What Are The Liabilities Of Shipping Companies For Lost Cargo?

Shipping companies act as carriers responsible for the safe and timely delivery of cargo. Under Indian law, mainly through the Carriage of Goods by Sea Act, 1925 (which incorporates the Hague-Visby Rules), they are liable for loss or damage to cargo unless exempted under certain conditions. Understanding these liabilities helps shippers and receivers claim rightful compensation and protect their goods.

Liabilities of Shipping Companies for Lost Cargo

Carrier’s Duty of Care

Shipping companies must exercise due diligence to make the ship seaworthy, properly manned, equipped, and supplied before and during the voyage. Failure to do so can result in liability for cargo loss or damage.

Liability Under Hague-Visby Rules

The Indian Carriage of Goods by Sea Act applies the Hague-Visby Rules which limit carrier liability but require proof that loss or damage was not due to excepted perils like natural disasters or war.

Scope of Liability

Liability arises if loss or damage occurs between the time cargo is loaded on board and discharged.

Liability extends to delay in delivery causing financial loss.

Limitation of Liability

Shipping companies may limit their liability based on the weight or value of lost cargo as per the rules, often specified in bills of lading.

Bill of Lading

This contract document outlines the terms of carriage and liabilities. Shipping companies are bound by its terms and conditions regarding cargo claims.

Exceptions to Liability

Carriers are not liable for loss due to:

• Acts of God (natural disasters)
• War or hostilities
• Negligence by the shipper
• Inherent defects in the cargo

Claims and Compensation

Cargo owners can file claims with the shipping company. If unresolved, disputes can be taken to maritime arbitration or courts.

Insurance

Both carriers and cargo owners often hold marine insurance policies to mitigate financial risks related to cargo loss or damage.

Legal Protections and Consumer Actions

Cargo owners should carefully check the bill of lading terms and declare accurate cargo values.

Timely notification of loss or damage to the carrier is mandatory to preserve rights.

Filing formal claims within stipulated timelines is essential.

Legal recourse is available through Indian courts or international arbitration bodies.

Consumer Safety Tips

• Verify the shipping company’s reputation and insurance coverage before shipment.
• Use detailed and clear bills of lading.
• Keep accurate records and photographs of cargo condition before shipment.
• Understand carrier liability limits and purchase additional insurance if needed.

Example

A company ships machinery via an Indian flagged vessel. Upon arrival, part of the machinery is missing due to improper stowage. The company files a claim under the Indian Carriage of Goods by Sea Act. The shipping company argues the loss was due to an excepted peril, but an investigation finds negligence in stowage, making the company liable to compensate for the missing cargo.