ITIC e-learning video highlights dangers of switch bills of lading

International Transport Intermediaries Club (ITIC) has produced an e-learning video for ship agents on the use of ‘switch bills of lading’, a second sets of bills used as a substitute for the original bills of lading issued at time of shipment.

ITIC legal advisor Mark Brattman says, “There are a number of valid reasons why a carrier may be asked by the holder of a bill of lading to issue switch bills. For example, the original bill might name a discharge port which is subsequently changed, or perhaps the sellers of goods in a chain of contracts want to protect their commercial position by removing the name of the original shipper that appeared on the bills. Alternatively, the buyer of the goods may require one bill of lading covering items originally shipped in a number of smaller parcels.

“The issuance of a second set of bills of lading, however, is an extremely dangerous practice and the perils of having two sets of bills in circulation for the same cargo are obvious. Great care must be exercised by ship agents who are asked to issue switch bills. They must follow certain rules. It is essential that the second set of bills should only be issued if the complete first set has been surrendered for cancellation. Moreover, the principal must agree in writing to switch bills being issued, and must also approve any changes to the content of the original bills.

“If the second set of bills contains any misrepresentations, the carrier and its agent may be at risk of claims from parties who have suffered a loss as a result of such. Agents should also be aware that switch bills of lading are sometimes issued in addition to – rather than against cancellation of - the first set of bills. This may be because the first set has been held up in the country of shipment, or because the ship arrived at the discharge port in advance of the first set of bills, or simply because the first set have been lost.

“Agents should only ever act on the instructions of their principal and should not, for example, respond to direct requests from a consignee to issue switch bills of lading.” Agents should comply with reasonable requests from their principals but should never knowingly change information that is factual – for example the port of loading – even if offered an indemnity to do so.”

The e-learning video can be accessed at: http://bit.ly/switchbills


ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
charlotte.kirk@thomasmiller.com

Liberia confirmed as world’s second-largest ship registry

Liberia is the second largest ship registry in the world, according to leading shipping analyst Clarksons in its Clarksons World Fleet Monitor January 2019. This report confirms that, in gross tonnage terms, Liberia has overtaken and outgrown the Marshall Islands, which now languishes in third place.

Alfonso Castillero, CCO of the Liberian International Ship & Corporate Registry (LISCR), the US-based manager of the Liberian Registry, says, “This is about quality of service, not discounted rates.

“The Liberian fleet was the fastest growing major open flag in both the shipping and offshore sectors in 2018, and currently has a growth rate of 8.0% - more than twice that of most other open flags. There are a number of reasons for this, not least a growing recognition on the part of major shipowners and managers that Liberia, more than any other flag state, is able to combine increased safety and efficiency with reduced costs.

“The quality of service offered, and the rapid response times achieved, are important factors behind the significant growth recorded by the Liberian Registry, whose clients are able to communicate with our highly qualified, motivated staff at any time of the day or night, thanks to the registry’s global network of offices staffed by experience professionals.

“Owners and managers have also been shifting their fleets to Liberia because of the huge cost savings available under the historic agreement on port dues with the People’s Republic of China. This agreement, which was recently renewed, can result in savings to owners of millions of dollars.”

Liberia is not only making shipping more cost-effective. It is also making it more efficient and safer through the strategic deployment of its expanding global services and international presence and its pioneering role in the application of cutting-edge technology.

Alfonso Castillero says, “Compared to other flags, the detention rate for Liberian-flag ships was down significantly in key jurisdictions in 2018, especially in areas like China, where other flags experienced an increase in their detention rates. This was due in no small part to the success of Liberia’s complimentary Detention Prevention Programme, the first of its kind developed by a flag state.

“Liberia is ideally positioned to further strengthen its leading position in the global shipping industry. It will do this by continuing to take proactive action in the best interests of owners and managers who make their flag choices on the basis of a registry’s proven success and effectiveness. Liberia is the smartest decision for owners looking for the best quality with significant cost savings.”

