The advent of containerisation has led to a great many changes in the role of the carrier of goods by sea. In the past, the ship owner or operator was traditionally involved only in the transportation of goods between two ports. Thus with containerisation the documentation used has also had to be modified to care for this.
Introduction
With the arrival of containerisation, it is now often the case that a container liner carrier will assume responsibility for other modes and periods of carriage, often involving inland stages, in addition to carriage of cargo on his vessel. Recent years have seen the creation of many joint ventures or consortia, in which previously rival companies, through co-operation, are able to offer the enhanced levels of service, which their customers expect.
Bills of Lading
One area, which has inevitably been affected, is documentation and bills of lading in particular. The main purpose of this module is to identify certain potential problems, which can arise when bills of lading are issued in the container trade.
For present purposes there are, broadly speaking, two main types of bills of lading:-
Port-to-Port Bills of Lading
This represents a contract of carriage by sea between ports. The carrier’s responsibility will generally be limited to the sea carriage, although this may be influenced by factors such as the law or custom of the ports of loading and/or discharge, or specific terms in the bill of lading.
Through and Combined Transport Bills of Lading
These usually involve various stages of carriage, from the place of receipt to the port of loading, or from the port of discharge to the place of delivery, or both. The terms “Through” and “Combined Transport” bills of lading are not used consistently, although a “Through Bill of Lading” often describes a contract under which the carrier only assumes responsibility for that part of the transport when the cargo is carried by sea on his vessel. The terms of the bill of lading will usually make it clear that no responsibility is accepted for any other parts of the carriage. The carrier’s role in respect of any other leg(s) of the carriage is limited to that of an agent for the merchant, although in certain circumstances the carrier may still be exposed to a contingent risk of liability for loss or damage during other period(s) of carriage, particularly if the other carrier can not, in practice, be held accountable.
Under a “Combined Transport Bill of Lading,” on the other hand, the carrier generally accepts responsibility for the entire carriage, from the place of receipt up to the point of delivery, including any stage(s) of transportation performed by any sub-contractor(s).
Ultimately, however, it is important to look at the terms of any particular Bill of Lading to determine the period for which the carrier is accepting responsibility. It is common in the container trade for a carrier’s bill of lading to be drawn up in such a way that it can serve either as a “Port-to-Port” or “Combined Transport” bill of lading, depending on how the face of the bill of lading is completed. Most “hybrid” bills of lading, which are commonplace amongst the container liner consortia, have boxes on their face in which to record, amongst other things, the “place of receipt”, “port of loading”, “vessel”, “port of discharge” and “place of delivery”. Some of these “hybrid” bills of lading also have a specific “pre-carriage by” (or similar wording) box in which it is possible to insert, where applicable, the name (or names) of the feeder vessel(s) performing the initial leg(s) of the sea carriage. The details inserted in these various boxes, read in conjunction with the terms of the bill of lading, will have a direct bearing on the period of the carrier’s responsibility. It is thus vital that great care is taken when issuing the bill of lading to ensure that these are correctly completed.
Feeder Service
This article is concerned with documentation and bills of lading where the entire carriage is partly to be performed by one ship and partly by another ship or ships. It is usual for those in the container liner trade, and particularly those who form part of a consortium, to operate what are often referred to as “mainline services” and an advertised service route is quite common. These “mainline services” link certain specified “hub” ports along the route and are often dictated by geography and commercial factors such as volume of business. The growth of these “mainline services” has seen a corresponding growth in the use of “feeder” services, which are utilised by the “mainline carrier” to bring cargo from a number of other ports to a “hub” port or vice versa.
In cases of pre-carriage by a feeder vessel, unless the vessel concerned is owned, or chartered in, by the mainline carrier, it should not be described as the carrying vessel in any bill of lading issued. In such cases, the carrying vessel named in the bill of lading should be the intended mainline vessel, which he owns or has chartered, provided the bill of lading is issued before the cargo has been trans-shipped from the feeder to the mainline vessel. The use of the qualification “intended” is recommended because the cargo brought by the feeder vessel may fail to connect with the named mainline vessel for reasons beyond the mainline carriers’ control e.g. the feeder is delayed. In naming an “intended” mainline vessel, the carrier should exercise a reasonable standard of care. A carrier should not name an intended mainline vessel which he does not reasonably believe, can make the connection or carry the cargo. If the intended mainline vessel is entered in the same Club, the Member’s P&I cover will extend its cover to a properly named “intended” vessel.
Entries
The manner in which the places of receipt, port of loading, port of discharge and place of delivery are completed is also important, as is the date used for any “shipped on board” endorsement. If the port of loading and port of discharge named in the bill of lading are those of the mainline vessel, the “place of receipt” should reflect the port at which the cargo is loaded on the first of any feeder legs prior to loading on the mainline vessel. The “place of delivery” should reflect the port at which the cargo is to be discharged after the last of any feeder legs subsequent to carriage on the mainline vessel. As to “shipped on board” endorsements, care must be taken to ensure that such endorsement correctly reflects the position. In the circumstances presently being considered (see example 1 below), a “shipped on board” date would probably be regarded as the date upon which cargo was loaded on the mainline vessel at the port of loading indicated in the bill of lading. If the date used is that upon which the cargo is “shipped on board” at the “place of receipt” named in the bill of lading, the “shipped on board” date should reflect that fact .
