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What to Do When Facing a Cargo Damage Claim: Essential Steps, Services & FAQs

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Cargo in Transit – Managing Freight Damage Risk

When goods are transported across oceans, borders or within a country, the risk of damage is annavoidable reality.

These risks impact everyone involved in the logistics chain, including traders, carriers, insurance companies, freight forwarders, and other stakeholders.

Experiencing a cargo damage claim can be overwhelming, but understanding the administrative procedures clearly and acting swiftly can significantly protect your financial interests.

As a global law firm managing cargo damage claims regularly, we have seen first-hand how essential prompt and strategic actions are in preserving claim rights and ensuring successful outcomes.

In this post, we explain what a cargo damage claim entails, highlight the most common causes, provide a detailed step-by-step procedure for filing a claim, list all required documentation, and offer crucial legal and insurance strategies to manage claims effectively.

What is a Cargo Damage Claim?

A cargo damage claim is a formal request for financial compensation submitted by shippers, consignees, or insurers when goods suffer damage during transportation. 

The handling of such claims may involve multiple professionals depending on the stage and complexity of the incident.

A cargo damage claim is typically managed by a combination of stakeholders:

  • Claims Handlers or Claims Adjusters: These professionals, whether internal or appointed by the insurer, evaluate the documentation, inspect the loss, and coordinate the claim process.
  • Loss Adjusters: Independent experts who assess the extent of the damage and provide an objective valuation to support the claim.
  • Marine Surveyors: Often the first technical party on-site, responsible for inspecting the goods and issuing a survey report.
  • Freight Forwarders and Logistics Providers: In some cases, these parties assist with communication and documentation.
  • Insurance Brokers or Underwriters: They ensure the claim is consistent with the insurance policy and may negotiate settlement terms.
  • Legal Advisors: Law firms specialising in maritime and transport law are often involved in complex, high-value, or disputed claims.

Common Causes of Cargo Damage

Some typical causes include:

  • Rough handling during loading and unloading
  • Insufficient or improper stowage and securing of cargo
  • Mechanical failures, particularly with reefer units leading to temperature deviations (Read more about reefer cargo claims)
  • Severe weather conditions during shipment
  • Transport accidents involving collisions or derailments
  • Theft, pilferage, or contamination

Knowing these risks prepares you to take proactive steps in documentation and risk mitigation.

How to File a Cargo Damage Claim: A Step-by-Step Guide

In case of a cargo damage claim, it is essential to act quickly, methodically, and in accordance with both contractual and insurance policy requirements. Delays or missteps can weaken your position and potentially forfeit your right to compensation. Below is a structured process designed to help you manage cargo claims effectively, minimise further losses, and maximise recovery potential.

Taking the correct steps immediately after identifying damage is crucial to preserving your right to compensation:

1. Inspect and Document the Damage

Upon receipt of goods, conduct a thorough inspection. Photograph the damage from various angles and preserve evidence such as broken packaging. Engage a marine surveyor if necessary.

If you find discrepancies between the delivery and shipping documents, record them immediately on the delivery receipt or Bill of Lading. Learn how to protect your claim rights by appealing a potentially biased survey report.

2. Notify the Carrier (Notice of Loss)

Issuing a notice of loss is the first formal step in the cargo damage claim process. This notification informs the carrier of the damage and triggers their obligation to assess or investigate the situation. It’s important to distinguish this notice from an insurance claim, as both follow different protocols and involve different parties.

Specific requirements for the notice, such as the timeframe (often 3–7 days), format, and recipient, can vary by jurisdiction and contract terms. Always consult your shipping agreement to comply with its stipulations

3. Mitigate Further Losses

Take reasonable steps to prevent further deterioration of the cargo. This might include moving goods to safe storage or arranging for emergency repairs.

4. Compile the Necessary Documentation

Assemble all required documents to support your claim:

  • Copy of the Bill of Lading (noted with damages, if applicable)
  • Commercial invoice and packing list
  • Surveyor’s independent report
  • Photographic evidence
  • Notification letter sent to the carrier
  • Freight invoices and proof of payment
  • Statement outlining the claim amount

Documentation is your strongest asset in a cargo damage claim.

5. Submit the Cargo Damage Claim

Submit your claim with all supporting evidence, a detailed description of the loss, and the compensation amount sought. It is best practice to send your cargo damage claim through registered post or other verifiable delivery methods.

6. Engage Claims and Legal Professionals

Consider consulting specialists to strengthen your position. For instance, mastering best practices in freight damage claims can significantly increase success rates (Freight damage claims: best practices).

Essential Documentation Checklist for Cargo Damage Claims

Submitting a comprehensive and accurate package of documents improves your chances of prompt and fair settlement:

  • Bill of Lading
  • Invoice and proof of cargo value
  • Packing list
  • Survey report (preferably independent)
  • Photographs of damaged goods
  • Damage notice to carrier
  • Statement of claim amount

Insufficient documentation risks rejection or reduced compensation.

Legal Services & Insurance Strategies for Cargo Damage Claims

The Role of Loss Adjustment

In many cargo damage claims, particularly those involving substantial financial values or complex circumstances, the appointment of a loss adjuster is essential. A loss adjuster is a neutral, independent professional engaged to assess the extent of the damage and quantify the amount of compensation that may be owed under the policy. They gather facts, inspect the cargo, review documentation, and analyse contractual responsibilities to present a fair valuation of the loss.

The outcome of the loss adjustment process often shapes the negotiation between the insured and the insurer. Ensuring that the adjuster receives full and accurate information, including photos, reports, and expert opinions, is key to achieving a result that reflects the true scope of the damage.

Understand Subrogation Rights

When your insurer compensates you for loss, they may exercise subrogation rights to recover costs from the responsible third party.  Knowing your policy’s subrogation clauses is critical.

