When insurance does not pay · SECAL report
The cargo nobody secured
Three real lawsuits over cargo that moved inside the container. In all three, the claimant got nothing. Two of the losers were insurance companies.
When a container arrives with the cargo toppled, broken or crushed, almost every shipper thinks the same thing: “they mishandled it on the ship”.
The courts often conclude something else: that the cargo moved because nobody secured it. And when they reach that conclusion, the claim collapses.
These three cases are real, still good law and can be checked one by one. Read them before you close your next container with voids between the pallets.
- An insurer sued Maersk and lost: the A-frames were not fixed to the container and the lashings were insufficient. Shipment valued at US$ 306,760. Recovered: zero.
- A 19-tonne machine broke loose from its lashings and fell eight feet in the middle of the Atlantic. The carrier was not liable: the securing was the buyer’s responsibility.
- The Spanish Supreme Court closed a case of railway axles poorly lashed inside containers: €662,703.73 that the insurer paid and never recovered.
- A fact that surprises everyone: a clean bill of lading proves nothing if you stuffed and sealed the container yourself.
- And a point that matters if you ship from or to Peru: since April 2022 Peru is no longer governed by the Hague Rules, but by the Hamburg Rules. The time limits change, and so does who must prove what.
The insurer sued and lost: US$ 306,760 of unlashed glass
Hartford Fire Insurance Co. v. Maersk Line — U.S. District Court, S.D.N.Y., Judge P. Kevin Castel, 10 November 2021. Case No. 1:18-cv-00121 (PKC).
What happened
Glass doors and windows made in Cork, Ireland, bound for Connecticut via the port of Newark. Two FCL containers, stuffed and sealed by the shipper itself. The importer valued the shipment at US$ 306,760.02.
The stowage system looked reasonable on paper: each piece with a plywood board screwed to its base and cardboard corner protectors, stacked on A-frames, with cardboard separating each unit, lashing straps and filler material against the walls.
The survey report listed what failed, point by point: the A-frames were not fixed to the container; the lashings were inadequate and additional securing was needed; T-braces were missing to stop the A-frames buckling; the nails used should have been screws; cardboard was not enough as an anti-friction material; and the blocking against the walls was insufficient.
What the court said
Hartford, the importer’s subrogated insurer, sued the carrier and argued at trial that the damage was caused by heavy weather. There was a bench trial with five witnesses. The court dismantled the claim in two layers, and both matter to you.
First: the clean bill of lading proved nothing. When cargo is delivered in a container closed and sealed by the shipper, the carrier did not see what was inside —or how it was stowed—, so a B/L without remarks does not establish that the goods were shipped in good condition. Hartford could not prove good condition at loading, damage at delivery, or a single piece of evidence of heavy weather.
Second, and in the alternative: even if it had, the cause was the stowage. And here is the most uncomfortable detail of the case. The conclusion that sank the claim was signed by the surveyor hired by the cargo owner itself, whose final report the court quoted:
“The supporting and bracing structures as well as securing and lashing arrangements failed to provide adequate protection, and as a result the cargo suffered damage.”
Report of surveyor Nicholas Bruno, quoted in Findings of Fact ¶22
The court concluded that the damage pattern was “more consistent with deficient packing and loading rather than the neglect or fault of the carrier”.
Judgment for Maersk. The insurer recovered zero. No appeal was filed: the judgment is final.
Nothing exotic. Fix the cargo to the container instead of leaving it resting; unitise with strapping of the right strength, not nails; eliminate the voids against the walls with air bags instead of improvised filler. Each of the six defects in the report has a countermeasure that fits in the same container and costs a fraction of what was lost.
The underlying lesson: the claim was not sunk by the carrier’s surveyor. It was sunk by the report of the inspector hired by the cargo owner. When stowage is poorly done, it shows —and it ends up in writing— no matter who draws up the report.
