Shipping and Freight Resource https://shippingandfreightresource.com THE definitive resource for the industry Sat, 30 May 2020 17:53:09 +0000 en-US hourly 1 https://wordpress.org/?v=5.4.1 https://i0.wp.com/shippingandfreightresource.com/wp-content/uploads/2017/12/cropped-SAFRES-Logo-Live.png?fit=32%2C32&ssl=1 Shipping and Freight Resource https://shippingandfreightresource.com 32 32 56701741 APL England containers lost at sea – Update 30th May https://shippingandfreightresource.com/apl-england-containers-lost-at-sea-update-30th-may/ https://shippingandfreightresource.com/apl-england-containers-lost-at-sea-update-30th-may/#respond Sat, 30 May 2020 10:55:16 +0000 https://shippingandfreightresource.com/?p=114572 As reported, the APL England, a 5,780 TEU capacity containership lost around 40 containers off the coast of New South Wales in Australia with around 74 containers lying in a collapsed state within the stacks on board the ship..

Although inspections are continuing, preliminary investigations have found that the lashing arrangement for the cargo was inadequate and that some of the securing points for containers on deck were heavily corroded..

These findings are clearly in breach of the requirements of SOLAS (The International Convention for the Safety of Life at Seas) and as a consequence, the ship has been detained in the Port of Brisbane by AMSA and it is understood that this detention will be lifted only after these serious deficiencies have been fixed by the ship’s owner APL and the vessel operator..

In the meantime, charges have been laid against the Master (Captain) of the APL England relating to pollution and/or damage of the Australian marine environment due to this incident..

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News - Shipping and Freight ResourceAs reported, the APL England, a 5,780 TEU capacity containership lost around 40 containers off the coast of New South Wales in Australia with around 74 containers lying in a collapsed state within the stacks on board the ship..

The APL England was on its routine A3N ANL service between Asia and Oceania (China to Melbourne) when it is said to have rolled in heavy weather, losing the containers overboard..

AMSA surveyors conducted an inspection of the ship at the Port of Brisbane anchorage (off Port Cartwright) on 26th May to establish the structural and operational condition of the ship..

The ship was subsequently declared to be fit to be brought safely into the Port of Brisbane and was arrived safely at the port and has been in berth since the 26th of May..

 

Investigations

As per AMSA (Australian Maritime Safety Authority), the investigation into this incident will cover two main issues –

Compliance with safety standards

This is a foreign-flagged ship in Australian waters so it will be checked for compliance with both Australian and international maritime safety standards.

An outcome of this inspection will be available in a matter of days which will include any breaches of those safety standards and any measures the ship will need to take to rectify those deficiencies.

Australian environmental protection regulations and or standards

Establish if the ship has breached any Australian environmental protection regulations and or standards that apply to the safe and secure carriage of cargo.

The first phase of that investigation is expected to take at least a month and may take longer.

Subject to the outcome, legal action could be taken by AMSA against various parties including the ship’s owner and others.

It has been reported that although the inspections are still continuing, it has already been found that the lashing arrangement for the cargo was inadequate and that some of the securing points for containers on deck were heavily corroded..

These findings are clearly in breach of the requirements of SOLAS (The International Convention for the Safety of Life at Seas) and as a consequence, the ship has been detained in the Port of Brisbane by AMSA and it is understood that this detention will be lifted only after these serious deficiencies have been fixed by the ship’s owner APL and the vessel operator..

From the findings thus far, it has become clear that the risk of container loss could have been reduced if the proper compliance requirements were followed and AMSA is expecting that the shipowner and its insurer will take full responsibility for addressing any impacts of this incident..

As per experts, in such cases, the responsibility could rest on the flag state  – in this case, Singapore, who issues the ISM Document of Compliance and Safety Management Certificate and the company that these documents were issued to..

The flag state is required by UNCLOS (UN Convention on the Law of the Sea) to ensure that the ships that fly their flags have taken all required measures to ensure the safety at sea both of the cargo and the crew..

 

Charges against the Master

Charges have been laid against the Master (Captain) of the APL England relating to pollution and/or damage of the Australian marine environment due to this incident..

As per Allan Schwartz, the General Manager Operations of AMSA, “This and other incidents remind us of the important role the ship’s Master has in ensuring the ships that ply our waters are operated safely and do not damage our marine environment.

“Today’s actions should not detract from the responsibility of the shipowner APL Singapore, insurer Steamship Mutual, and operator ANL who remain accountable for remediation of any impacts of this incident.