Review Carrier Liability Terms

Understand contractual limitations or exclusions in your carrier’s liability terms, as these clauses directly influence your claim.

Act Within Prescribed Timeframes

Many jurisdictions impose strict limitation periods to initiate cargo damage claims, often one year from the date of delivery. Missing these deadlines could forfeit your right to compensation.

Engage Expert Claims Handlers

Cargo damage claims involving sensitive, high-value, or perishable items demand specialist expertise. Collaborating with experienced professionals reduces risks and procedural errors.

Implementing the best practices for handling freight damage claims ensures that all procedural steps are followed, deadlines are met, and communications with carriers and insurers are strategically aligned. These practices include timely notification of damage, comprehensive documentation, appointment of independent surveyors, and close monitoring of claim progress to avoid procedural pitfalls and ensure maximum recovery.

Alternative Dispute Resolution (ADR)

In the event of disagreements between the claimant and carrier or insurer, whether regarding liability, compensation, or evidence interpretation, ADR can be a constructive route. Methods such as mediation or arbitration provide faster, less adversarial alternatives to litigation, often resulting in mutually agreeable outcomes.

If a surveyor’s report appears biased, incomplete, or factually inaccurate, you have the right to commission a second, independent survey. Appealing an unfavorable cargo damage survey ensures that your claim is supported by fair and objective assessments, which is particularly important in complex or high-value disputes.

Our experienced claims adjusters and maritime lawyers handle your cargo damage claims with precision and diligence.



CONGEBILL in Ship Chartering

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CONGENBILL 2022 template example for ship chartering

As global trade continues to grow in complexity, the need for standardized documentation in the shipping industry has become increasingly critical.

Standardization became essential to mitigate the risks of disputes and legal inconsistencies that can arise across different jurisdictions.

The shipping industry, already navigating challenges such as piracy, stringent environmental regulations, and volatile market conditions, relies heavily on clear and consistent documentation to maintain smooth and secure operations.

In the specific context of charter parties, the importance of standardized contracts cannot be overstated. This is where BIMCO (Baltic and International Maritime Council) plays a pivotal role. As the world’s largest international shipping association, BIMCO sets the gold standard for contracts in the maritime industry. With a membership that covers 62% of the world’s tonnage and includes over 2,000 members from 130 countries, BIMCO’s influence is both extensive and profound, shaping the practices of companies ranging from local enterprises to global shipping leaders.

Among BIMCO’s most significant contributions is the development of CONGEBILL, a standardized bill of lading designed to accompany its charter party contracts, such as GENCON. CONGEBILL ensures that the terms of shipment and delivery are clearly defined and legally binding.

The evolution of CONGEBILL is a testament to BIMCO’s unwavering commitment to addressing the dynamic needs of the maritime industry. By providing standardized documentation that facilitates international trade, CONGEBILL has become an essential tool for shipowners, freight forwarders, and carriers.

In this article, we will delve into the importance of CONGEBILL and why industry professionals must understand and utilize this powerful document.

Also Read: The bill of lading contract in cargo claims

1. What is CONGEBILL?

CONGEBILL, short for “Congenbill of Lading,” is a standardized bill of lading specifically designed for use with the GENCON charter party, which is widely used in the shipping industry for the transportation of general cargo, whether it’s bulk or containerized, on various types of vessels.

This document serves as a receipt for the cargo, a document of title, and evidence of the contract of carriage.

BIMCO developed CONGEBILL to address several key needs in the maritime industry:

  • Ensuring uniformity and standardization by creating a consistent document recognized globally.
  • Keeping it legally compliant and flexible, ensures it remains up-to-date with evolving maritime laws and provides a reliable framework for all parties.

1.1. Why CONGEBILL is used with GENCON charter party?

The GENCON charter party sets out the terms and conditions for the chartering of a vessel, while CONGEBILL acts as the corresponding bill of lading, ensuring that the key terms of the charter party are seamlessly integrated into the documentation governing the carriage of goods.

So, while CONGEBILL is linked to the charter party contract, it is not itself a contract for hiring the vessel. Instead, it governs the specific terms of the cargo’s transportation, reflecting the broader agreement established in the charter party.

1.2. Why does CONGEBILL matter for Shipowners, Freight Forwarders, and Carriers?

In maritime shipping, CONGEBILL provides the framework for clear, consistent agreements that protect against legal risks. This document serves multiple purposes for shipowners, freight forwarders, and carriers:

  • CONGEBILL establishes clear and consistent agreements between the parties involved in a shipment, reducing the potential for misunderstandings and disputes.
  • CONGEBILL ensures all legal requirements are met and protects against potential liabilities.
  • CONGEBILL simplifies the documentation process, making it easier and more efficient to manage shipments and reducing administrative burdens.

1.3. Using CONGEBILL in Ship Chartering

In the shipping industry, the chartering process involves hiring a vessel to transport goods, and the CONGEBILL bill of lading is a key document in this process. CONGEBILL ensures that the terms of cargo transportation are clear, legally binding, and consistent with international standards.

When goods are carried on a chartered vessel, it is standard practice to include a clause in the bill of lading that incorporates some or all of the terms of the charter party.

However, it’s important to remember that a bill of lading remains a separate contract from the charter party, and incorporating these terms requires careful attention.

