Carrier Liability – Containers

1. The NUS Centre for Maritime Law (“CML”) recently published a paper on “The Impact of Containerization on Carrier Liability” authored by Mustafa Yilmaz, a research associate with CML. This paper is a must read for claims practitioners involved in containerized cargo given that it discusses the tensions created by use of the outdated legal rules to deal with cargo claims.
2. The paper touches on Container – related cargo loss or damage and broadly categorizes these into two groups – those associated with the physical soundness of the container and those concerning container handling and integrity.
   1. The challenge remains to determine whether the containers used for transportation were fit for purpose (physical soundness) and whether there were any incidents during the voyage / transit which caused loss or damage to the cargo (container handling). We submit that the cargo interests have a concurrent duty to inspect the containers prior to accepting the same for loading of their cargo (unless they are not involved in this part of the shipment – for instance LCL/FCL shipment)ⁱ.
   2. With respect to losses arising during the transit (container handling), technologyⁱⁱ is presently available to ascertain where the loss occurred and whether it was due to any specific stresses (bangs, etc.). Even for reefer containers, data can continuously be transmitted, and which would result in quicker repairs during outages, either by repairing or replacing the equipment. Unfortunately, this technology has only been harnessed by one Carrier, Hapag Lloydⁱⁱⁱ and therefore it remains to be seen whether other Carriers will also invest to take advantage of data which can be captured instantaneously and provided in real time.
   3. While there would be a cost for the use of technology, there will be  corresponding benefits. One of these would be that parties will now be able ascertain who was at fault and which would, in turn, lead to higher chances of recovery. This information will also assist parties in instituting preventive measures to avoid future recurrence of similar losses. The unfortunate fact in the Shipping Industry is that technological changes generally happen at a very slow pace^iv and therefore use of Technology should be incentivised by Insurers (both cargo and liability insurers), say by providing a lower premium. Alternatively, cargo interests should demand for the use of technology and should be prepared to bear the minor increase in costs.
3. Period of responsibility: The paper discusses the period of responsibility^v as provided in the Hague / Hague-Visby Rules and its application to container shipping and for which two cases, Volcafe and The MV Maersk Chennai, were discussed on. As was pointed out, this will be fact and jurisdiction based i.e. some jurisdictions give a wider definition beneficial to the cargo interests whereas other jurisdictions will prefer a narrower application. Our issue with the wider application is that most Carriers have no control over events at the Terminals / Ports and whose contracts with the Carrier may be more restrictive with lower limits and shorter time bars^vi. This being the case, it would be incorrect to simply make the Carrier the punching bag unless they were at fault.
4. In conclusion, we believe that the use of appropriate technology may aid in the development of law, particularly for container carriage. However, only time will tell whether this actually happens. 

ⁱ. See our earlier article, Container Operators – Equipment related issues
ⁱⁱ. See information provided on Smart Containers — The Internet of Cargo The IoT Transformation Company
ⁱⁱⁱ. Hapag-Lloyd starts installation of tracking devices on its dry container fleet – Hapag-Lloyd
^iv. See our earlier article on Electronic Bills of Lading – 3 where we had mentioned the slow pace for the adoption of this technology.
^v. See our earlier article, Container Issues – CY/CY & Detention
^vi. See for instance, The General Conditions of Business of Port of Tanjung Pelapas and which provides for limitation of liability for cargo damage for a sum of RM 55,000 (approx. USD 12,405) for 20’containers and RM 80,000 (approx. USD 18,044) for 40’ containers …