ONE MANEUVER, a brightly coloured cargo ship, left Southampton on 15th October on a routine voyage to Rotterdam, loaded as usual with a complement of containerised goods. Shortly after departure, the vessel suffered a loss of power and drifted onto the infamous Bramble Bank, a hazardous sandbar close to the entrance to Southampton Water. The running aground was one more in a series of incidents over the years, including the Queen Elizabeth 2, which suffered a similar mishap on approach to Southampton in 2008. Both the One Maneuver and the QE2 were soon cleared by tugs and successfully refloated. 

So, what does this all mean for exporters and importers? It should be a reminder that goods in transit are always at risk, even in relatively benign conditions on short routes. Currently, the One Maneuver is anchored off the Isle of Wight, and three days after leaving Southampton, it is still awaiting a full inspection. All crew and cargo are reported to be safe, but at best, this is a significant delay to a journey that would usually be completed in about 12 hours, and even that could have repercussions for traders. 

Whether any cargo has suffered damage may only become apparent once the containers are unloaded at their destination. That, of course, applies to all containerised shipments and is an issue for traders to consider. Four of the rules in the current Incoterms® series specify that risk of loss or damage passes from the sender to the recipient when the goods are either adjacent to or on board the ship. The ICC Guide to Incoterms® is clear on what this means for containerised shipping; these four rules are simply unsuitable. 

The reason for this guidance can be summed up in one word: visibility. When the transfer of risk is linked to the loading of goods on a ship, anything shipped in a container is very unlikely to be visible at the point of transfer. Therefore, the allocation of any loss or damage discovered later, for example, when the container is unpacked, cannot be definitively made to one party. In other words, the Incoterm® isn’t doing the job it’s supposed to do. 

This is a prevalent issue for the FOB and CIF rules. These rules go back to the earliest days of Incoterms® and are in everyday parlance for many people. Hence, they are widely used simply because that’s the way it’s always been done. However, containerisation makes them a questionable choice for containerised shipping, especially given that up to 90% of sea-going freight is now transported in containers. If your company had a container on a vessel like One Maneuver and the goods arrived damaged, the loss may or may not have been caused by the run aground. It may be challenging to say for sure, as there was no way to check before loading. 

Also, remember General Average. It isn’t only if your goods are lost or damaged at sea that you can suffer financial loss. If any goods are jettisoned to avoid total loss, the cost of the lost goods is shared between everyone who has goods on that voyage. 

Do you understand exactly when your goods are travelling at your risk? Have you taken steps to mitigate that risk, for example, by arranging an appropriate level of insurance cover? 

Proper use of Incoterms® rules can revolutionise shipping operations and potentially save you from expensive mishaps. Sign up for a Strong and Herd public course today . We can also provide bespoke training for your whole team, either online or at your premises. Get in touch for further information and a quotation and make Incoterms® work for you, paving the way for smoother, more secure shipping operations. 

If you are interested in exploring this topic further, you might find it worthwhile to consider the training courses and live clinics offered by Strong & Herd LLP: