Minimizing Risk in Commercial Shipments

Regardless of your company’s size, or whether you export or import any goods, we all know that shipments do not always arrive on time or in one piece. There are many things that can go wrong. So, it’s wise to do as much pre-planning as possible to allocate the costs and risks. You should work with reputable partners, including your suppliers, carriers, insurance brokers, bankers and attorneys.

If materials arrive damaged, there can be “finger pointing,” and often no one is clearly at fault. In order to make claims easier to manage, you want to have a strong “paper trail” as protection. Thorough pre-shipment and post-arrival inspections and documentation are critical. For example, you can have a representative to inspect the shipments before your supplier places them on the truck, ship or other mode of transport. Date-stamped photographs should be taken so that you can demonstrate that the goods were in good condition when shipped. Also, when the shipment arrives at the destination port, you can have another representative there to take additional photographs and document the condition of the products upon arrival. If damage occurred in transit, your shipping and contract documents should allocate the risk.

All of your shipping and import/export documents should be checked carefully for consistency. It is critical that the names of the parties, the addresses, the description of the good, etc. on the various documents should all match each other. Any differences might raise “red flags” for Customs inspectors and delay your delivery.

Among the critical documents are the Bill of Lading, your Contract with the carrier and the Terms & Conditions with your supplier or customer. If there is a problem with the shipment, these documents will guide the parties toward a resolution. You do not need to simply accept the “standard” documents from the other parties. You should analyze the documents and negotiate acceptable terms.

In many cases, the risk of loss and other details are determined in accordance with INCOTERMS. These are commonly used shipping terms (e.g. FOB, CIF, DDP). Be sure that your contact indicates whether the relevant term is intended to be interpreted according to the INCOTERMS (2010 or other version) or some other state law. There can be differences which might affect your rights in case of a claim.

Whether your company imports, exports or both, you need to pay careful attention to all of the documentation, so that things are not left to chance if there is damage or delay. The up-front investment of time and resources should help you to avoid problems and give you more bargaining power in case of a dispute.

Regardless of your company’s size, or whether you export or import any goods, we all know that shipments do not always arrive on time or in one piece. There are many things that can go wrong. So, it’s wise to do as much pre-planning as possible to allocate the costs and risks. You should work with reputable partners, including your suppliers, carriers, insurance brokers, bankers and attorneys.

If materials arrive damaged, there can be “finger pointing,” and often no one is clearly at fault. In order to make claims easier to manage, you want to have a strong “paper trail” as protection. Thorough pre-shipment and post-arrival inspections and documentation are critical. For example, you can have a representative to inspect the shipments before your supplier places them on the truck, ship or other mode of transport. Date-stamped photographs should be taken so that you can demonstrate that the goods were in good condition when shipped. Also, when the shipment arrives at the destination port, you can have another representative there to take additional photographs and document the condition of the products upon arrival. If damage occurred in transit, your shipping and contract documents should allocate the risk.

All of your shipping and import/export documents should be checked carefully for consistency. It is critical that the names of the parties, the addresses, the description of the good, etc. on the various documents should all match each other. Any differences might raise “red flags” for Customs inspectors and delay your delivery.

Among the critical documents are the Bill of Lading, your Contract with the carrier and the Terms & Conditions with your supplier or customer. If there is a problem with the shipment, these documents will guide the parties toward a resolution. You do not need to simply accept the “standard” documents from the other parties. You should analyze the documents and negotiate acceptable terms.

In many cases, the risk of loss and other details are determined in accordance with INCOTERMS. These are commonly used shipping terms (e.g. FOB, CIF, DDP). Be sure that your contact indicates whether the relevant term is intended to be interpreted according to the INCOTERMS (2010 or other version) or some other state law. There can be differences which might affect your rights in case of a claim.

Whether your company imports, exports or both, you need to pay careful attention to all of the documentation, so that things are not left to chance if there is damage or delay. The up-front investment of time and resources should help you to avoid problems and give you more bargaining power in case of a dispute.

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Timothy D. Charlesworth

Licensed since 1985

Member at firm Fitzpatrick Lentz & Bubba, P.C.

AWARDS

BV Distinguished

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Timothy D. Charlesworth

Licensed since 1985

Member at firm Fitzpatrick Lentz & Bubba, P.C.

AWARDS

BV Distinguished

RECENT POSTS

  • Regional Business Leaders: Stay Informed of International Trade Deals’ Status
    Posted on June 11, 2015
    Topic: International Trade

    In the U.S. news media, it is hard to avoid stories regarding the importance of international trade.  Importing and exporting are both crucial to our economy.  Among the recent topics is the potential for a U.S./European union trade partnership (Transatlantic Trade and Investment Partnership – TTIP).  Although negotiations on that pact continue, President Obama is ... Read more

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    Posted on May 13, 2015
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    FLB has many clients doing business outside the US. This could be selling products, sourcing materials, or looking for a business partner. In any business dealing that involves more than one country, the laws of both jurisdictions need to be considered. Over the past few years, my firm has worked with US clients doing business ... Read more

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