Presentation of
Michael G. Roberts
Marine Salvage Update
Maritime Law Association /
Instituto Iberoamericano de
Derecho Maritimo
Fajardo, Puerto Rico
October 31, 2013
Company Overview
Crowley was founded in 1892, when Thomas
Crowley — grandfather of current chairman,
president and CEO Thomas B. Crowley, Jr.
— purchased an 18-foot Whitehall boat to
provide transportation of personnel and
supplies to ships anchored in San Francisco
Bay.
Crowley has since grown into a strong,
diversified, service-oriented company with
primary interests in marine solutions,
transportation and logistics.
Today, the company has more than $2 billion
in annual revenues; more than 5,000
employees; and owns / operates a fleet of
more than 250 vessels. Other assets include
terminals, warehouses, tank farms, office
buildings, trucks, trailers, containers, chassis,
cranes and other specialized vehicles.
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Principal Businesses
Container Shipping & Logistics
 About 20 vessels in U.S. – C. America / Carib regional service
 Warehouse, trucking, Customs brokerage, etc.
Technical Services
 Diversified menu of domestic & international services
Petroleum Transportation
 19 large tank vessels (17 ATBs) in domestic blue water trades; 4
MRs on order, plus options for 4 more. 5.5M bbls static capacity;
average hull age less than 5 years.
Petroleum Sales & Distribution
 Tank farms, fuel supply network in Alaska
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Crowley Solutions
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World-class ocean towing and barge transportation
Vessel design and construction management
Resource development project management
Ship management (40+ vessels; MARAD, MSP, others)
Marine salvage, wreck removal, emergency response
Titan Maritime
 Founded in 1980 by David Parrot
 Acquired by Crowley Maritime in
2005
 One of the very few organizations
in the world doing marine
salvage, emergency response
and wreck removal as its core
business
 Member of the Int’l Salvage
Union (ISU) and the American
Salvage Association (ASA)
 Depots in the US, UK, Singapore
& Australia
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Track Record
Now…
Marine Salvage
Marine Salvage – Legal Foundation
1989 Salvage Convention – Codified traditional English and
common law principles
 Peril to marine property
 Service not pursuant to pre-existing duty
 Applies in absence of contract
 General maritime duty to render assistance
 Master / owner has contracting authority
 Must cooperate with salvor to prevent / minimize
environmental damage, and accept redelivery of vessel
 Salvor has a duty of care, including to protect the
environment; must seek / accept aid when needed
Salvage Contracts and Statistics
Lloyd’s Open Form (LOF)
 No cure – No Pay
 Full set of rules, including London arbitration
 First LOF Contract 1892
 11 Revisions culminating in LOF 2011
 100-120 LOFs per Year
 Since 1978 About $31 Billion Saved
 Salvage Business = $400-$600 Million per Year
 LOF with SCOPIC (Special Compensation Protection
and Indemnity Clause)
Other contract forms may be used
Criteria for the Award
Classic / Common Law Factors
 Nature & degree of risk or danger to vessel
 Salved value
 Risks assumed by salvors
 Salvor’s skill, energy & promptitude
 Salvor’s time & expense
 State of readiness & efficiency of equipment
More Recent Additions
 Skill / effort / cost in preventing environmental damage
 Degree of success
Volume & Complexity of Cargo COSTA CONCORDIA
APL Panama
 Capacity 4,000 TEU
 1,805 Containers Aboard
 Largest Award in History
ISU: RECOVERY OF POLLUTANTS
Exxon Valdez Spill: 37,000 tonnes (1989)
Salvage operations: 244 (256 in 2008)
Pollutants recovered: 1,022,730 tonnes (667,497 tonnes in 2008)
15,976,297 tonnes of potential pollutants recovered 1994 - 2009
Wreck Removal
•Torrey Canyon 1967
•Largest wreck of its time
•120,000t crude oil spilled
•Outside UK waters
•$7.2M 3rd Party Settlement
•$14.8M H&M Claim
•Limitation Liability 1851
Wreck Removal
Key features of Wreck Removal
