Shut-out cargo
Things can go wrong. Where a stowage plan does not accurately delineate the physical dimensions of the cargo, the vessel may find herself unable to load the full complement of goods presented. The question then arises as to the consequences flowing from the shut-out cargo. An Operator may find, subject to the contractual provisions, that without all cargo loaded, a reduced amount of freight is payable under the sub-charter.
Conversely, the Merchant would not be able to load some or all its cargo for onward carriage to the place of discharge. In those circumstances, the Merchant would require substitute tonnage to perform the voyage, necessitating additional voyage costs. The question of who is to bear these costs will likely turn on whether the cargo, as described in the packing list presented by the Merchant, inaccurately stated the cargo’s physical properties or whether the stowage plan prepared by the Operator was deficient.
Part-cargo
A further complexity in the breakbulk trade resonates from the frequent fixing of part- cargoes. Each parcel loaded at a different port must fit in alongside the other cargoes stowed onboard the vessel.
Therefore, it can happen that a part-cargo is blocked from fitting into a vessel’s hold by a parcel loaded at a previous port, and somehow, the stowage plan did not envisage this. In such a scenario, the Operator would face lost earnings from the freight on the shut-out cargo as well as, potentially, claims from its shut-out counterparty for failing to perform the contractual voyage. A recovery action by the Operator for these losses by way of a damages claim against the Merchant at the first load port would again likely be a factual question of whether there was
a misrepresentation in respect of the description of the cargo’s physical properties by that Merchant or whether the Operator erred in the stowage plan.
A similar dispute is also possible regarding the nature of the cargo presented at the intermediate load port. The permutations are not limited to these examples given. The flexible character of stowage is ripe for disputes.
The reader will note the absence of any mention of the Owner in these scenarios. The responsibilities tend to land on the Merchant and the Operator in circumstances where the Operator draws up the stowage plan. Further, delays in restowing would not ordinarily be an off- hire event under the unamended NYPE 1946 form and opportunity costs resulting from lost freight are not the concern of an owner under a time charter, unless, of course, such an owner was itself at fault. Nonetheless, if the Owner were to contract directly with the Merchant or were to prepare the stowage plan itself, the Owner could find itself involved in a dispute as to the consequences of shut-out cargo.
Restowage liabilities
Aside from damages claims within the charter chain, a charterer, either as Operator or Merchant, should be aware of the risks of restowing at a port en route to the final place of discharge, whether a subsequent load port or a port of refuge. Operations may be required to rearrange cargo to create space to allow otherwise shut-out cargo to be loaded or shifted cargo to be re-lashed.
First is the question of the costs of these operations relating to shut-out cargo, which are potentially
considerable and are regulated by the charter terms. There may be a debate between the contracting parties in the charter chain as to the cause of any shifting and, if due to improper stowage, the party contractually responsible for stowage will have to bear the expenses of this operation. Nonetheless, to avoid undue loss of time, a party believing itself to be innocent might, under reservation of rights, reasonably decide to arrange restowing unilaterally. Where the final costs of this would fall would be determined later.
Second, and perhaps a more significant financial upshot
of shut-out cargo, is the potential liability for damage to cargo during restowage and who is responsible for any damage to the vessel. There are a multitude of potential insurance repercussions arising out of this type of operation. If a charterer has agreed to perform restowing, it should confirm with its own liability insurer that the risks of these operations, including damage to cargo, are covered.
THE REPORT | SEP 2024 | ISSUE 109 | 77
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