Inspection Observation Replies

REPLIES TO

SIRE
(and other)
INSPECTION OBSERVATIONS
Revised:

13 November 2003

Inspection Observation Replies

Note:
The following presentation
represents the policies of Koch
Shipping only, and may not
reflect the procedures or
opinions of any other SIRE user
or OCIMF member.

Inspection Observation Replies

Koch Shipping is an internal

service group that charters
and operates ships on behalf
of Koch entities, for cargoes
that are being actively traded
en-route.

Inspection Observation Replies

Assumption:
The quality of the owners
replies to SIRE inspection
observations is a measure of
owner management quality.

Inspection Observation Replies

When the SIRE inspector leaves

the gangway, the vessel
inspection is finished;
Now, the vetting of the vessels
management begins !

Inspection Observation Replies

How is the owner going to

be vetted for fitness?
By the vetting managers
subjective assessment of
the quality of the owners
replies to observations
from his ships inspection.

Inspection Observation Replies

Fitness:
The vessel, crew and her
owners are part of a team
of resources that must fit
together to maximize the
profit of the traders oil
trade (the deal).

Inspection Observation Replies

Some of the players on the team

that carries the oil traders deal:

cargo scheduler (operations assistant of the trader)

charterers vessel operations coordinator
cargo insurance broker and underwriter
charterers P&I Club
independent petroleum inspectors
measurement field agents - cargo auditors
port pilots, agents and line handlers
charterers chartering manager
vessel, master, officers and crew
vessel owner and technical managers
vetting manager
vessel class society

Inspection Observation Replies

We are all servants of the

cargo trader ..
His deals pay for all of our
activities.
What does he want .. ?

Inspection Observation Replies

The traders #2 objective:

Competitive cost .
A charter rate that is better
than market.
What is the traders #1
objective ..?

Inspection Observation Replies

OPTIONALITY!
The ability to deliver the cargo
anywhere the ship can safely
go.

Inspection Observation Replies

So the ships that make the

most money for us are not
necessarily the cheapest
but the ones that are
universally accepted.
They offer the greatest
optionality to the trader.

Inspection Observation Replies

The amount of money Koch

makes on every rejected
vessel is:
Absolutely nothing!
The added-value product of
every vetting system is a
pool of approved vessels.

Inspection Observation Replies

Many otherwise acceptable

vessels do not pass vetting
because the owners replies to
the SIRE report do not provide
closure of the indicated
conditions.
Approval is delayed or denied.

Inspection Observation Replies

So . please help me help you

get your ship accepted!
Send the inspecting company,
SIRE (and/or me), deficiency
responses that show:
acceptance & respect for the system.

Inspection Observation Replies

Help me help you get accepted!

Send responses that show:
acceptance & respect for the system.
An active Safety Management System
that takes every deficiency seriously.

Inspection Observation Replies

Send responses that show:

acceptance & respect for the system.
an active Safety Management System
that takes every deficiency seriously.
a reply that:
identifies the root cause of the deficiency
fixes the existing cause of the deficiency
identifies changes to operating procedures
to reduce the chance of the deficiency occurring
again.

Inspection Observation Replies

Some replies which are not accepted:

Rectified. .. (trust me!?) .

Inspection Observation Replies

Some replies which are not accepted:

Rectified.
when convenient (spending
money is never convenient!)

Inspection Observation Replies

Some replies which are not accepted:

Rectified.
when convenient
at the earliest opportunity

Inspection Observation Replies

Some replies which are not accepted:

Rectified.
when convenient
at the earliest opportunity
We have reminded the Master/Chief
...

Inspection Observation Replies

Some replies which are not accepted:

Rectified.
when convenient
at the earliest opportunity
We have reminded the Master/Chief ...
The parts have been delivered on
board.

Inspection Observation Replies

Some replies which are not accepted:

Rectified.
when convenient
at the earliest opportunity
We have reminded the Master/Chief ...
The parts have been delivered on board.
He has been cautioned and instructed ...

