American Club: Preventing shortages in dry bulk cargoes

According to the Club, dry cargoes, particularly those carried in bulk and bagged, are particularly subject to disputes arising related to the volume of cargo having been declared at the load port and that having been delivered at the disport. These disputes can arise due to a number of contributing factors, some of which are more controllable than others to prevent. Such disputes are also more likely more frequent in certain jurisdictions despite efforts by shipowners and their crews that are made to prevent them. 

Hazards and types of damages and claims for dry cargo shortages

The primary focus of this guidance is the period from when a cargo’s weight or volume is determined by the vessel owner’s interests at the loading port, until discharge into the hands of cargo receivers at the discharge port. Depending on the applicable law or contract, the period of responsibility for a vessel owner may range from “tackle to tackle” (as per the Hague Rules or U.S. Carriage of Goods By Sea Act (COGSA)) to periods before loading and after discharge (as per certain bill of lading clauses).

During these timeframes, the shipowner and/or charterer is exposed to various hazards and contributing mechanisms (e.g., lack of crew training) that can lead to short-landed cargo claims (i.e., shortage claims). 

What, in general, are the grounds for dry cargo shortage claims?

Discrepancies in the volume, weight, or count of cargo loaded aboard the ship at the load port—as stated on the bill of lading (B/L)—compared to what is unloaded at the discharge port commonly result from:

• discrepancies in tallied cargo units brought aboard the vessel;

• discrepancies in a vessel’s draft measurements during and after loading;

• errors in calculating remaining ballast and bilge water onboard, leading to overcalculated cargo loaded;

• excessive water loaded with cargo and discharged or evaporated during transit;

• incorrect temperature and/or density calculations of liquid cargoes;

• discrepancies in the calculation of the vessel’s constant;

• cargo loss during discharge due to mishandling, theft, or pilferage;

• manipulated or uncalibrated shore scales.

Shortage claims arise from discrepancies exceeding an acceptable margin of error between the cargo recorded as loaded (and stated on the B/L) and the cargo actually discharged. ‘Trade allowances’ account for minor measurement differences. However, if discrepancies exceed a certain threshold, a cargo claim may be made. For bulk and liquid cargoes, unless otherwise specified in the charter party, this allowance is generally between 0.5% and 1% of the cargo amount listed on the B/L.

To avoid claims, the American Club presents detailed mitigation measures. Some of these measures include the following: 

Best practices by the crew: General precautions

The Master and crew should ensure that they maintain detailed and accurate cargo records and documentation for each stage of cargo voyages. This includes, but is not limited to, cargo record book entries, photographs, videos, and any other documentation relevant to the condition and quantity of cargoes loaded, carried, and discharged.

Copies or relevant originals of all records and documentation should be stored aboard the vessel for no less than one year from the date the cargo has been delivered—or should have been delivered—to consignees at the discharge port.

The Master should consider stationing crew members at key locations during cargo loading and discharge operations to visually monitor stevedore activities. Crew members on cargo operation duties should be stationed at the following areas:

• Embarkation and disembarkation points for stevedores and surveyors to prevent theft and pilferage of cargo.

• Above each cargo hold where cargo load and discharge operations are underway, to visually scan and observe the activities of all stevedores and surveyors working in the cargo holds.

• Any other locations where cargo may be loaded onto or discharged from the vessel, where stevedores are engaged in cargo operations, or where any other visiting non-crew personnel are allowed access.