Incorrect cargo in container – who is responsible..??

Incorrect cargo in container – who is responsible..??

This is the gist of the question below from Bukky..

Container arrived,sealed Cleared customs in Houston, TX. Pick up the same for delivery by a trucking company to the buyer warehouse. Container unsealed, inside the container was bags full of cement/unknown stuffs instead of cooking oil. Who is responsible for the missing oil. the shipper(NVOCC) OR THE CARRIER (MSC) OR CAN MARINE INSURANCE BE CLAIM? CIF shipping. Clean bill of lading

Image of Fraud

Bukky, if this is true, it is clear that the seller has taken the buyer for a big ride.. This is completely the responsibility of the seller who has contracted to sell and deliver XYZ cargo to the buyer and has failed to do so.. This has nothing to do with the NVOCC operator or the Shipping Line..

Several buyers use several methods to safeguard their purchases, chief among which would be the proper insurance cover for the cargo..

If you look at what ICC says regarding CIF terms,

‘The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.”

In this case, if the cargo has been properly and additionally insured, then the buyer should be able to seek redress through the insurance company..

While there should be a certain amount of trust involved in first time transactions based on the credibility check on the seller, market presence, reputation in the market etc, where such dealings take place between the buyer and seller for the first time or if the buyer has even a little bit of doubt , it would be prudent practice on the part of the buyer to employ the services of a surveyor or inspection agency at the port of load to be present at the time of packing of the container till it is sealed..

That way the buyer can establish that he is receiving what he paid for and bought..

Also read a similar article that I wrote previously based on a scenario from a reader..

If anyone has any other opinions, please do share..

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19 thoughts on “Incorrect cargo in container – who is responsible..??

Be part of the discussion and share your views about the article here..

  1. This nightmare just happened to us and discovered last week when the container / cargo arrived at the destination.

    We brought 25 tons (one container) of aluminum scrap from a supplier in China.
    We personally supervised loading the scrap in the container, placed seals on the container doors ourselves, followed the container to the port of Xingang and delivered it to the shipping company’s cargo receiving warehouse on July 16.
    At that time, when the container was delivered to the port, we paid the supplier.
    The container was loaded on board the vessel on July 20.

    When the container arrived in Santos, Brazil, it was weighed and found to be 2.9 tons light. Alarms went off immediately.
    Our seal and the shipping company seal were both intact.
    When the container was opened by the Brazil Customs and Pest Inspection agents, there was no aluminum scrap inside!
    The container was full of bricks!!!

    The aluminum scrap cargo must have been removed and replaced with bricks at the shipping company warehouse or at the dock sometime during the 4 days before it was loaded on the vessel.

    The supplier / shipper term was CIF.

    Who should be held responsible for this crime?
    Who do we file a claim with?
    Is there any realistic expectation that we will be able to recover all or any portion of our approximately $40,000 loss?

    Any help, information or advise will be greatly appreciated.
    Thank you!

  2. i shipper or is customes broker stuf wrong cargo inside the containers and declare other cargo in manifest. then who will be responsible? either shipping line/NVOCC or Shipper? recently it happend with us….

  3. Carrier has no liability here. This could be either an intentional fraud by the seller or a fraud committed by the vendor of the shipper before delivering the container to CY. Several such cases were reported in India where transporters were involved. They removed the container doors by removing the hinges. So the seals remain intact. But the original cargo was removed and some rubbish was packed. When container was received at the CY the seal was intact. Without any doubt it is the shipper who is responsible, even if the fraud/theft was committed by his vendor who was appointed by the shipper.

  4. Hi, I came across this site whilst doing research for an international trade law assignment. I must say it is extremely informative and helpful. This post is on-point to what I needed to know. Thanks a million!

  5. Even though I told you I am not 100% sure if the shipper or NVOCC company loaded the container, Does not mean that they are not the ones that loaded the container. As of now, we have no clues has who loaded the container, sealed and ship. What we know is that the cements bags came from the same city where the NVOCC company is located. The Shipper city is very far away from the port city. The shipper city is in Baotou, China why the NVOCC city is in Tianjin, China. The port is Located in Tianjin.

  6. Mr. .Manaadiar, I think the weight of the container should have alert them, (the shipper) that something was not right with the container. I also strongly believed that the shipper and the NVOCC staffs combined to carry out the fraud.

  7. After going through above details, I feel that it is a fraudulent act committed by shipper in collaboration with NVOCC. The packing materials of cement and cooking oil can easily be identified which shipper alone can’t do without the cooperation from the forwarder. Even then Buyer has to hold shipping line responsible as well as shipper to realise claim as usual through their insurance company.

    • Hi Humayun, as I clarified in one of the responses below, Bukky is not sure if the NVOCC actually did the packing of the container in which case, they will not know what was in the container and will depend on what the shipper declared..

  8. If the BL has a cause ‘Said to Weight and Said to Contain ‘ then receivers of cargo can not hold shipping line or NVOCC resposible . I feel it is an intentional fraud committed by shipper.

    No question of any insurance cover since fraud is involved .

    Ramana Murthy
    India

    • As confirmed by Bukky subsequently, he is not sure that the cargo was actually packed by the NVOCC operator.. I have also seen the NVOCC operators bill of lading and their Law and Jurisdiction clause covers similar to Shippers Load, Stow and Count..

      Based on the new facts, it is a clear cut case of fraud by the shipper who confirmed to supply Vegetable Oil as per the invoice, bill of lading and all other documents and eventually supplied other useless stuff instead..

      We can also rule out the possibility of a theft enroute because the seal on the container is apparently intact and same as the one put after the packing was done..

  9. The liability of the issuer of a bill of lading incorporating the UNCTAD/ICC Rules is ‘back to back’ with the liability of the actual carrier.’138 One of the critic points of the Rules is that it shifts the burden of proof for the place of loss or damage from the shipper onto the forwarder, who thus bears the risk of insufficient compensation in recourse actions against carriers and other sub-contractors.139

  10. I think the NVOCC companies and the vessel owner can still be hold responsible for the losses including the Marine insurance. Base on these facts.
    1. if the NVOCC acted as the principal and loaded the goods and seal it.( if they are not sure of the goods why issued a clean bill of lading).
    2. The weight of the container should have alert them to content of the shipment. (due Diligent).
    3. The Insurance company issue the certificate base on the description on the bill of lading with no clause . Since goods arrived were not the goods insured, we can assumed that the goods got lost some where in transit.

    • Hi Bukky, now that you clarified that the NVOCC “loaded the goods” meaning “physically packed the goods“, then this scenario becomes completely different.. The NVOCC “knew” what they are loading.. I would imagine it is difficult to mask cement and other stuff as Cooking Oil and also the fact that it is loaded in bags..

      So, my opinion would be :

      1) Primary culprit would be the seller for selling/declaring one thing on the commercial invoice and all other documentation and shipping something totally different..
      2) Secondary culprit would be the NVOCC for mis-declaring cargo and issuing a bill of lading with that mis-declaration which would make it fraudulent..

      What does the Master Bill of Lading state as the cargo..??

      Out of academic interest, I would be interested in seeing the Commercial Invoice, Packing List, House Bill and Master Bill for this shipment.. If you are ok with it, pls send privately to manaadiar@shippingandfreightresource.com..