Art and History Combined.

April 1, 2010 - Some recent interest in this subject by some readers warrants reposting this article. It was one of my favorite ones to write because I spent many years in the ocean freight business.

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Despite the slick advertising you see on Sundays between NFL games, shipping by any mode is still more of an art than a science.   Nature plays a factor in the movement of anything.  No whiteboards involved at all.

Check out the video below, which shows a container ship at sea in heavy weather.  The ship takes an absolute beating and rest assured, nobody on deck is very happy.   That HDTV you have in your living room right now might have been on this ship but you'd never know it.

This takes me to another subject... How many of you know what "General Average" is?   Do you know where it came from?   Methinks its time for a maritime history lesson!

General Average is a maritime legal term that allows a carrier to charge its customers for damage done to the ship while at sea.   The video above shows a major storm.   If the ship were damaged with massive cargo loss etc., the carrier could legally take the cost of the repair and divide that by the cargo interests on board and send you a bill.  Look at the back of your ocean bill of lading.  Its on there. 

Here's the history. 

Back in the "olden days", prior to the early 1800's,  merchant ships would be commissioned for voyages.   A British merchant with wool to sell, along with other merchants with other native products, would commission a vessel and a captain and crew to sail to a foreign market like China or India.   On arrival, the captain became a trader and would sell the goods in exchange for money or other local goods like silks, tea, Chinese pottery, anything!   How much money the enterprise made, including the captain and crew, depended on how good he was at trading.   Now, if the ship got damaged in transit from weather, pirates, acts of god, etc., the commission contract said that the commissioning merchants could be billed for the damage repair cost.    That tradition in maritime history continues to this day though carriers are very sensitive about whether to charge this because it is very unpopular with major customers.

The reason shippers get so mad about General Average today is that they enjoy what's called full liner terms on their ocean bills of lading, which is a contract of carriage.   The shipping company promises to run a regularly scheduled service with predictable schedules.  Given that people expect that what they buy will be fulfilled, they are very surprised when something happens to their goods and they themselves are held responsible.  Most protest vehemently!   That wasn't the case prior to 1837.

In 1837 the Peninsular and Oriental Steam Navigation Company (P&O) was commissioned by the British Government to make scheduled runs between England and Spain and Portugal in support of the British mails. A country trying to run an empire needs regular mail service. 

P&O was the international mail company long, long before UPS, DHL or FedEx ever delivered an envelope.   P&O started what became known as Liner Service.   England is an island nation and this was a common way that shipping companies got started.  NYK of Japan started the same way.  Nippon Yusen Kabushiki Kaisha means Japan Mail company. 

This idea of commissioning ships with trade goods created strong trades with China long before Wal*Mart ever existed.   Ever heard of the Opium Wars?   Shipping companies (P&O in particular) wanted to trade British wool with the Chinese.  The Chinese already had silk, which was not only cooler, it was lighter and much more suited to the weather in China.   Frustrated, the Brits needed a different product.  They were already active in India and noted that the Indians had a nice local trade in opium poppies. 

So...rather than trade that smelly old wool,  the Chinese were offered opium.   That's a product that creates instant demand if you weren't already aware...  and a nice but infamous trade took place for awhile between India and China and P&O made good money on it.  That's something the company wasn't real proud of in the view of history, but that's what happened.

In case you didn't know it, I spent many years working for P&O Containers, then P&O Nedlloyd.   Both now part of Maersk Lines.   The heritage of our commerce is directly tied to our global maritime history.  That's evolving to suit current markets, but the old history is worth knowing.   I'm intensely proud to be an old steamboater, even though I now wear a forwarders clothing! 

Eric

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Comments

[Bobby Hamon]

Force Majeur, in legal term casus fortuitus;
described by "act of God" in common law (e.g., flooding, earthquake,), prevents one or both parties from fulfilling their obligations under the contract.

[Eric]

Relax Siggie. Steamboater is a colloquialism.

[Scott Sigman]

Good article. I liked the review. However, I am aghast at the use of the term "steamboat" and its various forms in this context. OK, I admit that I sometimes have slipped and referred to the industry as steamship liner services. But really that was all a golden age ago.
The freight movements and efforts of personnel to which the article referred have had absolutely nothing to do with steamboating at least since the dawn of containerization on the MV "Ideal X" (The MV stands for Motor Vessel) in 1956. The anachronism holds, despite the fact that the more accurate references, ocean carriers or shipping companies, may be steeped in history that dates back to other means of propulsion power.
Motors are driven by bunker fuel, today. That term, bunker fuel, is a throwback to use of coal in a bunker, or hold. That coal was for fueling the fires for boilers that produced steam onboard a vessel. Today, the bunker fuel is some categorization of diesel, for burning in huge diesel engines onboard ships.
Thanks for the history lesson. This is the 21st Century. I seem to recall a post long ago that highlighted the use of sails on some of the latest designs for "green" container vessels. Perhaps what goes around, comes around.

[Eric]

Force Majeure literally means "greater force". These clauses excuse a party from liability if some unforseen event beyond the control of that party prevents it from performing its obligations under the contract.

Typically, force majeure clauses cover natural disasters or other "Acts of God", war, or the failure of third parties--such as suppliers and subcontractors--to perform their obligations to the contracting party. It is important to remember that force majeure clauses are intended to excuse a party only if the failure to perform could not be avoided by the exercise of due care by that party.

[Harry Joiner]

Wow! Great post. So, what's "Force Majeure?" I'm an old steamboater, too!