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remain subject to carrier defenses, including governmental action, force majeure, or inspection delays, highlighting the importance of documentation and proactive risk management.

Statutory and Regulatory Oversight

Shippers operate within a framework of statutory over- sight, contractual obligations, and commercial risk alloca- tion. Under the Shipping Act at 46 U.S.C. § 41102(c), car- riers must maintain just and reasonable practices. Shippers can ? le complaints with or notify the FMC if a diversion is discriminatory or commercially unreasonable, but the FMC generally allows carriers to operate with broad discretion.

Risk Allocation and Recovery Strategies

Marine cargo insurance is often the most reliable mecha- nism to mitigate diversion-related losses, but contractual limitations and exclusions often leave shippers responsible for signi? cant charges. First-party cargo policies typically will cover direct rerouting expenses, while underwriters re- tain subrogation rights against carriers in cases of proven negligence. Ocean transportation agreements may require intermediaries to indemnify shippers for third-party carrier failures, though claims for consequential damages and delay are usually excluded. Proactive coordination with insurers, meticulous documentation of charges and carrier actions, and understanding bill of lading and service contract terms are critical to preserve recovery potential. Responsibility for ad- ditional costs such as demurrage, detention, storage, re-han- dling, and inland transport is typically borne by the shipper under bills of lading and service contracts.

Managing Claims and Preserving Rights

Vessel diversions create complex operational, regulatory, and commercial risks, requiring shippers to act promptly and deliberately. When losses are primarily economic such as additional handling, rerouting costs, or schedule-related im- pacts, shippers should issue a formal notice of claim, preserve all shipment information and documents, and coordinate with insurers to maintain coverage and subrogation rights. Ongo- ing communications with carriers to track cargo status and ensure lawful delivery are essential. Shippers may mitigate some risk through insurance coverage, but carriers’ discretion and contractual protections signi? cantly limit shippers’ direct remedies against its service providers in practice.

The Author

Nester

Phil Nester is a Senior Managing Associate with the Transportation & Logistics Practice Group,

Benesch Law. He may be reached at jpnester@ beneschlaw.com.

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