The Liberian Registry has a long-established track record of combining the highest standards of safety for vessels and crews with the highest levels of responsive and innovative service to owners. Moreover, it has a well-deserved reputation for supporting international legislation designed to maintain and improve the safety and effectiveness of the shipping industry and protection of the marine environment. www.liscr.com

ITIC reimburses broker accused by owner of breach of authority

International Transport Intermediaries Club (ITIC) recently represented a shipbroker accused by an owner of breach of warranty of authority in a dispute arising under a non-performing contract of affreightment (CoA).

The shipbrokers had negotiated the terms of a CoA between the charterers and the ship owners, receiving all their instructions from an agent purporting to act for the charterers. The CoA provided for a minimum of 18 shipments to take place over a 12-month period but, when the charterers failed to nominate any cargoes during the period of the CoA, the owners began proceedings against them, claiming damages of $3.1m. In their defence, the charterers denied being a party to the CoA and alleged that neither the shipbrokers nor the agents had authority to negotiate or enter into the CoA on their behalf.

The owners then joined the shipbrokers into the proceedings, alleging that they had breached their warranty of authority by representing to them that they were authorised by the charterers to conclude the CoA. They added that, if the brokers did not have such authority, then they would be liable for the loss suffered.

Liability for breach of warranty of authority does not, under English law, depend on any negligence on the part of the shipbroker. It is, however, specifically covered under ITIC’s rules. The shipbrokers maintained that they had not purported to represent the charterers and said that the owners had known that the brokers were acting on the agent’s instructions. The agents, meanwhile, claimed that they had been authorised to conclude the CoA.

After filing their defence, the charterers did not take an active part in the proceedings. The matter went to mediation between the remaining parties but did not settle on the day. Following the mediation, the owners indicated that they would be willing to accept a
substantial reduction in their claim. The brokers and agents were able to negotiate a
split of the settlement, with the agents paying the largest proportion. ITIC reimbursed the shipbrokers’ contribution of $260,000.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Moore Stephens says leaner and greener shipping will attract investment in 2019

Leading accountant and shipping adviser Moore Stephens says shipping will continue to attract investors in 2019 if it fulfils its ESG (environmental, social and governance) responsibilities.

In the latest issue of Bottom Line, the Moore Stephens shipping sector newsletter, Richard Greiner, a partner in the firm’s Shipping & Transport team, says, “It has been suggested that the future is very much like the present, only longer. Should that prove to be the case for the shipping industry, it would not be such a bad thing, since the present is not so bad as it has appeared to be at various times over the past ten years.

“Confidence in the shipping industry actually dipped slightly towards the end of last year, but that was against a four-year high recorded in first-half 2018. There remains an appetite for investment in shipping from both new and existing players. That is likely to continue in 2019 so long as shipping lives up to its ESG responsibilities.

“Existing and emerging regulations such as those on ballast water management and greenhouse gas emissions show that shipping is becoming more environmentally aware and accountable. New funds will be needed and the environmental investment story should prove attractive to many potential investors. Green doesn’t come cheap, or easy, however, the more so when viewed in the context of rising interest rates. This year we will see important decisions made on investments to comply with the new environment-driven regulations which are coming into force, and we will have a better idea of whether the drydocking capacity exists to cope with demand.

“Meanwhile, the industry will face other challenges. Operating costs are set to increase, and hopes will persist that freight rates will do likewise. Tonnage imbalances will endure in some trades. The Baltic Dry Index may behave less erratically than in the latter part of last year. Brexit may finally mean Brexit, which could mean a number of things, but should prove positive for shipping in the UK. The introduction of new lease accounting standards will change things for some, though not their actual cashflows. And, last but not least, the effect of geopolitical influences will continue to be felt throughout 2019.

“Despite the prospect of new trade negotiations between China and the US, the world remains a volatile stage on which to trade. There are presidential elections this year in a number of countries, including Argentina, Indonesia, Nigeria and Panama. Additionally there are a plethora of parliamentary elections over the coming year in, among others, Greece, India, North Korea, at least a dozen African nations and perhaps even in the United Kingdom.

“Uncertainty is likely to remain the norm in 2019.”


Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and transport & logistics adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 614 offices of independent member firms in 112 countries, employing 30,168 people and generating revenues in 2017 of $2.9 billion. www.moorestephens.co.uk/shipping-transport

For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
richard.greiner@moorestephens.com