By Richard Kamppari-Baker, Claims Director, World Insurance
In recent months, we have seen instances where a carrier has terminated a voyage or shipment at a different destination than the one booked. Often the forwarder found themselves in a difficult position explaining to the client that the place of delivery was different than expected. Does the carrier have legal right do this?
As with any bill of lading, the document is a contract of carriage. The carrier is obliged to transport said shipment from the place picked up to the place of destination shown. There are a few examples, however, when the cargo cannot be shipped to its intended destination. This exception is called “Frustration,” which entitles the carrier to terminate the voyage at any time if unable to fulfil its obligation without incurring extra cost.
Examples have involved strikes or congestion, but, in theory, this could involve any scenario so long as it is considered reasonable that the carrier was unable to fulfil its obligation. Not only is the carrier still entitled to the full freight, but also the merchant must pay all additional charges to get the cargo to its final destination. This often a greater expense than usual because there are hundreds of containers in the same situation.
What is the best way to protect against this? Some tips:
- The freight forwarder is entitled to follow the same and must not make additional commitments without the carrier’s or insurer’s consent, as this can be an expensive commitment even for the best customer.
- Cargo insurance may contain a “Forwarding Expense” clause, so it’s important to double check with your provider.
- Avoid areas or pay close attention to local restrictions such as strikes, congestion, and/or delay before making a booking.
- Make sure you have adequate “Abandoned cargo” cover.