Here are some essential tips for using CONGEBILL effectively in ship chartering:

  • If the goal is to incorporate all the terms of the charter party, using a standard form bill like CONGEBILL 2007 is advisable. This ensures that the terms are recognized and enforceable under international shipping practices.
  • Always make sure that the charter party referenced in the bill of lading is identified by date and relevant details. This prevents any confusion and ensures that the correct terms are incorporated, which is crucial for maintaining legal clarity.
  • When incorporating charter party terms into the bill of lading, use specific and precise language. Ambiguous or general incorporation clauses can lead to disputes over which terms are applicable, so it’s important to be explicit about what is being incorporated, especially for crucial clauses like dispute resolution or governing law.
  • Review the charter party and the bill of lading to ensure that their terms are consistent. If there is any inconsistency, the terms in the bill of lading will typically prevail, which can cause legal complications. It’s best to resolve any discrepancies before finalizing the documents.
  • Not all charter party terms automatically transfer to the bill of lading. Generally, only terms directly related to the carriage of goods—such as shipment, delivery, and freight payment—are incorporated unless explicitly stated otherwise.
  • Consider Third-Party Transferees: The bill of lading often ends up in the hands of third-party transferees who were not part of the original charter party. To protect these third parties and avoid binding them to unknown terms, ensure that the incorporated terms are fair, clear, and well communicated.

Also read: Introduction to Charter Party Agreements: The Contracts That Move Cargo

2. The evolution of CONGEBILL

The original CONGEBILL form was introduced in 1950 to simplify and harmonize the process of issuing bills of lading—a crucial document in maritime transportation that serves as a receipt for cargo, evidence of the contract of carriage, and a document of title. Over the years, the form has undergone several revisions to reflect changes in shipping practices, legal requirements, and technological advancements.

2.1. Major Revisions and Updates

  • 1950 Inception: The first edition of CONGEBILL was launched to standardize the bill of lading, addressing the industry’s need for a uniform document that could be widely accepted across different jurisdictions and legal frameworks.
  • 1978 Edition: The first major revision occurred in 1978, updating the document to address emerging issues in the maritime industry, such as changes in cargo handling practices and the growing complexity of international trade routes.
  • 1994 Edition: The 1994 update introduced more detailed provisions, reflecting the increasing importance of containerization, a trend that was revolutionizing the shipping industry by allowing goods to be transported more efficiently and securely.
  • 2007 Edition: This edition included significant updates that addressed the growing complexity of international trade and legal considerations. It introduced clearer definitions and improved clauses regarding the carriage of goods. The 2007 version remains one of the most widely used standard forms today, favored for its balance of legal certainty and practical applicability.
  • 2022 Edition: The latest revision in 2022 reflects modern updates, especially in the areas of legal compliance (with international conventions), risk management (via clauses like the General Average and Both-to-Blame Collision Clauses), and digitalization (as seen in the electronic handling provisions).

2.2. The Future of CONGEBILL

The CONGEBILL continues to evolve to meet the changing needs of the industry. While the 2007 version remains dominant, BIMCO and other industry bodies are constantly reviewing and updating standard forms to incorporate new legal developments, technological advancements, and industry practices.

The latest versions of CONGEBILL include provisions for electronic bills of lading, aligning with the industry’s move towards digitalization.

3. Key Components of CONGEBILL

3.1. Key fields

The CONGENBILL 2022 includes the following key fields, designed to capture essential information about the shipment and the terms of carriage:

Here is the information presented in a two-column table:

Field Description
Shipper’s Details The name and address of the shipper who is sending the goods.
Consignee’s Details The name and address of the consignee who is intended to receive the goods.
Notify Party Details of the party to be notified upon the arrival of the goods at the destination.
Vessel Name The name of the vessel carrying the cargo.
Port of Loading The port where the cargo is loaded onto the vessel.
Port of Discharge The port where the cargo is to be unloaded.
Description of Goods A detailed description of the goods being shipped, including the quantity, weight, and any identifying marks or numbers.
Gross Weight The total weight of the cargo, including a note on whether any part of it is “on deck at shipper’s risk,” which absolves the carrier from responsibility for loss or damage in such cases.
Freight Payable as per Charter Party Information on the payment of freight, linked directly to the specific charter party under which the goods are being shipped, including the date of the charter party.
Date Shipped on Board The date when the cargo was loaded onto the vessel.
Place and Date of Issue The place and date where the bill of lading is issued.
Number of Original Bills of Lading The number of original bills of lading issued, with the stipulation that once one is accomplished, the others become void.
Clauses Incorporated A field to incorporate the terms and conditions of the relevant charter party, often referring to specific clauses that apply to the carriage of goods.
Signature of Carrier or Master The signature of the carrier or the master of the vessel, crucial for the validity of the bill of lading. It also includes options for the role (Master, Agent, Owner, Charterer) with instructions to delete as appropriate.
Special Instructions or Remarks Any additional instructions or remarks that need to be considered during the transportation of the goods.
Electronic Bill of Lading Options The 2022 version includes provisions for issuing and handling electronic bills of lading (eBLs), reflecting the industry’s shift towards digitalization.

3.2 Clauses

CONGENBILL 2022 includes a series of well-crafted clauses designed to ensure clarity, fairness, and legal protection for all parties involved in a maritime shipping transaction. Below are some of the most critical clauses found in the CONGENBILL 2022, along with their significance and practical applications:

General Paramount Clause

This clause ensures the application of the Hague-Visby Rules or the Hague Rules, depending on the country of shipment or destination, including the application of the SDR Protocol 1979. This is crucial for maintaining compliance with international conventions regarding the carriage of goods.

Example: If goods are shipped from a country where the Hague-Visby Rules are in force, those rules will automatically apply to the bill of lading, ensuring consistent legal standards for liability.

General Average Clause

General Average is to be adjusted according to the York-Antwerp Rules 2016, and this will be settled in London unless otherwise agreed in the charter party. This clause is essential for defining how costs related to extraordinary sacrifices (like jettisoning cargo to save a ship) are shared among stakeholders.

