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We had earlier penned an article on Shipped on Board Date. Given that we recently encountered further queries on this topic and have had the opportunity to view the latest article of The Shipping and Freight Resource on Should the Shipped on Board date and the Bill of Lading date be the same?, we are penning our further thoughts on this subject.
- Sale contracts used for international trade frequently provide for shipment to be effected by a particular date. Whether the shipment has been effected by the particular date would be ascertained by reviewing the SOB date i.e., the date when the goods were shipped (loaded) on board a vessel for carriage. The importance of this date is that from this time onwards, the cargo is under the care and custody of the Owner/Carrier and who would be liable to the cargo owners for any cargo damage or loss but subject to the contractual provisions (which would generally provide for both exclusions and limitations of liability either by incorporation of compulsorily applicable cargo conventions or in its absence by contractual incorporation).
- There remains a view that the Carrier becomes liable as soon as the container is placed in the CYi. However, it is our view that this will depend on the contract. In any event, if the Contractual Carrier is different from the Actual Carrier/Owner, then the Actual Carrier/Owner will not come on risk till such time the container is loaded on board the vessel.
- As mention in 2 above, if the Bs/L reflect a date after the shipment period provided in the sale contract, then the the buyer is entitled to reject the documents given that this not what they had agreed. Similarly, if the payment for the goods is through a financial institution, they would similarly reject any payments given that the documents provided are not in conformity with the documents required.
- Given that any failure to ship the goods by the SOB date may result in rejection of goods, Shipper’s may request the Owner/Carrier to back date the BL to ensure conformity to the contract. This however is fraught with dangers given that issue of an incorrect SOB would lead to a charge of fraudii of the Owners/Carrier such that they would have no defence if pursued for recovery.Additionally, liability insurers specifically exclude coverage for such incorrect BL SOB datesiii.
- In Bulk and Break-Bulk shipments, as mentioned in our earlier article, the SOB date is when the cargo is loaded on board the vessel. However, in container vessels, the general practice is to consider the date of sailing of the vessel as the SOBiv. As stated in Shipping and Freight Resource’s article referred earlier, sometimes cargo interests ask for the SOB date to be the date when the container was loaded and not the date of sailing, particularly when the loading operation continues for a few days. We would caution against this practice due to the following reasons:
- Due to specialization in the container industry, we often find that there are various participants including the Owners, Charterers/Operators. Given that the loading operations are only concluded when all the containers are loaded, it is not uncommon for some of the loaded containers to be discharged as “shut out” cargo allowing the vessel to sail without them. In this case, the issue would be whether loading of the containers initially would result in the transfer of risk to Owners? If the contract between Owners and Operator provides for the risks of loading to be on Operators, then we submit that the Owners risk will only incept once the containers have all been loaded and the vessel is ready to sail.
- We are aware that, if the vessels engaged are chartered, the Bs/L issued to the cargo interests would generally be of the Operators. If loading of the containers would trigger a SOB B/L of the Operator, then the Operator may face a difficulty should the container be later discharged from the vessel for operational reasons. Additionally, the Operator may face issues in their liability cover if one of the pre-conditions of cover is that the Operator, in turn, contracts upwards on similar terms.
- Container vessels have developed in size exponentially. Loading is generally conducted using multiple gantries. Due to the complex loading operations, terminals rarely allow third parties access to view the loading process. Instead, terminals update all interested parties of the containers loaded in their system/website and which is generally known when the vessel loading has been accomplished.
- In a strive to optimise, Bs/L are generally processed by the Carrier’s Shipping Systems, and which incorporate various dates/notations on the basis of various rules (there may be a rule on the SOB date being the date of vessel sailing). Accordingly, we submit that this is a natural development and therefore should be the basis how the SOB’s should be stated in the Bs/L issued. If the Shipper have concerns that their cargo may face difficulty to fulfill the shipment dates, then they should take a pro-active approach and plan their shipments to be loaded in an earlier vessels.
- As mentioned in our earlier article Shipped on Board Date, it would be preferable for the trade to use recommended Incoterms ® 2010v (at the time of that article, this was the latest edition of the Incoterms) and which will remove the necessity of having a SOB to deal with the transfer of risk. This may not however be possible in Bulk/Break Bulk shipments where the transfer of risks may occur on loading.
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In conclusion, given the changes occurring in container shipping,
- relook at the contractual basis for transfer of risks between Buyer and Seller.
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if SOB date is required to be stated in a Bs/L issued by a Carrier, then this should be contractually agreed say on the Carriers standard operating procedures rather than on a case to case basis.
i. See one definition from Maersk which can be viewed here.
ii. See Brown Jenkinson Co V Percy Dalton [1957] 2 Lloyds Rep 1.
iii. See Rule 34 1 X of the Gard Rules for Ships 2024 which states “liabilities, costs and expenses arising out of the issue of an ante-dated or post- dated Bill of Lading, waybill or other document containing or evidencing the contract of carriage, that is to say a Bill of Lading, waybill or other document recording the loading or shipment or receipt for shipment on a date prior or subsequent to the date on which the cargo was in fact loaded, shipped or received as the case may be;”(words in underline by us for emphasis).
iv. See procedures followed by CMA – More on documentation Pt 2 and which states “Shipped onboard Date Shipped on Board Date showing on the draft BL is Vessel ETD Date. After vessel departure Shipped on board date might change as per Actual Departure Date. Correct SOB date will appear on the BL at the time of BL Release. To check SOB Date, please refer to Vessel Unberthing Report at http://www.cma- cgm.com/local/singapore/schedules.”
v. The present incoterms are Incoterms ® 2020.