This may not have been a news conference but nevertheless, ISU president Charo Coll hoped that ‘some of what I say will be of interest’.
Indeed. For some time, the ISU has been making clear its concern about the decline of the use of the Lloyd’s Open Form for emergency response to casualties; early in 2018, Coll said: “LOF remains the best contract for many emergency response situations. It enables rapid intervention, the financial risk of the job lies solely with the salvor, the rewards are proportionate to the value of the cargo and vessel and there is a well-regarded system of arbitration if parties cannot agree a settlement.”
However, the London lunch gathering heard, the ISU has decided to change its public stance, its ‘vision’ for the industry. “In recent months the ISU executive committee has been thinking carefully about the position of the salvage industry in the context of the current market realities,” said Coll.
“We have to recognise publicly that the traditional model of ‘tugs on station’ cannot properly sustain a salvage business any more.”
Competitive pressure has led to the use of alternative contracts not intended for emergency situations that need immediate assistance, she said. “But we must not simply complain and wish the world was different. We need to accept the reality of different ways of working and cooperate with owners and underwriters to provide services in mutually beneficial ways.”
At the ISU’s annual meeting in South Africa in October, members’ view was that traditional salvage services provided on a ‘no-cure no-pay’ basis using the LOF contract cannot alone properly sustain a salvage business in today’s market.
The ISU will continue to promote unamended LOF but, as we all know, its use has diminished and is unlikely to return to historic levels, Coll told guests in London.
To summarise the ISU’s new direction in one sentence, she said: “ISU is not making radical change but is seeking a shift in its message with less emphasis on LOF and ‘clinging to the past’ and more emphasis on the wider work and benefits of a properly funded, innovative and motivated salvage industry.”
There is so much more than LOF that ISU’s members do, which often goes unnoticed, said Coll. “They work with insurers to prevent losses from occurring; they work to minimise losses when incidents do happen; they facilitate trade and growth by keeping goods moving and, really importantly, by keeping ports open. They are brilliant project managers, safely executing complex operations like the removal of major wrecks. And we should not forget the expertise and equipment they have to fight fires.”
In 2017, ISU members provided services to vessels carrying more than 3.4m tonnes of potentially polluting cargoes. They know that there are pressures on shipowners who have had difficult market conditions for many years and the insurance sector, particularly the hull market, has suffered as well, said Coll.
“But the shipping and insurance industries must, in their own interest, recognise the need to provide sufficient remuneration to encourage investment in vessels, equipment, training and the development of highly qualified staff in order to continue to provide an essential global emergency response capability.”
There is much to be positive about, she insisted. “It is not possible to envisage the shipping business without some provision of salvage, wreck removal and associated activities. There is a need for ISU members’ services and that will continue, and we are positive about the value of our contribution to shipping and the wider economy and environment.”