The Dali Case

On 26th March 2024, a 9900 TEU (twenty-foot equivalent unit) container ship DALI, sailing with 21 Indian crew, allided with the Baltimore Bridge, causing significant structural damage to the 1972 built Francis Scott Key (FSK) Bridge.

The collapse of the bridge tragically resulted in the loss of six workers who fell into the river while on duty. This disaster has also severely disrupted Baltimore’s port operations, cargo movement, businesses, and social life.

While the ship owner and ship management company managing the vessel DALI have claimed for limiting their liability to about US$ 43 million as per an 1851 act, however, two US Congressmen are sponsoring a bill, “Justice for Victims of Foreign Vessels Act,” to increase the liability for foreign-flagged ships up to 10 times the value of the ship. If passed, the law would apply retroactively from 25th March 2024, which is a day before DALI’s allision with the bridge.

What went wrong with vessel DALI and what caused the incident is still under investigation by NTSB (US Marine Investigation Agency) and the FBI. The initial reports suggest a failure of the ship’s propulsion machinery to restart promptly from a state of blackout.

DALI’s incident should be seen as the last straw that broke the camel’s back of an outdated and strained ISM Code (International Safety Management Code), the bible of the shipping industry. “Established in 1998 by the IMO (International Maritime Organization), the 26-year-old code is not in sync with the 21st-century complexities of the shipping industry. The ship owner controls the operational expenses but cleverly shifts the responsibility for the vessel’s safe management and operation to a ship management company. It is like the ship owner who owns a gun, but the license is in the name of the ship management company. Thus, by using the shoulder of the ship management company, the ship owner fires the budgetary cuts, at the cost of the safety of the crew, vessel, and cargo. This practice has flourished over the past 20 to 25 years due to intense competition in the ship management industry. Furthermore, by transferring the management and operation of the vessel to a ship management company, the ship owner absolves themselves of responsibility due to a lack of privity or knowledge.

In the past centuries, ships sank more because of nature’s fury; however, in the 21st century, more ships are floundering due to ‘depleting management system standards and practices’ under a flawed ISM code.

Indian ship owners, such as SCI and Great Eastern predominantly, spend quality resources and money to manage the operation of their vessels, however, in the charter market, ship owners may lose out since the operational cost of a ship by a ship-owner who pass their vessel to a ship management company, is far less, with ship safety, crew wages and wellbeing taking the hit.. This highlights the need for the DG of Shipping (India) to propose these changes that create a level playing field.

1. Shipowners must appoint a Designated Owners representative (DOR) to monitor vessel activities, ensuring owner accountability for safety and operations.

2. The Chief Engineer must be given the authority to stop a vessel from sailing or divert the vessel to carry out urgent safety repairs.

3. Shipowners must be aware of the vessel’s condition, including any machinery or equipment issues.

4. Charterers must be notified if the vessel is in poor condition and requires urgent repairs.

5.Seafarer contracts should be limited to six months to improve performance and well-being.

6.Shipping companies must annually assess how much they have benefitted from implementing quality and safety practices.

The deadline for filing claims in U.S. courts for the DALI incident was September 24. Various parties, including the Maryland state government, the city mayor, and affected individuals, have filed claims, along with the insurance company covering the bridge for $300 million. However, the estimated cost of a new bridge exceeds $2 billion, and it may take years to resolve these claims, with neither side likely to receive everything requested. If regulators fail to address the shortcomings in the ISM code and ignore the lessons from the DALI incident, the shipping industry will bear the greatest cost, by compromising ‘safer ships and cleaner oceans’.

(The author is a Marine and Shipping Consultant. Views personal)