• Transhipment issues


    The growing size and capacity of container vessels to already up to 14,000 TEU and in future rising to as many as 18,000 (see 05.01.03) is resulting in increased incidences of transhipment whereas transhipment routings may also become more diverse. Increased transhipment also means that ever more strict instructions must be given, in writing, as to the type of ‘cargo care’ that is required whereas details of the shipment’s routing must be known and agreed in advance. From some origins it is now not at all unusual for shipments to be transhipped three times*. For example from the local port by feeder vessel via a larger national port to a regional shipping hub where the large ‘mother vessels’ call. Or, from the national port to the regional hub and then transhipment again abroad, for example discharge at Antwerp and onward shipment to Helsinki. This means increased transit times, particularly if a feeder vessel is late and misses the mother vessel’s slot at the hub port. Modern container vessels spend the vast majority of time at sea – days in port are kept to a minimum and ‘late cargo’ simply gets left behind. Such events make it difficult for importers to guarantee ‘on time delivery’ to their roaster clients and causes additional costs (particularly financing) which, of course, they will wish to recoup.

    However, because most if not nearly all green coffee shipped from origin is sold basis FOB (Free On Board) the exporter’s responsibility usually ends when the goods cross the ship’s rail. Naturally this presupposes that shipment is made in accordance with the terms and conditions of the contract: those stipulated by the buyer including any ‘cargo care’ notes, and those that form part of the under-lying standard form of contract, and that the shipping documents are correctly and timely presented to the buyer. (Of course, quality and other claims always remain a possibility – see Chapter 04 Contracts).

    Even though selection of the carrying vessels is sometimes left up to the exporter, especially FOB buyers should also engage with the process, by being well informed about shipping opportunities from a particular port and by insisting that the most suitable options and routings are chosen. Once the goods are on board ship they have become the buyer’s responsibility in the sense that he has to ensure the goods are insured, he will have to settle the freight and, of course, he will have to take delivery. If any claims arise after loading due to delays and/or damage then it is for the buyer to lodge these with the shipping company if he thinks there is a case for doing so.

    However, the exporter is duty-bound to make sure that he keeps the buyer informed of all and any changes to the shipping process, also when information reaches him about changes in transhipment dates, vessels or schedules after the goods were shipped. All parties to a transaction must always exercise due diligence: that is, they must be able to prove that at all times they acted correctly. And of course the shipping agents at origin should monitor transhipment cargo and keep their principals fully informed – this is not always the case though. Nevertheless, in the vast majority of cases it is the buyer who, at least initially, is liable to cover any extra costs although, where appropriate, an exporter might perhaps be asked to assist with the lodging of claims etc. And it would make good sense to assist where possible.

    But, once a buyer realises that shipping delays are becoming a more or less regular occurrence for goods shipped from a particular port then he will adjust his cost calculation from fob original port of shipment to ex dock at destination accordingly. On a case-by-case basis then, usually it is the buyer who suffers the consequences but, in the longer run, it is always the exporter who will bear the cost because he will receive lower bid prices. Which of course are passed on to the grower…

    Unfortunately, there are no magic solutions to the transhipment issue: once a port drops off the international schedules of the major shipping companies, i.e. main or ‘mother’ vessels no longer call there**, then that port and everyone utilizing it will have to adjust and make the best of it through improved efficiency and other cost saving measures.

    For example

    • Keep up to date and make sure your buyer knows not only what you know, but also as soon as you come to know it yourself!
    • Ensure you choose the right shipping agent. One who will not simply book on ‘friendly’ vessels but who will offer the most efficient routing and transhipment connections.
    • Make sure all appropriate ‘cargo care’ details are stated in the cargo booking. Do not only rely on the shipping agent to take care of this.
    • Demand the agent monitors the cargo all the way, keeping you informed. Liaise closely with the shipping companies, both coastal/regional and international.
    • Usually, this is best achieved through the forum of an exporters’ association, a coffee authority, a chamber of commerce or other such body that brings together a number of parties with individual but similar interests.
    • Conduct regular reviews of recent shipping experiences, highlight buyers’ concerns and claims/comments, etc.
    • Stress the fact that, in the final analysis, all extra costs come off the producer price, meaning this is an industry issue - not just one concerning exporters…

    It is good to remember that more and more bills of lading simply state ‘said to contain’ which means decreased shipping line responsibility and increased difficulty in making any claims for damages ‘stick’. (See next section: 02 Shipping in containers).

    *There are also known cases where goods have been transhipped no less than four times.
    **For example due to insufficient deep water; insufficient cargo on offer; inefficient cargo handling.

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