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FOSFA

Special Reports

by Pierre de Jager, Consultant Chemist CWA International Ltd.

 

The bulk transportation of edible oils by ocean tanker vessels is a well established international trade encompassing a wide range of plant and animal oil/fat
products. Carriage aboard tankers is regulated by the International Maritime Organisation (IMO) and commercial aspects are governed by international contract bodies such as the Federation of Oils, Seeds and Fats Associations Ltd (FOSFA) and the National Institute of Oilseed Products (NIOP).

The majority of edible oil products are shipped from the major oil producing countries such as Malaysia, Argentina, USA and EU to areas where demand is highest including, more recently, the increasing demand of emerging countries. Further, demand for edible oil products has also been driven by the increasing utilisation of oils and fats in the manufacture of bio-fuel production, which is nowadays seen as a renewable fuel source.

Global production of edible oils has increased year on year with a global production of 175 million metric tonnes recorded for 2014/2015; palm and soybean oils making up the largest constituent parts of the edible oils consumed1.

The worldwide consumption of edible oils can broadly be divided into two main areas, i.e. food and non-food use. Edible oils, apart from being used as a food source, can also be used in the oleochemical sector for the production of personal products such as shampoos and soaps and for industrial applications such as the manufacture of paints and chemical intermediates. Additionally, as indicated above, oils and fats are used in the production of fatty acid methyl ester (FAME) components which can be used as a blending agent in the bio-diesel fuel sector.

Oils and fats intended for human consumption require care when transported by sea and generally during storage and custody transfer operations. International food trade has, of course, existed for thousands of years but until relatively recently food was mainly produced, sold and consumed locally. Over the last century the amount and variety of food traded internationally has grown exponentially; the term ‘food-miles’ has become familiar. Standards and Guidelines for the carriage and storage of food products are provided by the World Health Organisation (WHO) and Food and Agricultural Organisation(FAO) of the United Nations in the Codex Alimentarius. The latter publication outlines harmonised food standards and practices for the protection of product quality and consumer safety. Food hygene principles outlined in Codex Alimentarius are adopted worldwide and in commercial terms edible oil and fat cargoes are shipped, as mentioned previously, under contractual terms issued by such bodies as FOSFA or NIOP which are in accordance with the requirements of Codex Alimentarius for the safe carriage of the goods.

It is currently estimated that approximately 85% of edible oils and fats traded worldwide are shipped under FOSFA contracts. The benefit for using standard contractual terms is that there is a reduced potential for misunderstanding leading to costly disputes between the trading parties. The use of a central contract body also allows for a common jurisdiction and language to be used throughout the trading process and the contract issuing body also provides mediation and arbitration services should dispute arise.

FOSFA Contracts

The Federation of Oils, Seeds and Fats Associations Ltd. (FOSFA), is a professional international contract issuing and arbitral body concerned with global trade in oilseeds, oils/fats and related oleo products, such as FAME. Standard form contracts are offered for goods shipped under various trading terms for a variety of seeds and vegetable/marine/animal oils and fats. Some thirty contracts are offered for the trading of oilseeds which include the ‘major’ products such as soya, groundnuts, sunflower, rapeseed etc. together with generalised contracts for ‘Oilseeds’. More specialised contracts are issued for goods such as flax, linseed, sesame, cotton seeds etc. FOSFA issues twenty two contracts for vegetable/marine/animal oils and fats and in same way for oilseeds, some are specific to certain trades and others generalised, for example:-

Contract No 52: Sunflower seed Oil in Bulk European Ports – FOB Terms

Contract No 53: Vegetable and Marine Oil – FOB Terms

Contract No 54: Vegetable and Marine Oil – CIF Terms

Contract No 80: Crude Unbleached Palm Oil – CIF Terms (Issued in conjunction with MPOA)

Contract No 81. Palm and Palm Kernel Oil Products (Issued jointly with PORAM, MEOMA)

In view of the complexity involved in the carriage of bulk oils and fats, and to ensure that all the trading parties remain satisfied throughout the custody transfer chain, FOSFA issues guidelines and prerequisites to be met by the trading parties, ships engaged in the carriage of the cargoes, the cargo superintendants and laboratories associated in the shipment process.