If the ports of loading and discharge named in the bill of lading are those, at which the cargo is loaded on the first of any feeder legs and to be discharged after, the final feeder leg respectively, (i.e. from place of first receipt to place of ultimate delivery). The face of the bill of lading should be clearly endorsed to indicate the name of the feeder on which the cargo has been loaded and to identify that part of the voyage, which is being performed by the feeder. The port of discharge from the feeder vessel should therefore be shown as the port of loading of the intended mainline vessel (see example 3 below). The endorsement should also indicate that there is an intended transhipment from the mainline vessel at its port of discharge for on-carriage by feeder to the port of discharge named in the bill of lading.
Some Examples
The examples given below are based upon a shipment from Bangkok (place of receipt) to Hong Kong by feeder, thence to Rotterdam by mainline vessel and then to Felixstowe (place of delivery). It is assumed that the mainline carrier has accepted responsibility for the entire period of the carriage.
Example 1
Place of Receipt: Bangkok
Port of Loading: Hong Kong
Intended Vessel: Mainline Vessel’s name
Port of Discharge: Rotterdam
Place of Delivery: Felixstowe
“Shipped on board. (Date loaded on mainline vessel)”
Example 2
Place of Receipt: Bangkok
Port of Loading: Hong Kong
Intended Vessel: Mainline Vessel’s name
Port of Discharge: Rotterdam
Place of Delivery: Felixstowe
Shipped on board: “Shipped on board M. V. ——(name of feeder vessel) at Bangkok on —— (Date loaded on feeder vessel)”
Example 3
Place of Receipt: Bangkok
Port of Loading: Hong Kong
Intended Vessel: Mainline Vessel’s name
Port of Discharge: Felixstowe
Shipped on board:
“Shipped on board.” M.V.—– Name of feeder vessel) at Bangkok on —– (Date loaded on feeder vessel) for carriage to Hong Kong for intended transhipment to M.V. —–(name of intended mainline vessel) for discharge at Rotterdam and subsequent transhipment to Felixstowe.”
Recent cases
In a number of recent cases, ship-owners acting as mainline carriers have issued a bill of lading identifying the feeder as a carrying vessel, the feeder being neither owned nor chartered by them. (In these cases, the feeder usually issues a non-negotiable bill of lading to the mainline carrier, limited to the carriage performed by the feeder itself). The pressure to issue a bill of lading for the feeder vessel usually comes from customers who themselves wish to comply with letter of credit terms calling for a “shipped on board” bill of lading. Of course, if the Member has entered the feeder vessel in the Club (as its owner or charterer), the feeder can thus be identified as the carrying vessel in the bill of lading, which should also record any intended transhipments for later stages of the voyage. However, if the Member neither owns nor charters the feeder vessel, it is preferable (as noted earlier in this module) that the bill of lading should identify one of the mainline vessels, which the Member operates, as the intended carrying vessel. In such circumstances, the bill of lading can be completed in accordance with examples 2 or 3 above, both of which identify the intended mainline vessel, and the fact of prior shipment on a feeder vessel.
Other points
In addition, the following points need to be borne in mind:
If the bill of lading fails to disclose that the cargo is to be transhipped, it is likely to be construed as meaning that the feeder vessel will be performing the entire period of carriage. The carrier will of course be aware when the bill of lading is issued that there will be one or more transhipments involved in the overall carriage and, even with a well drafted liberty clause in the bill of lading, the Courts in many jurisdictions will see such transhipment(s) as an unreasonable deviation or other breach of contract.
If the mainline carrying vessel is lost, claims under bills of lading naming the feeder vessel are likely to be excluded from the limitation fund. Similarly, if the feeder vessel is lost, claims brought by reference to the bill of lading may fall outside that vessel’s limitation fund as, inter alia, the mainline carrier will not be the owner or charterer of the feeder.
In the absence of a conventional charter party or other express authority, it may well be that the mainline carrier is not entitled to bind the owners or operators of the feeder vessel under any bills of lading which he (the mainline carrier) issues. The feeder vessel interests would probably expect the mainline carrier to indemnify them against any liabilities incurred under such an unauthorised bill of lading.
Assuming that at least one leg of the voyage is to be performed by a vessel entered in the Club, cover will be available in respect of claims under a properly completed bill of lading.
Finally, for those ship owners whose vessels are engaged in the feeder trade the text of a circular is set out below:
Feeder Vessels – Issuing of Non-Negotiable Receipts
The use of feeder vessels to support liner services is now commonplace. A negotiable bill of lading may be issued to cargo interests at the load port, by or on behalf of the main carrier or “mother line,” naming the mother line’s vessel as the carrying vessel, but a feeder vessel may be employed to perform one leg of the voyage. The feeder vessel operator will issue to the mother line a receipt, often in the form of a bill of lading, for cargo loaded on the feeder vessel.
The Association strongly recommends that cargo documentation issued to mother line operators by Members operating feeder services for cargo loaded on feeder vessels, whether it be a bill of lading, way bill or other document, should always be clearly marked as “non-negotiable.”
Groupage
In Groupage, more than one or two freight forwarders may be involved. Documents are issued by individual freight forwarder is called “House Bill of Lading” to the Shipper. Groupage Freight Forwarder issues his house bill of lading and takes a service bill of lading from the shipping line if it is a company owned container (COC).
Import Containers
While issuing “Delivery orders” (DO), the bill of lading be examined properly. If it is a bank document, ensure that the bank before issue of the delivery order to the consignee endorses it. It may be noted that the consignee will have to pay delivery charges at various stages i.e. to the Shipping line, the Main Freight forwarder who does groupage and the regular freight forwarder. After paying delivery charge at every stage, the consignee obtains final “Delivery Order” and takes delivery of cargo after payment of Customs duty and related charges.