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Food Cargo An Experts View

Special Reports

A visit to a local supermarket will illustrate the wide variety of foods that are available to the consumer. Manufactured food products are imported from many different countries especially with the growth of immigrant sectors of the population who wish to continue to eat familiar food. Foodstuffs used for local manufacture of fresh foods like the wheat used for baking bread is imported from countries where it is grown rather than from local farms.

Fresh fruit and vegetables are available for 365 days a year and not just when they are in harvest locally. Modern technology, for example the storage of apples under controlled atmosphere, has extended the local harvest season but to ensure that fresh apples are available over the entire year involves importing large quantities from other parts of the world especially from the southern hemisphere where harvested fruits are available during the European winter.

Over the years appropriate technology has been developed to enable foods, particularly fresh fruit and vegetables, in prime condition to be placed on supermarket shelves over the entire year. As a consequence very large quantities of food and food raw materials are transported around the world. The majority of this material, especially the raw materials for processed foods is carried by sea. In recent years there has been a large increase in refrigerated foodstuffs carried by road within the EU but in total this is only a small fraction of international trade. The Food & Agriculture Organisation of the United Nations (FAO) compile statistics for the annual trade in food stuffs. For the year 2011 (the latest available) they show the values recorded in tables 1 and 2. (overleaf)

The goods transported can be divided into two categories, those that are used as raw materials for further processing to food products, for example oilseeds to be processed into edible vegetable oils, and those that are for direct consumption by humans, for example fresh vegetables and fruit.

It is inevitable that some of these goods are damaged during storage or transportation either due to accidents or to human failure. For example a cargo of wheat on board a ship in transit may be damaged by wetting during bad weather, or may be infested with insects despite having been fumigated so that when it arrives at its destination it may be partially or, in extreme cases, totally unfit for use as human food.

In any event there will be a claim against the insurers of the cargo and for this to succeed the cause of the damage must be investigated by a suitable expert. Impartial experts are involved in these investigations for several reason not least of which is that the value of a cargo of food is high, for example at current prices a 35,000 tonne cargo of milling wheat may have a value between 4 and 6 million pounds. Fresh fruit has an even higher value, for example a 5,000 tonne cargo of fresh apples would be worth over 3 million pounds.

table 1

The role of the cargo expert is clearly defined in law. The Civil Procedure Rules laid down by the Ministry of Justice govern the role of the expert. Part 35 gives explicit instructions to experts called to give evidence in disputes. Section 35(3) says that “It is the duty of experts to help the court on matters within their expertise” and “This duty overrides any obligation to the person from whom experts have received instructions or by whom they are paid.”

table 2

The cargo expert may perform other roles prior to the hearing at which disputes are resolved. In general these fall into two categories, the role may be advisory to the client or it may be advisory to the client’s solicitors in preparing the case for subsequent hearing. There is nothing improper in the same expert acting in one or more of these roles provided that in his expert report he makes it clear that his first duty is to the court even where some of his opinions may be contrary to those expressed by the client or his legal representatives. The cargo expert is retained as an impartial expert and his advice should be the same irrespective of to whom it is addressed and of who pays for his services.

There are regulations governing the carriage of food stuffs by sea. Some of these relate to the safety of the ship and the crew, for example maintaining the stability of the ship during loading. Ships that carry food stuffs like some oilseeds that can heat up to a point where actual combustion occurs must be equipped with appropriate equipment to smother incipient fires using an inert gas like carbon dioxide. Ships must carry breathing apparatus in case crew members need to enter a hold where the air is not breathable. Some food cargoes are alive and respire taking in oxygen and breathing out carbon dioxide so that there is insufficient oxygen within the hold to support life. Respiration can lead to a build-up of heat within the cargo since many foodstuffs are effective insulators when loaded to a ship’s hold. Thus temperature monitoring of such food cargoes is required to ensure that temperatures do not reach a sufficiently high level to initiate spontaneous combustion. Some food and animal feed cargoes are classified as potentially dangerous since they are prone to heat up and spontaneously combust. There is an International Maritime Dangerous Goods Code (known usually as IMDG) that classifies potentially dangerous cargoes and some foodstuffs are included in class 4.2 as “substances liable to spontaneous combustion.”

In general a cargo of foodstuff should be carried according to written instructions given to the Master by the shippers. In many instances, for example with bulk dry food cargoes like wheat or soya beans, the carriage conditions are known within the trade and are published in a number of books readily available to ships’ Masters. Typical examples are “Thomas on Stowage” and “Lloyds Survey Handbook”. In other instances where special carriage conditions are necessary these are provided in writing to the Master. They may be quite specific and include precise conditions for temperature control of the cargo during carriage or for ventilation of the cargo following testing the atmosphere inside the cargo hold. Some cargoes are carried under a controlled atmosphere in order to delay the premature ripening of fresh fruit or vegetables.

