The Age-Old Question Revisited: When Is a Container Considered a Package Under COGSA?
Just when we thought the question of “What Is a Package?” had been addressed ad nauseum, the United States District Court for the Southern District of New York took another look at the issue.
The Carriage of Goods by Sea Act (COGSA) applies to carriage of goods to or from ports in the United States. Clause 4(5) of COGSA provides “[n]either the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package …, or in the case of goods not shipped in packages, per customary freight unit….”1 This provides a statutory minimum but parties are free to negotiate for higher coverage; most cargo interests opt to obtain insurance instead.
In Mapfre Atlas Compania de Seguros S.A. v. M/V LOA,2 the court examined whether a single shipping container constituted a single “package” limiting defendants’ liability to $500. In that action, 989 “pieces” of computer and printer pieces were shipped from Florida to Ecuador in a single container.3 Upon inspection of the container in Ecuador, it was discovered that 491 of the “pieces” had been stolen.4 The defendant moved for summary judgment for a determination that the single container was the COGSA package. The court granted the same.
In determining that the container was the COGSA package, the Court examined the bill of lading. Under the column entitled “No. of Pkgs”, the number “1” was written.5 There is no guarantee, however, that simply listing the container as a package is sufficient. The Court also looked at the column entitled “Description of Goods”, which stated “989 pieces”.6 Even though some courts have found that “pieces” meant “packages”, the Court in Mapfre distinguished those cases where, as in this case, there was no indication of how the 989 pieces were otherwise prepared for shipment (ie. on pallets or in cartons) other than the fact that they were in “1x40’ HC Container”. The Court’s decision was bolstered by the fact that even if it were determined that the container was not considered to be the package and the pieces were considered to be “goods not shipped in packages”, freight was paid in one lump sum for a single package (the container).7
The case reiterates that all parties to the documentation process (shippers, freight forwarders, NVOCCs, and carriers) must be vigilant about the words they include on bill of lading instructions and the bills of lading themselves. It serves as a useful decision to share with company personnel as the opinion provides a copy of the bill of lading itself with the key language at issue.