Inspection Observation Replies

A world-class response includes:

The observation (SIRE), number and text repeated.

Inspection Observation Replies

A world-class response includes:

The observation (SIRE), number and text repeated.
A convincing statement that the root cause has been
sought and found - (see: Analytic Trouble Shooting).

Inspection Observation Replies

A world-class response includes:

The observation (SIRE), number and text repeated.
A convincing statement that the root cause has been
sought and found - (see: Analytic Trouble Shooting).
A statement that managers has objective evidence
that corrective action has been completed,(or will be
completed by a stated date), to fix close the item.

Inspection Observation Replies

A world-class response includes:

The observation (SIRE), number and text repeated.
A convincing statement that the root cause has been
sought and found - (see: Analytic Trouble Shooting).
A statement that managers has objective evidence
that corrective action has been completed,(or will be
completed by a stated date), to fix close the item.
A statement of preventive measures taken to avoid a
repetition of the condition (SMS change, etc.).

Inspection Observation Replies

Objective evidence
A document, report, message, completed
checklist copy, note, or certificate in your files,
that you can show me when I come to visit
your offices.
Something that closes the loop on the
deficiency!

Inspection Observation Replies

The corrective action (ISM), cycle:

Identify & record the non-confomity.
Find the root cause(s).
Develop effective corrective action.
Implement the corrective action.
Revise procedures.
Complete the closure process.

Inspection Observation Replies

Helpful hint:
Refer to specific parts of your Safety
Management System whenever
possible when writing your SIRE
report replies is shows that you
really believe in the process.

Inspection Observation Replies

Bad example #1
Observation:
The vessel does not have a vapor release
response plan.
Reply:
The vessels vapor release response plan is
included in section 8.3.2 of the vessels ISM
Manual.

Inspection Observation Replies

Bad example #1
Better reply:
+ Recognizing that the Master was not
aware of the location of the vapor release
plan within our SMS manual, we sent our
superintendent on board 11 Oct 02, and he
conducted SMS training with all officers so
that they are now fully aware of all contents
of our SMS procedures manual.

Inspection Observation Replies

Bad example #2
Observation:
The main engine is covered with oil.
Reply:
The main engine has been cleaned.

Inspection Observation Replies

Bad example #2
Better reply:
During the shipyard period Nov 02, we have
arranged for a factory representative to
supervise work to eliminate all fuel and lube
oil leaks from the main engine, after which
the engine will be cleaned and re-painted.

Inspection Observation Replies

Bad example #3
Observation:
The IGS oxygen sensor bubbler was found
without any water in it while the vessel was
discharging.
Reply:
The bubbler was filled with water
immediately.

Inspection Observation Replies

Bad example #3
Better reply:
The engineers pre-discharge checklist has
been amended to include an item to verify
that the IG sensor bubbler is filled to correct
operating level prior to starting the cargo
transfer. SMS section 13.6, revised 11
October 2002.

Inspection Observation Replies

Bad example #4
Observation:
A June inspection found a C-of-C issued Feb,
due in July: vessel to submit results of
stern tube lube oil analysis.
Reply:
Condition of class will be attended to in
due course.

Inspection Observation Replies

Bad example #4
Better reply:
Stern tube lube oil sample test results
were submitted to class on 17 March and
Condition of Class was deleted on 22 April
2003. Deletion of C of C will appear on 1
July class quarterly report.

Inspection Observation Replies

Good example #1
Observation:
Steering gear emergency reserve tank was
found only 1/3 full of hydraulic fluid.
Reply:
Reserve tank was refilled immediately.
The engineers weekly checklist has been
amended to include an item to verify
steering gear reserve tank is full.

Inspection Observation Replies

So,
Saying:
we fixed the deficiency
may no longer be sufficient to
close an inspection observation,
but ..

Inspection Observation Replies

Saying:
we fixed the deficiency and we
fixed the reason that the
observation existed (giving details).
is truly impressive and indicates
the presence of an active Safety
Management System.

