MYTH #2 - GRAIN SELLER’S PASSIVE APPROACH TO POST-DISCHARGE


CARGO. LOSS MITIGATION… It is a common misconception among grain traders that once a sales contract is signed under CIFFO (Cost Insurance and Freight Free Out), the seller can wash their hands of any responsibilities during cargo discharge. This passive stance can lead to a myriad of problems, escalating the costs associated with transit damage to cargo. First and foremost, the lack of active seller’s involvement during discharge can worsen contamination, water ingress or self- heating damage to cargo. Without proactive loss mitigation, segregation and salvage proceeds, grain value deteriorates by days. Receivers in Chattogram, Bangladesh may struggle to address issues promptly such as segregation, discharging and protecting cargo interest against vessel owner - always result in more significant losses and potential dispute with sellers. Operational costs can soar as well. Holding vessel at berth until a P&I (Protection and Indemnity) correspondent returns from 14 days’ vacation on top of daily charter fees, the risk of cargo self-heating and partial or full abandonment by the receiver. Cargo receivers often worry about unnecessary media attention. Additionally, this passive seller’s approach can cause an uptick in his cargo insurance premiums or partial coverage only. Recently, we recovered claim from a vessel owner for wheat contaminated by brackish water during the sea voyage. Regardless of sales terms, the seller in Switzerland, buyer in Singapore, receiver in Dammam, Saudi Arabia and cargo underwriter all acted collectively to gather evidence, protected cargo interest against the vessel owner and their P&I, inspected, were fast to offer a loss mitigation plan, obtained LOU (Letter Of Undertaking) and allowed the vessel sail in a matter of days...not weeks or months. Considering the industry’s strong drive to reduce cargo claim costs, we anticipate increased collaboration in the area of cargo claims among various cargo stakeholders.


THE LACK OF ACTIVE SELLER’S INVOLVEMENT DURING DISCHARGE CAN WORSEN CONTAMINATION, WATER INGRESS OR SELF-HEATING DAMAGE TO CARGO...


5 | ADMISI - The Ghost In The Machine | Q4 Edition 2023


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