Unseaworthiness and unfitness of the container as a cause of cargo damage

Water ingress through the rusty, dented roof of the container is one of the most popular reasons for cargo damage in transit.

As a general rule, shipping lines reject these claims confirming, that container gate out documents were clean. Insurance companies use Unseaworthiness and Unfitness Exclusion Clause stated in ICC (A) not to cover similar claims either unless the insured proves that he was not aware of container conditions at the time of loading.

Obviously, this situation causes a lot of frustration, feeling of injustice, and result in absorbed losses among shippers globally.

In this article, we discuss how exporters and importers can protect themselves when cargo is damaged in transit due to preexisting container conditions.

Legal arguments supporting shippers’ defence

The shipping line is under an obligation under Art III of the Hague Rules to provide seaworthy containers. This means the carrier is under a legal obligation properly and carefully load, keep, care for and carry the cargo under their care and custody, also to deliver it in the same good order and condition in which it was in upon loading.

When cargo is damaged due to the preexisting condition of the container it is evident that the carrier failed to provide a seaworthy container. In the cases, when the container was delivered to the consignee with a bent door hinge, rust, dents, old cracks in the door of the container, etc. these are preexisting damages or improper previous repairs which are apparent that the damage to the Cargo arose as a result of water ingress through the damaged container.

Shipping Line must exercise its due diligence to make the container equipment seaworthy by regularly servicing its container. However, it is a responsibility shared by both ship owners and shippers too. Before loading, the shipper should be responsible for checking:

Outside of container:

1. No holes or cracks in walls or roof.
2. Doors operate properly.
3. Closing devices operate properly.
4. No adhesive labels from the previous cargo, e.g. IMO placards.
5. For flatracks: stanchions (if ordered) are complete and correctly fitted. For 40′ flatracks: all lashing belts are present.
6. For open-top containers: roof bows are complete and correctly fitted.
7. For open-top containers: tarpaulins are undamaged and fit properly; ends of tarpaulin ropes are undamaged; all roof eyes are present.
8. For hard-top containers: roof is undamaged, roof locking mechanism fits and operates properly.

Inside of container:

1. Check for cracks, holes, door gaskets etc.
2. Make sure interior is absolutely dry.
3. The container is clean, free of cargo residues, and neutral in odor.
4. No nails or other protrusions which could damage the cargo.

This inspection takes 3 to 5 minutes.

However what to do when shipper duly inspected container, loaded cargo and at the port of discharge cargo was received water damaged?

Gather below information during cargo destuffing:

1. Clean BL,
2. Pictures at the discharge: holes, cracks in walls or roof, door gaskets, floor, dents everything could signal that damage was preexisting and result of the bad maintenance from the carrier. See the pictures below. Make sure you take pictures before return empty container to the yard.
3. If Surveyor attends inspection, show to surveyor all the above and ask to clearly mention in the survey report the cause of cargo damage.

I am sure you are aware that there are containers in the fleet of shipping lines that are 20-year-old. For some destinations majority of the containers are this age. It is in the shipper’s interest to protect himself by checking containers before loading cargo and taking clear evidence of preexisting container damage at the discharge, to make sure you get fairly paid for the damaged cargo.