Cargoes carried under FOSFA contracts are independently surveyed by approved ‘Member Superintendents’ who comply with the FOSFA ‘Code of Practice for Member Superintendents’. Shipments are conducted according to practices set out in the COP which, amongst other things, stipulates the pre-shipment approval of cargo tanks, measurement ascertainment required to quantify the cargo when loaded to, or before discharge from a tanker and the sampling requirements to accurately determine the quality of the goods. The sampling requirements are comprehensive and include the procedure by which samples are drawn, the specification of the sampling equipment itself, how many and size of samples drawn and the locations in the custody transfer chain at which they are taken. Even the materials from which the sampling bottles are fabricated are specified.

Insofar as shipowners are concerned, the vessel must comply with ‘FOSFA Qualifications and Operational Procedures for Ships Engaged in the Carriage of Oils and Fats in Bulk for Edible and Oleo-chemical Use’. Qualifications include, amongst other things, being classified by a recognised Classification Society. Due to the catalytic nature of copper, cargo tanks and the associated containment system (pumps, heating coils, pipework etc) must be free of copper-alloys. For ships with coated cargo tanks, the coatings must be approved for the carriage of foodstuffs and be in good condition with minimal rust and no closed blisters or loose splits. Tank hatches must be staunch and all internal structures in the tanks are self draining.

The Master of the vessel must issue a ‘FOSFA Combined Masters Certificate’ which warrants that the vessel meets the above qualifications and declare the last three cargoes carried in the cargo tanks, which must not include leaded products. The Master must also declare the tank cleaning methods used to cleanse the tanks.

The Member Superintendent must issue a ‘FOSFA Certificate of Compliance, Tank Cleanliness and Suitability of Ship’s Tank’ for each cargo tank to be loaded which warrants that each cargo space was visually inspected and deemed suitably clean to accept the nominated cargo. Last, second and third last cargoes are reported and declared to be not a substance appearing on the current ‘FOSFA List of Banned Immediate Previous Cargoes’ and that the tanks comply with other restrictions beyond the immediate previous cargoes as set out in the ‘banned list’. Alternatively, as might be required under the terms of some contracts the immediate previous cargo must be a substance appearing on the FOSFA List of Acceptable Previous Cargoes with other restrictions beyond the immediate previous cargoes as set out in the ‘acceptable list’.

The Certificate of Compliance also confirms that the Member Superintendent has checked ship’s records to confirm the declared tank cleaning methodology
provided in the Combined Masters Certificate, has inspected tank hatches and closures and, so far as possible, ship lines/pump and heating system and which latter were found to be copper-free and suitably clean.

FOSFA, in seeking to maintain cargo quality during bulk shipment, developed the lists of ‘acceptable’ and ‘banned’ previous cargoes during the 80’s/90’s as a result of industry concerns following a series of contamination incidents. These were attributable, in part, to advances in scientific analysis methods giving
improved limits of detection for ‘foreign’ substances. The banned list of previous cargoes was drawn up to ensure that products and chemicals which are known to be toxic and persistent are not shipped prior loading FOSFA contracted cargoes.

This has proved to be a very successful strategy and contamination incidents by ocean carriers are now a comparatively rare occurrence. As indicated above,
trading parties do not necessarily have to stipulate that last cargoes should not be on the ‘banned list’, there are very many cargoes carried aboard tankers that are neither on the FOSFA banned or acceptable lists. The fact that a last cargo may not be described on either the acceptable or banned lists would not make that specific tank unusable for loading a FOSFA cargo, providing that the trading parties mutually agree to its acceptance. However, the trading parties can also, by inclusion of the so-called ‘AS9 clause’ within their contracts, stipulate that the immediate previous cargo has to be on the FOSFA ‘acceptable list’. This provides
extra quality assurance as the acceptable list only includes safe food compatible products.

Some ‘soft oils’, such as soya bean oil, do not require heating during transport, however, more saturated oils/fats typically must be carried at elevated temperatures in order to keep them liquid and sufficiently mobile to enable pumping at reasonable rates of flow. In the absence of cargo heating instructions from Charterers and/or Shippers, the relevant ‘FOSFA Heating Instructions in Respect of Bulk Shipment of Oils and Fats’ shall be followed and the temperature of the cargo recorded on a daily basis. The FOSFA heating recommendations provide voyage min/max temperatures and additionally temperature at discharge min/max requirements for no less than thirty seven products including various refined palm oil fractions, each with differing thermal requirements.

Maximum heating rate of 5°C/24 hours is stipulated in order to prevent thermal ‘damage’ to the quality of the oil. Insofar as is practical, top and bottom tank
temperatures should be maintained at the same temperature but never at a differential greater than 5°C. Recommended voyage temperature for any oil is always lower than the recommended discharge temperatures, the elevated temperatures enabling expeditious cargo handling operations.

