TT Talk - Sobering thoughts on Dangerous Goods
The recent ruling on a five-year long Chinese legal battle is a reminder of the importance of declaring goods correctly.
In 2000 a company based in Dalian shipped 80 barrels of Oxalyl Chloride, a highly acidic and corrosive substance, on a Malaysian Airlines Airbus flight. The cargo was misdeclared as benign 8-Hydroxyquinoline, and was loaded, shipped, and treated as ordinary cargo. The cargo leaked during the flight bound for India from Beijing. After crews detected an odour, the plane landed in Kuala Lumpur and evacuated the passengers. The leak caused enough damage for the aircraft to be considered a constructive total loss.
The insurers of the aircraft sought recovery against the shipper, the state-run company China National Chemical Construction and won US$65 million, plus interest, in the Beijing Higher People s Court (the most senior court of Beijing municipality). This is one of the highest sums awarded in a Chinese civil court to date. The parties are entitled to appeal against the judgment.
This case emphasizes the severity of the misdeclaration of dangerous goods. Unfortunately, this is not an isolated issue, as the TT Club has highlighted previously. It echoes the 1983 'Kapitan Sakharov' incident, where a slot charterer was held liable for the loss caused by the explosion of dangerous cargo. In both cases the cargo was misdeclared and treated as ordinary goods.
The TT Club stresses the importance of packing and declaring goods correctly. Any money saved by not declaring dangerous goods is dwarfed by the potential cost of liability in the case of an accident. This is not only a question of financial gamble, but reputation risk, and the loss of life and property. All steps should be taken to ensure the safety of the cargo, the persons transporting it, and third parties on sea, land, and in the air. Furthermore, many liability policies will stipulate a lower limit than US$65 million, a sum which itself might be dwarfed by the exposure in a major shipping casualty.
You may also be interested in:
TT Talk - Mitigating the corrosion nightmare
Corrosion is a perennial concern for tank container owners and operators. The stainless steel construction is resistant to staining and corrosion, but may be vulnerable to pitting from certain cargoes or certain cleaning and maintenance operations. Visually minor pitting may conceal development of substantial or even catastrophic corrosion below the surface.
A number of container lines have recently announced measures to discourage shippers from mis-declaring hazardous cargoes, which is a practice strongly suspected as being either the cause of, or at least contributory to, the spate of container ship fires in recent months.
Peregrine Storrs-Fox, Risk Management Director at TT Club, discusses the risks faced by licenced customs brokers and mitigation steps to take: