Ask A Maritime Attorney: What does this terminology mean in this yacht transportation arrangement?

Question:

I just bought a 65 ft. boat on the East Coast, and I am looking at different methods for transporting the boat to California.  Since it’s too big for a truck, my options appear to be limited to sailing it here myself or loading it onto a ship.  The ship would obviously save a lot of wear and tear on my boat, but I have a few questions about the process.  First, I have noticed these ships will deliver a boat to Ensenada but not to California.  Is there a reason for that?  Second, the bill of lading includes some unfamiliar language.  What is meant by a “package limitation,” and what is “general average?”  Any insight that you can offer on this process would be very helpful.

Answer

The ships that are used in the yacht delivery trade are all foreign built and foreign registered.  And most of the ships that deliver yachts from the U.S. East Coast will load their cargo in Florida.   They discharge their cargo in Ensenada because they are prohibited by American “cabotage” laws from carrying cargo directly between two U.S. ports.

Cabotage laws require the transportation of passengers or cargo between U.S. ports to be performed aboard “U.S. flagged” vessels (vessels registered under the laws of the United States), and U.S. built vessels.  These laws are a form of protectionist legislation, and they have been a component of U.S. transportation law for over a century.  The current cabotage statutes which establish these restrictions include the Merchant Marine Act of 1920 and its amendments (popularly known as the Jones Act), the “Passenger Services Act,” and various other provisions of the United States Code which define and regulate foreign vessels and U.S. Coastwise Trade.

A bill of lading for ocean transportation is a classic example of “fine print legalese,” and I congratulate anyone who has the eyesight and the patience to actually read one of these documents.  Unfortunately, bills of lading are drafted to protect the steamship company and to place most of the risk of the voyage on the owner of the cargo.  Cargo owners are assumed to know and understand the contents of a bill of lading, and to take whatever steps they may deem necessary to protect themselves.  This is a reasonable assumption if the cargo is owned by a large retailer or manufacturing company that imports a lot of cargo.  But most people who retain a yacht transport company to ship their boat are not experienced shippers.

The most onerous concept in the ocean transportation of cargo is the limitation of liability provided under the U.S. Carriage of Goods at Sea Act (“COGSA”).  Under COGSA, the steamship line may limit its liability to $500 per “package.”  The definition of a “package” may be open to discussion, but a yacht will always be deemed to be a single package.  As such, a steamship line’s liability for damage to your yacht may be limited to $500.00!

A bill of lading may also require a lawsuit to be brought within a very short period of time, and it may require a suit to be brought in a foreign country (China, for example) that had no connection whatsoever to the actual voyage.

The reference to “general average” is probably the least onerous term of a typical bill of lading.  General average refers to a circumstance where the crew of a ship needs to sacrifice some of the cargo to save the ship after some sort of casualty.  The classic example of this is where the crew throws cargo overboard to lighten the load after the ship has run aground. In such a case, the remaining cargo shares the loss of the cargo that was jettisoned, on the theory that “we’re all in this together.”

The simple solution to all of these one-sided contractual provisions is to get a cargo insurance policy for the voyage.  This is extremely important, since a regular yacht insurance policy will generally not insure a boat that is being shipped as cargo.  The shipping company will refer you to a company that offers cargo insurance, or you can get a referral from your regular insurance agent or broker.  Talk to the cargo insurance people about the extent of coverage that may work for you and ask them to explain the bill of lading to you.

Finally, don’t rule out the trucking option completely.  You may find it prohibitively expensive for a 65 ft. boat, but trucking companies do move boats of that size.  The terms of a motor carrier’s bill of lading may include many of the same restrictions that are found in an ocean bill of lading, but it will nonetheless be a little less onerous.  And a truck is not subject to the “cabotage” laws so it will deliver the boat directly to your nearest shipyard.   The best solution, of course, is to talk to a maritime or transportation attorney and ask him or her to walk you through the process in greater detail.

David Weil is licensed to practice law in the state of California and as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state.

David Weil is the managing attorney at Weil & Associates (www.weilmaritime.com) in Seal Beach. He is certified as a Specialist in Admiralty and Maritime Law by the State Bar of California Board of Legal Specialization and a “Proctor in Admiralty” Member of the Maritime Law Association of the United States, an adjunct professor of Admiralty Law, and former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at 562-799-5508, through his website at www.weilmaritime.com,  or via email at dweil@weilmaritime.com.