Shipping a cargo via ocean freight is one of the most tedious processes you can face as a shipper. The various agents and terms you have to deal with are endless. There’s you, the shipper. Then there’s the shipping carrier. But there’s also an agent. And what about the consignee? Don’t forget customs as well. That being said, the grey areas of responsibilities are abound. Given the complexities of shipping, it’s not uncommon for problems to arise. And when that happens, just who is responsible? Enter: Knowing your liabilities as a shipper as well as the back of your palm.
The A to Zs of shipper liability
Be it an FCL or LCL - the shipper’s liabilities are exactly the same. You’ll come to realize that prepping the container and pallets are the easiest parts of sending a shipment. As a shipper, you’re fully responsible for submitting the required documents and permits and packing your cargo. You’re also in charge of making sure all your procedures go according to the rules and regulations. And these can change from destination to destination. As a quick note, always make sure if your cargo is permitted for entry at destination. Remember that special cargo may require a specific customs declaration/permits which you are liable to provide.
Hazardous cargo
Take extra precaution when shipping hazardous cargo. As a shipper, it’s your responsibility to make sure your hazardous cargo is declared. This applies for absolutely any and all types of dangerous cargo. The process includes producing the Material Safety Data Sheet (MSDS), HS codes (Harmonized System) and hazardous packing declarations along with UN numbers, packaging class and haz group. Also note that hazard labels on containers are required.
Many companies outsource this service to third-party companies. But it is your responsibility to ensure that everything is executed perfectly. That goes for the filing of paperwork as well as filling in of correct and up-to-date information.
Note the container seal
One common mistake shippers make lies with the container seal. It is of the utmost importance that you remember to place the seal on the container and take note of the seal number. Make sure you provide correct details to your shipping carrier. I guarantee you this: Incorrectly-stated seal numbers on the Bill of Lading will send customs official raging. Not to mention the shipping delay charges that will rack up from the resulting customs exams/holds!
In the event of cargo abandonment
If, for whatever reason, the shipment is abandoned, the responsibility of paying the charges involved with finalizing the shipment goes to you, the shipper. You become responsible for all charges for the entire shipping process. You can also throw the Incoterms out the window as they no longer apply in this case. This is regardless of what you end up doing with the cargo, be it returning it, disposing it or selling it.
Shipper liability: General advice
Until the cargo arrives at destination and is released, the shipper liable for anything that happens to the shipment. Once the Bill of Lading is released, the consignee can do whatever he wants with the cargo. That said, we recommend that you give the Bill of Lading’s terms and conditions a good read to make sure you can verify and confirm every detail listed. It's also best to know how to pick the right Incoterm to avoid dealing with grey areas.
This shipper liability post was originally published on the iContainers blog.
FAQs
What are the obligations of the shipper? The shipper normally is liable for any accidents during the delivery if the driver is negligent. Either the broker or the shipper must vet the driver's safety record, depending on the wording of the contracts and agreements involved.
What is shipping liability? ›
Carrier liability typically only covers damage or loss that occurred due to the carrier's negligence. In many cases, in order to settle a claim, the shipper must prove that the damage was the carrier's fault.
What is the shipper not responsible for? ›
Acts of God: A carrier cannot be held liable for instances of natural disasters or other uncontrollable phenomenon such as severe weather, medical emergencies involving a driver, etc.
What is the responsibility of the shipper? ›
The shipper is responsible for preparing their load for transport, and they also bear the shipping cost. When transporting a car, for example, they should ensure it has no personal items and is clean during the transport date so that the inspection process is easy.
Who is responsible for paying the shipper? ›
Once on the ship, the buyer is responsible financially for transportation costs, customs clearance, fees, and taxes. Conversely, with FOB destination, the seller pays the shipment cost and fees until the items reach their destination, such as the buyer's location.
What is the limitation of liability in shipping? ›
This means that if a ship is involved in an incident which causes damage to persons, property or the environment, there is a limit on the maximum amount of compensation that a court can order the shipowner to pay.
What is excess liability in shipping? ›
Excess Liability – An additional amount of coverage that is purchased from the carrier to be paid out upon a successful claim that the shipment was damaged or lost. Excess Liability refers only to the amount of coverage that is greater than the coverage inherent to the billed class.
When the seller is liable for the shipping costs? ›
When a shipment is marked as FOB destination, it means the seller handles getting the goods to the buyer's location. The seller pays for transporting the goods, including freight charges and insurance if needed. The title and risk move from the seller to the buyer once the goods arrive at the destination.
What is an example of carrier liability? ›
Destruction, loss or damage to baggage
In the case of checked baggage, it is liable even if not at fault, unless the baggage was defective. In the case of unchecked baggage, the carrier is liable only if at fault.
Who is responsible for a damaged shipment? ›
Carriers are almost always responsible for transit loss or damage. However, consignees have a legal responsibility for keeping damage costs at a minimum and must accept damaged freight that can be reasonably repaired.
Fault of the shipper as an excepted cause is any negligent act or omission that has caused damage or loss—for example, faulty packing. Inherent vice is some default or defect latent in the thing itself, which, by its development, tends to the injury or destruction of the thing carried.
What are the five exceptions to carrier liability? ›
- An Act of God. ...
- The “Public Enemy” or the “Act of War” ...
- Act or Default of Shipper. ...
- Public Authority. ...
- The Inherent Vice or Nature of the Goods Transported. ...
- Freight Claims, the Carmack Amendment, and Contracts.
The duties of the shipper include control over the correct placement of cargo in the body of the vehicle and the safety of its fastening. The shipper usually participates in the acceptance and transfer of cargo (reception from the transport company, transfer to the customer) and payment acceptance.
Who is responsible for shipment? ›
The seller handles arranging shipping and handling until the goods reach the buyer's destination. The buyer typically arranges and pays for insurance. The seller generally arranges and pays for insurance. The buyer is responsible for customs clearance and paying import duties and taxes.
Who is responsible for checking the shipper correctly? ›
2 – The Carrier. Takes the shipment from the shipper to its destination. Prior to transportation, checks that the shipper correctly described, marked, labeled, and otherwise prepared the shipment for transportation.
What are the liabilities of shipowners? ›
The shipowner shall be liable to defray the expense of medical care and maintenance until the sick or injured person has been cured, or until the sickness or incapacity has been declared of a permanent character.
Who is liable in a shipment contract? ›
With a shipment contract, the buyer bears the risk of loss for the goods prior to actually receiving them. Here, the seller's only duty is to get the goods to a common carrier and make proper delivery arrangements for the goods to get to the seller.
What are the liabilities of a carrier? ›
If a claim is validated, the carrier is deemed liable and legally required to cover the claim. However, certain defenses may absolve the carrier from liability, such as acts of God, the inherent nature of the goods, or inadequate packaging by the shipper.
