My containers fell overboard – who is responsible and what should I do..??

Shah Nawaz wanted to know who is responsible if his containers fell overboard and what should be the next course of action..

genoaWe had loaded 14 containers stuffed with cooking sunflower oil packed in consumer packs on a Ship & After loading of the containers on the deck 6 containers were accidentally dropped in the water.

Later those containers were taken out of the water & kept at the leakage area of the port. Along with these 6 containers 8 good containers were also offloaded from the ship & kept in the port. 

Many claims, surveys, reports etc. were carried out by Insurance, Surveyor etc. & this took lots of time due to procedural delay. As a result there are huge Port Storage Charges accumulated on those 14 Containers.dontknow

My question is that as per law who will bear those port storage charges; Shipping Line, Freight Forwarder, Insurance or Shipper?

The mistake was entirely from the shipping line side & shipper (us) have already suffered in terms of Loss of Sales & Revenue, Unhappy customer etc. Are we legally eligible for any compensation from Shipping Line on these losses?

Thanking you in advance for your kind consideration & expert reply

Shah, there is no one straight answer to your question as there are several variables for this scenario..

I would like to analyse this question operationally..

1       You mention that out of 14 containers loaded on deck, 6 were accidentally “dropped” in the water.. From a purely operational point of view, it is not possible to “accidentally drop” containers that have already been loaded on deck.. Even if the wording “accidentally dropped” was used incorrectly, an incident like this where multiple containers went overboard, can happen only if :

a. The ship listed so badly  these containers slipped off the deck.. For those who don’t understand “listed“, it means a ship leaning sideways – click here to see an example..

  • A ship can list due to stability problems on board, which is under the control of the ship (Captain & Chief Officer) and in that scenario, the ship could be held liable.. But on the other hand, the stability of the ship could also be affected by incorrect stacking of containers which could be due to mis-declaration of container weights by various clients..

b. These 6 containers were stacked one on top of the other and the whole stack collapsed after loading and all the 6 fell into the water.. Highly improbable..

  • If the containers were stacked one on top of the other and it collapsed, here again that could be due to incorrect stacking of containers or the ship not calculating the tier weights properly which again could be based on the weight information provided..

2       On a container ship, the stevedore is responsible for the lashing or securing of containers that have been loaded on board.. The stevedores do the lashing or securing on deck as the loading progresses so as not to avoid time wastage.. Did these containers “drop into the water” inspite of this being done or before it was done..?? securing

3       You would need to ascertain all this information before any blame is apportioned and you cannot categorically state that the shipping line is at fault, although technically they undertook the responsibility of accepting your containers for safe transportation to a specified destination.. No shipping line will accept any responsibility till the facts are made clear and even then it will be an uphill task as generally the shipping lines are quite adequately covered for such incidents..

4       The type of insurance coverage that your cargo has, plays a major role in what kind of remedy you can seek and from whom..

5       Each country has its own regulations with regards to insurance coverage/marine claims and it would be best if you seek advice from your insurance company on how to tackle this..

I had also sought the legal/contractual views of Mr.David D Murray one of the regular contributors to this blog and also a Contract/Law expert and he raises some valid points as below :

Hariesh,

In order to analyze this, I would need to see the shipping line’s standards terms and conditions, which besides defining the rights and liabilities between the shipping company and the shipper, would detail the jurisdiction, venue and choice of law issues.

Because these issues do not exist in a vacuum, whenever there is a contract involved, one must always go to the contract first and if the contract does not speak directly to the issue, then apply the law. I would also need to know the port where the goods were loaded, where the containers went overboard, and the port of intended delivery. Yuppie-46-e

There are two types of law in the world, the Common Law, used in the countries that were or are UK colonies or commonwealths, and the Civil Law, which is applied in most other countries of the world, and which apply to Admiralty Law issues. Negligence, I believe is pretty well a shared concept in both legal systems, however every jurisdiction has its nuances.

In other words, it is not as simple as how many pancakes does it take to cover a rock. Everyone knows you must first know the size of the rock.

If you can provide me the contract information, I would be happy to analyze it. Strictly from a negligence tort action, the shipping line would most likely be liable, but I would need to see the Standard Terms and Conditions of the shipping line before making any type of judgment call.