 Wreck has no commercial value (CTL)
 Risk Covered by P&I not H&M
 Bid / award process vs. emergency response
Nairobi Int’l Conv. Removal of Wrecks (2007)
 Authorizes coastal states to act where danger to navigation,
environment
 BIMCO contract forms commonly used (WRECKHIRE (day rates);
WRECKSTAGE (milestone payments); & WRECKFIX (single
payment at completion)
 Other contract forms – sometimes not suited to wreck removal
projects – may also be used
Salvage – Wreck Removal Continuum
 IG LCWG Found 3 Stages in Contracting Common
 SCOPIC Often Presages Wreck Removal
 Interim Contracts Usually for Fuel Removal While Tendering
 Wreck Removal Typically Fixed or Staged
 Delays in Switching or State Interference Forcing SCOPIC to Run
Resulted in Cost Increases
 Sharing of Risk – More Global View
 Twenty largest projects included significant day rate
components
 Many other projects beyond the top 20 primarily lump sum
Year
Vessel name
Type
Club
GT
Containers On
Board
ROW/SCOPIC (US$)
2002
2003
2004
TRICOLOR
CP VALOR
HYUNDAI 105
Ro Ro
Container
Car carrier
Gard
WoE
UK
49792
15145
40772
2004
2005
SELENDANG AYU
Bulk carrier
Bulk carrier
Swedish
Japan
39775
14437
148,118,187
33,751,367
2006
2006
2006
2006
2006
2007
2007
OCEAN VICTORY
Bulk carrier
Container
Ore carrier
Bulk carrier
Container
Bulk Carrier
Passenger
WoE
Swedish
Japan
American
London
Swedish
WoE
88853
33047
98587
40182
53409
26824
22412
52,155,913
73,284,457
38,887,613
44,066,473
135,301,307
177,372,321
57,983,161
2007
2008
EASTERN BRIGHT
FEDRA
Chemical tanker
Bulk carrier
Japan
American
1715
35886
58,513,442
60,700,000
2010
2010
2011
2011
JOLLY AMARANTO
MSC CHITRA
B OCEANIA
RENA
Ro Ro
Container
Bulk Carrier
Container
UK
Standard
Swedish
Swedish
22945
33113
38337
37209
43,517,545
102,474,886
55,080,527
243,972,652
2011
COSTA CONCORDIA
Cruise ship
Standard
114147
Container
Gard
35881
2012
TWIN STAR
ROKIA DELMAS
GIANT STEP
CALIFORNIA
MSC NAPOLI
NEW FLAME
SEA DIAMOND
BARELI
900
391
2,318
1,219
1,366
54,742,493
44,553,142
57,664,127
561,636,615
1,397
TOTAL
54,327,008
2,098,103,236
RENA
COSTA CONCORDIA
 Capacity 3,350 TEU
 1,366 Containers Aboard
 US$244M & Counting – 2nd Most Expensive Removal
COSTA
CONCORDIA
JOLLY AMARANTO – RoRo
Breakbulk
 10,500 mt Cargo
 Including >100 mt Steel Wire
OCEAN BREEZE - Bulk COSTA CONCORDIA
 36,000 mt Grain
 Removed via Telepherique
Wreck Removal
Wreck Removal Cost Drivers
 Technical & operational characteristics of
the wreck & the site
 Coastal state & stakeholders intervention
 Media can drive unwarranted concerns / actions
 Characteristics of fuel removal
 Contractual arrangements
 Effectiveness of contactors, salvage
consultants & claims manager
Wreck Removal Cost Drivers
Issues Facing the Industry
Responder Immunity
 P&I or Salvors policy will cover loss; therefore,
liability rules should drive best behaviors
 Owners/public need responsive, professional responders
 Responders need immunity from liability for ordinary
negligence, not gross negligence or recklessness
 Mechanisms to deter frivolous claims
Performance Guaranty
 Salvor agrees to cover cost of completion
 Not suitable given uncertainties in bidding
 No such clauses in standard BIMCO forms
COSTA CONCORDIA
COSTA CONCORDIA – A Perfect Storm
 Characteristics of Wreck
 45,000 mt lightship, Salvage weight 55,000 – 75,000 mt
 Complex Heavily Damaged Structure
 Capsized Upslope
 Characteristics of Site
 Environmentally & Cultural Sensitivity – Removal Intact
 Complex Topography – Bridged Between Rock Ridges
 Complex Geology
 Casualty Occurred Winter 13 January
COSTA CONCORDIA – A Perfect Storm (Cont)
 Fuel Removal – 71 Days Dead of Winter
 Heavy State Oversight
 Crime Scene – Prosecutorial Permissions for All Operations
 Extraordinary Media Spotlight
 Heavy Environmental Requirements
 Meet of All Industrial Regulations
 Salvage or Offshore Construction??
Platform PF-1
Sponson Installation
Blister Tanks
Ready
Commence Parbuckle
www.parbucklingproject.com
Upright – 1.5 Degrees Port
Starboard Side Damage
Crowley / Titan
Thank You!
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