US Coast Guard Gives Opportunistic Owners Early Christmas Present

In early October, I enjoyed dinner with a member of management of one of the world’s largest VLCC owners. We discussed COFRs and, while we both agreed that unlimited liability had to be dealt with and that the COFR deadline with the prospect of a “train wreck” presented an opportunity for the industry to stick together – and perhaps force the US into a rational reexamination of both unlimited liability and the foolish COFR rule – I argued that, as a public company, they had an obligation to their investors to obtain a COFR. Further, as the largest VLCC owner, they not only had the chance to reap the benefits of any COFR rate spike but, arguably, to monopolize the PG-to-US carriage of oil. It was, in fact, just an idle dinner table debate as we both sincerely hoped that the industry threat of oil shortages would mix with Coast Guard, owner, and P&I Club genius to produce a sane answer. In fact, the industry “coalition” has all but crumbled, replaced by that opportunistic trait the industry is so well known for.

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