Our company exports a batch of goods to Germany through a well-known logistics company. The goods have been insured and are LCL goods. We have sent the bill of lading and other documents to the client in time. These days, the client has demanded a claim with our company and sent us photos. The photo shows that the packing of the goods is badly damaged and the product is somewhat deformed. The client now has a simple repair of the goods. However, the client demands 1000 Euros from us. And his reason is that the price includes freight and we arrange the transportation, so we should responsible for the problem. What should I do?
There is a difference between theory and practice. Under CIF terms, all risks and responsibilities are borne by the buyer after the goods have crossed the ship’s rail. The seller only carries out the transportation and insurance business on behalf of the buyer. If the buyer finds something wrong with the goods, he can demand a claim with the insurance company and the shipping company.
But the facts are much more complicated than the theory. Anyone who knows the insurance clause knows that insurance is mainly responsible for the loss of goods caused by natural disasters, accidents, etc. If you are insured against FPA and WPA, the situation mentioned above must not be included in the insurance liability. Even if it is all-risk insurance, it may not compensate for the deformation of the goods. The shipping company is responsible for the transportation of the goods and charges the freight. There is nothing wrong on the way. So it’s no use looking for shipping companies. They won’t pay for it.
Let’s take a look at the possible causes of the deformation of the goods first:
- The goods themselves are not packed firmly.
- The combination of goods and packing may not be scientific enough, such as the center of gravity is too high. During transportation, the product slides or moves inside the package because of bumps.
- In containers, there may be no adequate protection, binding or fixing, or there may be other cartons stacked on it. Shipping for more than 30 days has led to the crushing of your packing and the deformation of the goods.
If the packing isn’t strong enough, or if you don’t give precise and clear instructions to the forwarder, the forwarder will box them with the regular requirements. Then your goods may be pressed by other goods. Your goods may be damaged on the way. Unless you can prove that the warehouse responsible for packing the goods is seriously in violation of the rules, they won’t be responsible for the matter.
In this case, the buyer will hold the seller responsible for compensation. If the client doesn’t find the goods deformed when the container is unpacked, but in the warehouse, he loses the opportunity to demand from the forwarder or the insurance company. Even if he comes to the forwarder or the insurance company afterward, they won’t admit it. If you find something wrong with the goods at the time of pick-up, contact the agent listed in the insurance policy or bill of lading immediately. Only if there is a signature confirmed by all parties is it possible to demand a claim.
Many people think that the risk and responsibility have nothing to do with the seller after the goods leave the ship’s rail. If the seller doesn’t have a secure packing or explicitly remind the forwarder or warehouse, he has a unshirkable responsibility. And he is the easiest to find, so the buyer will certainly investigate his responsibility.
In terms of responsibility, your company should bear the responsibility for damage to the goods and compensate for the losses. You can analyze whether the cost is reasonable, or you can try to share the cost with the client. If you feel your packing is strong enough, and you clearly indicate that the goods cannot be pressed, you can also ask the client to negotiate with the freight forwarder. Or you can negotiate with the forwarder to see if they can bear or share some cost. Or at least let the forwarder know about it, take it as a warning.
There is a great difference between theoretical knowledge and practice. You will know when you have experienced it. The exporter should try to ensure the safety of the goods before shipment. Meanwhile, the safety and reliability of the transportation scheme should also be considered carefully before and after delivery to ensure the safety of goods. Sometimes, accidents occur, although not directly the seller’s responsibility. Or, in the event of an accident, the risks and responsibilities have been transferred to the buyer. However, it is still the buyer’s market, or the buyer has not yet paid for the goods, he will ask the seller to bear these losses or costs.
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