We welcome ANL taking responsibility by engaging contractors to undertake shoreline clean-up and retrieve some of the floating containers this week, but the impacts of this incident could take months, if not years to remediate and we expect these efforts to be sustained for however long it takes.

As of today, AMSA has placed an additional requirement on the owner of the ship under the Protection of the Seas Act which must be met before the ship will be released from detention.

This action seeks financial security from the insurers in the order of $22 million. This provides a commitment that they will remediate all impacts of this incident. That $22 million covers estimated costs including that of a clean-up.” he added..

In the meantime, AMSA’s Challenger jet is continuing its aerial survey of the New South Wales coastline to try and locate and identify semi-submerged containers in the water which could be salvaged still, especially a set of four containers still locked together..

Below is the planned search area as shown in this image from AMSA

APL England containers lost at sea

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UN Agencies issue plea to Governments for facilitation of crew changes https://shippingandfreightresource.com/un-agencies-issue-plea-to-governments-for-facilitation-of-crew-changes/ https://shippingandfreightresource.com/un-agencies-issue-plea-to-governments-for-facilitation-of-crew-changes/#respond Wed, 27 May 2020 23:23:32 +0000 https://shippingandfreightresource.com/?p=114566 "The restrictions for crew change due to COVID-19 is unsustainable for the safety and wellbeing of over 150,000 seafarers who will require international flights to be changed over to and from the ships they work on from the middle of June 2020. These seafarers are having to extend their service onboard ships after many months at sea, unable to be replaced or repatriated after long tours of duty."

This is the message from The Secretary-General of the International Civil Aviation Organization (ICAO), the Director-General of the International Labour Organization (ILO) and the Secretary-General of the International Maritime Organization (IMO) who issued a joint statement to enlist the support of Governments for the facilitation of crew changes in ports and airports in the context of the COVID-19 pandemic.

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Press Release - Shipping and Freight ResourceThe restrictions for crew change due to COVID-19 is unsustainable for the safety and wellbeing of over 150,000 seafarers who will require international flights to be changed over to and from the ships they work on from the middle of June 2020.

These seafarers are having to extend their service onboard ships after many months at sea, unable to be replaced or repatriated after long tours of duty.

This is the message from The Secretary-General of the International Civil Aviation Organization (ICAO), the Director-General of the International Labour Organization (ILO) and the Secretary-General of the International Maritime Organization (IMO) who issued a joint statement to enlist the support of Governments for the facilitation of crew changes in ports and airports in the context of the COVID-19 pandemic.

The heads of the maritime, labour and aviation organizations of the United Nations have issued this plea for urgent action on crew changes and for keyworker designation so that sea and air workers can be relieved and repatriated in a safe way during the COVID-19 pandemic.

In a joint statement, the International Civil Aviation Organization (ICAO), International Maritime Organization (IMO) and International Labour Organization (ILO) advised that from the middle of June 2020, around 150,000 seafarers a month will require international flights to ensure crew changeovers can take place.

Half of these seafarers need to be repatriated home by aircraft, the other half will be joining ships.

Due to COVID-19 restrictions, large numbers of seafarers, as well as crews of fishing vessels, have had to extend their service onboard ships after many months at sea, unable to be replaced or repatriated after long tours of duty. This is unsustainable, both for the safety and wellbeing of seafarers and the safe operation of maritime trade.

For humanitarian reasons – and the need to comply with international safety and employment regulations – crew changes cannot be postponed indefinitely,” the statement said. “We are seeking the support of Governments to facilitate crew changes, operations essential to maintain the global cargo supply chains and operations related to humanitarian aid, medical and relief flights.

During the unprecedented COVID-19 pandemic, travel is being curtailed to prevent the spread of the disease. Some ports and airports remain closed due to travel restrictions, with ships and aircraft denied entry, and/or have introduced restrictive measures for foreign nationals travelling to or from the country. As a result, seafarers around the world are stranded onboard ships, unable to be repatriated home or replaced by relief crews

The three Organizations urge “key worker” designation for seafarers, marine personnel, fishing vessel personnel, offshore energy sector personnel, aviation personnel, air cargo supply chain personnel, and service provider personnel at airports and ports, regardless of nationality. Governments are urged to exempt these personnel from travel restrictions, to ensure crew changes can be carried out and that they have access to emergency medical treatment and, if necessary, to facilitate emergency repatriation.

crew change

The joint statement says Governments and relevant national and local authorities should implement already-agreed guidance, issued by ICAO, IMO, ILO and the World Health Organization (WHO), including on keyworker designation. This includes permitting seafarers, marine personnel, fishers and offshore energy sector personnel to disembark and embark ships in port and transit through their territory (i.e. to an airport) for the purpose of crew changes and repatriation; and implementing appropriate approval and screening protocols.