19 tonnes that broke loose in mid-Atlantic: the carrier was not liable
O’Connell Machinery Co. v. M.V. Americana and Italia Di Navigazione S.p.A. — U.S. Court of Appeals, Second Circuit, 797 F.2d 1130, 18 July 1986.
What happened
A 43,000-pound gear-generating machine —about 19.5 tonnes— bought from an Italian manufacturer and shipped from Genoa to New York.
Because of its size it travelled on a flat rack, secured with wire lashings and covered with a tarpaulin. The preparation and securing were the buyer’s own responsibility.
In the North Atlantic, in heavy seas, the machine broke loose from its lashings and fell about 2.4 metres, destroying itself and damaging six containers below. The detail that decided the case: the flat rack stayed firmly in position on deck. What failed was not the ship’s stowage, but the securing of the cargo to its platform.
What the court said
The claimant argued that the carrier had improperly stowed on deck. The Second Circuit affirmed the dismissal of the entire claim and was direct about the cause:
“the sole cause of the slippage of O’Connell’s machine was indeed the packing of the machine, for which Italia was never responsible”
The carrier relied on the “insufficiency of packing” exception under U.S. maritime law (COGSA). The court added that the shipper also had a duty to give advance notice of any special stowage requirements. It did not.
Claim dismissed in its entirety. The carrier paid nothing. The machine was beyond repair. The ruling is still cited as authority in the Second Circuit.
Lashing sized for the real forces of the voyage, not so the cargo “looks secured”. On a platform or inside a container the rule is the same: the cargo must move as one with the transport unit —strapped, blocked and with no slack—, because the ship moves on several axes at once, non-stop, for days.
Poorly lashed railway axles: €662,703 that nobody recovered
Supreme Court of Spain, First Chamber, judgment no. 604/2021 of 14 September 2021 — appeal 5035/2018, reporting judge Pedro José Vela Torres. ECLI:ES:TS:2021:3310.
What happened
1,260 sets of railway wheel axles made in Gipuzkoa and bound for India, shipped from Bilbao in two consignments.
The judgment’s description fits hundreds of containers every week: the axles “were poorly lashed inside the containers, which allowed them to move during the voyage”. The axles moved and struck each other, and the friction of the lashing ropes against their ends broke the fibres. The goods had to be returned to Bilbao for salvage.
The insurer indemnified the manufacturer with €662,703.73 —the total damage and costs of both shipments— and then went after the company that had done the lashing.
What the court said
It lost at first instance, lost at the Provincial Court and lost at the Supreme Court. The reasoning has a practical consequence worth understanding:
“The service of properly preparing and securing the bulky, heavy objects inside each container… was not independent, but ancillary to the carriage.”
Supreme Court judgment 348/2011 of 26 May, cited in judgment 604/2021
Because the lashing was treated as part of the sea carriage, the one-year time bar of the regime then in force in Spain applied. The claim was time-barred. It was lost in full.
Appeal dismissed. The insurer paid the indemnity and recovered nothing from whoever did the poor lashing. A six-figure loss absorbed by the system —which, in the long run, the shipper pays in its premium.
Two things. The first, obvious: lash correctly from the start, with strapping and blocking sized for the cargo. The second, less obvious: time limits in sea carriage are short and run on their own, even while you are still negotiating with the adjuster. You will find the limits that apply in Peru in the next section, because they changed recently and almost nobody noticed.
The three doors that close
Side by side, the three cases draw the same funnel. When cargo moves inside the container, the shipper runs into three closed doors, one after the other.
Door 1: the exclusion written in your policy
The Institute Cargo Clauses (A), found in practically every marine cargo wording, exclude in clause 4.3 damage caused by packing or preparation insufficient to withstand the ordinary incidents of the transit. And they define the term leaving no room:
“for the purpose of these Clauses ‘packing’ shall be deemed to include stowage in a container and ‘employees’ shall not include independent contractors”
Institute Cargo Clauses (A) 1/1/09 (CL382), clause 4.3
In other words: stowage inside the container is packing for the purposes of your policy. It is not an operational detail of the warehouse. This door does not depend on which international convention governs the carriage: it is your insurance contract.
