Claims for cargo shortfall are very common in the dry bulk sector. A receiver may allege a cargo shortage at the discharge port claiming that the weight of the cargo discharged was less than the Bill of Lading (B/L) weight.
The receiver’s position is simple Ð they want delivery of the amount of cargo that they have paid for. Assuming the B/Ls are issued by the owners, they will look to the shipowner for compensation for any shortfall. In this respect, Article III Rule 3 of Hauge/Hague-Visby Rules (HVR) (the most commonly incorporated international convention dealing with B/L related issues) provides that the B/L is evidence of the quantity of cargo received by the ship and the shipowner is bound by this statement of quantity.
While there is the possibility for cargo to be lost in transit, in our experience shortage claims commonly arise as a result of different methods for determining weight being used at the load and/or discharge port. These methods are usually prescribed under the sales contract or the charterparty.
There are several methods of calculating cargo weight, including:
- (i) weighing loaded trucks on a weighbridge;
- (ii) weighing cargo on a conveyor belt; and
- (iii) by draft survey.
Each of these methods may produce slightly different figures. To mitigate against such claims, there are several options available, including:
- (i) to approach the relevant counterparty to agree the figures to be used;
- (ii) asking the Master to add the words ‘shipper’s figures’ or ‘shore figures’ next to the cargo weight;
- (iii) asking the Master to clause the B/L with the disclaimer ‘weight, quantity, quality, condition, contents, and value unknown’; and
- (iv) conducting a draft survey at both the load and discharge port. Draft surveys are generally regarded as an accurate (i.e. +/- 0.5%) means to measure cargo weight.
Options (i) and (ii) are especially important when a discrepancy between weights is identified at the load port. Even where these options are available, it is important to consider that in some circumstances, adding remarks on the B/Ls will not be acceptable or permissible under the relevant contract.
In addition, and while not ideal, Letters of Indemnity (LOIs) can sometimes also be obtained to give a shipowner protection against shortage claims. However, the parties need to be careful as an LOI will only be enforceable in certain circumstances.
If weight remains a problem, evidence will be necessary to demonstrate a real claim for cargo shortage. Draft and independent surveys, along with the vessel’s tallies are useful tools for the shipowner to defend a shortage claim.
A receiver will have only one year to bring a claim against the shipowner for cargo shortage as per Article III Rule 6 of the HVR. If a shipowner receives a claim for shortage, it should look to the B/L for warranties given as to weight and quantity and available defences if any, under the CP. English courts usually provide full protection to a shipowner where the B/L is claused, however, that may not be the case in other jurisdictions.