Whilst FOSFA does not provide any recommendations as to temperatures during loading operations it is stipulated that Shippers should ensure that the temperature of the oil during delivery into the tanks of a ship is that at which the oil is usually handled and that where heat is applied, the temperature of the oil in no case exceeds that given in the heating recommendations i.e. the discharge temperatures.

The use of elevated temperatures is limited during handling due to the fact that certain cargo degradation mechanisms such as FFA formation and oxidative rancidity increase at elevated temperatures.

Specifications of edible oils

The main quality parameters associated with edible oils depend upon the type of oil shipped and whether it is a unrefined crude product or an already fully or partly refined product. FOSFA contracts that are specific to products such as, say, Contract no.80 for Crude Unbleached palm Oil or Contract no.58 for Olive Oils and Olive Pomace Oils will incorporate specific (and very different) quality specifications.

Notwithstanding, the quality of edible oils are frequently described by some or all of following quality parameters:-

• Free fatty acid content (FFA)
• Moisture and impurities (M&I)
• Colour (Lovibiond)
• Melting point
• Iodine value (IV)
• Saponification value

Specification limits are stipulated in the FOSFA sales contract, which, in turn, is often based on the local manufacturers’ specifications, which for palm oil are PORAM, the Palm Oil Refiners Association of Malaysia or MEOMA, Malaysian Edible Oil Manufacturers Association. Similarly, a typical soyabean oil specification is issued by ABIOVE, Associação Brasileira das Indústrias de Óleos Vegetais.

Background to basic refinery methods

The general composition of edible oils comprises one molecule of glycerol combined with three molecules of fatty acid to yield a molecule called a fatty acid

A lipid having a high degree of unsaturation (C=C bonds) is typically described as being an oil and is usually a liquid at ambient temperatures. In contrast, fully saturated lipids are typically solids at room temperature and are described as being fats.

Refining of edible oils and fats is a necessary step in the production of wholesome products suitable for consumption with the main objective being the removal of impurities and other products that adversely affect the quality, specifically the appearance, taste and stability (shelf life) of the product.

There are two basic types of refining that can be applied to crude oils and fats:

• Chemical refining
• Physical refining

The main difference between the two methods is the method employed to reduce Free Fatty Acid (FFA) content, a key quality parameter in all refined edible oils. Certain oils will require the removal of phospholipids (e.g. soya bean oil) and waxes (eg sunflower oil) requiring additional treatment stages, however, in general both refining methods result in removal of metals, colour pigments and insolubles from the crude oils.

Chemical Refining

Removal of FFA is facilitated by the addition of an alkali; generally caustic soda. The addition of alkali causes, by reaction with FFA, soaps to form, the mixture separating into an aqueous and a nonaqueous lipid phase. The aqueous phase containing the soaps and impurities from the oil is then separated by decanting or centrifuging the mixture. This stage of refining is followed by bleaching and filtration, resulting in the reduction in colour and moisture of the oil.

Deodorisation is the final step involving heating the oil, typically to 200°C, whilst applying a vacuum and passing steam through the oil. This is done to facilitate
the removal of any volatile odoriferous molecules that might taint the product.

Upon completion of same, the oil will be classified as refined, bleached and deodorised or RBD, a prefix commonly seen when describing edible oil grades on Bills of Lading. 

Physical Refining

Physical refining is an alternative to chemical refining and is a method where the removal of FFA is facilitated by distillation at high temperature and low vacuum. In the same way as chemical refining, the deodorisation step is used to remove any volatile components by using heat, vacuum and steam, with steam being used as the stripping agent.

The application of steam will reduce the FFA concentration of the crude oil due to the volatility of the FFA. The secondary oxidative products, such as aldehydes and ketones that are formed by the breakdown of hydroperoxides are also removed by the same process.

The deodorisation step is followed by bleaching using an absorbing agent, and which reduces the colour of the crude oil usually to an acceptable light straw yellow. Physical refining has largely overtaken chemical refining methods due to superior yields, reduced energy costs and the avoidance of producing largely unwanted soapstocks – instead more commercially useful acid oil is produced as a by-product.

Difficulties associated with shipment of FOSFA contracted cargoes

Cargo Mishandling / Overheating

As stated above, FOSFA provides recommended temperature ranges for laden voyage and discharge operations and, whilst no temperature ranges are prescribed per se for loading operations, FOSFA does stipulate that shippers should not exceed during the delivery operation that given in the heating
recommendations i.e. the discharge temperatures .

