How to Nail Your Next Cargo Claim Against a Shipping Line
Shipping from one country to another could be very challenging and complex. In most cases, damages occur during transit. As an exporter or insurer, to keep your business running you often file a claim against the shipping line.
It is important to understand how you can be strategic when filing a claim against the shipping line in order to be successful. You may not be a claims expert and irrespective of the field in which you find yourself, whether you are a fruit exporter, fish and meat exporter or pharmaceutical exporter, you would find a lot of value in this article.
Before we jump into how you can nail your next cargo claim against a shipping line, let’s make sure we understand what the basics are all about.
What is a cargo claim?
A cargo claim is a demand made by a cargo owner or their insurer to recover any loss or damage that occurred to their cargo in transit. This can happen for a variety of reasons.
It could be a result of theft, mishandling, contamination or even temperature violations if you are dealing with temperature-sensitive products. In certain cases, it could be a delay in the delivery of your cargo.
Now let’s break down the tips on how to successfully file a cargo claim against a shipping line using the 5cs of cargo claims.
The 5Cs of cargo claims.
1. Contract
Firstly, ensure that you have a clear understanding of the contract with the shipping line. Now, depending on the type of contract, it could be a bill of leading contract. It could be a charter party contract, but whichever it is, you need to familiarize yourself with the terms and conditions, specifically the carrier’s liability and any limitations or exceptions, these are typically where or what the carrier will rely on to reject your claim.
2. Collect evidence
Secondly, you need to gather all relevant documents such as the bill of lading, the commercial invoice, the packing list, and photographs of the damage. You need to keep a really detailed record of communication with the shipping line as this will help build a strong case.
We normally tell our clients that, you start preparing for a cargo claim before a claim arises. You don’t have to wait till a claim has arisen, then you will probably already be very late. Either people have moved away from companies, or evidence has been lost or tampered with.
So it makes it very difficult for you to investigate backwards what the cause of damage to your cargo was. But if you are collecting this information at the beginning, then you stand a better chance of a successful claim against a shipping line.
3. Calculation.
Thirdly, you need to accurately calculate your claim amount by taking to account the value of the cargo, any incurred expenses and potential loss of profit. The value of the cargo here may be the declared value at customs, or it could be a declared value plus a certain percentage depending on which country you are in or who your cargo insurer is. Typically, it is the value of your cargo or of your loss, that is the sale market value of that cargo in the country of destination less the arrived damaged value of the cargo in question.
So if you have these two figures, subtract one from the other, and then you get the true value of your loss. However, as indicated earlier on, it is really important that you keep the supporting documents to prove, for example, a commercial invoice to prove the value of the cargo, or if it is in a foreign country, then you have to look at the market value of your particular type of cargo.
This could mean going through price comparison websites and online shops just to see what the value of the cargo is at that particular point in time or period
4. Communication.
This is really relevant, and very important because you need to maintain open and professional communication with the shipping line throughout the process.
Now, your communication would typically be by email. There are certain cases where you could do it by phone call but I, wonder if you’d be able to handle or manage a claim from the beginning to the end using a phone conversation. The shipping lines wouldn’t even allow you to do that, so you’d have to draft an email and send it to them.
To overemphasize the importance of you drafting an adequately written email, remember that once you click sent on this email your reputation goes along with that email to the shipping line. How you are perceived is closely linked to how you present yourself in that email. If you want to be a good claims manager, you must be good at writing and putting your thoughts concisely. Putting your arguments logically in an email would help you go a long way and this will show your commitment to resolving any issue or resolving the issue amicably.
This will help establish goodwill, which is really important when it comes to cargo claims because a good amount of cargo claims are settled out of court. So goodwill is very important.
5. Consulting.
Consulting an expert is very important. You may not be a claim expert and cargo claims can be complex. They’re maritime laws that are applicable. They are at least two jurisdictions when you’re shipping from one country to the other. They are at least six parties that are involved in a cargo claim so it can get really complex. If you feel that it’s getting too complex for you, consult an expert and if you’re unsure of any aspect of the cargo claims don’t hesitate to consult a recovery agent or a maritime lawyer. They can provide you with valuable guidance and support.
Be sure to consult an expert before the shipping line reject your claim. That is, you have provided all the evidence that you have in your position to a shipping line before you turn to your consultant. At that point, you may have already jeopardized your claim beyond repair. So always contact them before you establish any sort of meaningful conversation with your shipping line.
Timing and the legal framework.
When it comes to cargo claims timing is crucial. Everything is, but timing is really of the essence. Make sure that you are aware of the time limits for filing a cargo claim. And this can vary depending on the jurisdiction applicable. In general, the Hague/Hague Visby Rules will provide a one-year time bar limit within which you need to bring a claim. This would typically be applicable in European countries or in more developed countries where you have cargo or cargo-carrying companies. Also, the Hamburg Rules provide for a two-year limitation period.
Always remember that a successful cargo claim often requires a solid understanding of the legal framework governing your case. For example, you are exporting cargo from Cameroon to the UK. Now as an exporter based out of Cameroon, you need to be aware of the laws that are applicable in Cameroon as far as the courage of goods is concerned but also the laws that are applicable in the UK.
The reason why this is important is that sometimes the laws of one country may not be favourable, but the laws of another could be favourable to you.
Practical Example
In the UK you have Hague/Hague Visby Rules that are applicable, so you have a one-year time in the UK within which you need to bring a claim.
Whereas in Cameroon, there’s a two-year within which you can bring your claim. The interesting thing here is Cameroon’s biosignature to Hamburg Rules allows you to be able to commence your claim in Cameroon and not go to a more expensive jurisdiction as the UK or English law on the England London High Court.
So you can bring your claim to Cameroon and you are well within your rights to do so. Having this understanding is really critical when it comes to managing cargo claims where you are filing yours. It could determine the outcome of your claim.
Being tactical and strategic when handling your claim could save you some, time and money. Always consider these 5Cs when handling cargo claims and you will be well on your way to success.