Example: If the vessel encounters a severe storm and cargo is jettisoned to save the ship, the General Average Clause stipulates that all parties, including cargo owners, share in the costs incurred.

New Jason Clause

This clause requires cargo owners to contribute to General Average, even if the event that necessitated the General Average was not the fault of the carrier. This clause is particularly important in scenarios where the carrier is exonerated from responsibility due to circumstances beyond their control.

Example: In case of a collision or a fire onboard, cargo owners must contribute to the General Average costs, even if the carrier was not negligent.

Both-to-Blame Collision Clause

This clause stipulates that if the vessel collides with another vessel due to the negligence of both vessels, the cargo owner must indemnify the carrier against any liability claims from the other vessel.

Example: If a collision occurs and both vessels are found partially at fault, the cargo owner would be required to cover the carrier’s liability to the other vessel’s owner.

International Group of P&I Clubs/BIMCO Himalaya Clause for Bills of Lading and Other Contracts 2014

This clause extends the carrier’s legal protections to their servants, agents, and subcontractors, limiting their liability. It’s crucial for protecting the broader network of parties involved in the shipping process.

Example: If a third-party stevedore damages the cargo while loading, the Himalaya Clause protects the stevedore from direct legal action by the shipper, as the liability is covered under the same protections granted to the carrier.

Law and Arbitration Clause

The clause ensures that any disputes arising from the bill of lading are resolved according to the law and arbitration provisions specified in the referenced charter party. This provides a consistent legal framework for dispute resolution.

Example: If a dispute over cargo damage arises, the Law and Arbitration Clause directs that the matter be settled according to the arbitration rules specified in the charter party, typically in a specified jurisdiction like London.

Conclusion

CONGEBILL has established itself as a cornerstone of the maritime industry, offering a standardized, reliable, and legally sound framework for shipowners, forwarders, and carriers. Developed and continuously refined by BIMCO, CONGEBILL ensures that the complex and often risky business of maritime shipping is underpinned by clear terms, consistency across contracts, and adherence to international standards.

By using CONGEBILL in conjunction with BIMCO’s charter party contracts, stakeholders in the shipping industry can significantly reduce the risks associated with cargo transportation. The document’s carefully crafted clauses provide robust legal protection, while its alignment with BIMCO’s broader contractual standards ensures uniformity and predictability in shipping operations.

As the industry continues to evolve, especially with the growing emphasis on digitalization, CONGEBILL remains at the forefront, adapting to meet the challenges of the modern maritime environment. Its role in the future of ship chartering is assured, with BIMCO’s ongoing commitment to maintaining its relevance and utility.

If you need assistance with understanding or implementing CONGEBILL, or if you’re facing challenges with your current maritime contracts, don’t hesitate to reach out to Marlin Blue.

FAQS

Q1. What happens when CONGEBILL is not properly aligned with the corresponding BIMCO contract?

A1: When CONGEBILL is not properly aligned with the corresponding BIMCO contract, it can lead to significant legal and operational issues.

Misalignment may result in discrepancies between the terms of the bill of lading and the charter party, which can cause confusion, disputes, and potential breaches of contract.

These issues can escalate into costly legal battles, delays in cargo delivery, and strained relationships between shipowners, charterers, and other stakeholders.

Q2. What services does Marlin Blue offer related to BIMCO contracts and CONGEBILL?

A2: Our team of experts can assist with drafting and reviewing charter parties, ensuring that CONGEBILL and BIMCO contracts are correctly integrated to prevent disputes.

At Marlin Blue, we help clients ensure that their CONGEBILL documents are correctly aligned with BIMCO contracts, providing legal advice, and resolving any disputes that arise from misalignment.
We also provide tailored legal advice on specific issues, including negotiation, arbitration, litigation, and claims management.

Q3. How does CONGEBILL affect shipowners, and how can Marlin Blue help in this regard?

A3: CONGEBILL plays a crucial role in ship chartering, particularly when used alongside BIMCO contracts such as GENCON. For shipowners, the integration of CONGEBILL with these contracts can streamline operations, ensure consistency, and reduce legal risks. Marlin Blue can assist shipowners by providing expert legal guidance on how to effectively use CONGEBILL in conjunction with BIMCO contracts.

Our services include contract review, dispute resolution, and advice on best practices for maintaining operational efficiency and legal compliance.

Liquid Bulk Carriers [Types, Examples & Descriptions]

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Liquid bulk carriers, also known as tankers, are specialized ships designed to transport large quantities of liquid cargo, such as crude oil, petroleum products, chemicals, and other liquid substances. Unlike container ships that carry packaged goods, these vessels are built specifically for non-packaged, fluid cargo.

Other modes of transportation of liquid bulk cargo include rail tank cars, tanker trucks, and pipelines, depending on the distance, and specific requirements of the cargo

History and Development

The concept of specialized tankers for liquid cargo emerged in the early 1900s.

However, it was not until the 1950s and 1960s that Very Large Crude Carriers (VLCCs) were introduced, revolutionizing the industry by significantly increasing transportation efficiency. The first company to build and use VLCCs was Mitsui O.S.K. Lines (MOL) from Japan, which placed orders for these large vessels to meet the growing demand for oil transportation.

In the 1980s, double-hull designs were adopted following major oil spills, such as the Exxon Valdez incident in 1989. This design provided an extra layer of protection, significantly reducing the risk of environmental disasters.

Technological advancements have continued into the 21st century, with modern tankers now featuring advanced navigation systems, automated safety protocols, and compliance with stringent environmental regulations.

Classification

Liquid bulk carriers are classified based on:

  1. Properties of the cargo: the physical and chemical properties of the cargo, including potential hazards.
  2. Size: the dimensions and capacity of the vessel.

