Fleeting Contracts, Perils Examined At River Seminar

Issues surrounding fleeting contracts and liability in unusual events were examined during a panel session at the 41st annual River and Marine Industry Seminar in New Orleans. The Greater New Orleans Barge Fleeting Association (GNOBFA) hosts the seminar each spring.

An afternoon panel on April 9 looked at increasing liability risks of fleeting and terminal operations due to increased traffic, new policies and new regulations. Panelists included Baxter Southern, an insurance broker with McGriff/Marsh & McLennan Insurance Services, and Ford Wogan, general counsel at Associated Terminals.

Southern noted that customer agreements usually include coverage, but only for legal liability. A standard form is usually issued as part of package coverage, but it can be customized. Some exclusions are standard, while others should be negotiated. It’s all about who has effective “care, custody and control” of a barge or other piece of equipment.

In response to a question, Wogan noted that, at most fleets he knows of, no one can simply “drop off” a barge without prior notice and agreement from the fleet operator. The term “tariff” in this context refers to terminal or fleet rules.

“It is the first thing to be referenced in an incident—but you can’t ‘tariff’ your way out of legal liability,” Wogan said.

All stevedoring locations that he knows of have tariffs or operating rules, which are attached to a rate sheet.

A fleeting permit from the Corps of Engineers comes with conditions. In cases of high water, Southern said, it doesn’t necessarily mean that a fleet has legal liability just because a barge sinks.

Fleet rates can go up during high water, Wogan said, and a rise at the Carrollton gauge in New Orleans might trigger a rate rise because a fleet has to do more things, like adding extra wires to barges or repositioning them.

“Fleets monitor high water very closely,” he said. “If there’s one thing we learned from Hurricane Ida [in 2021], it was ‘shut down when it’s time.’ Horsepower is precious during these incidents. Underwriters are very interested in what’s in our fleeting plan.”

Southern noted that fleet operators incurred more losses from Katrina than Ida.

Southern said insurers mostly want to know that fleet operators have a plan, and that it’s dynamic—that is, it allows for responses to changing conditions. Southern recommended that fleet operators inspect and document all incoming and outgoing barges, noting anything unusual or even ordinary. Drone images or videos of a fleet before and after an event may be useful.

Panel moderator Marc Hebert said it may help to have the Coast Guard sign off on a plan before a storm hits the fleet. In that case, said Wogan, fleet operators should notify the Coast Guard if they deviate from their storm plan in any way.

One attender asked whether the fleet owner is free of liability if he or she asks the barge owner to remove a barge ahead of a high water incident but the barge owner can’t or won’t comply. Southern said the bailee or person in charge has responsibility, although he or she may have the barge owner sign a “hold harmless” letter.

Panelists discussed the popularity of “parametric” coverage in which payouts are tied to pre-defined event parameters, such as wind speed, high water level or earthquake intensity. Southern noted that parametric policies have both a daily limit and an aggregate limit.

Another attendee asked how important surveyors are to damage recovery.

“Never be afraid to have a surveyor present to represent your interests,” Southern said.