The Carriage of Goods By Sea Act (Cogsa) provides that every bill of lading contract for the carriage of goods by sea to or from the United States, in foreign trade, be subject to the Act.
Under Cogsa, the ocean carrier must issue a bill stating the number of packages or the quantity or weight of the cargo. The bill of lading contract is a cargo receipt as well as a document of title.
Order bills permit shippers to consign goods by endorsement. This enables shippers to sell cargoes during ocean transit. It also allows consignees to rely on bill of lading descriptions to determine the quantity of goods purchased.
Under Cogsa, to prove a loss, the cargo owner need only establish that the shipment was delivered in full to the carrier and short-delivered at outturn. This is usually accomplished by producing the bill of lading issued at loading and a shortage tally at discharge.
Before the advent of containers, shipowners could quantify the amount of cargo shipped by visual inspections. All this changed during the 1960s when the shipping industry began using shipper-loaded and sealed house-to-house cargo containers.
In house-to-house service, an empty container is supplied to the shipper who loads and seals cargo in the container. The container is then delivered to the ship for ocean transport and is eventually discharged and delivered to the consignee’s trucker.
The trucker transports the container from the discharge terminal to the consignee’s premises where the seal is broken and cargo is tallied. If goods are missing, the consignee will claim against the shipowner for the loss. The shipowner will argue that it should not be responsible for cargo quantities it cannot verify.
Theoretically, Cogsa provides a method for avoiding liability for short-loaded cargo in sealed containers. The shipowner is not obligated to state on the bill the shipper supplied weights or quantities, which it has no reasonable means of checking. Shipowners began skirting the description obligation by adding qualifying clauses on bills such as shipper’s weight, load and count.
Court Ends Practice
This practice ended in 1982 when the New York 2nd Circuit Court of Appeals in the Westway case (675 F.2d 30) held that once the shipowner lists weight on a bill of lading, this represents there is no reasonable ground for suspecting the weight is false and the shipowner has reasonable means for checking the weight.
On April 20, 1994, the 2nd Circuit again addressed the sealed container issue in the “Zim America” case (1994 U.S. App. Lexis 8359) and clarified its earlier Westway decision.
In “Zim America” goods were weighed and shipped from Italy to New York in a sealed container. At New York, the shipowner did not weigh the container prior to delivering it to the consignee’s trucker. Neither did the trucker request to have the container weighed at the terminal. The next day the sealed container was delivered to the consignee’s warehouse and 65 cartons of cargo were counted missing.
The consignee unsuccessfully argued that it was entitled to judgment because the shipowner failed to weigh the container at the discharge terminal. The Court of Appeals held for the shipowner.
“We have never held that the carrier had an obligation of weighing cargo at the time of delivery. Had the consignee weighed the container while it was still sealed, and thereby demonstrating a shortfall on weight at outturn, (the consignee) would have had a better case against the (shipowner).”
The “Zim America” case makes it clear that shipowners are bound by weights declared by shippers at load ports because containers can be weighed. However, to prove cargo losses based on weights, consignees (not shipowners) must weigh containers at discharge ports before seals are broken.