OCEAN CARRIAGE OF FRUITS AND VEGETABLES

BY

MARC DE MAN

AND

MATTHEW HAMERMAN

Shipping fresh fruits and vegetables overseas in a reefer container is a risk-filled but often unavoidable proposition for traders and wholesalers everywhere. Indeed, many types of fresh produce are volatile commodities that if not held at the correct temperature, not properly humidified or not adequately ventilated (to name just a few potential perils), will arrive damaged at their destination. The following is a brief overview of certain issues that carriers and cargo interests wrestle with when litigating cargo claims involving fresh fruits and vegetables.

Typically, when fresh fruits or vegetables are shipped in a reefer container, the shipper places a temperature recorder (known under various names – Sensitech, Ryan or Cox Recorder etc.) within the reefer. Generally, once the container has arrived at its destination, the device is promptly calibrated and, as such, provides interested parties with an indication of what the temperature surrounding the cargo was throughout the duration of the voyage. Often times, to counter these findings, the carrier will supply the printout from the reefer container’s Electronic Data Recorder. This instrument records the temperature of the air entering (“supply air”) and exiting (“return air”) the container on an hourly basis. When it comes to these two temperature recorders, the debate often centers around which of the two provides the most accurate account of the temperature at which the cargo was held, as well as what information can be gleaned from the respective temperature read-outs. Naturally, the carrier will claim that its sophisticated machinery that provides an hourly read-out of the supply and return air garners a more precise idea of the cargo’s temperature. Meanwhile, the cargo interests will posit that that a device that measures the ambient temperature within the container is the better indicator.¹

In addition, a new theory relating to cargo damage has begun to emerge in recent years, which has served to further muddy the waters with regards to the above-mentioned debate: the theory of the damaged baffle plate. Prior to being returned to use, every refrigerated container undergoes a pre-trip inspection (PTI). While the PTI is mostly meant to verify the condition of a container’s refrigeration machinery, it should also take into account the container’s structural condition and the condition of any fittings, to generally insure the container’s cargo and transport worthiness. Frequently however, the condition of such fittings escapes attention. Primarily amongst these is the baffle, or kick plate. The baffle plate is located in the extreme forward end of a container and is designed to direct the incoming temperature-treated air backwards, along the ducted floor. Damage to a baffle plate usually involves its partial displacement and misalignment and causes gaps through which the air is misdirected; usually upwards. This can provoke a process of short-cycling, sending air directly up to the outflow and thereby, giving incorrect data on the overall temperature in the container to the sensors, which will influence the adjustment of the temperature of the incoming air. A displaced baffle plate can also reduce the strength of the incoming air flow, backward along the container’s floor.²

Another common problem that faces cargo interests when fresh produce is shipped via reefer container is container power-downs. When this occurs, no power is supplied to the container and, consequently, cooling air ceases to circulate within the container. While it is common for these to take place when the container is transshipped, power-downs of varying length often occur at different points throughout transit. As a result, the meaning of these power-downs is usually a hotly debated topic amongst solicitors. Recently, Canadian courts, namely the Cour du Québec as well as the Quebec Court of Appeal have shed some light on this debate. In Les Courtiers Breen Ltée v. Mediterranean Shipping Company S.A.³, the Cour du Québec ruled that power interruptions of eleven and nine hours in length were sufficient to cause damage to the cargo, once the consignee had proven that the said cargo had been loaded in good order and condition. The Quebec Court of Appeal affirmed this decision⁴ in finding that despite the power-downs occurring at a time when the shipment was not subjected to the Hague-Visby Rules, Mediterranean Shipping Company S.A. (“MSC”) could not rely on clauses in the terms and conditions of the bill of lading to free itself of liability for breaching the contract of carriage. Accordingly, MSC was found liable for the damages to the shipment in question. As such, this decision demonstrates that power-downs of reefer containers can trigger liability on the part of a carrier. What remains at issue is how long the container need be shut down in order to engage the liability of the carrier. The commodity being shipped will likely play a role in determining this factor.

A further concern for cargo owners is what has come to be known as the prohibition of suit clause, sometime referred to as a “circular indemnity clause”. A clause of this nature can generally be found in the terms and conditions of a bill of lading, as it will generally prohibit the “merchant” (shipper, consignee etc.) from suing the carrier’s (i.e. the entity that issues the bill of lading, which could be either a freight forwarder or actual carrier) subcontractors. This type of clause will come into effect when cargo interests book their shipment through a freight forwarder. If the freight forwarder issues a bill of lading, cargo interests will likely appear on its face as the shipper/consignee. However, they will likely be absent from the actual carrier’s bill of lading, with the freight forwarder appearing as shipper/consignee. If the shipment arrives damaged, a prudent cargo owner will institute proceedings against both the freight forwarder and the actual carrier. However, as cargo interests booked their shipments through a freight forwarder, actual carriers will attempt to rely on the circular indemnity clause found in the freight forwarder’s bill of lading to escape liability. Though this type of clause has generally been upheld by the courts, some notable scholars posit that it violates Art III (8) of the Hague-Visby Rules, which govern most bills of lading.

While the above is far from an exhaustive list, it serves to demonstrate that when fresh fruits and vegetables are shipped overseas in a reefer container, many risks arise. Accordingly, problems that arise in determining the party responsible for the damages are issues that will undoubtedly remain hotly debated amongst litigants.