Article by Thomas R. Denniston, Carter T. Gunn, and Alfred E. Yudes, Jr.
Many transportation analysts expected the container revolution to have a beneficial influence on the maritime industry. Shippers and ocean carriers believed the container would deliver them from their past break-bulk woes. However, others criticized containerization as unplanned investment suicide. These critics believed containerization would result in unknown liabilities that would threaten the survival of many ocean carriers.
Despite this criticism, the container has flourished and is now widely recognized as a means to speed cargo delivery and reduce handling costs. Containerization permits individual commodities to be loaded at the point of origin and to be transported without interim handling until the container arrives at its ultimate destination. Between the points of origin and destination, the container may be transported by ocean, rail, motor, or air carriers with a substantial reduction in transit time, loss, damage, and theft in comparison to that experienced under traditional break-bulk carriage.
Recognizing the economic benefits of containerization, many foreign and domestic ocean carriers now regularly contract, either directly or through subsidiaries, for the shoreside movement of containers. Although there is nothing novel about a contract between an ocean carrier and a shipper to transport cargo from an inland point of receipt to an inland point of delivery, multimodal transportation contracts, now becoming commonplace, were once rare. Under such multimodal contracts, agreements may be signed with a railroad, hauler, and depot to provide the inland services necessary to complete a door-to-door shipment. As a result, ocean carriers may become involved in inland cargo documentation, rating, and carriage. The company is then placed in the center of a contractual web of terminals, haulers, railroads, shippers, and perhaps, independent freight forwarders and other sea carriers involved with an intermodal cargo. Carriage obligations will vary according to relevant law and according to the contractual terms upon which the cargo has been accepted or the law of the transport document under which the cargo is being moved.
Containerization has raised questions concerning the relevant responsibilities and attendant liabilities associated with each leg of a multimodal movement. What happens if something goes wrong during an ocean, road, or rail journey? Who bears the responsibility of compensating the cargo and container owners, the hauler, the railroad, or injured third parties? How can ocean carriers protect themselves against shoreside liabilities? Can the shoreside participants in the overall transportation process take advantage of the ocean carrier's defenses and immunities? Does federal or state law apply? The answers, unfortunately, vary greatly depending on the identity of the disputants and the forum in which the dispute arises.
Multimodal transportation has thus aroused the commercial world's dissatisfaction with myriad and inconsistent protocols. There is pressure for simplification and standardization of documentation, customs procedures, and the many legal rules involved. A growing specific concern of the transport industry is the broad variation in national and state laws and the attendant liabilities that apply to international commerce.
This Article focuses on one aspect of these issues: the frustrating problems posed by conflicting laws and regulations for certain shoreside participants in the multimodal transportation process. With the trend toward multimodal transportation showing no signs of abatement, it is likely that the problems discussed will arise with increasing frequency. Therefore, these problems must be addressed and rectified.
About the Author
Thomas R. Denniston. Vice President and General Counsel, Bradshaw & Associates Limited. B.S. 1975, State University of New York; J.D. 1979, New York Law School.
Carter T. Gunn. Member, Vandeventer, Black, Meredith & Martin, Norfolk, Virginia. B.A. 1969, University of Virginia; M.A. 1973, George Mason University; J.D. 1976, University of Virginia.
Alfred E. Yudes, Jr. Member, Burlingham, Underwood & Lord, New York, New York. B.S. 1969, United States Naval Academy; J.D. 1978, McGeorge School of Law, University of the Pacific.
Citation
64 Tul. L. Rev. 517 (1989)