Earlier this month, IMO Secretary-General Kitack Lim endorsed a series of protocols developed by a broad cross-section of global maritime industry associations to ensure that ship crew changes can take place safely during the COVID-19 pandemic.

More than 80% of global trade by volume is moved by maritime transport, which is the lifeblood of the global economy and is dependent on the two million seafarers who operate the world’s merchant ships.

Air transport carried about 4.5 billion passengers in 2019, according to preliminary ICAO figures, while airfreight represents 35% of the value of goods shipped in all modes combined. The total number of licensed aviation professionals, which include pilots, air traffic controllers and licensed maintenance technicians, was 887,000 in 2019, according to ICAO personnel statistics and forecasts.

The joint statement was signed by Fang Liu, Secretary-General International Civil Aviation Organization (ICAO); Kitack Lim, Secretary-General International Maritime Organization (IMO); and Guy Ryder, Director-General International Labour Organization (ILO).

The statement can be downloaded here – CL.4204/Add.18

A Joint Statement on the designation of seafarers, marine personnel, fishing vessel personnel, offshore energy sector personnel, aviation personnel, air cargo supply chain personnel, and service provider personnel at airports and ports as key workers, and on facilitation of crew changes in ports and airports in the context of the COVID-19 pandemic.

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Containers falling off ships while at sea – who is responsible..?? https://shippingandfreightresource.com/containers-falling-off-ships-while-at-sea-who-is-responsible/ https://shippingandfreightresource.com/containers-falling-off-ships-while-at-sea-who-is-responsible/#comments Tue, 26 May 2020 23:23:25 +0000 https://shippingandfreightresource.com/?p=114526 2019 was quite the year for maritime disasters with ships on fire, containers falling off ships etc.. 2020 seems to be hitting the industry in other ways which could also be considered a kind of maritime disaster..

But in what may be the first reported case of containers falling off ships in 2020, the APL England a 5,780 TEU capacity containership lost around 40 containers off the coast of New South Wales in Australia.. It has also been reported that around 74 containers are lying in a collapsed state within the stacks on board the ship..

Such incidents bring to the fore the question whether the ship register or ship registry is liable for containers falling off a ship and who is really responsible..

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containers falling off ship2019 was quite the year for maritime disasters with ships on fire, containers falling off ships etc..

2020 seems to be hitting the industry in other ways which could also be considered a kind of maritime disaster..

But in what may be the first reported case of containers falling off ships in 2020, the APL England a 5,780 TEU capacity containership lost around 40 containers off the coast of New South Wales in Australia..

It has also been reported that around 74 containers are lying in a collapsed state within the stacks on board the ship..

The APL England was on its routine A3N ANL service between Asia and Oceania (China to Melbourne) when it is said to have rolled in heavy weather, losing the containers overboard..

As per the Australian Maritime Safety Authority (AMSA), the ship experienced a temporary loss of propulsion during heavy seas about 73kms South-East off Sydney..

The ship has reached Port of Brisbane anchorage (off Port Cartwright) where it has been boarded by a team of surveyors organised by AMSA to conduct a seaworthiness inspection to establish the structural and operational condition of the ship following the collapse of container stacks on deck..

The identity of the containers (container numbers) that have fallen overboard is still not known and from initial information, the containers are said to contain a wide range of goods like household appliances, building materials and medical supplies..

Click to view slideshow.

 

Australian news channels are reporting that surgical masks have washed ashore on Australian beaches reportedly from the APL England.. There are no immediate reports of any dangerous goods in the affected stack rows and AMSA is verifying all information to confirm the nature of the cargoes in the containers that went overboard..

As per AMSA’s General Manager of Operations Allan Schwartz, “Once the ship is safely in port we will begin our investigation which will focus on the safety of the ship including whether cargo was appropriately stacked and secured on board the ship, and any potential breaches of environmental pollution regulations. 

We have received a report of some medical supplies (for example, face masks) washing up between Magenta Beach and The Entrance. This information has been passed on to NSW Maritime. These correlate to drift modelling of debris and are consistent with items listed on the ship’s cargo manifest.“..

