Claims of crude oil shortages in VLCC transportation are not always indicative of actual physical loss. Generally, such discrepancies fall into two categories: true shortages, where cargo has physically decreased; and false or apparent shortages, commonly known in the industry as a paper loss.
A true shortage occurs when cargo physically disappears from the system. This may result from leakage, evaporation, transfer errors, or operational failures that remove oil from containment. By contrast, a false shortage arises when measurements at the discharge port indicate less cargo than expected, as the quantity originally recorded at the loading port was overstated or inaccurately determined. In many crude oil trades, a substantial proportion of reported shortages fall into this second category and are therefore measurement-related rather than physical losses.
Measurement uncertainty is inherent in crude oil transportation, especially in offshore loading and discharge operations. Many cargoes are loaded at single buoy moorings (SBM) or transferred by ship-to-ship (STS) in open sea. Under these conditions, vessels are subject to continuous motion from rolling and pitching, making precise tank gauging difficult. Unlike measurements taken alongside a stable berth, offshore gauging introduces additional variability that can accumulate into significant apparent discrepancies.
Incorrect estimation of basic sediment and water (BSW) content is another major contributor to false shortages. Net cargo quantity depends on accurate deduction of non-oil components. If sampling methods differ between ports, or if laboratory analysis is inconsistent, calculated net volumes may vary substantially even when the physical cargo remains unchanged. These technical differences in sampling and analysis frequently generate the appearance of loss where none has actually occurred.
While less common, true losses carry greater operational and insurance significance. Miscalculation of remaining onboard quantities (ROB) or onboard quantities (OBQ) can distort cargo balances. Leakage through pipelines, valves, or transfer systems may cause unintended movement of cargo between tanks, particularly when two different grades are carried under separate bills of lading. Such internal transfer errors may create a shortage in one parcel and an unexplained gain in another.
Evaporation also represents a loss phenomenon, particularly for volatile crude oils. When vapour containment is inadequate or tank vapour tightness is compromised, volatile organic compounds may escape. The tendency of crude oil to evaporate is strongly related to its vapour pressure, meaning lighter or more volatile grades present higher risk.
Cargo tank cleaning practices further influence measurable recovery. To reduce berth time, terminals may request that crude oil washing (COW) be minimised. However, limiting COW will increase the remaining onboard (ROB) quantities. Waxy crude oils present particular challenges in colder regions: when temperatures fall below the pour point, the cargo may solidify and adhere to tank surfaces. Crude oil washing under such conditions increases deposits and residual cargo remaining onboard.
Some residues, often referred to as clingage, may not be immediately visible at the discharge port. Oil adhering to internal tank structures can persist after discharge and only become evident later during transit, complicating reconciliation of cargo balances.
Industry practice commonly recognises a trade allowance of approximately 0.5 percent to account for normal measurement uncertainty. However, tolerance margins should not substitute for technical control. Minimising discrepancies requires calibrated equipment, reliable sampling, accurate temperature measurement, appropriate COW planning and disciplined measurement procedures—particularly during offshore operations where uncertainty is inherently higher.
Understanding the distinction between physical loss and measurement-related discrepancy is essential for accurately evaluating VLCC cargo shortage claims and ensuring fair commercial and operational accountability.
