Gard P&I Club informs on the challenges and legal risks shipowners face in China when handling bulk cargo shortages and related claims.
According to Gard, shortage claims in China often stem from lightering operations, where cargo is transferred to smaller vessels at multiple ports before final discharge. This process can lead to quantity discrepancies due to factors affecting draft survey accuracy—such as sea swell, water density, ballast conditions, weather, and surveyor expertise. The absence of independent surveys at anchorage further complicates verification, exposing shipowners or charterers to short delivery claims.
Lightering is common for Panamax bulk carriers at Chinese ports with draft limits over 12 meters, including Chiwan (Shenzhen), Xinggang and Xinsha (Guangzhou), and ports along the Yangtze River. These operational constraints heighten the risk of cargo quantity disputes.
How shortages are determined
The Supreme People’s Court (SPC) of China issued the “The Carrier’s Liability for Shortage of Bulk Cargo” in 2022, which provides the following principle:
In bulk cargo transport, minor shortages may occur due to natural loss, spillage, leakage, as well as the permissible error in measurement by hydrostatic weighing, etc. If a cargo shortage occurs at the discharge port, and the carrier provides evidence that it resulted from natural loss, permissible measurement error, or industry standards/customs, the People’s Court of the People’s Republic of China will generally uphold an exemption from liability—unless there is proof of carrier fault. If the shortage exceeds accepted norms and the carrier cannot distinguish between reasonable and unreasonable losses, the Court will typically support the claimant’s demand for full compensation, Gard explains.
Key advice
Chinese courts often rely on the ship’s draft survey to assess shortages. Disputes arise when surveys performed by the crew conflict with shore scale measurements. While carriers argue their responsibility ends at the ship’s rail, there is a risk that Chinese Courts may decide that surveys performed by the crew are not sufficient.
Therefore, when transporting cargo to China, Gard advises that:
The owner arranges for an independent surveyor to conduct the draft survey.
If no independent surveyor is appointed, the crew should at least conduct the draft survey jointly with the cargo interests’ surveyor and co-sign the draft reports.
The crew should take photographs or video recordings of the draft marks as supporting evidence.
When lightering at a sea-port is required before the vessel sails into a river port, the crew often overlook the importance of correctly recording the draft at the lightering port. This is usually because they assume all the cargo belongs to the same consignee.
Another factor driving shortage claims in China is the perception that owners often avoid contesting small claims due to high legal costs. This encourages claimants to pursue cases with low chances of success, expecting owners to settle to avoid the cost of litigation. Such settlements allow lawyers to recover part of the amount as fees.
Source: safety4sea.com