An interesting point to note is that this same ship APL England reportedly lost 37 containers which fell off the same deck in the Great Australian Bight in August 2016 also due to bad weather..

This ship is a Singapore flagged ship and such incidents bring to the fore the question whether the ship register or ship registry is liable for containers falling off a ship and who is really responsible.. Let’s see..

 

Cargo movement while at sea

If you are in shipping or in the business of exporting and importing it would be good for you to understand a bit about the laws of physics, the connection between shipping and physics, concepts like velocity, inertia and how it applies to the motion of the ocean, and the movement of cargo inside containers while it is in transit..

As per the IMO (International Maritime Organisation), the accelerations acting on a ship during its passage results in a combination of longitudinal, vertical and predominantly transverse motions and the forces created by these accelerations give rise to the majority of securing problems.. 

The worst movement a cargo undergoes maybe while it is at sea.. Unlike road and rail transport, while at sea, a ship can move in 6 different ways as shown below..

pack your cargo properly

Each of these movements causes a different kind of stress on the cargo packed inside the container and if there is movement of cargo inside the container due to improper packing, there is a greater chance of it damaging the container and even coming out of the container..

Such opposing and counter acting motion could also result in container stacks collapsing especially if the cargo is heavy and is not packed properly..

 

CSS Code and Cargo Securing Manual

The IMO adopted the Code of Safe Practice for Cargo Stowage and Securing (CSS Code) in November 1991 as a guideline to avoid the hazards arising from these forces..

The CSS Code which deals with measures to ensure proper stowage and securing of cargoes on board and to reduce the amplitude and frequency of ship motions, provides an international standard to promote the safe stowage and securing of cargoes by:

  • drawing the attention of shipowners and ship operators to the need to ensure that the ship is suitable for its intended purpose;
  • providing advice to ensure that the ship is equipped with proper cargo securing means;
  • providing general advice concerning the proper stowage and securing of cargoes to minimize the risks to the ship and personnel;
  • providing specific advice on those cargoes which are known to create difficulties and hazards with regard to their stowage and securing;
  • advising on actions which may be taken in heavy sea conditions; and
  • advising on actions which may be taken to remedy the effects of cargo shifting..
The General Principles are
  • All cargoes should be stowed and secured in such a way that the ship and persons on board are not put at risk..
  • The safe stowage and securing of cargoes depend on proper planning, execution and supervision..
  • Personnel commissioned to tasks of cargo stowage and securing should be properly qualified and experienced..
  • Personnel planning and supervising the stowage and securing of cargo should have a sound practical knowledge of the application and content of the Cargo Securing Manual..
  • In all cases, improper stowage and securing of cargo will be potentially hazardous to the securing of other cargoes and to the ships itself..
  • Decisions taken for measures of stowage and securing cargo should be based on the most severe weather conditions which may be expected by experience for the intended voyage..
  • Ship-handling decisions taken by the master, especially in bad weather conditions, should take into account the type and stowage position of the cargo and the securing arrangements.. 

The IMO has issued revised guidelines (MSC.1/Circ.1353/Rev.1 – 15 December 2014) for the preparation of Cargo Securing Manual..

In accordance with the International Convention for the Safety of Life at Sea, 1974 (SOLAS) chapters VI, VII and the Code of Safe Practice for Cargo Stowage and Securing (CSS Code), cargo units, including containers, shall be stowed and secured throughout the voyage in accordance with a Cargo Securing Manual, approved by the Administration..

The purpose of these guidelines is to ensure that Cargo Securing Manuals cover all relevant aspects of cargo stowage and securing and to provide a uniform approach to the preparation of Cargo Securing Manuals, their layout and content..

These guidelines state that “It is important that securing devices meet acceptable functional and strength criteria applicable to the ship and its cargo. It is also important that the officers on board are aware of the magnitude and direction of the forces involved and the correct application and limitations of the cargo securing devices.

The crew and other persons employed for the securing of cargoes should be instructed in the correct application and use of the cargo securing devices on board the ship.

It is expected that adherence to these guidelines combined with the possibility of weight misdeclaration, will be the subject of the investigation by AMSA and The Australian Transport Safety Bureau (ATSB) while they are onboard the APL England..

 

Conclusion

Thankfully there has been no loss of life here and while many may think this is just a small passing issue and an inherent vice of the business, there are a few issues arising out of this..

