If you are in the business of shipping and transporting goods as an owner, carrier or broker, you may be familiar with a number of legal issues when shipping and transporting goods. As part of the supply chain, you ship goods to all corners of the globe. However, successfully navigating through the web of legal complications to avoid fines and punishment is a critical component of the industry.
Heightened security is also a concern in our modern political and economic reality. Often, legal issues arise when dealing with differing laws between states and countries. Attention to detail and due diligence can save you from costly mistakes.
Here are five potential areas of legal concern when shipping and transporting goods:
1: Transporting Hazardous Materials
The shipping of hazardous materials is heavily regulated with due cause. In 2004, the Pipeline and Hazardous Materials Safety Administration (PHMSA) was created to oversee all shipments of hazardous materials by land, air or sea. Failure to comply with regulations results in stiff fines up to $500,000.00 and can lead to a jail term of up to 5 years.
Common problems that arise from transporting hazardous materials include:
Falsely assuming that materials shipped are non-hazardous;
Not adhering to regulatory differences between modes of transportation such as shipping via highway versus air.
Mistakes made by improperly-trained employees.
2: Managing Heightened Security at the Port of Savannah
The Port of Savannah is the second busiest in the United States today. As a result of the increase in transactions (and the increasing number of large TEU container units of which the contents remain difficult to confirm), security measures have understandably heightened. Illegal stowaways have been caught in shipping containers with the intent of carrying out acts of terrorism, and U.S. ports remain vulnerable to attacks.
The use of technology has helped to monitor the safety of the contents within shipping containers and also to watch for suspicious activity on the port’s premises. However, a common issue encountered is the delays caused by security inspections. Inspecting large shipping containers is difficult and time-consuming, but necessary for security reasons. Businesses encounter legal problems when shipments are delayed which affect warehouses with just-in-time delivery systems. Businesses sometimes try to alter shipping routes to avoid ports at overcapacity which can hurt their bottom line.
3: Improper Documentation
When exporting goods, it’s important to have the help of a legal team to help you through the mountain of documentation required which includes bill lading, certificates of origin and export licensing to name just a few. Any omissions or slight errors may result in nonpayment or your goods being held or seized by customs. It typically falls on the exporter to ensure all documentation is up to par, so ensure you know the ins-and-outs of shipping before proceeding.
4: Inadequate Insurance
Ensure your cargo is properly insured for both unforeseen and common hazards, such as broken goods as a result of rough handling or damaging adverse weather conditions. Depending on your shipment mode, different types of insurance are required. For example, marine cargo insurance is required for shipment by vessel. If you are a carrier, your liability coverage may be hindered by international agreements.
5: Unclear Incoterms
Incoterms or International Commercial Terms are a standardized set of rules to facilitate the shipping and transporting of goods. However, legal issues arise when the Incoterms are not crystal clear. For example, failing to put a specific port or place with an exact location may result in failure to deliver. Another common problem is not ironing out the details of how terminal handling charges (THC) are to be paid at the point of arrival.