Liability of the freight forwarder on Abandoned Cargo – a case study based on below question from a reader, Rehan..
“Fwdr booking 10 containers for Shipper ABC which is consigned to XYZ and now the consignee not taking delivery at destination… Forwarder received the freight n released the B/L to shipper.. now is the forwarder liable or responsible for consignee not taking delivery at destination..”
A good question Rehan, one that is faced by many freight forwarders around the world..
You have however not clarified whether the bill of lading that you are talking about is a House Bill of Lading (HBL) issued by the Freight Forwarder or a Master Bill of Lading (MBL) issued by the carrier..
The answer to this question varies depending on which bill of lading you are talking about and as we have already seen, there is a distinct difference between Master Bill of Lading and House Bill of Lading..
But before that, lets go to the very beginning as to HOW and in WHAT CAPACITY you made this booking with the shipping line..
- If you booked it “as agents” of the shipper and this fact was clearly made known to the shipping line – either via their booking form or clearly indicated on an email or covered via your STC (Standard Trading Conditions), then you will have limited to no liability.. In such cases, if required, you can invoke your Liability Insurance cover with an insurance and risk management provider such as TT Club (you do have one right..??)..
- If however, you booked it under your own name or failed to mention the fact that you are acting in the capacity of an agent, then you might have some answering to do..
As mentioned above, what bill of lading was issued to the customer and how it was issued also plays a vital part in this case..
Scenario 1 – You have issued a HBL to the shipper, consigned to a direct consignee who hasn’t cleared the shipment
In this case, since you have issued a HBL, there must be a corresponding back to back MBL.. It is most likely that on the MBL your company would be shown as the “Shipper” and your agents overseas would be shown as the “Consignee” and/or “Notify”..
In cases of abandoned cargo the carrier will pursue the entity listed as the shipper on their bill of lading being the original party to the contract and in the case of a MBL issued as above, that party would be you and since you have acted as a principal and not as an agent, the shipping line will be well within their rights to place a claim on you..
Scenario 2 – You have issued a MBL to the shipper, consigned to a direct consignee who hasn’t cleared the shipment
In this case, since the document is not in your name and also presuming you booked the cargo “as agents” then you will have limited to no liability..
If you are a member of a Forwarding Association in your country, then those associations would have created STC’s for the use of their members and generally since such STC’s would be localized, this should cover your liabilities if any sufficiently..
While we have had a discussion about “Can anyone become a Freight Forwarder” already on this blog, any serious freight forwarder should at the very least have
- A comprehensive Liability Cover and Risk management
- A properly incorporated STC in order to manage the risks and limit exposure
to cover themselves sufficiently before embarking on the business of freight forwarding..
You can read some useful articles regarding STC below..
- Standard Trading Conditions and its importance to Transport Operators
- TT Talk – Brief reprise on Standard Trading Conditions (STCs)
- TT Talk – Are your standard trading conditions reasonable?