Port congestion can lead to force majeure under German law

Port congestion does not occur very often, but once it does occur, the impact is often significant. If the ports are congested and ships have to stay at anchor, many follow-up costs can quickly arise and the shipments cannot be delivered on time.

In 2015, for example, in the United States of America there were weeks of work stoppages due to a strike and smouldering wage conflicts, which led to port congestion, and considerable container demurrage and container detention demands and demurrage money accumulated. At that time, numerous shipowners and forwarders invoked force majeure for port congestion.

The shipowner will also invoke force majeure in port congestion

If ports are congested the shipowner will invoke force majeure so that he will be exempt from delivery delays and damage caused by delays.

According to the conditions of bill of lading the carriers usually reserve the right to cancel any booking or contract if port congestion occurs.  Some B/L terms also go so far that, at the carrier’s option, the cargo can be diverted to another port of discharge or destination and the shipper has to bear all associated additional costs himself.

In the USA, many shipping companies at the time invoked force majeure after port operations in New York and New Jersey were discontinued, and many containers were diverted to alternative ports such as Baltimore and Norfolk. At that time, 6,000 containers alone were diverted to Virginia terminals. Forwarders then had to clarify how to return all these containers to their original destinations.

Do not assume liability for port congestion

The blockage of seaports and the backlog in ship handling is also a problem for involved project carriers, especially in plant construction. It is of utmost importance that the individual lots arrive on time at the construction site, especially when shipping in plant construction. If the seaport becomes congested, the freight forwarder may be called upon by his customer.

It is then important that the freight forwarder has not assumed liability for congested seaports in his logistics contract >. Sometimes logistics contracts of large companies provide for a liability of the forwarder.

Marks: The clause on force majeure in the logistics contract should be so specific that not only the liability for strikes is excluded, but also for the consequences of the strike, as just port congestion .

Even if liability has not been assumed, the freight forwarder will himself invoke force majeure in order not to be liable for damages to his customer. However, the logistics contract should describe the consequences of such an event. If, for example, only “strike” is listed as an event of force majeure, but not the consequence of “port congestion”, there may later be disputes about the scope of the clause.

Lawyer Dr. Tristan Wegner

Your consultant

ABC-Straße 21
20354 Hamburg
T +49 (0) 40 / 36 96 15 0
F +49 (0) 40 / 36 96 15 15
E ow@owlaw.com