This classification is crucial in determining the vessel’s design, construction materials, and safety procedures required for the safe transportation of various types of liquid bulk cargo.

1. Types of liquid bulk carriers based on properties of the cargo

The classification is primarily based on the properties of the cargo, including its potential hazards. Here’s a brief overview of the primary classifications:

  • Oil tanker
  • LNG Carriers
  • LPG Carriers
  • Chemical Tankers
  • Product Carriers
    • Edible Oils and Animal Fats
    • Molasses and Liquid Sugar
    • Other specialized liquids

1. Oil Tanker 

Oil tankers are specialized ships designed to transport crude oil or petroleum products. 

Crude tankers move large quantities of unrefined oil from extraction points to refineries, while product tankers transport refined products like gasoline, diesel, and jet fuel to points near consuming markets.

Regarding their design and structure, oil tankers are equipped with specialized tanks capable of carrying up to two million barrels of oil per voyage. These vessels typically contain between 8 to 12 individual tanks, each designed for safe and efficient transport of liquid cargo. Due to safety concerns and stringent international regulations, there has been a significant shift towards constructing double-hulled tankers. This design, featuring two layers of hull plating, aims to minimize the risk of oil spills and environmental pollution in the event of an accident or hull breach.

The global crude oil carrier market has experienced steady growth, with a compound annual growth rate (CAGR) of 3.6% from 2018 to 2024. As of 2024, there are approximately 8,900 oil tankers in operation worldwide, encompassing various types such as VLCCs, Suezmax, Aframax, and smaller vessels. This expansion is primarily driven by rising oil demand, particularly in Asia, and the necessity to replace aging vessels with more efficient models due to stricter environmental regulations.

Major owners of large oil tanker fleets include:

A view of the manifold system on a bulk carrier ship, showing multiple pipes and valves used for loading and unloading liquid cargo.
The manifold system on a bulk carrier ship is critical for managing the flow of liquid cargo. Proper maintenance and operation are essential to prevent contamination and ensure accurate measurements during transportation.

2. LNG carriers

LNG carriers are specialized ships designed to transport liquefied natural gas (LNG). Inwardly, they are very sophisticated and utilize high technology, resulting in high construction costs. There are two main types of LNG carriers, easily identified by their deck structures. Some feature large spherical tanks, while others have a more streamlined design for the new transportation system known as the “Technigaz System.”

Regarding their design and structure, LNG carriers are equipped with cryogenic tanks that maintain LNG at temperatures as low as -162°C. This allows for the safe and efficient transport of large volumes of natural gas. These vessels can carry between 125,000 to 266,000 cubic meters of LNG.

The global LNG carrier market has experienced robust growth due to the rising demand for natural gas, particularly in Asia and Europe. As of 2024, there are over 700 LNG carriers in operation worldwide. These vessels range in size, with capacities between 125,000 to 266,000 cubic meters. The growth in the LNG carrier fleet is driven by increasing global LNG production and consumption, as well as the expansion of LNG export facilities.

Major owners of large LNG carrier fleets include Teekay LNG Partners, Mitsui O.S.K. Lines (MOL), Nakilat, GasLog, Golar LNG, Höegh LNG, BW Gas.

An LNG (Liquefied Natural Gas) tanker ship docked at a port during sunset, with large spherical storage tanks illuminated in red.

3. LPG carriers

LPG carriers are specialized ships designed to transport liquefied petroleum gas (LPG). LPG, which consists primarily of propane and butane, is transported in a liquefied state under pressure. These vessels are equipped with pressurized tanks to maintain the LPG in its liquid form during transportation. LPG carriers can be categorized into fully pressurized, semi-pressurized, and fully refrigerated types, based on the pressure and temperature conditions they maintain for cargo.

Types and characteristics:

  • Fully pressurized carriers: These are small vessels with spherical tanks designed to transport LPG under high pressure at ambient temperatures. They are typically used for short-distance trade.
  • Semi-pressurized/Partly refrigerated carriers: These vessels use both pressure and refrigeration to maintain the LPG in liquid form. They are versatile and can handle different types of LPG and petrochemical gases.
  • Fully refrigerated carriers: These are large ships designed to transport LPG at low temperatures and near-atmospheric pressure. They are used for long-distance, large-volume transportation.

The LPG carrier market is expanding due to increased demand for LPG as a clean fuel alternative and its widespread use in residential, commercial, and industrial applications. Key operators in the LPG carrier market include BW LPG, Dorian LPG, and Avance Gas.

4. Chemical Tankers

Chemical tankers are specialized ships designed to transport chemicals in bulk. These vessels are constructed to handle a wide variety of liquid chemicals, each with unique properties and hazards. Chemical tankers are equipped with multiple cargo tanks, allowing them to carry different chemicals simultaneously without risk of contamination.

Types and characteristics:

  • Stainless steel tankers: These vessels are used to transport highly corrosive chemicals and are characterized by their stainless steel cargo tanks.
  • Coated Tankers: These tankers have epoxy or phenolic coatings on the tank surfaces, allowing them to carry a range of chemicals that are less corrosive.
  • Dedicated Chemical Tankers: These ships are built specifically for the transport of chemicals, with advanced safety features and sophisticated cargo handling systems.

The shipping of chemicals in bulk is covered by regulation in SOLAS chapter VII – Carriage of dangerous goods, and MARPOL Annex II – Regulations for control of Pollution by Noxious Liquid Substances. Both conventions require chemical tankers to be designed and constructed to a certain standard as defned in the International Code for Design and Equipment of Ships carrying Dangerous Chemicals in Bulk (IBC Code).

What can go wrong with the chemical tankers?

