NEW DEVELOPMENTS IN THE VENEZUELAN PORTS

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Dear Sirs,

Following our previous communications, we would like to inform you that due to Government Regulation dated 29 July 2009, the state has now taken over the operations and warehousing of the main Venezuelan Ports including Maracaibo, Puerto Cabello and La Guaira. The Ports will be managed through the company named BOLIVARIANA DE PUERTOS (BOLIPUERTOS).

Warehouses and handling equipments have been taken over from the private companies, which were handling the port operations up to the date mentioned (29-7-2009), by the state.  Port workers have also become state workers.

The operations, recently with Puerto Cabello, were interrupted during several days in the past. Nevertheless, these were resumed a few days after, with delays and disorganization, as it could be expected due to the taking of the port activities without previous coordination with parties involved. Actually, the general cargo is handled almost totally by the government; some of the bulk cargo is still handled by private stevedores for now.

During the transition time, the load risk increased, during its handling as well as it storage, due to the general existing confusion about the load control (inventories), new procedures, personnel and lack of recognition of responsibilities in its handling.

Nevertheless, the new port institution BOLIVARIANA DE PUERTOS (BOLIPUERTOS) has been taking control of the operations and reorganizing itself. In this moment, we consider that they are improving their operations and minimizing risks, even though this is not a guarantee and there is always a risk of accident.

Furthermore, BOLIVARIANA DE PUERTOS (BOLIPUERTOS) acquired a Responsibility Policy over the Load and Operations of Seguros Altamira (Venezuelan Insurance) and the reinsurance was acquired with TT Club, internationally acknowledged. Between both enterprises they have organized themselves regarding the procedures for claims and the TT Club remains active, working in this matter.

Actually, at W. Moller C.A., we are handling some new surveys with claims introduced before BOLIVARIANA DE PUERTOS (BOLIPUERTOS), where we have been able to perform joint inspections regarding damages and/or shortages and there have been joint Inspection Acts. These claims have been presented before Seguros Altamira /TT Club and we are awaiting for the possible recuperation of losses.

Regarding the surveys of Refrigerated Containers (Surveys due to missing appropriate connection of Containers in Ports), they have reduced, at the same time; imports related to these have also reduced themselves. These problems repeated themselves in the past, due to large imports by the state, when through deals with other Latin American countries it imported large quantities of meat, chicken, etc. without taking the necessary precautions regarding logistic of imports. Therefore the state did not consider the storage capacity of the Refrigerated Containers in Ports, which caused an unexpected arrival of great volumes of merchandise to some enterprises working with refrigerated Containers. Regarding this risk, we have recommended the Insurances to include an Institute Refrigeration Clause. Here we send our considerations:

CONSIDERATIONS REGARDING THE INSTITUTE REFRIGERATION CLAUSE

 

This clause is a limitation for the coverage given by the Institute Load Clause (A), since the definition of Covered Risks of the Clause (A) is conditioned as following:

This insurance covers, except what is included in Articles 4,5,6 and 7 that can be found below:

1.1. All risks that damage and cause losses of the Insured Goods, due to any external cause that takes place during the validity of this clause, in transit or storage covered, in exception of damages or losses caused by any temperature variation disregarding its origin. 

1.2. Losses or damages of Insured Goods caused by any temperature variation, when this can be caused by:

1.2.1. Damage of the refrigeration equipment that causes its stop for a period longer than 24 continue hours. 

1.2.2. Fire or explosion

1.2.3. When the ship strands, grounds or sinks.

1.2.4. Rollover or derailment of means of ground transport.

1.2.5. Collision or contact of the vessel, ship or means of transport with any other external object or matter that is not water. 

1.2.6. Discharge of Insured Goods in refugee port. 

 

It is clear that the insurance intention through this clause is to limit their risk to clear and specific events regarding refrigerated load, since this, due to its nature, can suffer more risks than general load, and in this there can generate damages that can be attributed or confused with damages caused by own vice or by nature of the insured good. Therefore, in the Institute Refrigeration Clause, in its article 4.4. corresponding to the exclusion of own vice, it is stated:

4.4. Losses, damages and expenses caused by own vice or by own nature of the Insured Goods (except for losses or damages caused by temperature variation specifically covered by article 1.2. formerly mentioned). 

We stay aware to the what happens regarding Import and Export Load in our country, as well as the increase or reduction of the existing risks, which we will inform in due time.

With nothing else further to mention and remaining at your disposition for any additional information,

Best regards,

Mollergroup.

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NEW DEVELOPMENTS IN THE VENEZUELAN PORTS

 

Caracas  August 14, 2009

Further to our previous Circular dated June 17, 2009 we inform that per  government decree dated July 29, 2009 the state has now taken over the operations and warehousing of the main Venezuelan Ports  including Maracaibo, Puerto Cabello and La Guaira. The Ports will be managed through the company named BOLIVARIANA DE PUERTOS (BOLIPUERTOS) .

Warehouses and handling equipments have been taken over from the private companies, which were handling the port operations up to now.  Port workers are also said to be taken over by the state although we understand that an important number of managers will not accept the transfer.

Operations, especially in Pto. Cabello were interrupted for some days and now have been resumed although, as we could notice, with delays and disorganization. The general cargo is handled almost totally by the government; bulk cargo is still handled by private stevedores for now.

The risk for the cargo is expected to increase both during its handling as the warehousing. During the transition time the risk will increase even more due to the general confusion existing (For example we understand that the inventory system for the merchandise in some warehouses is not working).

However we understand that the new Port Institution was making inquiries regarding liability insurance, as stated in our previous circular, we expect that claims against them regarding robbery and damage of merchandise  will be extremely difficult if not impossible. Also stevedores damages to the vessels will be difficult to claim.

We will inform about any new developments,

Best  Regards,

Mollergroup.