  1. Losses to those whose containers fell overboard ;
  2. Possible loss and damage to those whose containers are in the collapsed stacks ;
  3. Delays for all the customers whose cargoes are on board the ship whether damaged or not ;
  4. Loss/damage due to these delays which may or may not be covered by insurance even ICC(A) ;
  5. There could even be a few who may not have insured their cargo (intentionally or otherwise)

Stay tuned to get updates on this issue..

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Guidelines for claims handling and submission https://shippingandfreightresource.com/guidelines-for-claims-handling-and-submission/ https://shippingandfreightresource.com/guidelines-for-claims-handling-and-submission/#respond Mon, 25 May 2020 23:23:16 +0000 https://shippingandfreightresource.com/?p=114408 For obvious reasons, no one wants to receive cargo claims. More so, carriers who carry the cargo from A to B. It could possibly be the reason why there is a lot of misunderstanding among BCOs and OTIs about which documents are really necessary to submit and which are completely irrelevant in the process of claims recovery.

Below are some simple guidelines for claims handling and submissions. I hope this will help to make the claim submission process as efficient and as simple as possible for you.

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claims handling and submisionFor obvious reasons, no one wants to receive cargo claims. More so, carriers who carry the cargo from A to B. It could possibly be the reason why there is a lot of misunderstanding among BCOs and OTIs about which documents are really necessary to submit and which are completely irrelevant in the process of claims recovery.

Below are some simple guidelines for claims handling and submissions. I hope this will help to make the claim submission process as efficient and as simple as possible for you.

 

1) Be Aware of the Preliminary Notice of Claim

The Hague and Hague/Visby Rules art. 3(6), states

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of
discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.

Today it is almost impossible for cargo receivers within a period of 3 days to know if cargo inside of the container is damaged. That is the primary reason why shipping lines reject any claim submitted after this period. Claim defense, if submitted after the 3 day period, is more difficult and takes more time.

To overturn this current situation it has become industry practice for shippers to notify shipping line before cargo arrival or within 3 days after discharge about the potential damage and invite them to attend de-stuffing at the receiver’s warehouse (regardless if the receiver appoints the surveyor or not, regardless if the cargo has actually been damaged or not).

This notification legally puts the burden of proof on the shipping line to prove that cargo damage or loss was not caused by the carrier’s negligence,  serves as a protest in due form, and acts as a timely survey invitation.

Feel free to use the below notification to the shipping line template for your shipments. Just by doing this, a receiver increases their chances to receive favorable compensation substantially in case cargo appears to be damaged or lost.

 

LETTER OF PROTEST

NOTIFICATION OF SURVEY

Date :

BL number(s)
Container reference number(s)
Load port
Seal number upon loading
Port of discharge /Final
Destination

Dear Sirs,

We are contacting you as cargo receivers with regards to the above referred shipment. As a result of improper transit conditions and do hereby hold shipping line liable for damages and subsequent loss incurred.

In view of the above, we, as cargo receivers and without prejudice to the rights and recovery of interests involved, hereby hold you fully liable for all the damages and/or losses and financial consequences that may result from such damage.

Your failure to acknowledge and/or to confirm and/or to contest the above claim protest will be considered as consent and acceptation from your part.

In addition, in order to investigate the exact circumstances, nature, extent and cause of the reported damage to the above-mentioned shipment, we hereby invite you to attend the joint survey which will be held at the following address:

Address Line 1
Address Line 2
Address Line 3

Please consider this letter as a legal protest in due form.

Yours faithfully

 

2) On taking delivery of the cargo

 

3) Notification and survey

  • Notify your insurance underwriter when the loss extent is above the deductible. Otherwise, you risk damaging your loss ratio and not being paid by insurer anyway.
  • Ensure you are in the legal position to claim – you are as a receiver mentioned on BL or BL was duly endorsed to you.
  • If the damage is excessive or cargo description, segregation, loss assessment require expert knowledge for example pharmaceuticals,  foodstuff, invite surveyor. Make sure Surveyor attends a joint survey and inspects containers together with the cargo.  There is little benefit from the inspection when Surveyor arrives after cargo is destuffed and the container is not available for inspection.
  • Take photographs and document the extent and type of damage to the goods and container(s):

 

Action Step 1. To collect proper photographic evidence you or your team need only a smartphone these days.

Action Step 2. Take pictures of container: make sure that the container number is clearly visible on the door and side panel. Then take pictures evidencing that container was damaged (holed, bent, dropped, corner post damages, etc), poor condition (heavy rust, dents, old door gaskets, etc) or was submerged in water (visible water lines on a side panel, etc). Pictures should be taken from outside and inside the container.

