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Saturday, May 18, 2024

Agents encouraged to act quickly on shippers’ instructions, warns ITIC

International Transport Intermediaries Club (ITIC) warns agents to respond to shippers’ requests in good time, or face the possibility of financial penalties.

The insurer cites a recent case where a container of frozen beef was being carried on a liner service from Australia to China. Seven days after the vessel had departed, the shipper noticed that it had failed to obtain the necessary health declaration from the Australian authorities. The shipper immediately contacted its agent and instructed them to return the container to Australia upon its arrival in China and without clearing Chinese customs.

Unfortunately, the ship agent failed to act immediately and when it did, the container was already in the hands of the Chinese authorities who had broken the seal. The container was returned to Australia. However, the broken seal led the Australian customs team to treat the container as a new import (as opposed to a return of goods) meaning it was fully inspected by the quarantine authorities and shipped back to China. 

In total, the consignment was delayed by more than two months during which the container remained “on power”, incurring further costs. Added to this, the shipper argued that it was now forced to sell the beef to the Chinese receiver at a discounted price. The shipper claimed the additional costs incurred and the difference in price from the agent for failing to act in good time.

During its investigation, ITIC concluded that had the ship agent acted promptly on instruction from the shipper, the container would have been returned from China intact. However, ITIC settled the shipper’s claim for additional shipment costs (around US$20,000) but successfully argued against the claim to make up the difference in price.

ITIC strongly advises agents to take notice of instructions from their principals and to act accordingly and promptly.

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