Stevedores, Marine Terminal and Vessel Service

When cargo is lost or damaged during terminal operations, the shipper or consignee will typically sue the carrier as well as the stevedore or terminal operator. If suit is brought only against the ship, other potentially responsible parties can be joined in a third-party action claiming either indemnity or direct liability in whole or in part.

If the cargo owner’s claim is based on contract, an action for cargo damages is in admiralty even if the loss occurred on land because both an affreightment contract and a stevedoring contract are maritime contracts. However, actions in tort against non-carriers for damages occurring while the cargo was in a warehouse, or on a pier, are non-admiralty state law claims. The liability of the stevedore, terminal operators or other cargo handlers may be based on two separate theories. In the first place, if the carrier is liable to the shipper for breach of the contract of carriage under recognized principles of law, the stevedore may be liable over to the carrier based on contract principles, tort, and breach of the implied warranty of workmanlike performance. This latter liability is without regard to negligence and is based on indemnity principles. Second, the stevedore may be liable directly to the shipper or consignee for negligence or on a state law bailment theory.

Terminal operators are generally independent contractors with the carrier and have the status of bailees under state law. As bailees, terminal operators will be liable for negligence or lack of due care that result in loss or damage to cargo. A terminal operator acting as a warehouseman is also liable for negligent mis-delivery or non-delivery of cargo.

Stevedores also have a duty to exercise due care in cargo operations. They must possess reasonable skill and expertise, and are liable for loss or damage caused by their negligence or lack of due care. A stevedore may be liable based on (1) its contract with the carrier; (2) its negligence; or (3) breach of its obligation to perform its duties in a workmanlike fashion. A stevedore is liable to indemnify the carrier for any loss caused by breach of its warranty of workmanlike performance. The stevedore may also be directly liable to third parties. Where both the carrier and a stevedore are responsible for cargo damages, the damages are apportioned according to principles of comparative fault.

Ocean Freight Forwarders and Customhouse Brokers

Ocean freight forwarders are intermediaries usually employed by a shipper or exporter to facilitate and handle the details of shipment of goods. They are licensed and regulated by the Federal Maritime Commission. The role of the ocean freight forwarder has been described as follows:

“A freight forwarder acts as an intermediary between the shipper and the ocean carrier. The freight forwarder arranges for the ocean transportation by locating available space, handles various documents for the shipper’s goods, including preparation of bills of lading, and performs such other services as arranging for the transport of the goods to dockside. The intermediary role of freight forwarder is well-recognized in the ocean shipping industry and benefits both the shipper and carrier. The freight forwarder receives compensation for its services from both the shipper and the carrier.”

Since the freight forwarder is not necessarily the carrier’s agent, the shipper is not relieved of liability for freight to the carrier by paying the freight forwarder. The freight forwarder is liable to the shipper for negligence in supervising the transport of cargo; if there is an agency relationship between the parties, the freight forwarder may be liable for a breach of fiduciary duty. As a general rule a freight forwarder is not a COGSA carrier.

When a freight forwarder knows or should have known that a cargo is dangerous, he has a duty to note that fact on the bill of lading which he prepares. The primary responsibility for labeling cargo is on the shipper, however, and there is no duty on the part of the forwarder to independently investigate the cargo to determine whether it may be dangerous.

A customhouse broker is a person whose business it is to clear goods through Customs on behalf of cargo interests.

Vessel Repairs and Shipbuilding

Shipbuilding, oddly enough, is not within admiralty jurisdiction and a contract to build a vessel is not a maritime contract. Admiralty and maritime law are concerned with the flow commerce on navigable waters. Until the vessel is constructed and launched she is non-maritime in nature. Once she is put into service, however, she becomes the pivotal object of maritime commerce. It is her baptismal launching into navigable waters that makes all the difference. Once a vessel is in service any repairs to her are maritime contracts and within admiralty jurisdiction. The ship repairman is entitled to a maritime lien as security for payment of his work.

Excerpts from Admiralty and Maritime Law, 4th Ed. by Professor Thomas J. Schoenbaum (Thomson West 2004).