Action Step 3. The next picture has to show how cargo was stuffed inside the container (you present evidence, that shipper/exporter fulfilled the obligation to pack and stuff cargo properly at the time of loading).

Action Step 4. Try to show the extent of damage when taking the picture. Was it only 1 bag of rice soaked in the water or half of the container?

Action Step 5. Take all the pictures before you return the empty containers to the container yard. If possible, put the time stamp on each picture and send it immediately to the carrier together with the claim!

 

cargo damage - unseaworthy container

 

4) Necessary documents

Documents that are required to be sent to the shipping line based on international conventions.

We assume that you already sent the notification to the shipping line described in the first paragraph. In addition, the Claimant has to provide:

  • Copy of BL (proving the fact shipment took place and you are the cargo owner), if BL was To order, please send a recto-verso copy showing that cargo was duly endorsed to you. If you are claiming as a freight forwarder or third-party service provider, do not forget to submit a Letter of Assignment evidencing your legal right to claim.
  • Packing list.
  • Commercial invoice.
  • Damaged cargo and damaged container pictures.
  • Description of the damage: water damage (water ingress or flooding), physical damage ( container mishandled during loading or discharging operations), reefer damage, loss (cargo pilferage mainly).
  • Loss breakdown. Legally, shipping lines have to reimburse sound market value (if you can prove) or commercial invoice value, freight, and cargo insurance if the cargo was insured. Please bear in mind that survey fees are not recoverable.

Below are the documents which might not immediately available to you, so you can submit it later:

  • Survey report (if you have it. See above part 3)
  • Proof that you mitigated loss (salvage invoice) or evidence that cargo is a total loss (destruction certificate).

 

5) Not so vital documents

Sometimes shipping lines can ask the claimant to provide more documents, which may not be really relevant to the claim investigation. Like the Gate out documents. Carriers collect these documents at their side, thus there is no need to ask you to provide the same. Unless you have a dirty interchange receipt, evidencing that container was discharged from vessel damaged.

 

6) Time limitations

All claims will be subject to limitations of time. It is your responsibility to review the BL  terms and familiarise yourself with the applicable limitation of time. In the event that it is not possible for the claim to be resolved within the limitation of time, an extension of time may be requested.  The countdown starts with the day of delivery at the receiver’s warehouse.

 

The steps shipping line will take afterwards include:

  • Acknowledge receipt of your claim notification and provide a reference number for further correspondence;
  • Engage a surveyor if necessary; if the damage is below $15,000 most of the time shipping lines do not appoint Surveyor.
  • Initiate an investigation of the cause of damage;
  • Awaiting your sufficient supported and quantified claim;

The steps you should be taking include:;

  • Follow up on your claim weekly ;
  • 85% of the claims submitted to shipping lines become time-barred and shippers get 0 compensation ;
  • Make sure your cargo claim does not fall into this category

Improper handling of freight claims can be very expensive, time-consuming, and frustrating and should be avoided if possible. The more knowledgeable you are about the ins and outs of the claims process, the better equipped you will be to resolve the matter without entering litigation or absorbing losses in full.

I would like to hear your experience when you submitted a cargo claim for the compensation to the shipping line.


About the Author

Lina JasutieneLina Jasutiene is an entrepreneur, international shipping lawyer, an expert in marine insurance, and cargo claims with strong business acumen.

Prior to founding Recoupex to fix the cargo claims refund experience in global trade, Lina worked with one of the biggest shipping lines, where she witnessed first hand the implications of unrecovered claims for cargo owners and insurers.

Lina is passionate about merging technology and industry expertise to create a radically better customer experience and to substantially reduce losses and increase cost savings for marine insurers and cargo owners.

Recoupex is a technology company helping customers globally to obtain the compensation they are entitled to when cargo is lost or damaged in transit.

 


Disclaimer : The opinions expressed in this article are that of the author and does not purport to reflect the opinions or views of Shipping and Freight Resource.. The intention of this article is to provide guidance, knowledge and information and is not offered as legal advice or legal opinion.. If you require legal advice or opinion, specialist advice should be sought about your specific circumstances..

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The beginning of the end for the Paper Bill of Lading https://shippingandfreightresource.com/the-beginning-of-the-end-for-the-paper-bill-of-lading/ https://shippingandfreightresource.com/the-beginning-of-the-end-for-the-paper-bill-of-lading/#comments Sun, 24 May 2020 23:23:29 +0000 https://shippingandfreightresource.com/?p=114411 Many things have changed in the last 30 years in shipping and freight..

