What Constitutes a Package Under COGSA?

In 1936, Congress enacted the Carriage of Goods by Sea Act (COGSA) in order to implement the Hague Rules, which the United States signed in 1924. The lan­guage in COGSA is almost identical to that in the Hague Rules except with regard to the carrier’s limitation of liability. The Hague Rules limit a carrier’s liability to £100 per package or unit, whereas COGSA limits such liability to $500 per pack­age or, in the case of goods not shipped in packages, per customary freight unit. They both indicate that the limitation of carrier’s liability applies unless the nature and value of the goods in question have been declared by the shipper before shipment and inserted in the bill of lading.

Given the absence of a definition for the term “package,” courts and scholars in the field have provided different interpretations of the Rules. This has become a major source of litigation in cargo damage claims.

When a cargo is fully boxed or crated in such a manner that the identity of the cargo is concealed, the cargo is considered a COGSA package regardless of size, shape, or weight. If, however, the cargo has been partially packaged for facilitat­ing transportation, the parties’ description of the cargo in the bill of lading is a determinative factor. In a case where a company sought damages from a carrier for the loss of 1,680 television tuners shipped from New York to Rio de Janeiro, the court rejected the argument that each cardboard carton was a package and held that each pallet constituted a package. The complete shipment consisted of nine pallets, each loaded with six cardboard cartons holding forty tuners. The dock receipt, the bill of lading, and other documents all indicated that the ship­ment consisted of nine packages.

Another case involves a container load of perfumes and cosmetics shipped from France to Florida that mysteriously disappeared while in a marine terminal at Port Everglades, Florida. The perfumes and cosmetics in the missing con­tainer were packaged in a total of 2,270 shoebox-size corrugated cardboard car­tons, which were then consolidated into forty-two larger units. They were bound together with plastic wrap and packed onto forty-two pallets with two cartons remaining. The insurance company paid the shipper for the loss under a cargo in­surance policy and brought a subrogation action against the carrier. The onboard bill of lading described the cargo as four container units. The pro forma invoice and the revised bill of lading stated that there were forty-two packages plus two cartons. The carrier issued a clean bill of lading with these particulars (forty-four packages). If the bill of lading does not show how many separate packages there are, then, each container is generally considered a package.

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.