There are several reasons why the cargo inside a container could get damaged.
It could be due to improper packing of cargo inside a container, incorrect container used for the cargo carried, but one of the main reasons for cargo damage inside a container is the condition of the container itself.
- Wet damage due water ingress (rain, seawater etc) into the container ;
- Wet damage due to condensation inside the container when an incorrect type of container is used like using a normal container instead of a ventilated container ;
- Contamination due to adjacency risk or odor transfer ;
- Infestation damage
are some of the common types of damages reported on cargoes that are packed in containers.
As a general rule, shipping lines reject these claims confirming that the gate out documents of the containers were clean at the time of release to the shipper.
Insurance companies use Unseaworthiness and Unfitness Exclusion Clause stated in ICC (A) not to cover similar claims either, unless the insured can prove that he was not aware of the condition of the container at the time of loading.
Obviously, this situation causes a lot of frustration, feelings of injustice, and could result in absorbed losses among shippers globally.
So should the shipper simply accept this rejection of claims and move on?
No, the shipper can take a few precautions to avoid these or some steps to mitigate their losses as listed below if there are cargo damages that may have occurred due to pre-existing condition of an unseaworthy container.
Pre-existing conditions means when the container released has bent door hinges, rust, dents, old cracks in the door of the container, apparent improper previous repairs etc.
Shipping Lines must exercise due diligence to make the container equipment is seaworthy by regularly servicing its containers.
As the shipping line is obligated to properly and carefully load, keep, care for and carry the cargo under their care and custody and deliver it in the same good order and condition in which it was in upon loading, they would also try their best to take care that they release good condition containers and avoid unseaworthy containers.
As cargo damages affect both parties, it is a responsibility shared by both the shipping lines and shippers to check that the container issued is not an unseaworthy container.
A shipper and/or his agent or logistics services provider (like a freight forwarder) needs to ensure that they have received a seaworthy, good, clean and sound condition container from the shipping line and the container does not have any of the above mentioned pre-existing conditions.
On the outside of the container:
- No holes or cracks in the walls or the roof of the container because this is one of the easiest ways for water or air to get into the container ;
- Doors operate properly because this is also an easy way for water or air to get into the container ;
- Closing devices operate properly. This is to avoid easy access for theft or possible damage to the goods inside the container ;
- No adhesive labels from the previous cargo, e.g. IMO placards. This is a common issue that could affect the carriage of the goods for the current shipper because they could be penalised by the port or the ship for the carriage of undeclared hazardous goods whereas the goods inside the container are not actually hazardous. There are several very strict ports around the world where misdeclared hazardous cargo will not be allowed to move through the port and the only way to prove this could be for the container to be unpacked in that port ;
- For flatracks: stanchions (if ordered) are complete and correctly fitted. For 40′ flatracks: all lashing belts are present ;
- For open-top containers: roof bows are complete and correctly fitted ;
- For open-top containers: tarpaulins are undamaged and fit properly; ends of tarpaulin ropes are undamaged; all tarpaulin eyelets are present ;
- For hard-top containers: the roof is undamaged, the roof locking mechanism fits and operates properly ;
- Take pictures of the container from all sides outside, showing the container number as well, as proof of its condition at the time of packing
Inside the container
- Check for cracks, holes, door gaskets etc ;
- Check there is no light or air coming into the container when the container is fully locked ;
- Make sure the interior is absolutely dry and not damp or moist ;
- The container is clean, free of cargo residues and neutral in odor ;
- If you are loading any sensitive or clean cargo ensure there are no oil stains on the floorboard as those could seep through to the cargo ;
- No nails or other protrusions which could damage the cargo.
- Take pictures of the inside of the container, showing the container number as well, as proof of its condition at the time of packing.
If there are signs of cargo damage when cargo reaches its destination, the receiver should take necessary steps to ensure they have all the details to place a claim with either the carrier or the shipper especially if the container is found to be unseaworthy.
- Pictures of showing the damage to the cargo clearly ;
- Pictures of the container while unpacking, with a specific focus on holes, cracks in the side panel or roof, door gaskets, floor, dents and anything else that could signal that the condition of the container was preexisting and result of the bad maintenance of the container ;
- Ensure that the pictures are taken before the return of the empty container to the yard ;
- Arrange a joint survey with the shipping line and the surveyor of the shipper where all the details of the damage to the cargo and condition of the container should be included in the survey report
Containerisation started 64 years ago and the containers have evolved very much since then but I am sure you are aware that there are containers in the fleet of shipping lines that are 20+ years old. On some of the trade routes, majority of the containers could be of this age and not in the best shape.
It is in the shipper’s interest to protect themselves by checking the condition of container(s) before loading cargo and collecting clear evidence of any pre-existing condition of the container in order to make sure they get fairly compensated for the damaged cargo.
Do you have any other points to share on how to avoid cargo damage due to an unseaworthy container?
About the Author
Lina Jasutiene is an entrepreneur, international shipping lawyer, an expert in marine insurance, and cargo claims with strong business acumen.
Prior to founding Recoupex to fix the cargo claims refund experience in global trade, Lina worked with one of the biggest shipping lines, where she witnessed first hand the implications of unrecovered claims for cargo owners and insurers.
Lina is passionate about merging technology and industry expertise to create a radically better customer experience and to substantially reduce losses and increase cost savings for marine insurers and cargo owners.
Recoupex is a technology company helping customers globally to obtain the compensation they are entitled to when cargo is lost or damaged in transit.
The CSC inspection / certification (Containers Safe Convention) does not normally guarantee that the container is seaworthy. However it happens every 30 months or so …
Why is it not mentionned in the article ? is that useless ?
@Gael Vinh, as you rightly mentioned CSC inspection takes place every 30 months, that’s why it is not enough to rely on that container is seaworthy and in good condition.
Good timing of this article. During the past 10+ years shipping lines have already been changing their internal maintenance guidelines to allow for larger dents, etc to go unrepaired and for containers to be older before being scrapped. I believe this has primarily been driven by a motivation to safe on container maintenance. With the current financial stress of shipping lines it is not unlikely to think that guidelines with be further relaxed, posing additional risk to cargo owners.
@Hans-Henrik Hansen, great point on container repair costs.
Shippers have to be more vigilant now that ever before checking containers before loading and gathering evidence of preexisting damages at the discharge