Food cargoes are supplied under a sales contract which specifies the commercial limits required. Usually these limits cover parameters like moisture, oil content, degree of ripeness, temperature and any other characteristics that define the condition and quality of the cargo.

Finally, food cargoes must comply with the health and other regulations of the country that is importing the food stuffs. These can be divided into two categories, first, those that are common and are found in most countries’ regulations, for example, the absence of live insects and the absence of known harmful chemicals below the limit set by the countries’ public health authorities and second, those specific to that country for example the absence of certain known plant pathogens not present in that country.

All of these factors relating to the condition and quantity of the cargo should be documented and, in most cases, the documents are carried on board the ship. Monitored temperature and other parameters should be recorded either in the ship’s deck log or in special logs dedicated to a particular set of measurements, for example the detailed temperature logs on board ships with temperature-controlled holds.

One of the first tasks of a cargo expert when attending the discharge of a cargo is to collect copies of these documents and of any logs or electronic records that the ship may have created during the voyage.

There is a network of cargo inspection around the world that ensures that cargoes of food stuffs are inspected prior to loading to ensure compliance with the commercial contract governing their supply. Usually this is a combination of ensuring that the cargo is within the contract specifications and also that the relevant government regulations for safe export have been met. On the basis of these examinations and of the inspection of the cargo by the crew during loading the ship the Master is required to certify that the cargo is satisfactory.

Cargoes are carried under documents called Bills of Lading. This is a document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation, and must be presented before taking delivery at the destination.

There are variations in the wording of Bills of Lading but in general they contain the following:

•  The shippers and receivers/consignees names and addresses

•  Special instructions for the carrier to ensure prompt delivery

•  The date of shipment

•  The number of shipping units, e.g. 15,000 metric tons of sugar in 300,000 x 50 kilo bags

•  A description of the packing, e.g. polypropylene woven bags with a polyethylene inner liner

•  If the foodstuff is considered a potentially dangerous cargo, e.g. prone to spontaneous combustion it should be specified on the Bills of Lading together with the appropriate UN classification

•  The value of the cargo being shipped.

If the Master believes that there is something wrong with the cargo being loaded he has the right to reject it. This happens from time to time and usually results in a dispute at the loadport. In some instances cargo experts may be called in to assist in solving the problem.

In any event the Bills of Lading are not usually endorsed with adverse comments but Masters can accept a cargo with a qualification such as “weight, quality and condition unknown.”

Most of the work of the cargo expert is done at the discharge port since this is where problems of damage to a food cargo are usually seen. Damage may be obvious, for example live insects seen in the cargo when the hatches are first opened. In other instances it may manifest itself during discharge when cargo is found to have been wetted deep within the cargo stow. This may result in mould growth within the cargo or in the creation of areas where there has been an increase in temperature to a point where heat damage has occurred.

The cargo expert is then faced with a number of tasks. First, decisions must be taken about how the cargo is to be discharged. If there has been wetting of the cargo then the damaged part needs to be separated from the undamaged part. With bagged cargoes segregation is relatively easy and the damaged cargo can be kept separately from the undamaged for future investigation. With bulk cargoes segregation is more difficult and inevitably some sound cargo becomes mixed with damaged thereby inflating the quantity adjudged to be damaged.

It is important to do the segregation as rapidly as possible since ships are expensive to operate on a daily basis and the contract to carry the cargo (called a charterparty) will specify how long it should take to discharge the cargo with financial penalties if this is exceeded. The cargo expert must be present during this operation since he is responsible for the forensic examination of the cargo and must try to get as much information as possible about the damage, where it is in the cargo and its extent.

The ultimate quantification of damage may rely on an examination later of the segregated damaged cargo which may involve several cargo experts inspecting the damaged cargo jointly. Often a sampling plan is agreed among the various cargo surveyors and the samples taken are analysed in approved laboratories. There is frequently disagreement between surveyors at this stage since each is employed to look after the interests of his principals and these may be different from one party to another. The cargo expert may try to remain apart from such disagreements but inevitably he may become involved. For thisreason when such a case calls for an expert report this is prepared post mortem by another cargo expert leaving the original attendee as a witness of fact rather than an expert.

At this point the question of mitigation needs to be considered. It is the duty of the receiver of the cargo to try to mitigate the ultimate loss. Thus it is not sufficient to say that a damaged cargo has no use and should be destroyed. This may be the ultimate fate of parts of a damaged cargo but only after all reasonable attempts have been made to find alternative solutions. For example a cargo of wheat intended for milling to produce flour for bread-making may be suitable for animal feed. This would tend to reduce the financial loss on the cargo. Some damaged cargoes can be sold for salvage to specialist companies that are able to clean the cargo and then sell it in other markets that they can access. When these types of alternative solutions have been considered and rejected then the cargo may need to be destroyed by one of the appropriate methods used within that country. The cargo expert may take part in all of these activities.