Door 2: your clean bill of lading proves nothing
This one surprises almost everyone. The general belief is that a B/L without remarks certifies that the cargo left in good condition. It does not when you closed the container yourself. The carrier could only see the outside of a sealed metal box: it did not see the goods, the blocking or the straps. This is the door that closed in Hartford v. Maersk, and the reason the insurer could not even establish its initial case.
Door 3: the carrier answers for what it caused, not for what you put in
In both U.S. cases, the carrier relied on an express statutory “insufficiency of packing” exception. And here an important clarification is needed for shipments under Peruvian law, because the framework changed and the market has barely noticed.
Peru is no longer governed by the Hague Rules. The country denounced them and acceded to the Hamburg Rules, in force for Peru since 1 April 2022. That changes three things worth being clear about:
- The catalogue of exemptions disappears. The Hamburg Rules have no stand-alone “insufficiency of packing” exception. The carrier is liable unless it proves that it and its servants took all measures that could reasonably be required. On that point, a shipper in Peru is better placed than the claimants in these cases.
- The time limit for a claim is two years, not one.
- But notices are immediate: apparent damage must be notified in writing no later than the working day after delivery; non-apparent damage, within 15 consecutive days. Missing that notice complicates the claim from day one.
However —and this is the part that does not change—: none of that helps you if the damage originated inside your own container. A carrier that received a box sealed by you has no difficulty showing it did its part. And door 1, your policy exclusion, stays exactly where it was.
A note on rigour, because honesty sells better. The 4.3 exclusion is not automatic, and there are decisions where the insured won: when the stuffing was done by an independent contractor —whom the clauses themselves exclude from “employees”—, or when the policy distinguished between “bad stowage” and “defective lashing” and excluded only the former. The practical conclusion does not change: the exclusion bites hardest in the most common scenario, which is the shipper stuffing its own container at the plant, with its own staff.
How to secure a container properly
The physics is simple and does not negotiate. The forces cargo withstands at sea are no greater than those of a braking truck —the IMO CTU Code sets up to 0.8 g transverse in heavy seas, against 0.8 g longitudinal by road—. The difference is another one: at sea those forces act in several directions at once and non-stop for days. Every void is distance the cargo can travel before hitting something. And all cargo that hits, hits with its full mass, thousands of times.
| Front | What is done wrong | How it should be done |
|---|---|---|
| 1. Voids | Leaving gaps between pallet rows and against the walls, or filling with cardboard, loose wood or whatever is at hand. | Air bags of the right size and pressure for the gap. They close the space and spread the force instead of concentrating it. |
| 2. Unitisation | Pallets wrapped only in film, boxes stacked with no securing between them, nails where there should be strapping. | Polyester or composite strapping with buckles and tensioning, plus corner boards. The pallet must behave as a single piece. |
| 3. Lashing to the unit | Cargo resting but not fixed —the exact mistake of case 1, where the A-frames were not attached to the container. | Securing to the container’s lashing points for heavy or irregular cargo, sized for the forces of the voyage. |
| 4. Friction and surfaces | Cardboard as the only anti-friction material between pieces that rub for weeks. | Suitable separators and protection at contact points. Continuous rubbing causes damage without anything visibly “moving”. |
An important link with moisture: the material you use for blocking also matters. In a 2012 Canadian case, three containers of machinery arrived rusted without a drop of water getting in —the moisture came from the timber the shipper used to brace the load. If you block with wood, make sure it is dry; and if you can avoid it, better.
Checklist before closing the container
Ten checks. With dated photographs, they form the file an inspector would have to rebut —and which, in the three cases in this report, simply did not exist:
- Measure the voids between pallet rows and against the walls before choosing the filler. Do not estimate them by eye.
- Place air bags of the correct size at the stated pressure. An oversized bag at half pressure does not block.