Chemical tankers face several risks, including:

  • Cargo Contamination: Insufficient surface pre-treatment or cleaning can lead to contamination from previous cargoes, causing chemical reactions or degradation of the new cargo
  • Corrosion: Highly corrosive chemicals can cause blistering, cracking, and corrosion of tanks if not properly maintained. This risk is mitigated by using stainless steel tanks, but long-term exposure can still cause damage.
  • Heat Resistance: Inadequate resistance to high temperatures can result in blistering during loading and unloading processes.
  • Water and Seawater Resistance: Exposure to water or seawater can induce hydroscopic stress, leading to cracking and blistering of the tanks.
  • Salt and Oxygen Resistance: Areas not properly coated can suffer from osmotic blistering and corrosion under creep damage conditions.
  • Mechanical Impact: Lack of resistance to mechanical impacts can result in scratches and abrasions, followed by corrosion.
  • Internal Stress/Stress Fatigue: Coatings that lack resistance to internal stress can develop micro, mini, and macro cracking, leading to subsequent corrosion and flaking.
  • Operational Errors: Mistakes during loading, unloading, or during the voyage can lead to spills or leaks, posing environmental and safety hazards.
  • Fire and Explosion Risks: Many chemicals are flammable or reactive. Any ignition source, such as electrical faults or static discharge, can lead to fires or explosions on board.
  

The market

The chemical tanker market is driven by the global chemical industry’s growth and the increasing demand for various chemicals used in manufacturing, agriculture, and pharmaceuticals. The market is also influenced by stringent environmental regulations and safety standards.

Major operators:

  • Odfjell SE
  • Stolt-Nielsen
  • Navig8 Chemical Tankers
Stainless Steel Tankers
Coated Tankers
Dedicated Chemical Tanker

2. Types of liquid bulk carriers based on the dimensions and capacity of the vessel.

Class Dimensions (Length x Beam x Draft) Capacity (DWT) Cargo Description
General Purpose Tanker 150-200m x 20-25m x 10m 10,000–24,999 Crude oil, refined products These are small to medium-sized tankers used primarily for short-distance trade. They are versatile and can navigate through coastal waters and smaller ports.
Product Tanker 150-200m x 25-32m x 12m 10,000–60,000 Refined products Product tankers are designed to carry refined products such as gasoline, diesel, and jet fuel. They often have coated tanks to prevent contamination and corrosion.
Medium Range Tanker 175-225m x 25-32m x 12m 25,000–44,999 Crude oil, refined products Medium Range (MR) tankers are widely used for transporting refined petroleum products and chemicals over moderate distances.
Panamax 200-250m x 32.31m x 12m 60,000–80,000 Crude oil, refined products Panamax tankers are built to fit through the Panama Canal. They offer a balance of size and capacity, making them efficient for various global routes.
LR1 (Long Range 1) 225-250m x 32-42m x 13m 45,000–79,999 Crude oil, refined products LR1 tankers are used for long-haul routes, carrying larger volumes of refined products and crude oil.
Aframax 230-270m x 42m x 14.5m 80,000–120,000 Crude oil Aframax tankers are optimized for maximum efficiency within certain maritime routes, especially where port and canal size restrictions apply.
LR2 (Long Range 2) 250-280m x 42-48m x 15m 80,000–159,999 Crude oil, refined products LR2 tankers are capable of carrying large quantities of crude oil and refined products over long distances. They are often used on international routes.
Suezmax 275-285m x 48m x 17m 120,000–200,000 Crude oil Suezmax tankers are designed to fit through the Suez Canal, maximizing their capacity while adhering to canal restrictions. They are one of the larger classes of tankers before moving to VLCC and ULCC.
VLCC (Very Large Crude Carrier) 320-330m x 60m x 20m 160,000–319,999 Crude oil VLCCs are among the largest tankers used for long-haul routes, primarily for transporting crude oil from the Middle East to Europe, Asia, and North America. They are highly efficient for large-volume transportation.
ULCC (Ultra Large Crude Carrier) 380-415m x 68m x 24m 320,000–549,999 Crude oil ULCCs are the largest tankers in operation, designed for transporting vast quantities of crude oil on the longest international routes. They are highly cost-effective for transporting large volumes but are limited to very few deep-water ports.

Road Transport Vehicles [Types, Irregularities, & Claim Examples]

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In the cargo insurance sector, subrogations can result in successful recoveries if it is demonstrated that there were irregularities in the vehicle that caused or contributed to an incident involving cargo loss or damage.

When a loss occurs due to vehicle irregularities, such as inadequate maintenance, failure to comply with safety regulations, or mechanical defects, the insurance company can use these irregularities as the basis for a subrogation claim. After proper inspections and reporting, often following a cargo claim, the focus shifts to the carriers and freight forwards for accountability.

Violations or negligence in these areas can lead to serious legal and financial problems.

Among the most common regulations are those related to the maximum weights and dimensions of vehicles, restrictions on the types of cargo that can be transported on certain routes, and rules on vehicle maintenance and inspection.

Failure to comply with these regulations can result in fines, penalties, and, in extreme cases, the immobilization of the vehicle. Moreover, any incident resulting from negligence in complying with these regulations can lead to legal claims for damages and implications under the carrier’s liability as per CMR.

These vehicles are typically categorized by their weight (e.g., Maximum Authorized Mass (MMA)), type of merchandise containment (e.g., refrigerated trucks for perishable goods), structure (e.g., flatbed trucks for oversized cargo), or sustainable and environmentally-friendly forms of distribution (e.g., electric delivery vans).

Here is a list of common types of vehicles used in road freight transport, along with examples of claim denials and recoveries due to vehicle irregularities, negligence, and violations:

Box trucks

Box trucks are the most common vehicles for transporting general goods, frequently used for distributing dry products and valuable items.

