RISK MANAGEMENT IN DRAFTING SHIPBUILDING CONTRACTS
APPLICATIONS IN PRACTICE
by Dimitri Capaitzis Consultant Surveyor
In 1940 a British Mission, headed by R.C. Thomson, went to the USA and Canada to propose the building of their EMPIRE LIBERTY Design — 10,000 DWT, ‘Scotch’ Cylindrical Boilers, Reciprocation Steam Engines, 2500 BHP, 10 Knots, 25 tons/day. From 1940 to 1945 various Canadian Yards built 300 of this type, all riveted. These were the EMPIRES or FORTS or PARKS.
In the USA the Maritime Commission partly modified the design to allow for extensive welding, prefabrication, series production, assembly line methods, a single ‘block’ deck house midships and watertube boilers. New TODD and KAISER shipyards originally built 60, called OCEANS, at about $1,600,000 each, followed by 200 on the ‘Emergency Liberty Fleet’ program in all US Yards, which established the LIBERTY name for this EC2-
Liberty Contracts must have made an interesting exercise in Risk Management.
Ships have since grown in size, efficiency and capabilities.
A LIBERTY carried 10,000 tons at 10 knots on 25 tons of Fuel. A Panamax Bulker carries 75,000 tons at 15 knots on that consumption. A tenfold increase in efficiency. Five years ago one could order a new Panamax at $20 million. Today one may not find a berth at $30 million.
There are many risks, but also many rewards.
My experiences with shipbuilding have taken me to England, Scotland, Japan, Germany, Poland, Korea, Brazil, Spain, Denmark, Italy, Romania, Ukraine, China, Turkey.
A substantial personal risk. Not so much in dealing with the Builders, as with local officials, customs, inn-
The ships were mostly cargo and tankers and gradually also extending to container, multipurpose, gas, cement and other specialities.
There were of course plenty of other risks, but the ships built were great and the Contracts therefore adequate at the time.