BIFAlink


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Covid 19: Handling abandoned cargoes


With the Covid-19 pandemic expected to result in more cargoes being abandoned overseas, BIFAlink provides advice on when freight forwarders are liable for quay rent, demurrage costs and cargo disposal


Much of the guidance that BIFA has been giving during this Covid-19 period relates to imports into the UK and domestic problems. However, one problem that we anticipate will increase is that more cargoes than ever before will be abandoned at the overseas destination. We have already seen this occur in the UK and we believe that this will be repeated overseas. Prior to the present crisis, reasons for


abandonment were varied with one of the most common being that the seller and buyer have a commercial disagreement leading to the latter rejecting the consignment at the destination port. Previously, we have also seen changes in regulation, often introduced at short notice, prohibiting the importation of certain goods together with regulatory checks identifying non- compliant goods that cannot be imported. Certain trade lanes or types of goods seem to attract particular problems; for instance waste plastics and similar products cause significant issues because traders still persist in trying to hide non-compliant types of plastics along with compliant products.


New reasons for rejection Now the reason is often much more straightforward, the consignor has seen its market collapse and decides to reject the cargo, or the trader has ceased business. In either scenario the forwarder is in a difficult position and under the shipping lines’ Merchant Clause is likely to be pursued for outstanding monies. As the cargoes are often held on the quay for several months, this can include large amounts of quay rent and demurrage. Dealing with abandoned cargoes can be both


difficult and time consuming; carriers have whole departments dealing with such situations. The issues usually revolve around who is responsible for the quay rent, demurrage costs and the disposal of the cargo. One of the most frequent questions we receive


is, who is responsible for the quay rent and demurrage charges should the freight not be


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on the master bill of lading, it has done so as principal, not as agent, and the shipping line will be within its rights to place a claim on the forwarder. Also, it is important in both scenarios for the


Member to have incorporated the BIFA STC into any contracts with its customer because this will give it the legal basis, if correct procedures are followed, for exercising a lien (see article on page 12) and selling goods to recover costs. At the very start of the process it is important to obtain a letter of abandonment from either the shipper and/or consignee. Also, establish the whereabouts of and collect together all relevant documents relating to the shipment. Having reviewed some of the situations that


we have heard about, the costs surrounding abandoned cargo can run into many tens of thousands of pounds and, in at least one case we heard of over £100,000. Whilst these are extreme cases, our best


advice in this situation is to act quickly and contact the carrier, as often it is willing to come to a more commercially viable settlement. At the same time, contact insurers to see the extent of the cover provided.


collected from the destination port. BIFA has long advised that for FCL consignments, Members should have processes in place to monitor the arrival, clearance and removal of containers from the quay. Given the current situation, we would additionally suggest that for FCL shipments from the UK, all efforts are made to check with the destination agent/consignee before the consignment is even accepted for export to destination. Using the Merchant Clause incorporated within


their conditions of carriage, carriers will contact those parties named on the master bill of lading that it believes can be identified as a ‘merchant’. If the forwarder has booked the shipment ‘as agent’, putting the shipper in a direct contractual agreement with the shipping line which acknowledges this mutual arrangement via its booking form, email or similar, then the forwarder may have limited or no liability. In such cases, if in place, liability insurance cover can be invoked to cover the associated costs. However, if the forwarder has contracted directly with the carrier and is shown as shipper


FIATA guidance BIFA has contributed to the recent FIATA publication ‘Demurrage and Detention in Container Shipping’, which provides guidance intended to reduce unnecessary supply chain costs and inefficient behaviour that lead to detention and demurrage charges. The full document can be downloaded from www.bifa.org/media/4265929/fiata-good- practice-guide-on-demurrage-and-detention.pdf It is also worth remembering that it might be


possible to remove the goods to a cheaper storage area than the dockside, so this option should be explored. Faced with an abandonment, the three most common options are to: re-export the goods (which may include returning them to the original shipper); sell the goods to another party; or destroy them. It is important to identify a party that has local


knowledge to assist in dealing with abandoned goods; it will know about the correct procedures to be followed and may have information regarding potential buyers for the goods. Although we work in a global industry, the


rules in every country are different and BIFA has been made aware that the UK P&I Club has released a guide, which can be searched by country to see how abandoned cargoes are dealt with. The guide can be found at www.ukpandi.com/knowledge- publications/publications/cover-service/abandon ed-cargo-advice/


June 2020


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