Ultimately the cargo expert will produce a report of his attendance. This is a report for his principals who may be the Owners of the ship, the Charterers of the ship, the Sellers of the cargo, the Receivers of the cargo or one of the various insurance companies involved in the chain of supply. This report is for the use of those who instructed the cargo expert and is not the same as any report that the expert may be required to produce in response to a court or tribunal instructions. However the expert will be giving his opinions in his attendance report and these should be the same as those which he will give in his expert report if a dispute follows the incident.

Although the science behind the ways in which cargoes may be damaged is well understood it is sometimes extremely difficult to say with confidence that the cause of the damage was attributable to a particular event or events. It is simple to distinguish sea water wetting from fresh water wetting by carrying out a laboratory analysis for the presence of the appropriate amount of salt.

However it is often not clear whether the fresh water wetting came from rain, water ingress or condensation. Often the relevant records are not available for example ships’ logs are often incomplete or inadequately written up. Then the forensic examination depends to a large extent on the experience of the cargo expert. It is hardly surprising that in such instances there is considerable disagreement between experts about the cause of the damage and the case can only be settled by some form of dispute resolution.

Fresh food such as fruit or vegetables is still alive in the sense that the goods respire and may continue to mature or ripen following harvest. In any event they continue to age so that their fresh shelf life is reduced with time. Fresh shelf life is defined as the period during which the goods remain in a condition suitable for consumer use following the voyage from grower to retailer.

Since the purpose is to present goods at the peak of their fresh life to the consumer the cargo expert needs to know about the growing of the crop and its treatment following harvest but prior to shipping. In modern technology the concept of product tracing has become important since the reason for damage to a food cargo may sometimes be found in its treatment during growth of the parent crop or in the immediate post-harvest treatment of the goods. Thus in many instances the forensic examination carried out by the cargo expert involves an investigation of the crop and its treatment following harvest.

Dispute resolution following damage to a food cargo may be by one or more of several different methods. These can be considered as resolution by mediation, or by an arbitration tribunal or by a court depending on the precise nature of the dispute and what is agreed between the disputants and their lawyers.

There is an increasing tendency to use mediation or some other form of settlement meeting rather than proceed to the more expensive options of arbitration or trial. The role of the cargo expert in a mediation meeting differs from that in an arbitration hearing or a trial. At mediation the principals are present (or their representatives who are empowered to agree any settlement) and the role of the expert is to deal with technical problems that may arise during the meeting. Usually there are several experts representing the various interested parties although the technical discussions may often be restricted to the experts representing the two disputants. The proceedings are not under oath and the role of the expert is advisory albeit more oriented towards the party that instructed him. Under the guidance of a skilled mediator such meetings often achieve a settlement of the dispute.

The commonest method of resolving a dispute following food cargo damage is that of an arbitration tribunal. Most charterparty documents include a clause stating that in the event of a dispute about the cargo arbitration will be the preferred method of resolving the dispute. So far as the UK is concerned there is also a clause stating that the arbitration will be held in UK under English law. Similar arbitration tribunals can be and are established in many countrieseither as independent tribunals or under the auspices of various trade organisations or national arbitration bodies.

Arbitration tribunals are conducted in a manner similar to that used in a trial in court. Clients are represented by legal counsel and evidence is given in a similar manner to that used in a court trial following the familiar pattern of examination-in-chief followed by cross examination and any final rebuttal. The evidence given by a cargo expert is intended to assist the tribunal in understanding the technical complexities of the case and also to examine the opinions expressed by the expert in his report. The role of the expert is to be impartial and to express his opinions based on scientific evidence with particular reference to published literature and to his own experience of food cargoes.

Trials in court are usually restricted to matters where there are legal as well as technical problems. Commercial courts often call for expert evidence to be given where they feel that the technical bases for a claim are not clear or require explanation. Courts will often call for a meeting between the experts prior to trial in the hope that some of the technical issues can be resolved and therefore need not be heard at the trial. At trial usually the facts are not at issue and it is the opinions of the cargo expert that are examined in detail and sometimes with great vigour.

The modern cargo expert works within a network involving other experts with different forms of expertise, master mariners and where relevant external experts who may be qualified in a particular speciality that the cargo expert does not possess. This is normal and provided that the appropriate acknowledgement is given for such external knowledge it is perfectly proper to use it. No single person can possess all the knowledge enabling a sensible opinion to be given about the probable cause of cargo damage.

When the scale and complexity of the global trade in food and food stuffs is considered it is hardly surprising that occasionally things go wrong and cargo is damaged. While this is undoubtedly of interest and concern to cargo insurers the main point is that the consumer is protected by a strong network of cargo inspection so that there are very few occasions when the consumer suffers or even is aware of damaged food.