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Mainland shipping company SITC International is set to take action against the German owner of a 917  20-foot equivalent unit (teu) container ship after the vessel was arrested in Hong Kong in mid-May.
The company said it would seek compensation for breach of a charter agreement after the vessel, the SITC Moderation, was seized by banks seeking to recover loans advanced to Bremen-based Beluga Shipping. The German company and its subsidiary, Beluga Chartering, filed for insolvency protection in March and are at the centre of a fraud investigation after financial irregularities were found in their accounts. 
SITC International chartered the ship from Beluga Shipping to operate an intra-Asian service between Xiamen and Haiphong via Hong Kong. 
But the ship was detained on arrival in Hong Kong on May 17 creating some disruption for SITC. 
The company said it successfully applied the following day to Hong Kong's Admiralty court to have the ship's cargo transferred to other SITC vessels for shipment to their original destinations.
 'The incident has inflicted almost no impact to SITC International's shipping routes and operations,' a company spokeswoman said.
The spokeswoman said that under the rental contract with Beluga, 'SITC International will soon announce that the charter will no longer be valid'. This was because daily rental payments on the ship were due to be paid  every 15 days. But since Beluga defaulted on the charter agreement when the ship was arrested, SITC can no longer use the ship and does not need to make the next charter payment which is due today.  
 Once that happens, 'SITC International will no longer have any relationship with that vessel. SITC International will then start procedures to claim compensation from the vessel owner', the spokeswoman said.
The company declined to comment on how much money was involved or how much compensation it would seek. But SITC International had chartered the ship until next month, having leased the vessel from at least June last year. One legal source said the company can claim for the period from the date when the ship was arrested to the end of the charter together with other related costs including renting a replacement ship and legal bills. 
Confirmation that SITC International planned to take action coincided with the release yesterday of the firm's latest operational figures. 
These showed the average freight rate rose by 12.1 per cent to US$545.20 per teu in the first four months of this year compared with US$486.50 per teu in the same period last year. Average rates were up12.2 per cent year-on-year to US$553.6 per teu in April. Total cargo volumes rose 13.1 per cent to 474,484 teu between January and April, up from 419,561 teu a year earlier.



Compensation action by SITC over seized ship