Liability in Marine Ports: Who Pays?
Who pays for damage or loss of containers and cargo during shipment? There is no straight forward reply to this question, since there are several situations which must be evaluated before compensation can be issued. The situations also vary, whereby some may be asking who pays for the damage or loss of cargo during transit, while others will ask who pays compensation during storage at ports. This clearly shows how vast the nature of claims is in the maritime industry. To help shed some light on the topic and make it more understandable, some important situations linked to maritime related compensation cases and solutions need to be addressed.
Container Loss and Damage During Shipment
In most situations, the freight agents will usually take responsibility of the cargo after inspection and payment of the shipping charges. By law, all shipping agents are required to have compensation insurance, which covers any loss or damage to the containers and cargo while in transit. Failure of having the insurance can result in the agent being liable to pay compensation from their own pocket. Even with insurance protection, the insurance company still must investigate the situation to determine who is responsible for the damage or loss and hold them responsible for compensation.
During the shipping process, cargo will usually change hands from the inspection and freight agent to road transport companies, port authorities, marine vessels and vice versa. This means the time and place of the accident will play an important role towards determining who is responsible for paying for the damage or loss of cargo. For this precise reason, you will find that each of the handling companies require deliveries to be signed after inspection, before passing the consignment over to the next handler. This allows easy tracking of the shipment, which helps determine when the damage or loss occurred and therefore, who is responsible for paying the compensation for the damage or losses incurred.
Consequently, each of the handling companies must have effective accident and damage protection insurance policies. Furthermore, they should ensure that they have qualified staff, minimizing the risk of any accidents or losses occurring. In most cases, maritime accidents, such as the loss or damage of containers at port, are linked to the shipping vessels or port authority.
However, for vessels out at sea, weather and other natural causes could result in the loss or damage of cargo while in transit. A different insurance policy will come in to effect in either situation, since some policies require the shipping company or port to offer compensation for damage or loss caused by them. However, accidents related to bad weather will usually be compensated by the general maritime accident insurance companies.
Other types of liabilities can be:
- Theft of cargo from containers: The responsibility of safeguarding a container carrying your cargo begins from the time the shipping agent inspects the container and places the seal on the container door. At this point, the agent should sign a receipt stating that they have received the container and cargo in good condition; removing any kind of liability for the primary shipper. For this reason, it’s best to contract shipping agents to take over container shipments right from their origin, since this reduces the overall risk and hassle on the container owner.
The delivery note must have the door seal number, which must be verified by the owner, before the container is given over to the next handler. In most situation, the original seal will remain on the container until delivered and only broken when the container owner is present. Situations requiring seals to be broken in transit, require the shipping agent’s representative to be present at the breaking of the seal. Furthermore, the representative must also take responsibility and be accountable for the container and its cargo, before resealing the container and recording the new seal number. This helps to prevent theft, which could occur during transit.
- Road traffic accidents: Road accidents could find either the shipping agent or transport vehicle paying compensation for losses, if the container is damaged. It is possible to find container transport trucks tipped over across the road and containers damaged or even looted. In such a situation, the transport vehicle liability insurance would be responsible for compensation of the losses.
- Marine vessel container loading and port storage: In some situations, containers have also been noted to slip from the hoisting cranes while being arranged and stacked at the port storage facility or while being loaded on to ships. In this case, the port authority would be responsible for the compensation of the container and cargo it bears.
- Ship listing and container overboard: Although rare, container ships list or tilt due to improper arrangement of the container loads. This could result in the containers falling over board at port or while at sea. In both situations, the container ship is responsible for compensation of the lost containers and cargo. Listing mainly occurs due to human error, but weather conditions may also be responsible. Advances in weather technology prediction have greatly improved evidence that most ship listing cases are blamed on human error; making the vessel responsible for the compensation of lost containers.
Compensation in the maritime shipping industry plays an important role towards protecting each stakeholder involved in the shipping of cargo. Each of the different organisations handling the containers and cargo are held responsible and must have proper insurance protection to avoid liability.
Container damage and loss has greatly reduced in the marine shipping industry due to advances in technology. However, it is still important that each person understands the exact process linked to claiming compensation for loss or damage to containers while in transit.