There are Delays and then there are Delays!

Understanding Liabilities for Delayed Cargo

The Ever Given was an unprecedented event in shipping history, and the fallout continues to be felt now, almost two months later. Cargo has been delayed, and with that comes a financial impact on shippers, logistics intermediaries and ocean carriers.

The effects are not uniform, and knowing the liabilities of all of the parties requires an understanding of the bills of lading of individual carriers. Metro Group Maritime has substantive experience evaluating bills of lading as a comprehensive receivables manager with legal, financial and shipping industry expertise. Our knowledge base is valuable as delays ripple through global supply chains.

While cargo on the Ever Given has a unique set of circumstances, in the grand scheme, it is a limited amount of cargo, about 18,300 containers. The greater volumes of cargo were those sailing on vessels globally that were held up by the blockage or had their voyage schedules changed due to the congestion stemming from the Ever Given and blockage of the Suez Canal. How do bills of lading and contracts of carriage account for the delays? Herein lies the challenge, because U.S. law does not offer much clarity. In a brief written shortly after the blockage became known, and linked here, we explain the challenge in sorting out rights and liabilities. We wrote:

“... generally speaking under United States law, claims purely for delay damages against one vessel, such as the Ever Given, by interests associated with other vessels, such as those adversely impacted by the grounding, would be problematic, to be sure.”

Case law does not provide conclusive direction on delays, but provisions of United States Carriage of Goods by Sea Act (COGSA) can apply to every bill of lading for goods departing or arriving at U.S. ports. We explained in our brief that “...where the parties are privy to a contract of carriage subject to COGSA, recoverable “’loss or damage’ includes loss or damage caused by delay.’” But case law on the issue is mixed and may depend on the circumstances.

Given this quandary, Metro Group Maritime anticipates increased customer disputes related to cargo delays. Our team has put together collector guides for our clients, incorporating the insights of our in-house attorneys on ocean carrier bills of lading terms and conditions, to manage disputes over freight, detention, and demurrage invoices based on delay claims.

Delay clauses can vary in terms of both the reach of obligation and shared liability. On one end of the spectrum, the carrier is completely absolved from any direct, indirect or consequential loss or damage caused by delays. Others limit the liability to such measures as the amount of freight. On the other end of the spectrum, some carrier delay provisions do have a provision whereby if the carrier acted with the intent to cause damage, then they can be held liable.

Most carrier’s delay clauses allow that the carrier does not undertake that the cargo will arrive at a particular time. Some further define it to mean that the carrier does not that undertake it will arrive in time to meet a “particular market.” If the market happened to decline during the delay, without any physical damage to the cargo, COGSA also may not provide shippers

protection.

When the cargo has been damaged, a shipper’s claim still may be debunked. As our brief noted, even with perishable cargo, the devil is in the details.

“Even with respect to perishable cargoes, which, due to inherent vice, naturally decay and deteriorate over time, an appropriate “delay clause” in the contract of carriage, expressly disclaiming responsibility for damages caused by delay, has on occasion been found to excuse the carrier from liability.”

The application of COGSA, terms and conditions in the carriers’ bills of lading, and case law in a dynamic case like the Ever Given produce an opaque film over the issues. Each case may need unique attention when it comes to managing claims and unpaid charges for freight and equipment. In this situation, and many others, count on Metro Group Maritime to help when you needed it.