(只有英文版本)



To: Transport Industry Operators

This continues the Q&A in our off-line real seminar on Uncollected and Undelivered Cargo on 28 May 2024. Participants were keen to know more about seaway bills, how war plays in insurance? How modes of transport differ mis-delivery claims handling? What is insurers’ attitude towards transloading claims? And finally, why mis-delivery and uncollected cargo claims deserve special attention.  SMIC deals with similar questions daily.  Each case varies in its cause, and therefore healing recipe differs.  But if you are conversant with fundamentals. They could be simple.

因戰爭,影響很多國家受到制裁,有那些國家保單上不受保?

Due to the war, many countries have been affected by sanctions. Which countries are excluded from coverage by insurance policies?

SMIC: The impact of sanctions on insurance policies varies depending on the terms and conditions of each policy. In general, most Transport Liability Insurance policies on the market typically exclude claims related to sanctions. Some policies even exclude shipments to, from, or via sanctioned countries. Additionally, some insurance policies may exclude claims related to Russia-Ukraine conflicts.

To obtain accurate information about your specific insurance coverage and which countries could be excluded, it is recommended to consult your existing insurance broker or insurer.

從廣西去越南全陸路保險包嗎?經不同國家關口要換當地運輸車的,最後有少貨,可否賠償,怎樣賠?

Is there insurance coverage for a complete overland transport from Guangxi to Vietnam? When passing through different country borders and needing to switch to local transport vehicles, if there is a shortage of goods, can it be covered by the insurance? And if so, how would the compensation be provided?

SMIC: Transport Liability Insurance usually provides coverage for the entire operations of the transport company including ocean, air and land transportation. The coverage is based on the transport contract between the transport company and customer. So, if the contract terms for the overland transport from Guangxi to Vietnam are in line with the transport industry practice, it will be accepted by the Transportation Liability Insurer. The insurance will provide compensation for cargo loss in accordance with the contractual liability and legal liability of the transport company.

May I know more why uncollected cargo and cargo misdelivery is classified as a manpower black hole when it is mostly associated with money-related topics such as Liquidated Damages/Penalty and related charges?

SMIC: Although cargo misdelivery and uncollected cargo cases may have monetary implications,

they are considered as manpower black holes due to the extensive time and resources required to resolve these issues.

For cargo misdelivery case, the process of defending against these claims and taking recovery action against the party responsible, such as the agent who released the cargo without collecting the original Bill of Lading, typically entails a lengthy and litigation process that can span several years. Freight forwarders are required to invest significant time and manpower into conducting investigations, gathering evidence, and coordinating with lawyers to defend against cargo misdelivery claims and seek recovery.

As for uncollected cargo case, the detention and demurrage charges imposed by shipping companies are usually excessive and not legally enforceable. Without the assistance of professionals specializing in claims handling, freight forwarders would bear an unfair and substantial financial burden when faced with such charges.

Is air freight similar to sea freight in terms of misdelivery of cargo?

SMIC: Unlike B/L, AWB is not a document of title to the goods.  Hence, the consignee is not required to present original AWB for taking cargo delivery.  However, cargo misdelivery may still happen in air freight, for example, the carrier’s delivery agent mistakenly delivers the goods to a wrong party instead of the consignee under the AWB.  So it is imperative that the HAWB should have contract terms to reasonably limit the forwarder’s (as carrier) liability for cargo misdelivery, or the forwarder would bear the risk of assuming liability based on the value of the cargoes misdelivered.

If shipper signed telex release or guarantee letter to freight forwarder and confirmed to release cargo without presentation of original B/L, can delivery agent release cargo to the consignee without the consignee’s production of original B/L? Example: straight B/L, “to order” B/L.

SMIC: For straight B/L, after the shipper’s giving its telex release instructions to the carrier that the carrier can release the goods to the named consignee without the named consignee’s production of original B/L, the carrier can instruct its delivery agent to release the goods to the named consignee without the named consignee’s production of original B/L.

For “to order” B/L, the carrier should not accept the shipper’s telex release instruction.  The reason is that when the shipper gives a telex release instruction to the carrier, the shipper must have a particular party to whom the shipper wants the carrier to release the goods.  That’s said, the B/L should be a straight B/L (i.e. the consignee is a named consignee but not “to order” or “to order of a party”) before a telex release instruction is given.  If the shipper wants to give its telex release instruction to the carrier, the shipper should (i) firstly surrender the full set of the original “to order” B/L to the carrier, and (ii) give written instructions to the carrier to change the B/L consignee to a named consignee, and to release the goods to the named consignee without the named consignee’s production of the original B/L.

For sea waybill, can freight forwarder release cargo to consignee without original sea waybill?

SMIC: Sea waybill is not a document of title to the goods, hence, the consignee is not required to present original sea waybill to the carrier for taking cargo delivery.

HAWB – After cargo landed, cargo right should be transferred to consignee directly and consignee needn’t submit original HAWB to delivery agent when collect cargo at destination?

SMIC: The carrier should have no concern with the “cargo right” since it is a matter of the sale of goods contract between the seller and the buyer of the goods.  The carrier should only be concerned with its AWB, which is the  carriage contract between the carrier on the one hand, and the shipper and the consignee on the other hand.  Since AWB is not a document of title to the goods, the consignee is not required to present original AWB for taking cargo delivery.

If FOB cargo, destination agent’s HB/L is issued, agent releases cargo without properly surrender of original B/L, shipper sue origin agent, will the origin agent be liable?

SMIC: The origin agent should have no liability for its NVOC principal’s act of cargo misdelivery without production of original B/L (issued in the name of the NVOC principal as carrier).  However, for shipments to/from China, freight forwarders acting as agents for NVOCs (which have not been registered with the Ministry of Transport in China) will be held jointly and severally liable with the NVOC principals.  Therefore, it is imperative that the agents of the NVOCs should make sure that the NVOCs have been duly registered with the Ministry of Transport before the agents accept to act as agents for the NVOCs.

For a shipment exporting from Hong Kong, a Chinese freight forwarder placed the booking to the carrier, while another Chinese company was named as the shipper under the B/L.  The carrier does not have direct contact with the Chinese shipper.  If the Chinese freight forwarder gives its telex release instruction to the carrier, would the carrier be held liable for cargo misdelivery without the consignee’s production of original B/L?

SMIC: A telex release instruction should be given by the Chinese shipper since it is the contractual party under the B/L.  Unless the Chinese freight forwarder can prove that it has been appointed as agent by the Chinese shipper for the shipment, the carrier should not accept the telex release instruction given by the Chinese freight forwarder.  So if it was the Chinese freight forwarder that asked the carrier to name the Chinese company as shipper in the B/L, it should be acceptable to the carrier to follow the telex release instruction given by the Chinese freight forwarder as agent for the Chinese shipper.  And the carrier should not be liable to the Chinese shipper for future cargo misdelivery claims (if any).

Please feel free to contact us if you have any questions.



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