Inspection Observation Replies

I dont really want to know:

Did they fix it for BP 6 months
ago.
What I want to know is:
Will the problem still be under
control when my cargo is on the
ship next month?

Inspection Observation Replies

All SIRE report replies are

important, but reports with a
large number of conditions listed
deserve special attention by the
owners vetting manager.
More observations = less
chance of approval:

Inspection Observation Replies

Koch SIRE report grading system - score distribution:

number of
observations
0
1 to 4
5 to 8
9 to 12
13 to 16
17 to 20
21 to 24
25 to 28
29 to 32
33 to 36

report
score
10
9
8
7
6
5
4
3
2
1

number
of ships
60
230
335
190
110
100
140
80
40
20

% of
total
5%
18%
26%
15%
8%
8%
11%
6%
3%
2%

currently
approved
40
185
235
115
40
35
0
0
0
0

%
approved
66%
80%
70%
60%
36%
35%
0%
0%
0%
0%

Inspection Observation Replies

Summary: Koch uses the owners

replies to detect the presence (or
absence), of an active management
system that is necessary to provide
a reliable vessel, and a reliable
transportation partner, for routine
cargo transport AND in the event of
an incident.

Inspection Observation Replies

We also try to detect from the SIRE

replies whether or not the owners
management culture includes a
positive, helpful, service-oriented
attitude . always preferring an
owner who would rather be helpful
than be right (as in: stubborn).
Because .

Inspection Observation Replies

It is apparent from government

initiatives, legal cases and post
incident comment, that regulators
would like to consider the shipowner
and the charterer as
co-venturers (partners), in the oil
transportation voyage, and jointly
responsible for its outcome.

Inspection Observation Replies

Events which demonstrate this point

of view include:
Erica
Cerda
Neptune Dorado
September 18, 2002
Prestige - November 2002

Inspection Observation Replies

Events which demonstrate this point

of view include:
Erica: owner invisible - charterer
took the heat.
Cerda
Neptune Dorado
September 18, 2002

Inspection Observation Replies

Events which demonstrate this point

of view include:
Erica
Cerda: detained in Europe charterer was named in the press.
Neptune Dorado
September 18, 2002

Inspection Observation Replies

Events which demonstrate this point

of view include:
Erica
Cerda
Neptune Dorado: detained San
Francisco - FBI visited the charterer.
September 18, 2002

Inspection Observation Replies

Events which demonstrate this point

of view include:
Erica
Cerda
Neptune Dorado
September 18, 2002: the USCG 96 hr
Notice of Arrival must now include
name & address of the charterer.

Inspection Observation Replies

Events which demonstrate this point

of view include:
Prestige - Sank in November 2002;
Koch was named in a sloppy
Reuters report in December 2002
as charterer of a similar, blacklisted flag ship.

Inspection Observation Replies

To have confidence in a vetting

approval, Koch needs to feel that the
owner will skillfully and willingly meet
all of his obligations and liabilities in
the event of an incident or casualty.
The face you show us in your inspection
replies is used to judge that.

Inspection Observation Replies

Kochs 5-year results:

8000 vetting inquiries
3100 voyage charters
1 billion barrels of oil moved

Inspection Observation Replies

Kochs 5-year results:

1 crew fatality
3 medical diversions
7 spills; total < 1 barrel spilled
2 detentions (lifeboat failures)
3 general average claims
4 arbitration cases

Inspection Observation Replies

Kochs 5-year results:

Koch executive response to these
results:
Try harder.

Inspection Observation Replies

For the oil company vetting manager,

every marginal vessel he/she
approves can be a career decision.
He/she is not going to bet his career
on an owner who sends second-rate
replies to what are considered to be
serious vessel deficiencies.

Inspection Observation Replies

So:
Help me help you to get your ship
accepted ..
Show me you care enough to send
your very best response to every
inspection comment or deficiency.

Inspection Observation Replies

Thank you!
Captain John Dudley
Manager, Marine Operations
Koch Supply and Trading LP
Wichita, Kansas