Only A Small Fraction Of Unplanned Petroleum Logistics Events Are Reported
Below is a diagram of the universe of Petroleum Logistics operational incidents ("non-conformities") that could adversely affect a Charterer's economic outcome. One study indicated that 10% of the voyages made by carefully vetted tankers resulted in an incident with commercial impact. The average cost to the Charterer per incident was $50,000. The maximum cost, a General Average event, bore a price of $2.5 million.
Below is a diagram of the universe of Petroleum Logistics operational incidents ("non-conformities") that could adversely affect a Charterer's economic outcome. One study indicated that 10% of the voyages made by carefully vetted tankers resulted in an incident with commercial impact. The average cost to the Charterer per incident was $50,000. The maximum cost, a General Average event, bore a price of $2.5 million.
What can go wrong?
I often paraphrase a famous quotation by Sir Winston Churchill to describe the potential risks a petroleum tanker charterer faces when considering a voyage.
"Once the signal to load the cargo is given, the Charterer is no longer the master of policy but the slave of unforeseeable and uncontrollable events: antiquated Owner’s offices, weak Managers, incompetent terminal operators, arrogant Masters, untrustworthy suppliers, hostile officials, malignant Fortune, ugly surprises, and awful miscalculations."
Incident-free petroleum logistic operations require:
"Once the signal to load the cargo is given, the Charterer is no longer the master of policy but the slave of unforeseeable and uncontrollable events: antiquated Owner’s offices, weak Managers, incompetent terminal operators, arrogant Masters, untrustworthy suppliers, hostile officials, malignant Fortune, ugly surprises, and awful miscalculations."
Incident-free petroleum logistic operations require:
- In-depth understanding of and planning for all of the details (legal, regulatory, customary and ethically) for the proposed operation
- Risk assessment of each step of the operation (design, construction, testing, procedures, recruitment, training, maintenance)
- Development of response plans and training for exceptional situations