Many positive new developments have taken place with things from the vintage days of shipping either obsolete to almost obsolete now..

If you look at many of the news items about the industry recently, there has been a certain buzz and intensity around the electronic bill of lading..

I am fairly confident that people entering the shipping and freight industry in the next decade will be told that 2020 was the year that saw the beginning of the end for the paper "Bill of Lading" and the year in which the switch to "Electronic Bill of Lading" (eBL) began in earnest..

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electronic bills of lading - tradetrust - shipping and freight resourceMany things have changed in the last 30 years in shipping and freight..

Many positive new developments have taken place with things from the vintage days of shipping either obsolete to almost obsolete now..

If you look at many of the news items about the industry recently, there has been a certain buzz and intensity around the electronic bill of lading..

I am fairly confident that people entering the shipping and freight industry in the next decade will be told that 2020 was the year that saw the beginning of the end for the paper “Bill of Lading” and the year in which the switch to “Electronic Bill of Lading” (eBL) began in earnest..

While this buzz and hype may seem novel to those who are new to the industry, the electronic bill of lading as a concept has been around since the 1990’s and there have been several discussions surrounding this..

The beginning

CMI – The Comité Maritime International, is a non-governmental organization established in Antwerp in 1897 with the objective of unification of maritime law in all its aspects..

In 1990, the CMI adopted the Rules for Electronic Bills of Lading in order to establish a mechanism for replacing the traditional negotiable paper bill of lading with an electronic equivalent..

These rules are voluntary, not legally binding, and work on the basis of a “communication agreement” between trading partners for their application..

These rules also do not interfere with the laws applicable to the contract of carriage, such as the Hague, Hague-Visby or Hamburg Rules and the rules clearly states that “the contract of carriage shall be subject to any international convention or national law which would have been compulsorily applicable if a paper bill of lading had been issued“..

This opened the doors for anyone with an eBL technology platform to create an electronic equivalent for the paper bill of lading..

 

BOLERO (Bill Of Lading Electronic Registry Organization) was launched in September 1999 as an electronic trade community to provide a common and open system for businesses to exchange trade data and documentation electronically without the involvement of paper..

Bolero was jointly owned by the TT (Through Transport) Club, which represented container carriers, ports/terminals and logistics companies and S.W.I.F.T (the Society for Worldwide Interbank Financial Telecommunications) the international banking cooperative.. The TT Club subsequently wrote off its investments in Bolero in 2004..

The Bolero Project, which was the first commercial attempt at creating an Electronic Bill of Lading was set up as an electronic central registry system to enable the transfer of title between users..

The Bolero system (Rulebook/Operating Procedures) was one of the first two electronic trading systems approved by the International Group of P&I Clubs in 2010 alongwith the trading system administered by Electronic Shipping Solutions (essDocs)..

This approval meant that the P&I Clubs under the IGP&I umbrella will cover liabilities arising in respect of the carriage of cargo under such approved electronic trading systems in the same way as it would for a paper bill of lading..

Today there are 6 electronic systems approved by IG P&I :

  1. Electronic Shipping Solutions (essDocs) ;
  2. Bolero International Ltd (more specifically the Rulebook/Operating procedures September 1999.) ;
  3. e-Title™ solution ;
  4. Global Share S.A. edoxOnline ;
  5. WAVE ; and
  6. CargoX Smart B/L™ (“CargoX”)

 

So why the renewed buzz and hype around the electronic bill of lading..??

Well, the current buzz surrounding the electronic bill of lading (eBL) can be attributed to a virus – the COVID-19..

Due to the restrictions in human and transport mobility that COVID-19 has brought on, many containers are stuck at various ports, terminals, depots and warehouses around the world due to the receiver not receiving the original paper bill of lading required for the release of goods at destination..

The trade is already losing millions of dollars due to lockdowns, slow productivity at ports, port congestion, overpriced trucking costs, reduction in carrier’s TEU capacities etc.. Delays in receiving this paper documentation and the resultant delays in cargo delivery is creating further losses and stretching the budgets of the traders..

Although shipping lines have assisted with releasing the goods against LOI without insisting on the original bill of lading, this is one lesson that no one is going to forget and there is no going back..

Whatever doubts or hesitation that the trade had, whatever concerns they had on the issue of safety, security and acceptability relating to the transmission and receipt of electronic bill of lading, whatever concerns in terms of readiness of the carrier and country to handle an electronic bill of lading – it is all on its way out..