- Unitise each pallet with strapping and corner boards. Plastic film contains; it does not secure.
- Fix to the container any heavy, tall or irregular cargo, using the lashing points.
- Check rubbing points between pieces and add separators where contact is continuous.
- Make sure the blocking materials are dry, especially pallets and wood.
- Distribute the weight evenly: cargo concentrated at one end increases shifting.
- Notify the carrier in advance of any special stowage requirement. In case 2, failing to do so was part of the defeat.
- Photograph the complete stowage before closing the doors: overview, air bags in place, strapping, lashing and seal.
- When damage is reported at destination, start the clock immediately: written notice to the carrier the next working day if the damage is apparent, within 15 days if it is not.
Conclusion
Three courts, three countries, three unrelated goods —glass, heavy machinery and railway axles— and always the same ending: the cargo moved, and the claimant got nothing.
There were no exceptional storms or negligent carriers. There were voids, insufficient lashings and missing blocking. All of that is decided in the last hour before closing the doors, at the loading dock, and costs a tiny fraction of the value of what goes inside.
Your container is going to move. It is the only thing in this report you can take for granted. The question is whether the cargo moves with it or inside it.
SECAL tools — free
Size the securing before closing the container
Two calculators for the two gaps in this report: the X-lashing calculator sizes the lashing by cargo weight, height and floor friction; the air bag calculator sizes the filler for the channel left between stacks. Both give the number of units and the placement pattern.
X-lashing calculator →Air bag calculator →
All five SECAL calculators are free: see them all.
Before your next shipment
A SECAL specialist reviews your stowage plan and tells you which air bags and which strapping suit your cargo, your route and the way you consolidate. Free and with no obligation.
WhatsApp: +51 987 218 005
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Notice. Informational and commercial document. It does not constitute legal advice or an opinion on the scope of any particular policy or contract of carriage. Cover, exclusions and wordings vary between insurers and contracts; the cases reviewed were decided under U.S. and Spanish law, and their application depends on the law and jurisdiction agreed in each case. Time limits and the carrier’s liability regime depend on the convention applicable to each specific shipment. Consult your insurance broker and legal adviser before making decisions. The judgments cited are in the public domain and are reviewed for doctrinal purposes. Hartford v. Maersk is a federal district court judgment: persuasive authority, not binding precedent.
Sources
- Hartford Fire Insurance Co. v. Maersk Line, U.S. District Court S.D.N.Y., Judge P. Kevin Castel, 10 November 2021 — No. 1:18-cv-00121 (PKC), Findings of Fact and Conclusions of Law.
- O’Connell Machinery Co. v. M.V. Americana, U.S. Court of Appeals, Second Circuit, 797 F.2d 1130 (2d Cir. 1986), 18 July 1986.
- Supreme Court of Spain, First Chamber, STS 604/2021 of 14 September 2021 — appeal 5035/2018, ECLI:ES:TS:2021:3310 (and STS 348/2011 of 26 May, cited therein).
- Security Insurance Co. of Hartford v. Old Dominion Freight Line, 391 F.3d 77 (2d Cir. 2004) — evidential value of a clean B/L for a container sealed by the shipper.
- United Nations Convention on the Carriage of Goods by Sea, 1978 (“Hamburg Rules”), articles 5, 19 and 20. Peru’s accession: 25 March 2021; entry into force: 1 April 2022 (UNCITRAL).
- U.S. Carriage of Goods by Sea Act (COGSA), insufficiency of packing exception.
- Institute Cargo Clauses (A), CL382, 1/1/09, clause 4.3 — official text, Lloyd’s Market Association and International Underwriting Association of London.
- IMO/ILO/UNECE Code of Practice for Packing of Cargo Transport Units (CTU Code), chapter 5 — acceleration coefficients by mode of transport.
- Feuiltault Solution Systems Inc. v. Zurich Canada, Federal Court of Appeal of Canada, 2012 FCA 215 — moisture from bracing timber.