Gard has experienced substantial claims for damage to soya beans shipped primarily from Brazil to China where the damage has been caused by microbiological instability of the cargo. We took a deep dive into the causes of the instability, the role of ventilation and the legal underpinning internationally for claims up and down a charter party chain.
From Brazil to China - Understanding soya bean claims arising from microbiological instability
Soya beans naturally contain mould spores that under certain conditions grow and produce heat within a stow which can result in caking, visible mould and darkening of the beans. Whether soya beans will self-heat in this way is determined by the moisture content of the beans at loading, the temperature of the beans when loaded and the time the beans remain on board before discharge. The higher the moisture content and temperature at loading, the shorter the safe storage time for the beans. Brazil is the world’s largest exporter of soya beans and China is the world’s largest importer and given the export conditions and voyage times, some damage claims are inevitable.
Brookes Bell scientist, Dr. Tim Moss, explains the cause and effect of microbiological instability in this video:
Microbiological instability in soya bean cargoes
The role of ventilation
When warm humid air rises from the cargo and touches a cold steel surface like a hatch cover, condensation will form and this “ship’s sweat” drips down onto the cargo surface. Ventilation of the cargo headspace can, to a limited extent, reduce ship’s sweat and dripping on the surface of the cargo. Ventilation will not affect self-heating due to microbiological instability deeper in the stow.
Appropriate ventilation and ventilation record keeping are important to defend cargo claims. In this second video, Dr. Tim Moss explains the cause and effect of ship sweat. He also sets out the two alternative Rules – the Dew Point Rule and the 3 Degree Rule that inform the Master and crew when and when not to ventilate during the ship’s passage.
Best practice for ventilation of soya bean and grain cargo
When there is a claim, documentation supporting both actions taken to ventilate the cargo as well as reasons why ventilation could not be performed (fumigation or adverse weather for example), are important to defend the claim. Template ventilation logs are available here for the Dew Point Rule and the 3 Degree Rule.
Practical advice for cargo care and claims handling
Gard has produced the following articles:
Heat damage in soya bean cargoes – the importance of inspections - conditions at the load port indicating self-heating is underway
Master’s checklists for loading and carriage of soya beans - measures to take at loading and during carriage including record keeping
Discharging soya beans in China – steps to be taken when the vessels arrive with damaged soya beans in China or when experiencing delays to discharge
Soya bean shipping -- A Master’s toolkit to reduce cargo claims -- essential information designed for on board use
The legal landscape
Under the Hague-Visby Rules, the Master has a duty to independently record the apparent order and condition of the cargo on the bill of lading. In practice, the bill of lading is prepared by the shipper and includes the statement that the cargo as loaded is “in apparent good order and condition”. Apparent good order without qualification means the bill of lading is issued “clean” as is generally required by the banks that are financing or facilitating the sale.
Apparent good order and condition, is in law, a statement made by the Master regarding the cargo’s external condition at the time of shipment arising from a reasonable examination by a competent Master based on the prevailing circumstances during loading. A reasonable examination does not require that the Master is an expert in the cargo. The Master is not expected or required to perform a granular inspection or interrupt regular cargo operations for inspection.
In cases of microbiological instability in soya beans loaded in Brazil, the external appearance of the beans at loading may be sound but the moisture content and temperature of the beans combined with the longer transit times to Chinese ports mean that the beans arrive in a damaged condition. The receiver can then make a claim against the vessel based on the bill of lading showing the cargo was loaded in “apparent good order and condition”.
Under the Hague-Visby rules, the carrier has a defence that the cargo condition was due to inherent vice. However, as set out in the UK Supreme Court’s decision, Volcafe Ltd and another v Compania Sud Americana de Vapores, it is the carrier’s burden of proof to show that appropriate care was taken of the cargo or, that regardless of whether the carrier discharged the duty of care, the cargo damage would have occurred anyway.
How the law is applied in China and under English law and arbitration with respect to the various parties to the claim is explained in this video:
Soya bean damage claims – The legal landscape
Want to understand more about the trade in Brazilian grown soya beans?
Loading soya beans in Brazil – practical guidance - produced by P&I correspondents, Proinde, the guidance produced in 2020 provides extensive information about soya bean production and shipping from Brazilian ports.
An expert’s view on the carriage of soya bean cargoes from Brazil to China – an interview with Dr. Stephanie Heard of CWA about self-heating in soya beans and what can be done by producers to prevent deterioration and damage.