ISPS: All ship-related contracts up for review

Mumbai: The cost of shipping export cargo from India is expected to go up by August, 2004, as ship owners will now have to budget the cost of idling time at ports due to the implementation of the International Ship and Port Facility Security (ISPS) code.

All existing and future contracts relating to ship operations - including charter-parties, bills of lading and crew contracts - will need to be reviewed, according to the mutual marine liability insurer, North of England P&I Club (P&I Club), because of the ISPS Code, due for implementation globally by August 2004.

The P&I Club points out that since ship owners and manning agents will need to look more carefully at the people they employ or allow on board, to prevent ships being used by terrorists, new procedures and contractual arrangements will need to be worked. Prevention of terrorism is one of the main objectives of the ISPS Code.

Another important issue that will need to be factored in by ship owners and others in the logistics chain is the increased risk of delay in ports due to security issues. This will be reflected in charter-parties and bills of lading, for these contracts will now need to specify which party bears loss of time for delays under ISPS rules.

Any additional costs arising out of delays, ship idling time and the respective parties' obligations, especially in voyage charters, due to documents and information will have to be assigned clearly, according to the P&I Club.

The club says that unless these issues are addressed now, all parties run risks of suffering delays, and incurring expense that may not have been planned or budgeted for.