Reliant Logistics Institute

What are the ways to minimise losses from misdelivery?


Letter Of Indemnity From Reputable Financial Institutions

Although a letter of indemnity does not excuse a carrier from his obligation to deliver the cargo against bills of lading, nevertheless, they provide the carrier with an avenue to recover his losses from the party granting the letter of indemnity. In this regard, letters of indemnity should be obtained from reputable financial institutions. It is quite risky to obtain a letter of indemnity from a party whose financial strength is unknown to the carrier. The wording of the letter of indemnity is important: it should be as widely couched as possible to cover all situations of misdelivery without production of bills of lading.

Statutory Right Of Warehousing Pending Taking Of Delivery

As aforesaid, there is a statutory right under Singapore and English merchant shipping legislation for the carrier to warehouse the goods. This reduces the needs for the master to discharge and deliver the cargo hastily without insisting on bills of lading in order to achieve a quick turn around time. Under this legislation, the warehouseman is not to release the cargo without production of bills of lading.

Control Over Discharge Port Agents

Very often, misdelivery problems arise because of the misconduct of discharge port agents. These agents are the parties usually responsible for handling the cargo after it has been discharged from the vessel. There is, therefore, a need to be selective in the appointment of discharge port agents as well as to educate them on the fundamental importance of insisting on bills of lading when giving delivery of cargo. Discharge port agents should also be warned about the risk of accepting letters of indemnity issued by the party whose financial strength is not established.

Not Delivering To A Party Claiming To Be The Owners Of The Cargo

This is another common reason for the delivery without production of bills of lading. Sometimes, carriers’ discharge port agents are tricked into delivering cargo to a party who is able to prove that he is the owner of the cargo but who do not present bills of lading. As discussed above, such a delivery is wrongful and exposes the carriers to claims. Masters, chief officers as well as discharge port agents should, therefore, be alerted to this fact.

Establishing A System For Post Discharge Treatment Of Cargo

Ideally, every carrier should have a prescribed procedure for its masters, chief officers and discharge port agents as to what is to be done with the cargo during and after discharge from the vessel. This may minimise the possibility of persons not taking the proper precautions when faced with a demand for delivery of cargo.


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