Whilst the use of elevated temperatures for certain edible oil grades during loading operations is necessary to ensure the product viscosity remains within practicable limits, it can and does result in the cargo remaining above the FOSFA recommended voyage temperature for a considerable period of time; sometimes for a tropical passage for the duration of carriage. As can be seen from the below graph which represents an actual voyage for a parcel of Palm

Stearin, the vessel was loaded with cargo at a temperature above the FOSFA recommended lower discharge limit of 55°C.

From the temperature graph it can be seen that the cargo only reached the FOSFA recommended carriage temperatures some 18 days after loading, with the vessel not applying any heat whatsoever to the cargo. If taken at face value and in view of the fact that carriage of edible oil at elevated temperatures increases the rate of cargo degradation, an allegation of heat mismanagement by the crew was alleged by Cargo Interests. This is however, not the case.

The crew has no practical means of cooling the cargo and therefore the length of time for which the cargo is carried at elevated temperatures is solely attributable to the cargo temperature at the point of loading and the surrounding seawater temperature, both of which are outside vessel’s control.

Due care is, however, required when heating the cargo to ensure that the FOSFA stipulated 5°C/24 hour limit is not exceeded and that excessive cargo tank temperature gradients are avoided. Intense, rapid applications of heat can result in significant damage to cargo quality. Accurate temperature records of the cargoes and ambient air/seawater are essential in order for Owners to defend against claims of this type.

Effects of water and heat on edible oils

The effect that water has on the cargo depends to a certain extent on whether the water is fresh or sea water. Whilst the addition of both fresh and seawater leads to an increase in FFA formation in edible oil cargoes, the presence of seawater would further catalyse the formation of FFA molecules due to the presence of additional trace metal species.

Such increases in FFA concentration are due to water initialising a hydrolysis reaction, resulting in the breakdown of the triglyceride molecule. The breakdown of triglycerides leads to the formation of FFA and a diglyceride, a phenomenon known as hydrolytic rancidity. A figurative representation of FFA formation is provided below

In same way that the presence of excessive amounts of water is detrimental to cargo quality, so is the application of excessive amounts of heat to edible oils.

Oxidative rancidity is the process by which the constituent triglycerides are broken down by the addition of oxygen into the triglycerides. Accelerants of oxidative rancidity include exposing the oil to elevated temperatures for a prolonged time period and/or rapid increases in temperature above the FOSFA allowed 5°C per 24 hours.

Further conditions that would cause acceleration in oxidative rancidity would include exposing the oil to trace metals, such as those commonly found in sea water, where trace metals such copper and iron are most likely to accelerate the production of FFA. This process, in same way as hydrolysis, leads to an increase in FFA and also to an unwanted increase in the concentration of hydroperoxides.

The further breakdown of hydroperoxides leads to the formation of aldehydes and ketones, two chemical compounds that are very odoriferous and produces unpalatable ‘off’ taste and odours in the oil causing the cargo to become unusable in foodstuffs industry. The oil may be re-refinable but not in all cases, depending upon the extent of ‘damage’.

Whilst increases in FFA and peroxide concentration are regarded as a problem when the end use is food related, on basis of palatability factors, it is not considered a problem if the end use is intended for saponification processes, i.e. soap manufacture or for utilisation in the oleochemical industry, which in any
event requires the ‘splitting’ of the triglyceride to yield the FFA’s.

Reprocessing of edible oils with elevated FFA and moisture concentrations to wholesome oils fit for human consumption is possible, providing that no organoleptic (smell and taste) taint is permanently imparted to the oil. This option often presents a more cost effective mitigation route than when compared to salvage sale in the oleo-chemical or bio-diesel sectors.

Inherent vice

A certain degree of FFA formation is to be expected during the course of any well managed voyage. It is sometimes the case that a fully refined cargo might be
delivered to a ship with the closely specified FFA content of the cargo at maximum or some value close thereto. Typically, a fully refined palm oil is specified with FFA = 0.10% wt maximum. Instances are known where the cargo was received aboard the ocean carrier with FFA content of 0.09 % wt. Increase of the FFA of such a cargo to levels during a Malaysian/ Indonesian voyage to Europe would inevitably result in the cargo being found to exceed the 0.10% wt max specification which can lead to some (but not all) receivers lodging a claim against ship owners. More reasonably, certain receivers routinely lightly rerefine the cargo, without recourse to the carrier, recognising the inevitability of the FFA increase.