Potential Impact on Cargo Claims

Common issues with box trucks can include damage to the box structure, failures in the locking and sealing systems, and improperly secured cargo. These issues can lead to potential claims for water damage, theft of goods, and deterioration of sensitive products. To defend against such claims, it is essential to maintain thorough documentation of regular inspections and maintenance, which can demonstrate that the vehicle was in proper condition.

Example Claim Recovery

The insurance company can recover the costs of the claim from the truck owner or the maintenance shop if it is proven that lack of maintenance caused the accident.

Refrigerated Trucks

Refrigerated trucks are used for transporting perishable goods, maintaining controlled temperatures throughout the journey.

Potential Impact on Cargo Claims

Common issues with refrigerated trucks include failures in the refrigeration system and incorrect temperature calibration. These problems can lead to claims for loss of freshness, contamination due to temperature fluctuations, and spoiled products. Defending against such claims requires detailed records of temperature during transport and certification of the refrigeration equipment’s proper functioning.

Example Claim Recovery

The insurance company can recover the costs of the claim from the truck owner or the refrigeration equipment provider if it is demonstrated that equipment failure caused the damage.

Tanker Trucks

Tanker trucks are used for transporting liquids and gases, and must comply with strict safety regulations.

Potential Impact on Cargo Claims

Common issues with tanker trucks include leaks, cross-contamination, and improper tank cleaning. These problems can result in claims for loss of cargo, environmental damage, and contamination of products. Defending against such claims relies on thorough documentation of cleaning and maintenance procedures and verification of the tank’s integrity before loading.

Example Claim Recovery

The insurance company can recover the costs of the claim from the truck owner or the cleaning service provider if it is shown that improper cleaning caused the contamination.

Container Trucks

Container trucks are designed for transporting standard containers, allowing easy transfer between different modes of transport.

Potential Impact on Cargo Claims

Common issues with container trucks include improper securing of containers and structural damage to the chassis. These problems can lead to claims for damage from sudden movements, container overturning, and loss of cargo. Defending against such claims requires records of proper container securing and the chassis’s condition before each trip.

Example Claim Recovery

The insurance company can recover the costs of the claim from the truck owner or the container handling company if it is proven that improper securing caused the cargo loss.

Vans

Vans are smaller vehicles used for short-distance deliveries and the transportation of smaller loads, commonly utilized in urban areas for last-mile delivery services.

Potential Impact on Cargo Claims

Common issues with vans include overloading, inadequate securing of cargo, and vehicle malfunctions. These problems can lead to claims for damage to goods due to poor handling, theft, and accidents caused by overloading. Defending against such claims relies on documentation of loading practices, regular vehicle maintenance, and proper securing of cargo.

Example Claim Recovery

The insurance company can recover the costs of the claim from the van owner or the loading personnel if it is demonstrated that improper loading caused the damage.

Trailers

Trailers are large vehicles designed to transport substantial amounts of cargo over long distances, including flatbed trailers, dry van trailers, and refrigerated trailers, among others.

Potential Impact on Cargo Claims

Common issues with trailers include problems with the trailer hitch, tire blowouts, and inadequate securing of cargo. These problems can lead to claims for loss of cargo, damage due to improper loading, and accidents resulting from trailer malfunctions. Defending against such claims requires thorough pre-trip inspections, proper loading and securing practices, and maintenance records.

Example Claim Recovery

The insurance company can recover the costs of the claim from the trailer owner or the loading crew if it is proven that improper maintenance or loading practices caused the incident.

Road transport regulations vary by region and type of cargo. Complying with these regulations is crucial to avoid penalties and ensure insurance coverage. All commercial vehicles must be regularly maintained and undergo safety inspections to ensure they are safe to operate.

For more information or details about specific cases or legal procedures, please get in touch.

 

Incoterms: How do they affect Marine Insurance?

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Refrigerated shipping containers stacked at a port, illustrating the application of Incoterms in international trade of perishable goods.

Establishing standardized protocols is crucial for smoothly executing international transactions. Among these protocols, marine Incoterms© stands out as fundamental pillars, ensuring clarity and consistency across borders.

Primarily, they are designed to define three critical aspects of international commerce precisely: the allocation of logistic costs between the seller and buyer, the transfer of risks during the transport of goods, and the necessary customs documents and procedures for foreign trade operations.

Unbelievable as it may seem, buyers and sellers don’t always have the Incoterms© in mind when they take out freight insurance. Assuming that insurance will automatically cover a consignment until it reaches its destination is a common (and costly!) mistake.

Cargo insurance and regulations operate within the Incoterms© framework, as the risk of loss or damage to goods during transit significantly influences insurance policies and terms. The delineation of responsibilities and risks, as specified by Incoterms©, directly impacts the coverage and claims process, making an understanding of these terms essential for all parties involved in the international trade of goods.

This article delves into the essentials of Incoterms©, their significance for various stakeholders, and their implications on cargo insurance.

1.1 What are Incoterms©?

Incoterm® stands for International Commercial Terms. They are a set of trade rules, of voluntary use, crucial for the global trade of goods.

The purpose of Incoterms© is to precisely delineate three aspects of international commerce:

  1. The allocation of logistic costs between the seller and buyer.
  2. The transfer of risks during the transport of goods.
  3. The necessary customs documents and procedures for foreign trade operations.

The sales contract states the Incoterms©, so both parties know beforehand who bears which risks and expenses with respect to the transport and delivery of the goods sold.

2. For whom are Incoterms© relevant?

These rules are crucial for international sellers and buyers, but also for intermediaries in global trade, including carriers, lawyers, and significantly, cargo insurers.

