30 September 2020

Uncollected Cargo

Shipping moves International Trade and the Global Economy. Apart from raw commodities and bulk cargo, most of the cargo are moved in Shipping Containers. Container Shipment avoids manual handling of the cargo at each stage of the shipment and it has revolutionized Shipping. The Containers are either owned or leased by the Shipping Lines. Most of the cargo are carried in Containers in Full Container Load form [FCL].

Once the cargo arrives at the destination port they are collected by the buyer/importers who are commonly called consignees. The consignees often appoint forwarders who will clear container from the port and bring the fully laden FCL Containers to the premises of the consignee. There the cargo inside the container will be unstuffed and the consignee will again arrange for the empty container to be returned to the Shipping Line often to a transit or collection depot. The whole movement and clearance often is coordinated so that the containers will not lie uncollected at the Port for too long. The insurance cover in terms of a transit marine cargo insurance also relies on the laden container to be moved expeditiously.

What if the movement breaks down? The cargo is not collected at all at the port of destination/discharge?

This results in the laden container being held for substantial periods at the port. The Shipping Lines often will charge demurrage and detention for the period in which the containers are not returned and held at the Port. The Shipping Line will also invoke their contractual rights in the bill of lading to enforce contractual lien over the cargo inside. This is not always the solution when the cargo is perishables or worthless.

The situation is complicated further due to the practice of issuance two sets of bills of lading, ie a house bill of lading by the Forwarder and a master bill of lading by the Shipping Line. This means that the Shipping Line do not deal with the actual consignee but the forwarder. At the port of destination, the forwarder is normally named in the bill of lading as a releasing agent ie they assist in the document

The cases involving uncollected cargo in containers are more common now due to the disruption caused by Covid-19. In one case I defended a forwarder at a trial involving 40 containers carried by a well-known Japanese Shipping Line. The role of the forwarder is brought into scrutiny whether they are mere releasing agents and whether they are parties to the contract of carriage. Last year I successfully defended a forwarder whose role was a releasing agent for a claim for damaged cargo. I am handling another case now which trial started recently. The issues of lien, bailment and demurrage arise and the shipping lines often rely on the Bill of Lading definitions to hold parties liable. The demarcation of roles of the Master and House Bills of lading also come into play.

The situation is treated differently in different jurisdictions. Where it is clear that the forwarder is not the goods owner but assisted in the logistics process as agent, it is clear that their role is that of an agent. In common law jurisdictions the agent is not liable, only the principal. This may be the case no matter how wide the Shipping Line would like to extend the contractual liability in the Master Bill of Lading, through a wide definition of Merchant.

The Forwarder may sometimes find that the actual cargo owner abandoning the cargo leaving them to face the Shipping Line. This is a perennial issue faced by the Forwarders.

This area is also covered in Halsbury's Laws of Malaysia on Carriers and Bailment & Lien which I wrote. These issues are currently being discussed and studied by ABLM, the FIATA Legal Sub-committee which I am a member.

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