Some Cargo Interests who ship especially sensitive highly refined products (eg: Palm super-olein) will make provision for vessel’s cargo tanks to be ‘inerted’ with pure nitrogen for the voyage duration. This has the effect of excluding oxygen and thus reducing oxidative deterioration of the cargo. Failure of the ship to maintain the inert over-pressure atmosphere can result in justified claims for cargo ‘damage’.

Contamination

Contamination incidents onboard ships by means other than water and over-heating arise principally as a result of unwanted admixture of dissimilar oils, say, by pumping of coconut oil into palm oil. This is a very unwanted instance of mixing oil based upon lauric fatty acid with oil based upon palmitic acid. These very dissimilar oils require strict segregation as the admixture is nearly impossible to separate by normal refining methods and the blend is unusable.

Contamination by last cargoes, whilst now relatively rare, does still happen. Contamination by last cargoes from the FOSFA ‘banned list’ are nowadays virtually
unknown, however, contamination by cargoes not mentioned on either of the banned or acceptable lists can and does occur. This might be due to failure of the ship to remove residues of the last cargo from vessel’s containment system. Surface deposits of last cargo on the cargo tanks surfaces are unlikely to exist, as the tanks are visually inspected by the FOSFA Member Superintendent, and would be rejected if visible residues were present. However, visual inspection is understandably limited for vessel’s pipelines and pump internals where residuals might exist.

Detection of contaminants can nowadays be performed by modern analytical techniques to hitherto unachievable limits of detection. This places an increased burden upon ship owners to remove traces of last cargo to ever smaller extents and eventually the question is raised as to the significance of any alleged contamination in the face of detection ability that can often be in the parts per billion concentration range and have no meaningful effect upon the intended end-use of the goods.

Outturn losses associated with high melting point cargoes

Physical loss of product by retention aboard the vessel can occur for cargoes requiring heating in order to keep them liquefied, especially in instances of cold climate discharge conditions.

In these circumstances, attention has to be paid to the correct heating of the oil bulk and to the final stages of discharge where prompt discharge rate prevents the cargo ‘freezing’ when the cargo level falls below the heating coils. Attention to ballast operations is necessary to avoid cold adjacent bulkheads to heated cargo tanks, causing excessive ‘clingage’ to vertical surfaces, and the flow of cargo to the aft located pumps should be optimised by adjustment of vessel’s trim and list. Lines should be promptly blown clear in the event of stoppage in order to prevent complete line blockage. Manual ‘sweeping’ of the tanks should be preformed, if allowed.

Cargoes likely to be problematic in this regard are the ‘high’ heat cargoes which have high slip melting points, such as palm stearin, some tallow grades, palm fatty acid distillate and Palm acid oil.

About the Author

Pierre de Jager is a Consultant Chemist in the Oil and Chemicals Department at CWA International Ltd. The main matters on which he advises are related to preserving contractual quality of various edible oils, petroleum and petrochemical products, where he would typically be employed following contamination
incidents involving such products. As part of any investigation, he will identify the type of contaminant, the provenance of the contaminant and how the product can be restored back to a marketable condition in the most cost effective manner. In addition to post mortem analysis of contamination events, he also attends on site at the material time in order to expedite resolution and mitigation of such contamination events.

About CWA International Ltd

For more than 35 years CWA has been providing a first-class consultancy service to clients involved in international trade of commodities, including those active in shipping, insurance and reinsurance, as well as their legal counterparts.

Our departments possess specialist knowledge of all aspects of their respective industries including technical, scientific, logistical, commercial and market factors, making them well equipped to advise on causation, quantum, mitigation, and environmental impact.

We only deploy well-qualified experienced staff, including chemical and mining engineers, petroleum chemists, food scientists, risk analysts, master mariners and cargo surveyors, to provide technical advice on risks, damages and loss across the international trade of commodities including production, handling, storage, marine transportation, and distribution.

We undertake forensic investigations worldwide, typically onsite after the incident or remotely through the study of the available documentation and evidence. Our senior consultants regularly assist with dispute resolution, giving expert evidence in the High Court, in arbitrations worldwide and in mediations. We regularly provide technical assistance on unfolding incidents and operate on a 24/7 basis, 365 days a year, to provide urgent specialist advice to clients exposed to high damage incidents or faced with potential costly escalation.

For more information on our expertise and services offered please visit our website at www.cwa.uk.com or call 020 7242 8444 to discuss your needs

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