The electronic bill of lading is quickly becoming a thing of NOW..

If the 90s was the decade for the seeding and development of the eBL and the 2000s was the decade for its incubation (or hibernationa), this decade of the 2020s could see the growth and establishment of the eBL with possible full maturity in this decade itself..

 

Standardisation of the Electronic Bill of Lading

Although there has been a lot of interest and research into the eBL, there is still a question of its acceptability and global usage because not everyone is using the same data and communication standards..

Only the setting of digital standards will enable seamless communication and data transfer between all the role players in the chain..

Recently, DCSA which is a nonprofit, independent organisation established in 2019 by some of the largest container shipping companies has accelerated its efforts for the standardisation of the Electronic Bill of Lading..

As per a DCSA research, the container shipping industry stands to save an estimated annual savings of about US$ 4 billion based on a 50% adoption of electronic bill of lading.. The research using a financial modelling exercise showed that the processing costs for a paper bill of lading were 3 three times much as an eBL processing and that the actual process cost for a single BL can vary widely..

DCSA believes that if the eBL standardisation process is started now, the industry can achieve an adoption rate of 50% by 2030.. They are basing this on IATA’s e-Air Waybills (e-AWB) for airfreight which was adopted in 2010 and is sitting at a 68% adoption rate in 2020..

The organisation’s objective of achieving these standards is also buoyed by the fact that its members (MSC, Maersk, CMA CGM, Hapag-Lloyd, ONE, Evergreen, Yang Ming, HMM and ZIM) are all high profile container lines – all of them within the top 15 container lines in the world already with state of the art electronic systems themselves..

DCSA’s mission is to drive alignment and digital standardisation to enable transparent, reliable, easy to use, secure and environmentally friendly container transportation services. Digitising documentation, starting with the bill of lading, is key to the simplification and digitisation of global trade” says Thomas Bagge, CEO of DCSA.

The transformation that has taken place in the airline industry is an example of what’s possible if we work together. The e-AWB is now the norm rather than the exception among air carriers. We invite industry stakeholders to work with us to create standards that will make the eBL maximally useful and relevant for ensuring their goods are delivered safely and seamlessly to their final destination.”..

 

The reason for the adoption of Electronic Bill of Lading

COVID-19 notwithstanding, advances in new technologies such as Blockchain, IoT etc has enabled the world of trade to communicate, collaborate and continue business at a much quicker, safer and easier pace than ever before..

As mentioned above, although the eBL concept has been around since the 1990s, regulatory issues surrounding the acceptability of this bill of lading was a major dampener restricting its commercial usage.. Not just governments, but banks and insurers were also loathe to accept this form of trade documentation..

COVID-19 changed all that and many of these establishments are now looking at ways of changing the way they do business and the eBL has seen a sudden resurgence in interest..

André Simha, Global Chief Digital & Innovation Officer for MSC and DCSA Chairman recently noted, “The COVID-19 situation is bringing the core strengths of a standardised eBL to the fore. Cargo in ports cannot be gated out because of paper that is stuck elsewhere due to airfreight delays caused by the pandemic.”..

In fact, in a recent survey done on the impact of COVID-19 on supply chain, one of the most important trends unearthed was that a whopping 42% said they would change their shipping and supply chain strategy based on their experience with the Coronavirus pandemic..

67% saying they would invest in technology as part of their recovery efforts post the pandemic..

 

future of global supply chains

 

 

If you want to check your readiness to invest in freight technologies, you can take click here to take a short 5-minute survey..

 

Conclusion

The change in mindset in the market with regards to the eBL (albeit driven by a dark force like COVID-19) could just be the accelerator or push that the market needed in adopting the eBL..

Apart from the above, the recent improvements in technology and the collaboration within the industry is knocking down barriers for the adoption of the eBL..

The eBL is about to make a strong entry into the container shipping industry and the sooner everyone welcomes, adopts and accepts it, the better for all.. There are still a lot of doubts about the efficacy of the eBL, especially among small to medium business.. In fact, last week one of my neighbours who is a small scale exporter asked me how this eBL works and if it is worth looking into for businesses of his size..

The setting of standards for the handling and transmission of the eBL will greatly enable interoperability and acceptability among everyone involved in the documentary chain including BCOs, Banks and regulatory authorities and make the eBL a viable replacement for the paper bill of lading..

Will the year 2020 be the beginning of the end for the paper bill of lading..??

 

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