GUIDANCE ON SHIP LAY-UP
Published: 27 August 2020
The shipping industry transports 90% of the world’s trade and is naturally influenced by global volatile market trends. Owners constantly have to review the utilisation of their tonnage in order to suit the demand within their segment. Often the most flexible and profitable option is to lay-up one or more ships until demand resumes. This involves suspending trading and mooring the ship either alongside or at sea for a certain period of time. However, a lay-up may involve considerable risks and a thorough consideration is needed to ensure these are sufficiently mitigated.
When deciding on whether to lay-up a ship, commercial considerations such as the time and cost needed for reactivation of the ship, as well as its age and value, need to be taken into account by the owner. There also needs to be a thorough risk assessment conducted for the lay-up, which includes looking at the safety and suitability of the lay-up location; the safety of the ship, crew, moorings and environment; and also the preservation of the ship and its machinery. Before the lay-up, a plan consisting of appropriate procedures should be produced to safely mitigate all risks identified in the assessment.
- Lay-up condition
One of the key considerations in the early planning of a lay-up is its expected duration as this will affect what measures need to be taken. There are two lay-up conditions commonly referred to in the shipping industry:
Hot Lay-up – This is typically for a period between 1 and 12 months. A reduced crew, normally below safe manning levels, will remain on board to conduct necessary maintenance and keep some of the ship’s machinery in operation, as the ship will normally generate its own electrical power. Ships in hot lay-up will typically require a short time to prepare for reactivation or reinstatement, but in some cases drydocking may be required.
Cold Lay-up – This is typically for a period of more than 12 months. A minimum amount of maintenance is carried out during the lay-up and power is either supplied from shore or by a deck-fitted generator. A minimum number crew remain on board to deal with issues such as fire, flooding and mooring, although sometimes an external lay-up crew is employed. Ships in cold lay-up take much longer to prepare for reactivation and often require drydocking.
- Formal notification
Regardless of whether the ship is to be kept in a hot or cold lay-up, Members must notify the ship’s Flag administration and classification society, as well as the local authority in the jurisdiction where the ship is to be laid-up. Each of these stakeholders may impose their own requirements to ensure that the lay-up is conducted in a safe manner.
In order to maintain P&I insurance cover, the ship will need to remain in class throughout the duration of the lay-up and in compliance with applicable statutory requirements.
The location for the lay-up of the ship is essential to ensure its safety and protection. Before selecting a lay-up location, a Member should as a minimum consider the following:
- Traffic – The proximity to other ships and related traffic hazards, including shipping routes or open roadstead anchorages.
- Shelter – The extent of shelter from open seas and strong winds, taking into account the windage area of the ship, together with the swell, surge and any strong currents.
- Seasonal weather – The reliability and frequency of local weather forecasts and warnings and the proximity to known tropical cyclone or hurricane areas, moving ice, etc.
- Seabed – This should provide adequate anchor holding power and should be free from obstructions, wreckage or other projecting objects.
- Water depth – This should give sufficient clearance at extreme low tides while also not being too deep for the anchor chain limitations.
- Bollards – These must be of sufficient strength and should be positioned to ensure a proper lead suitable to the mooring pattern, taking into account the number of lines, lengths, angles and leads and the ability to maintain even tension on the lines.
- Emergency preparedness – There should be local plans and services lined up to deal with any fires, flooding, security incidents, mooring failures, medical emergencies or if it is necessary to move the ship due to sudden deterioration in weather or other conditions. This in particular includes the availability of local tug assistance.
- Security – Identify whether the area has any known security threats such as a high risk of piracy, armed robberies or other criminal acts that may compromise the security of the ship during the lay-up period.
Based on the selected lay-up location, the Member must decide on the choice of mooring and draw up a mooring arrangement analysis. There will be a full assessment which will include looking at the seabed and expected weather patterns, as well as the strength of available onshore and onboard bollards, mooring lines and anchors, and whether the ship is to be moored as part of a group or not, This analysis should also examine the readiness of the main machinery and consider the appropriate manning levels. The mooring arrangement analysis should be supported by calculations to ensure the strength and suitability of the moorings, as well as considering how these are maintained throughout the lay-up, taking into account industry best practices.
It is recommended that Members engage with their classification society or other competent body to produce a mooring arrangement analysis and decide on a safe mooring arrangement.
