Shipping accidents and incidents lead to billions of dollars of economic losses due to damaged or lost cargo. Carriers may be liable, which means that businesses can file claims or lawsuits to recover damages. A maritime lawyer can help you sort out the laws that apply if you have lost or received damaged cargo due to a shipping incident.
How Does Shipping Cargo Get Lost or Damaged?
Accidents are significant and obvious causes of lost or damaged cargo. For example, in a collision or grounding, shipping containers can fall off a ship and be lost. Even when containers are not lost, cargo can shift and become damaged.
How Cargo Gets Lost at Sea
While reports show that the number of lost shipping containers decreased from 2022 to 2023, it remains a significant issue. Lost containers represent economic loss. They also pose a risk to vessels at sea that must navigate around floating containers.
Some causes of lost cargo include:
- Rough weather
- Poor loading of cargo
- Improper packing of shipping containers
- Inadequate securing of cargo
- Incorrect reporting of weight of cargo
- Theft and piracy
How Cargo Gets Damaged at Sea
Cargo can be damaged in many ways during shipping, depending on the type of cargo and the incident that causes damage. For instance, water on board a ship might damage some types of cargo and not others. Power malfunctions can damage perishable goods but not other cargo types.
Here are some common causes of cargo damage at sea:
- Flooding
- Fire
- Collisions or groundings
- Power loss and changes in temperature
- Rough weather
- Improperly stowed and secured cargo
- Incorrect reporting of cargo weight
- Improper loading or packing of cargo
Types of Cargo Damage
Damage to cargo or loss of cargo in shipping is categorized in four ways for the purposes of making claims:
- If the cargo never arrives or some of the cargo is missing, it is considered a loss.
- A shortage occurs when the number of items is less than what was listed for shipping.
- General Damage. General damage is visible damage on cargo when it arrives.
- Concealed Damage. Damage is considered concealed if it is not immediately obvious upon arrival and is discovered and reported after the delivery is accepted.
What Law Applies to Lost and Damaged Cargo?
The federal law called the Carriage of Goods by Sea Act (COGSA) governs claims related to cargo loss or damage in the maritime industry. COGSA applies to foreign trade only and to the period of time between when cargo is loaded for shipping and unloaded at its destination.
Under COGSA, ship owners must provide a seaworthy vessel and ensure that cargo storage is appropriate for the type of cargo being transported. This includes providing the right temperature and secure fastening. A contract between a shipper and ship owner can impose more duties on the ship owner but not less than what is required by COGSA.
COGSA limits or exempts the liability of the ship owner in certain circumstances. These include situations where the ship owner could not have controlled the loss, such as negligence on the part of a crew member. A ship owner may also be exempt from liability for:
- Act of God
- Acts of war
- Strikes or work stoppages
- Quarantine restrictions
- Legal seizures
- Negligence on the part of the shipper
- Fires (unless the ship owner was negligent)
The shipper can make a claim under COGSA to recover damages for lost or damaged cargo. If the ship owner believes they are exempt from providing damages, they bear the burden of proof.
How to File a Lawsuit or Claim for Lost or Damaged Cargo
Shippers who have lost cargo or received damaged cargo shipped from overseas have a couple of ways to recover damages. They should have insured their cargo, which means they can make an insurance claim to get compensation.
Another option is to file a claim under COGSA. The owner of the cargo, the shipper, must show that the goods were damaged or lost. If the shipper wants to avoid liability, they have the burden of proof to show they meet exemptions.
To file a lawsuit or claim, you must have your bill of lading, which sets our liability limits. You must also understand applicable laws and be able to show that your goods were lost or damaged. The best way to go through these processes with a good outcome is to work with an experienced maritime lawyer.
