Cows come home

A container of frozen beef was carried on a liner service between Australia and China.

Seven days after the ship departed Australia, the shipper realised that they had failed to obtain the necessary health certificate from the Australian Department of Agriculture and Water Resources prior to exporting the container. The shipper emailed the carrier’s load port agent instructing them to return the container to Australia upon its arrival in China, without clearing Chinese customs.

The shipper received no response from the agent.

The shipper emailed the agent again 8 days later asking them to advise the status of the container, at which point the agent contacted the carrier who advised that the container had already landed in Shanghai and it was too late to send the container back to Australia without it being inspected by Chinese customs authorities.

That inspection took place, which required the Chinese authorities to break the container’s seal. The container was subsequently returned to Australia but not before being delayed by about two months in China.

Because the container seal had been broken, upon its return to Australia the container was treated as a new import (rather than the return of goods previously shipped from Australia) so was subject to a full inspection by Australian quarantine authorities. Eventually the container was shipped back to China.

The whole Chinese and Australian inspections caused a delay of about two months, during which time the container remained on power, incurring additional costs.

The shipper argued the additional costs would have been prevented had the agent acted upon their first request to turn the container around. The shipper brought a claim against the carrier for around US$ 50,000, which the carrier passed onto their agent.

The claim had two components. As well as the additional costs the shipper claimed they had also been forced to agree a commercial discount in the sale price of the meat with their Chinese customer.

ITIC discovered that if the agent had acted on the email promptly the container could have been returned to Australia on the same vessel without the involvement of Chinese customs authorities. The additional costs were settled. Liability for the discount in the sale price was excluded under the terms of its bill of lading.

The claim was ultimately settled for US$ 20,000, for which the agent was reimbursed by ITIC.