- Manning level
To minimise costs during lay-up, the manning of the ship is often reduced to an acceptable minimum. As part of their risk assessment, Members should identify any hazards that may occur during the lay-up, in order to determine the appropriate manning level required to ensure the safety of the ship and crew at all times.
To enable the ship to remain suitably operational and properly maintained during lay-up, Members must make sure that skilled personnel remain on board. For ships moored in groups, it may be possible that a single assigned lay-up crew can safely oversee the entire group on a rotational basis, although such a decision needs to take account of the hazards identified as part of the risk assessment.
It should be noted that local authorities may also have their own requirements for the number of personnel on board. Members are strongly recommended to seek guidance from the ship’s Flag state and local authorities so that they can agree on the final manning level on board during lay-up and obtain any necessary dispensation from the ship’s Safe Manning Certificate.
ENGAGING A LAY-UP MANAGEMENT COMPANY
For cold lay-up, Members may decide to disembark the entire crew for the duration of the lay-up and engage an external lay-up management company to attend the ship regularly for conducting necessary maintenance and to operate equipment and machinery.
Before appointing a lay-up management company, Members should perform due diligence to verify the quality of the company and ensure that it operates with a suitable quality management system. This will include relevant safety and operational procedures to ensure that the lay-up and required attendance on board is managed safely. Some lay-up management companies may be certified in accordance with applicable ISO or Classification Society standards which require their quality management system to be subject to external audits.
An attendance plan should be agreed which outlines the frequency of attendance on board and the level of the machinery and equipment to be operated during the lay-up period as well as the level of maintenance to be performed. The plan should also cover the security of the ship, particularly the prevention of intruders. Members should require regular lay-up reports from the supervisor, providing a detailed record of the condition of the ship and any areas of concern.
The lay-up management company should also provide Members with an emergency contingency plan covering the identified hazard scenarios related to the lay-up. This plan shall be reviewed and agreed by Members and 24-hour contact details shall be exchanged.
- Precautions during lay-up
The key aspect of a lay-up is to maintain the ship in a satisfactory condition while it is out of service. The ship’s classification society and also onboard equipment providers should preferably be consulted when developing the lay-up plan in order to:
- help ensure the satisfactory condition of onboard machinery and equipment, in particular to protect systems from corrosion and leakage; and
- facilitate the reinstatement of the ship at the end of the lay-up.
Some of the considerations to be taken into account :
- Dehumidification – A suitable humidity and temperature level should be maintained in the accommodation and other specified areas in order to protect them, and any installed equipment, against damage.
- Safe access – For boarding or movement between ships, a suitable gangway or an equivalent safe means of access with adequate lighting must be set up.
- Fire alarms and equipment – All fire alarm systems must remain fully operational. If the ship is unmanned there should be an alarm system which provides remote notification while always taking into account that the ship might be in an ‘electrical dead ship’ condition. The ship’s fire extinguishers should be regularly inspected and where fixed foam or CO2 systems are installed, the system should be maintained in a readily available condition. The emergency fire pump and the emergency generator should be maintained and tested at regular intervals. Fire dampers should be inspected and regularly greased.
- Gas free – In some areas, the local authority may require bulk carriers and tankers to be issued with a gas free certificate prior to lay-up and require that the gas free status be maintained during the lay-up.
- Exterior hull – Measures should be put in place to protect the ship’s hull against corrosion throughout the lay-up. Also, when a ship is idle for a period of time, biofouling will start to develop on the submerged part of the hull. This may be further intensified due to several factors such as the surrounding water temperature and ecosystem, as well as the anti-fouling coating applied to the hull. Different variations of anti-fouling coatings are available on the market. Some are designed for slow steaming ships which can encounter periods of low activity while anchored or drifting, while others are intended for fast steaming, high activity ships. Member should consult their coating provider on how to most efficiently maintain the hull during lay-up.
To try and reduce biofouling developing on the hull, it has occasionally been requested that a ship in hot lay-up temporarily leaves the lay-up location using their own propulsion in order to allow the hull to get “flushed” by the passing water while underway. However, the effectiveness of this approach is uncertain, and if the ship is underway then it will need to be manned in accordance with its Safe Manning Certificate which may require further approval by legislative stakeholders.
