‘Missing the boat’ - Supply Management

‘Missing the boat’

29 October 2013
Mike BurnsFor cargo exporters, getting goods from A to B and into market at the right time is of paramount strategic importance, whether it be for Christmas, the Chinese New Year or simply to meet a demand surge for the latest game-playing gadgetry. The expression “missing the boat” resonates not only in terms of the heavy financial consequences of being late to market, but also in terms of what rights and options exist opposite the sea carrier when goods are not shipped, or delayed somewhere on the high seas. Very few, it seems. The problem is that most container cargoes will be shipped by one of the large liner companies with scheduled sailing and arrival times, which may be relied upon, but which legally do not amount to a contractually binding promise to deliver on time. Where to start? In terms of contract rights, the first port of call is to identify the contract of carriage – usually the bill of lading or waybill. Who is it with, and what does the small print say? Often the contract is made with a forwarder or NVOCC who issues its own bill of lading, but does not operate the ship, and has in fact made its own contract with the line. Pressure will need to be applied on the NVOCC to obtain answers, or to persuade the line that you are the principal to the main contract, such as being named as the shipper or consignee, but which could be double-edged in terms of making the exporter subject to additional freight and liability obligations. The devil is then in the detail. While there is a basic contractual obligation to carry and deliver the goods to the port of discharge, in the same way as when loaded, fixed timescales are absent. Indeed most liner bills have very wide liberty provisions enabling the sea carrier to perform the carriage by any “reasonable manner, means and routes”, and giving entitlement if there are “hindrances” or “difficulties” to terminate the carriage altogether. Absent extreme conduct, recourse may be unlikely. Further carrier’s terms will exclude consequential loss (of market, for example) and will limit liability (if established) to very small sums, usually a percentage of freight. So, no real comeback when the Easter eggs arrive for Christmas. The position seems even worse if the vessel has suffered a casualty (such as grounding or collision) for which the line may have certain surprising exemptions from liability to cargo (master negligence, for example) provided the vessel was seaworthy, and the trader or insurers may be obliged to contribute towards salvage and general average expenses. Insult and injury spring to mind. What about the insurance route? Unless there is cargo loss or damage, it is unlikely (depending on policy wording) that delay or loss of market will found a claim. Last year in Masefield, the English courts decided that months of delays to a cargo detained by Somalian pirates did not amount to a recoverable loss. Given the difficult legal obstacles, the advent of container tracking is at least positive for exporters in giving some degree of knowledge (if not control), as is the lines’ increased commitment to customer service, which competition for market share has developed. So perhaps not all bad news. ☛ Mike Burns, partner in the marine and transit team at Weightmans LLP
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