International sale of goods implies several risks, expenses, and tasks that are split between the buyer and seller:

  • Paying the cost of freight
  • Incurring other expenses, such as loading and discharging
  • Clearing customs
  • Loss or damage to goods 
  • Arranging cargo insurance

Incoterms© play a crucial role in outlining who’s responsible for every step of the transport chain.

3. How are Incoterms© linked to marine cargo insurance?

When negotiating a trade agreement, buyer and seller are free to decide who sustains the risk and eventually takes out the required insurance.

The fact is Incoterms© don’t require the seller or buyer to provide marine insurance (except for the CIF and CIP terms).

However, they do define whether it’s the seller or buyer who will bear responsibility for any loss or damage that occurs during transit. Surely, it’s worth playing it safe and having this exposure to financial loss insured against.

Now, there’s something to take into account:

A marine cargo insurance policy can only legally pay out on goods the policyholder has an insurable interest in.

Wondering what “insurable interest” implies in this context? In plain words, it means you own the goods or bear the risk. So, in the event that the cargo got damaged, you’d suffer a financial loss.

If the Incoterms© specified in your sales contract points to the other party as the cargo owner, then your policy won’t pay your claim.

4. How do marine Incoterms© help?

Incoterms© provides clarity as to the parties’ obligations in key areas, enhancing the predictability and security of international trade. However, they do not cover every aspect that should be in a sale contract. Certain Incoterms© only apply to sea/inland waterway transport, while others can be used for all types of transport, making some more relevant for specific shipments.

5. Are marine Incoterms© compulsory?

The use of Incoterms© in sale contracts is recommended but not compulsory. They offer a framework that parties can choose to apply, to clarify the terms of their trade agreements, thereby reducing misunderstandings and disputes.

6. Origin and Evolution

The first edition of Incoterms© was published in 1936, with successive revisions and updates (usually every ten years) leading up to the current version, Incoterms© 2020.

This latest version was launched in September 2019 after a revision process that began in 2016, incorporating feedback from stakeholders, including the International Union of Marine Insurance (IUMI), and national ICC committees.
These updates reflect modern commercial practices, ensuring that Incoterms© remain relevant and useful tools for international trade.

7. Who Defines Incoterms©?

The International Chamber of Commerce (ICC) is the authority that defines and updates Incoterms©. This global organization undertook the revision of Incoterms© 2010 in 2016, incorporating views from stakeholders, including the International Union of Marine Insurance (IUMI), and national committees of the ICC.
The Incoterms© 2020 were launched as a result in September 2019, offering key updates to reflect modern commercial practices.

8. What is covered by the Incoterms ® rules?

They cover various aspects of the trade process, including:

  1. Licences/Authorisations/Security Clearances and Other Formalities: Incoterms® set out responsibilities for obtaining necessary export and import licences, authorizations, and security clearances. However, the specifics of these obligations depend on the chosen Incoterm.
  2. Contracts of Carriage and Insurance: While Incoterms® specify which party is responsible for arranging and paying for the carriage of goods and insurance, they do not govern the contractual details of these arrangements.
  3. Delivery: They define the point in the transaction where the risk of loss or damage to the goods transfers from the seller to the buyer, which is crucial for understanding delivery obligations.
  4. Transfer of Risk: This is a key feature of Incoterms®, delineating when the buyer takes on the risk for the goods, which can impact insurance requirements and responsibilities.

9. Classification and Categories of Incoterms 2020

According to the latest edition of the Incoterms (2020), there are 11 different trade rules. They are divided into 4 categories, based on the risk, responsibility and fees each party bears: E, C, F and D.

Out of them, 7 rules are applicable to any transport mode (multimodal terms), whereas 4 are “waterway only” .

EXW (EX-Works)

The seller makes goods available to the buyer at their premises. The buyer takes full responsibility for the transit through to the final destination.

FCA (Free Carrier)

The seller delivers the cargo to a carrier selected by the buyer at a named place. As the delivery point could be anywhere in the country of origin (e.g., a freight terminal), the contract of sale must specify where and to whom the cargo is to be delivered.

FAS (Free Alongside Ship)

The seller makes the cargo available alongside the vessel at the port of shipment, arranging export clearance and covering origin charges. The buyer bears all subsequent expenses and risks.

FOB (Free On Board)

The seller loads the cargo on board the vessel and clears it for export. After this, responsibility shifts to the buyer.

CFR (Cost and Freight)

The seller pays all costs up to the named port of destination. However, risk passes over to the buyer when the goods are loaded on the vessel.

CIF (Cost, Insurance & Freight)

This is one of only two Incoterms© which contains an obligation to provide insurance (the other one is CIP). The seller agrees to provide coverage for the buyer’s risk of loss or damage from the place of origin to the final destination.

CPT (Carriage Paid To) 

The seller agrees to pay freight costs to the destination, until the cargo is delivered into the custody of the first carrier. The buyer arranges onward transport and pays tax and duty.

CIP (Carriage and Insurance Paid To) 

In a nutshell, the same as CIF. However, the goods are made available to the carrier at a named place in the country of destination (as opposed to the port under CIF terms).

DAT (Delivered At Terminal)

The seller is responsible for all charges until the cargo is delivered to the agreed terminal (e.g., port, airport or any other hub). Once the cargo is unloaded, the risk passes over to the buyer.

DAP (Delivered At Place)

The seller delivers the goods to the buyer’s location. The latter is responsible for the import process, including unloading the goods at the destination.

DDP (Delivered Duty Paid)

The seller is responsible for the entire process, including import clearance and payment of applicable taxes and import duty at the destination.

For more information on the remaining set of Incoterms©, keep an eye out for our upcoming articles. If you ever find yourself in a dispute due to practicing the wrong Incoterms©, our expert legal team will help you solve it.

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