- Bilge and overboard valves – All sea overboard valves not in use should be closed. If seawater coolers/condensers etc. are left open, the seawater connections should be blanked off. The water level in the ballast tanks, pump room and bilges must be checked regularly to determine any water ingress. Bilge alarm systems for all spaces should be in an operational condition. If the ship is unmanned, an equivalent alarm system providing remote notification should be considered, taking into account the power supply in a potential ‘dead ship’ condition.
- Safety management – A safe working and living environment should be maintained for the crew and any external lay-up supervisors on board. Members’ Safety Management System (SMS) should remain in force as far as applicable, e.g. to ensure safe entry to enclosed spaces. Where an external lay-up management company is engaged, Members should ensure that their applicable procedures are communicated and adhered to during the attendance. If the lay-up management company use their own SMS, Members should ensure that this is of an equivalent standard to their own.
- Record keeping – Members should maintain a log of all the measures taken during the duration of the lay-up to facilitate the reactivation phase.
- Reinstating/reactivating the ship
Reinstating a ship after lay-up can be a time-consuming undertaking and the extent of which will vary depending on the level of preservation and maintenance carried out during the lay-up. Often when Members choose to reinstate a ship, it has been fixed by a charterer and Members will have to comply with the Laycan required by the charter party terms. Therefore, it is important that Members notify stakeholders of their intention to reinstate a ship in order to enable it to re-enter service without any delays or problems.
Depending on the duration of the lay-up and the operational level maintained on board, the reactivation process may include a requirement for the ship’s classification society and/or Flag state to complete any outstanding surveys in order to reissue statutory certificates. If the ship has been laid-up for more than 6 months, the classification society may withdraw the ship’s ISM Safety Management Certificate (SMC) and International Ship Security Certificate (ISPS), and require an interim audit to be carried out at reinstatement as if the ship was new.
Reinstatement may also require the ship to be drydocked to clean and inspect the outside of the hull, and in preparation, Members should find out the location and availability of nearby drydocks, so that any transit time and congestion at the drydock can be included in the planning and does not cause any delays.
In accordance with Rule 28(8) of the P&I Rules (Class 3), the Association may also require a condition survey to be carried out following a period of lay-up.
- Laid-up returns
Although certain significant risks such as collision, pollution and grounding remain, a ship that is properly laid-up may represent a reduced level of risk specifically in relation to cargo and crew claims.
In accordance with the terms of Rule 13 of the P&I Rules (Class 3), Members may make an application for a return of call when a ship is laid-up.
In order to qualify for a laid-up return, the Entered Ship must be laid-up in any safe port or place for a period of thirty or more consecutive days after finally mooring there (such period being computed from the day on which she finally moored to the day of departure, one day only being excluded), and the Entered Ship shall be completely free of cargo. The Association’s Managers shall determine whether the port or place is a safe port or place for the purposes of Rule 13.
The Entered Ship must remain at her mooring throughout the period for which the laid-up return is claimed. An extended period in a yard for the purpose of repairs will not qualify for a laid-up return. Likewise, a ship that is drifting, awaiting orders, will not qualify.
A laid-up ship is considered to be a ship that has been taken out of commercial trading and its operational capabilities reduced or shut down. The number of crew on board a ship applying for a laid-up return is generally expected to be less than that needed to meet minimum safe manning requirements. Ships that have a full complement of crew on board will be considered “idling” and will not qualify for a laid-up return.
To be eligible for a laid-up return, an application must be made to the Association’s Managers. The application form can be found on the Association’s website.
No return of call shall be made by the Association unless its Managers receive written notification within three months of the end of the period in respect of which the returns are claimed or within three months of the end of the policy year, whichever occurs first.
Detailed planning is essential when Members decide to lay-up a ship to ensure that it remains safe and in a sound condition throughout the lay-up period and also to keep both the reactivation time and cost at an acceptable level. There must be engagement with numerous stakeholders, and Members should consult them at an early stage so that their individual requirements are all taken into account as part of the lay-up planning process.
During times of economic recession there is often an increase in the number of ships being laid-up and when trading conditions again become favourable, many ships may need to be reactivated at the same time. This can cause congestion at shipyards or with service providers which may delay the ship returning to service. Members are therefore encouraged to plan ahead to try to avoid these possible obstacles, so that their ship will be able to meet all the contractual obligations.
If you have any questions or would like further advice on the lay-up of ships, then please feel free to contact the Britannia Loss Prevention team at: firstname.lastname@example.org