• QA 145
    Who is liable for missing bags when container seals and locks show no signs of tampering?
    We have received a claim for missing bags from a containerised shipment that we made from our inland mill. The sale basis was FOB, LCL/FCL. The containers were stuffed under supervision and we submitted a certificate to this effect. Unfortunately the shipping company issued a bill of lading claused FCL/FCL - STC. However, the buyer in Europe accepted this since he took up the documents. Yet the buyer maintains we are responsible because, as he says, there were no signs of tampering to the container seals and locks so the shipping company declines liability which therefore passes to us. But surely this is a matter between the buyer and his insurance company? After all, we have submitted proof that the correct number of bags was loaded.
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    As we understand it, in this case the shipper is responsible for loss or damage unless and until it can be shown that the responsibility lies elsewhere.

    This is based on the following criteria and information provided by leading industry sources…

    1. From a shipping perspective a bill of lading claused 'STC = Said To Contain… bags' only requires a shipping company to transport a container from A to B without damaging or losing it. Such a bill of lading does not commit a shipping company as to contents - after all, it states 'said to contain …'. Without clear proof that loss or damage occurred whilst the container was under its control, a shipping company will decline liability.

    2. From an insurance perspective the fact that both seals and locks were intact would be considered proof that the missing bags were not loaded, irrespective of what a survey certificate may say. Without concrete evidence that the loss or damage was due to an external event that took place after the container was locked and sealed, the burden of proof to the contrary rests with the shipper. In this respect tally lists or survey certificates do not help unless of course the shipper can convince the surveying company to accept responsibility. But this does not concern the buyer or his insurers.

    3. Shipping on bills of lading that are claused 'STC - said to contain…', does place additional responsibilities on shippers because of this burden of proof.  Whether or not buyers can obtain compensation from their insurers is, in fact, irrelevant since it does not affect the shipper's contractual responsibility. This is clearly spelled out in the European Contract for Coffee, clause 18(f) which states that, whereas 'buyers shall always accept a bill of lading claused "said to contain … bags (STC)" or "shipper's load and count", the sellers shall be responsible for any difference in the number of bags invoiced and the number of bags which arrive'.

    Where there is a clear risk situation our recommendation would be to insure the risk of loss during the inland leg of the voyage separately, and to strip and re-stuff the containers under shipping company approved supervision at the port of shipment. This enables a shipper to obtain an LCL/FCL Bill of Lading that in turn allows the receiver and his insurers to claim from the shipping company if loss or damage did occur. Of course this does cost money and the final decision will therefore depend on one's attitude towards risk exposure generally.

    Posted 20 April 2007

    Related chapter(s):
    Related Q & A:
    Q&A 058, 061