What are a carrier's rights and obligations in the event of a delayed or canceled shipment?
Every carrier regularly encounters it: upon arrival at the loading address, it turns out that the cargo is not yet ready for transport. After first waiting a reasonable amount of time at the loading address, the driver calls the planning department to say that the load cannot be loaded for another hour. With this, the carrier then tangles with his driving schedule for the rest of the day, which will cause him to suffer damages. Whether or not to pay waiting charges is often a point of discussion between carriers and shippers, especially when no (clear) agreements have been made. A less common problem is when the customer cancels an agreed transportation order. In that case, the carrier is suddenly faced with a gap in its schedule that often cannot be simply filled with a replacement order. In this blog - partly for refresher purposes - I will discuss what rights the carrier has in the aforementioned cases. The assumption here is that Dutch law is (declared) applicable between the carrier and his principal.[1] In addition, the Algemene Vervoerscondities (AVC) may possibly apply to the concluded contract of carriage.
The cargo is not yet ready at the loading address: waiting costs
If the principal has failed to prepare the cargo in time for the carrier, and he suffers damage in the form of waiting costs as a result, Article 8:1110 of the Civil Code provides as follows:
The sender is obliged to compensate the carrier for the damage suffered by the carrier as a result of the fact that the agreed goods, for whatever reason, are not at his disposal at the agreed place and time.
The question does then arise as to what damages the sender must compensate and also on whom does the burden of proof rest? The carrier must prove that it has suffered damages consisting of additional costs incurred and/or lost income. This must be based on a credible calculation. To avoid time-consuming discussions about the amount of waiting costs, it is wise to agree in advance on a price for the waiting costs per hour. In practice, we see that these costs start running after, say, 15 minutes after arrival at the loading address. The waiting costs are then invoiced in addition to the freight price.
Carriers who make use of the AVC must, pursuant to article 4 paragraph 3, first set a deadline in writing to still make the cargo ready for transport.[2] If the sender does not comply or indicates that he cannot comply, then the carrier is entitled to 75% of the freight (the so-called 75% rule).
Termination of transport contract before commencement of transport
Described above are the cases when a carrier is entitled to waiting charges while waiting at the loading address. However, it also occurs, albeit to a lesser extent, when a carrier is faced with an unexpected termination of the contract of carriage (just) before the actual transportation has begun
In that case, a connection should be made with Article 8:1111 of the Civil Code which provides the following:
Before making the goods available to the carrier, the sender is entitled to give notice of termination of the contract. He is obliged to pay to the carrier the freight agreed for the carriage of the goods.
Termination shall be made by oral or written notice or any other notice, the receipt of which is clearly demonstrable, and the contract shall terminate upon receipt thereof.
This article does not apply in the case of time chartering.
Pursuant to Article 8:1111 BW, a carrier is entitled to payment of the freight charge in the event that the sender terminates the contract of carriage. It does not matter whether the sender would offer a possible substitute trip that the carrier could perform instead (according to the sender). Only the carrier can decide whether to accept a substitute assignment or choose to pay the full freight price.
Yesterday, the Subdistrict Court of Rotterdam gave oral judgment in a similar case between a carrier and sender who disagreed on the interpretation of article 8:1111 BW. The sender took the position that he would not owe the freight after giving notice two hours before the start of the transport. The main defense was that a reasonable alternative trip assignment had been offered at that notice. However, the carrier did not wish to accept this trip assignment because it would compromise its schedule. Hence, the carrier persisted in paying the full freight, including the interest and (legal) costs due in the meantime. The Subdistrict Court agreed with the carrier and ruled in so many words that the carrier (and not the sender) has the choice whether or not to carry out an alternative route.
All's well that ends well, at least for the carrier.
