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June 09, 2014

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Q&A 84 THE JOURNAL OF COMMERCE JUNE 9.2014 By Colin Barrett A SHIPPER BAN WITH NO PLAN Q: ACTING AS FORWARDER (bro- ker) on ocean shipments, we regularly provide shipping instructions to ocean lines acting as agents for shippers. We place the original bookings and may or may not reference a particular named shipper. In this context, original bills of lading are direct, shipper to consignee, with no reference made to our company. On this basis, for a recent ship- ment we forwarded instructions for a particular shipper prior to loading at port of origin. We duly received the first provisional draft and, after some amendments, received the shipper's final approval (the shipment had since departed load port), upon which we informed the line and requested the original bills of lading. The carrier then informed us that this particular shipper was no longer permit- ted to show as "shipper" on its ocean B/Ls and therefore it could not provide the approved ocean B/L, but it could provide originals for alternative named shippers. To clarify a little, the shipper sometimes uses affiliate companies for corporate purposes. Hence, normally its name appears on documentation but sometimes affiliate names appear. In this case, the carrier said it could accept the named shipper on B/Ls but not its affiliate company because of a previous legal action that had been taken against the line for shipments under that name. This policy makes little sense to me; the legal owner is one and the same and is well-known to the ship - ping line because it trades worldwide. Our issue is, having accepted ship- ping instructions and providing a draft under the affiliate name, the line can't simply demand a letter of credit amend- ment and refuse to issue approved bills of lading. A lot of time was spent pushing the carrier for a common sense solution and asking it to look at the facts of the case rather than blindly following system requirements without perhaps a full understanding of their potential liability. The line finally relented, but the principles of the case concern me. In particular, if the line had stood firm, what would have been its liability? Further, could the line have pursued the original booking party (us, as the forwarder/bro- ker) or the cargo interests as specified by the parties to the B/L for any/all costs? A: I'D SAY THAT IT'S JUST as well, for its own sake, that the ocean carrier backed off its ridiculous position because that position was legally untenable. Once upon a time, common carriers were legally prohibited from imposing bans on individual shippers for any reason (sound or otherwise). They were obliged in law to serve all comers. This isn't the case in our modern "enlight - ened" (deregulated) era, and they can indeed place bans such as this one tried to do. But it's up to the car- riers to enforce their own bans. I don't much care why, but this one didn't. Instead, for whatever reason, it accepted the shipment and actually commenced transporting it. For it to refuse to provide documen- tation of that fact is simply ridiculous. The time to enforce the ban was before the carrier took custody of the goods and initiated the transporta- tion process, not afterward. Bills of lading serve multiple purposes, a key one of which is that they act as the carrier's receipt for the goods. The carrier's refusal to acknowledge the fact that it actually had the goods in its possession isn't acceptable. Does it propose to pre- tend that the shipment doesn't exist, simply out of pique at the named shipper? That's nonsense. In other words, the carrier didn't suddenly cease being a carrier by virtue of the fact that it has a dis- taste for the shipper who tendered it the goods. It's free to express that distaste by refusing the shipment at the time it's offered, but once the transportation has begun, the car- rier is obliged to complete it. And that completion includes proper documentation of the relationship. Indeed, if the carrier had been stubborn enough to stick to its guns, I could see this matter becoming a case of "conversion" — the legally polite way of saying "theft." I mean, what else are you going to call it when somebody takes your goods and refuses to acknowledge that they have them? And carriers aren't allowed to take advantage of any exceptions to or limitations of liabil- ity in such cases. They're liable for the full actual value of the goods. This shipper hopefully will repair its relations with the carrier or cease doing business with it. I don't think anybody would benefit from the legal hassle that might ensue from circum- stances such as you describe. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. What else are you going to call it when somebody takes your goods and refuses to acknowledge that they have them?

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