Cargo - Dry Bulk

 

Loading and Discharing Procedures

Shortage Claims

Damage Claims

Loading and Discharging Procedures

As in the case of liquid bulk cargo claims, many dry bulk claims are really paper shortages, caused by different measurement techniques at the loading and discharge ports, natural wastage of the cargo, unavoidable losses and other factors for which the carrier should not be liable. As with liquid bulk cargoes the use of proper operating procedures and the maintenance of careful records by the ship are the basis of successful claims handling.

 

The following procedures are recommended:

 

1.      Prior to loading, a check should be made to ensure that all cargo spaces are clean and free of previous cargo. If possible, a certificate should be obtained from the shipper confirming that the cargo spaces are suitable.

 

2.      Draught surveys should be arranged prior to and immediately after loading to assess the quantity of cargo that is aboard.

 

3.      The loading procedures, and if possible information about the method of weighing the cargo at the load port should be recorded, and a note should be made of any opportunities that might exist for cargo to be lost between the ship and the shore measurement facility.

 

4.      The weight recorded on the bill of lading is normally that provided by the shippers. In these circumstances, the bills of lading should indicate that the measurement is neither given nor warranted by the carrier, by words such as "shippers' weight" or "said to weigh" and "weight, quality and contents unknown". If there is a significant discrepancy between the weight declared by the shipper and that ascertained from the draught survey, both figures should if possible be recorded on the bill of lading. As in the case of liquid cargoes, if a dispute develops with the shippers, the Club should be notified immediately.

 

5.      A draught survey should be carried out on arrival at the discharge port and on completion of discharge to verify the quantity discharged.

 

6.      If there is only one port of loading and one port of discharge, the hatch covers can be sealed, if necessary under customs supervision, and on arrival at discharge port the consignees and/or the customs invited to confirm that the seals are still in place.

 

7.      Upon completion of discharge, all cargo spaces should be checked. If possible, a certificate should be obtained from the receivers or the supervising authority at the port confirming that the holds are empty of all cargo.

 

8.      If any cargo cannot be discharged, the amount left on board should be quantified as accurately as possible by an independent surveyor.

 

If these steps are carried out, and suitable records maintained, then in the absence of any casualty or actual loss of cargo during the voyage, the carrier should be in a good position to defend claims for shortages.

 

Shortage Claims

The Club should be notified as soon as a possible after either an allegation of shortage is made, or an alleged shortage of cargo is discovered. The Club will normally ask for the information derived from the loading and discharging procedures described in the preceding section, and it may be necessary to investigate cargo operations at any intermediate ports during the voyage.

 

Further documents normally required include the original bill of lading and/or charter party, commercial invoice, claim note or other documentary evidence submitted by the claimant showing how the claim is calculated, and a subrogation certificate if the claim is pursued by cargo underwriters.

 

Damage Claims

If cargo damage occurs during a voyage or during discharge, the Club and its local correspondents should be notified immediately so that a surveyor can be instructed to inspect the cargo at the first available opportunity.

 

Normally it is possible to arrange a joint survey with the consignees, so that allowances are agreed and inflated claims avoided. When a cargo problem first arises, the initial notification should contain as much information as possible, so that the Club can quickly make a preliminary evaluation of the seriousness and complexity of the claim and determine whether specialist surveyors or other experts should be instructed.

 

Consignees may attempt to refuse delivery of cargo, particularly if the market for their cargo is declining, by alleging such extensive damage that it amounts to a total loss. These allegations are often unjustified, and a refusal to take delivery usually causes the Member serious operational problems. In such circumstances, the Club will attempt first to persuade the receivers to take delivery of the cargo and subsequently, if they have the evidence for it, to present a claim for damages. In some countries, the Courts will make an order to that effect, although security for the Member's potential cargo liability may also be demanded [For more on security see the section of the Claims Handling page of this website on Guarantees]. If it is necessary to do so, the Club can try to negotiate a reasonable depreciation allowance, and on that basis persuade the receivers to take delivery. It is often worth negotiating with the cargo underwriter's surveyor, since his principals will usually wish to avoid payment of a total loss. If agreement cannot be reached with the receivers, and if the local Courts will not assist, the salvage market can be investigated to see whether alternative buyers can be found for the damaged cargo.

 

It is important, in the case of a salvage sale arranged by the carrier, that the cargo interest's rejection of the cargo is absolutely clear. Unless it can clearly be shown that the consignee has abandoned his goods, the carrier risks liability in conversion if he arranges a salvage sale without the cargo owner’s express agreement. This difficulty arises, in particular, if the receivers show no interest either in formally rejecting the cargo or in collecting it. In such cases, it may be that their lack of interest results from the fact that the export or sale agreement has not been concluded, or has broken down, and others - who are not readily identifiable - may have an interest in the cargo. In any event, the carrier's remedy in these circumstances lies not in salvage sale but in attempts to arrange storage ashore, if possible under the authority of the local Court. Whether or not the cargo is damaged, the cargo interests should be held accountable for storage charges. If no-one seeks to collect the cargo, or if a risk of deterioration develops, or if the costs of storage after a certain time become disproportionately high, then attempts should be made to sell the cargo, again under Court authority.

 

In cases of alleged cargo damage, the burden is normally on the carrier to show that due diligence has been exercised to make the vessel seaworthy at the commencement of the voyage, and to establish one or more grounds which constitute a defence to liability under the Hague or Hague-Visby rules. The following investigations will often be necessary and in serious cases the Club will instruct surveyors, experts and lawyers to assist:

 

Any claim submitted by cargo interests for loss or damage to cargo should be passed immediately to the Club or its local correspondents in order that prompt investigations can be undertaken. The sooner the Club or the correspondents are notified, the more potential there is for the investigations that are necessary to deal with the claim to yield helpful information.

 

1.      A review of the vessel's recent history, including such matters as classification surveys, ISM compliance, and maintenance programmes.

2.      A review of previous voyages, to see whether there is a recurring problem or whether damage may be due to cargoes carried on earlier voyages.

3.      Enquiries at the loading and intermediate ports to investigate the condition of the cargo on loading and during the voyage.

4.      Statements may be required from ship's officers and other witnesses [For more on written statements the section of the Claims Handling page of this website  on Documentary Evidence]. It is important that statements are only given to those representing the Member's interests. Officers and crew should be instructed not to make comments to anyone representing cargo or other interests. Cargo surveyors and others not acting for the ship owner should not be allowed on board the vessel without the Owner's and Club's approval. If approval is given for surveyors representing either the cargo owners or the charterers to board the vessel, they should be accompanied by a surveyor representing the Owner.

5.      The documents normally required will include:

• bills of lading and mate’s receipts;
• the charter party if any, and any written instructions from the shippers concerning carriage of the cargo;
• loading and discharge draft surveys, and
• relevant log extracts.

6.   Previous difficulties experienced with the same kind of cargo, the shippers, the consignees or the ports involved may also need investigation.