Insurance excludes port delays

06 Aug 1999 - by Staff reporter

Congestion victims consider their options

Portnet/Transnet are
'receptive' to lines'
complaints
and possible claims
IN THE aftermath of the Durban Cosmos debacle, there appears to be little appropriate insurance cover for the lost or short-shipped boxes which resulted from the introduction by Portnet of its Year 2000 computer system
Just-in-time (JIT) shipments have not been on time; perishable cargoes have perished; and SA's reputation as a reliable exporter has gone for a Burton as Portnet has fought a losing battle to keep up with the container flow.
The first question FTW asked was: Is there no insurance to cover these delay costs?
Not really, if you listen to Dave Keeling, m.d. of Cigna Insurance and chairman of AMUSA (Association of Marine Underwriters of SA).
You've got to have physical loss or damage to the cargo to have a claim, he told FTW.
And, if a container is lost for a week, and then turns up, that's a delay, Keeling added. It must be irretrievable loss for you to have a claim, he said.
The delay factor is not normally covered in terms of a policy. That's effectively what Exclusion 4.5 of the Institute Clauses says, Keeling added.
There is also a standard clause which lays a restriction on the delivery period after completion of discharge (normally 60-days), he said, but it's very seldom applied.

Lost boxes
susceptible to theft
One worrying factor for insurers, he added, lies in delayed containers lying around, often lost in the system - and more susceptible to theft. But Keeling has no record yet of such claims locally, and foreign receivers' claims for theft could take some six months to flow down the communication line to SA.
Karl Kisteman, head of Associated Marine, is similarly negative about insurance cover for such a situation.
We don't insure loss of income, only the goods, he said. The results of a delay, therefore, are not covered.
Kisteman does stress, however, that the current container traffic chaos in Durban will not affect the normal cover of the goods. The cover would continue, he said. Even if a UK-Durban-Johannesburg box goes UK-Port Elizabeth-Johannesburg.
But Kisteman also argues that there should be no extra costs facing the members of the shipping chain - like demurrage being charged for Portnet-induced delays.
I don't think there should be, he said, because it's Portnet's computer that has failed.
I can't see this happening. If it does, it can be taken to Portnet for explanation.

Legal claims
against Portnet
Again a finger points at Portnet. But what happens if someone wants to lay a legal claim against the port authorities for an extra cost for which Portnet is perceived to be liable?
The primary parties in such an action, according to Andrew Pike, maritime specialist at Durban-based attorneys, Shepstone & Wylie, would be the shipping lines.
Effectively they would face all the extra costs - transhipment, terminal storage and documentation amendment charges, for example - first.
So a lot depends on what results from the negotiations between the lines (in the guise of the Container Liner Operators' Forum) and Portnet - on the matter of compensation.

Compensation
meetings underway
Meetings on this are still being conducted, and final results are not yet known - but Portnet/Transnet have been described as receptive to the lines' complaints and possible claims.
This is really the core of the matter, said Pike. The shipping lines and their relationship with Portnet.
There are only two types of legal claim. In contract, Pike said, or in delict (a civil wrong).
Is there a contract between the lines and Portnet?
There would seem to be, said Pike.
Is there a part of this contract that implies promptness?
It can be understood that the port should act expeditiously, Pike said.
What is the definition of expeditiously?
This is where the legal battle lines would be drawn, said Pike. If the port has taken too long to service the ships then it is in breach of contract.
So, negotiation not confrontation - as the lines/ Portnet negotiations would imply - might ease the cries for battle, Pike suggested.
Those who will face the more ethereal of the delay costs - the shipper, forwarder, consignee, consumer etc (The man whose Easter eggs arrive in June, is this type of hypothetical character) - have no contract with Portnet.
And, if they wish to lay any sort of claim under delict, according to Pike, they would first have to prove Portnet's negligence.
A question that would be asked here, he added, would be: To whom does the port owe a duty of care?
Clearly, Pike said, the port must not be negligent of the shipowners. So there is a claim there.
The shippers, forwarders, consignees etc?
I think the courts would have difficulty in finding this (Portnet negligence and the alleged results) is the case, said Pike. On the delictual side, the remoteness of the claimant from the port would be a main factor.