATE
Edited by Nikita Lulla, Hong Kong Syndicate
With acknowledgment and thanks to:
Andrew Moore & Associates Ltd
www.andrew-moore.com
AVA Marine Group Inc.
www.ava-marine.com
Agencia Maritima Walsh (E.Burton) SRL
www.walsh.com.ar
Messrs. Alberto Martin Azcueta & Assoc.
www.martinazcueta.com
Brazil P&I
www.brazilpandi.com.br
In case Members have further queries they are asked to contact:
LOSS PREVENTION AND RECURRING CLAIMS GROUP /
[email protected]
Christian Ott
Vice President, Head of Claims, Singapore Syndicate
Loss Prevention and Recurring Claims Team Leader
WWW.SKULD.COM