Containers and bills of lading

Containers and bills of lading. With the advent of containerisation and also intermodalism, much cargo is being carried in containers, especially smaller consignments which can be carried on a “door-to-door” service.

The carriage of goods in containers may be under bills of lading and various problems can arise with this relatively recent mode of carriage. For example, the 1924 Hague Rules were not designed for containers and for the possibility that packages of cargo in the containers should be taken into account for the limitation of liability. If a bill of lading was issued for “One container”, this was the package for limitation of liability. The Hague-Visby Rules 1968 modified the Hague Rules and took into consideration the fact of containerisation and that the container frequently contains many packages.

However, this recognition does not necessarily mean that the problems are over. Another problem can arise if the shipper wrongly declares the contents and/or the weight of the contents of a container and yet another if the containers are stuffed by the shipper or an inexperienced freight forwarder and the stuffing has been carried out negligently, carelessly or unprofessionally. The contents can be damaged and the carrier, who may be a shipowner, may be faced with a cargo claim.

For example, in the United States, a decision in a New York Court may demonstrate how cargo packed into a container by shippers can be damaged. In Perugina Chocolates v. s/s Ro-Ro “Genova”, 1986, the shippers packed chocolates into a container in their factory-vahen the outside temperature was quite high. A clean bill of lading was issued for door-to-door carriage. The container was then stowed on the deck of the vessel because the shippers had not advised the carrier that under-deck stowage was essential. On the passage to the United States the outside temperatures rose. On arrival the contents were found to be damaged. The cargo interests claimed that the carrier was responsible for the damage: However, the court held that the cargo interests had not proved that the damage did occur while the goods were in the carriers’ care. The issue of a clean, on-board bill of lading meant only that the container was in good order and condition. There was no guarantee given of the condition of its contents!

In 1988, BIMCO advised its members that:

“The-correct stowing -of goods in the container is of vital importance to the safety of the vessel-and so is the weight. If the weight is declared incorrectly it may affect the stability of the vessel, and thereby touches on the most important issue of safety. Declaration of goods stowed in the container is of great importance to the vessel and to its Officers, who are responsible for correct stowing on board to comply with IMO and other international and national regulations.

An incorrect declaration of goods stowed in the containers can result in severe penalties imposed by local customs regulations and the carrier will therefore be caught as an innocent victim. Special attention should be paid to the recent exposure to owners when narcotics are discovered in containers . . .

Very often containers are received on board for loading after they have passed customs control. Thereby the containers are sealed, and the responsible Officers of the vessel will not be allowed to break the seal to check whether the cargo loaded in the containers is correctly stowed. They have to rely upon the shippers’ and/or the forwarding agents’ description of the goods and the proper stowage. The responsibility of the land-based operation cannot therefore be denied.”

Pilferage of cargo was expected to reduce when cargo was containerised.

The limitation of liability provisions contained in the various “Rules” and legislation can also lead to problems. The Hague-Visby Rules were an attempt to solve the problems raised by the Hague Rules. Article IV, r. 5(c) of the former states:

“Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned. Except as aforesaid such article of transport shall be considered the package or unit.”

The Hague-Visby Rules allow the carrier to limit liability to an amount of money per package or unit. The Hague Rules also allowed this. The last sentence of the above paragraph is very significant to the cargo claimant if the bill of lading does not specifically state that the container contains a precise number of pack: ages. In the United States, the Carriage of Goods by Sea Act 1936 enforces the Hague Rules but problems have arisen in the past on the package limitation under this legislation. If the contents of the container are described, the carrier’s liability is US$500 per package as described. If the contents are not described, the carrier’s liability is only for US$500 because the COGSA “package” is the container.


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Written by Ship Inspection

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Containerisation system