Common Sense Rules for Cargo Claims and Recoveries

15 July 2017   |   Cargo Claims

These quick rules are intended for all parties involved in container cargo claims such as shippers, cargo receivers, insurance companies, and surveyors. And the purpose of these rules is to briefly advise these parties on how to: [i] protect them from possible losses, and [ii] hasten the claims settlement process in case of a loss or damage to the goods.

  1. Pack, stow, and load. One of the most important shipper’s duties is to pack, stow, and load goods inside the container. And it is paramount for the shipper to fulfil this duty properly by either complying with the stowage requirements of a given cargo or appointing professional freight forwarders or other contractors who can undertake this obligation. More often than not, the inadequate stowage will result in damage to or loss of the goods.

  2. Pre-shipment survey and photos. It is advisable to conduct a pre-shipment survey to identify any problems with the packing, stowage, and loading of the goods. But it is not always possible when parties try to minimise the costs. So, we encourage all shippers to take photos of the goods after loading them inside the container and before shipping. This way, shippers and cargo receivers will have credible evidence that the goods are properly packed, stowed, and loaded inside the container. And if they are not, the parties will still have time to correct any given issues before shipment.

  3. Carriers. Whilst we understand that parties are forced to minimise costs, using unknown carriers might be too expensive in case of a cargo claim. This is especially true when parties do not take an insurance cover (which is never a good idea) because, quite often, it is simply impossible to contact such carriers. And even if cargo interests are successful in contacting the carrier, the latter may (sometimes without any reason) refuse to settle a given cargo claim. Similarly, it is very risky to commence legal proceedings against such carriers since they may not have any assets to pay the claim in case of a favourable judgment.

  4. Insurance cover. A rule of thumb is to always take insurance from an insurance company that has special expertise and knowledge of cargo claims. Many insurance companies indicate that they provide marine insurance cover, but not all of them have expertise in dealing with such cargo claims. If the cargo interests have no knowledge of a specialised insurance company, they shall contact an insurance broker or freight forwarders who can advise on the best options available for a given shipment.

  5. Unloading survey and photos. Even when there is a proper insurance cover in place, the cargo receivers still have to take certain actions to protect their own interests. In many cases, the cargo receivers would destuff (unload) the container without taking any photos of the container and of the way the goods were stuffed inside. Only then to discover that the goods were actually damaged either due to the shipper’s or the carrier’s negligence. It is, of course, not economically feasible to conduct a survey for small value cargo claims, but taking sufficient amount of photos and properly documenting damage to the goods will assist in claiming from the shipper, carrier, or under the insurance policy.

  6. Notice of loss or damage. The cargo receivers must notify the carrier and the carrier’s agents (or any other bailees) immediately if any loss or damage is apparent, and within three days of delivery if the loss or damage was not apparent at the time of taking delivery. This notice of loss or damage to the goods must be sent via fax, email, or courier.

    The cargo receivers shall always obtain delivery receipt proving that they, in fact, sent the notice and the carrier received it. Whilst late notification of loss or damage will not exonerate the carrier from liability per se, it will significantly complicate the process of persuading the carrier in settling a given cargo claim out-of-court.

  7. Survey report. In case of damage to or loss of the goods, the cargo receivers and insurance companies alike must ensure that the surveyors indicate the following information in their survey reports.

    - The carrier’s identity and contact details.
    - The precise date of damage to or loss of the goods.
    - Number of packages or items and, if possible, weight of the damaged goods – this will ease claim settlement process with the carrier or insurance company.
    - If the cargo interests appoint surveyors to send a notice of loss or damage to the carrier, the surveyors must supplement their report with the proof that they, in fact, sent the notice and the carrier received it.
    - Proof (email or fax exchanges) that either the surveyor or cargo receivers or both tried to minimise the loss, and contacted at least three salvage buyers if they are not willing to accept the damaged or destroyed cargo at a depreciated value.
    - If the cargo receivers intend to destroy (dispose of) the goods, the cargo receivers must procure a destruction certificate as well as take photos proving that the goods have been actually destroyed.
    - The surveyor must refer to the specific photos within the text (or appendix) to illustrate and support his or her arguments and conclusions in the survey report. Similarly, each photo must contain a short description of what exactly a given photo depicts.

 

We hope that these rules will help our prospective clients to avoid unnecessary losses. These rules, however, must not be construed as a legal advice or a detailed guide on container cargo claims.

Contact us today if you require our cargo claims specialist expertise and services.



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