Cheers, David

If anyone has any other views or thoughts to contribute, please do so.. This could happen to any of us in the normal course of business and its good to have some thoughts on how this issue must be handled..

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13 comments on “My containers fell overboard – who is responsible and what should I do..??”

  1. By Bleu Enriquez Reply

    Good Day!

    I’m working for a shipping line and right now our charterer don’t want to pay us the remaining payment for delivering their cargo safely to the discharging port. Instead, charging us the consumer price multiply the cargo lost.

    The thing is it is not our fault.

    The vessel left the loading port with 2100M.T of bulk cargo before leaving there are clearance from the surveyors and the stevedoring. the cargo holds are sealed and intact. The vessel’s ETA was met too.
    Now upon discharging at the designated port, the seal are okay as per surveyor report and started discharging. As we finished discharging there is a cargo loss of 300M.T of dry bulk cargo and the charterer blames us. The vessel is hired for voyage charter.
    Hope you can help me find concrete argument to defend this to the charterer. As much as possible if there is any law governing this case.

    Thank you.

  2. By Wilson Roial Reply

    It is very clear. The containers with goods are in the possession of the shipping line and they are in charge of it therefore it is their responsibility and they are liable. Why do we need to complicate matters?

    Who do you blame then, the sea?

  3. By Zafar Abbasi Reply

    How about claiming the loss from insurers and the insurers can go for subrogation and claim from shipping lines. Any commenst..

  4. By R.srimal Reply

    Hello Mr.Hariesh,

    I know about a similar case. No shipping line ever takes responsibilities of such mishaps and the shipper ends up waiting for the correct outcome. A lot of time is taken in survey process and other formalities. The container are in port so heavy demmurage is being charged. on the other hand the shipper is running out of the delivery time. In such a case, is it advisable for the shipper to send another consignment to the importer?
    Also, would shipper be charged with detention by the shipping line?

  5. By guptaajay Reply

    Since Incoterms are not spelt correctly . I assume that if it is FOB Shipment , the the consignee (buyer) is expected to take insurance soon after “on board”bill of lading is prepared. Shipper has nothing to do in this case.However , If CIF terms ,Shipper can claim thro’ Insurance .

  6. By Shah Nawaz Reply

    Hi Hariesh & David,

    First of all many thanks for time taken to consider my query & provide your expert opinion. As understood from above posts need to provide some details to the experts to examine the case & provide some comclusion.

    Kindly note that cargo was being loaded from Jebel Ali Port, UAE for shipping upto Bandar Abbas Port, Iran (Goods in Transit to Afghanistan; from Bander Abbas by road).

    This cargo fell into water at the time of loading & we are in touch with vessel operator (NVOCC) through our freight forwarder.

    Please advise if I need to forward you B/L so that you can go through the nature of contract & advise further. Kindly let me have your e-mail id for the same.

  7. By Vinnu Jo Mathew Reply

    Dear All, from the shippers point of view, he does not need to know why it happened and how. All he knows that his cargo is damaged and he needs to be compensated. The shipper can put the claim on to the shipping company and pass the documents to his insurance company. It is the duty of the insurance company to go behind the chain and find those at fault and recover from them.
    In 99% cases, all those in chain will be insured and behind the screen it will be settlements between insurance companies.

    Now for those 8 ctr’s which was held back at port is the question. who asked to hold those ctr’s back ? Did the shipping line / vsl stevedors or port took permission from shipper to hold the ctr’s back ? If not, the shipper have to take this matter via the shipping line as he does not have any direct dealing with port or stevedors.

  8. By Ranjit Ajgaonkar Reply

    Mr. Hariesh & Mr David, GOOD DAY !
    Even after going through your comments that seek more clarification from Shah Nawaz, I have one very very basic question. Supposing if shipping line or stevedores are finally held guilty then, what would be their liabilities ?
    1. Cost of the cargo
    2. Cost of salvage
    3. Loss of overall revenue to the shipper
    4. Most importantly, the incurring port storage charges / demurrage – as asked by the shipper above.

    Brgds

  9. By asish ghosh Reply

    Good to read and know something new .Seems a contract should be drafted with utmost care covering all the terms and conditions…

    • By Hariesh Manaadiar

      Hi Asish, that is precisely the intention of such posts.. To raise a bit of awareness among all concerned as to what all can happen in our industry and what precautions one needs to take when dealing with international trade..

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