Clausing Bills of Lading When Loading Steel

04/07/2025

Read time: 6 minutes

Category: Blog

Author: Lee Myers

With over 30 years of experience in marine surveying, I’ve come to appreciate the critical role that accurate documentation plays in the safe and efficient transport of steel cargoes. Among the most important documents in this process is the Bill of Lading (B/L) – a legal instrument that not only serves as a receipt for the cargo but also as a record of its condition at the time of loading.

This article outlines best practices when clausing Bills of Lading, based on real-world experience and industry standards.

Why Clausing Matters

Clausing a Bill of Lading may be essential when loading steel cargoes. Instructions for such surveys often come from P&I Clubs, but we are also regularly engaged by shipowners and charterers. This is typically due to requirements in a vessel’s P&I entry terms requiring a qualified surveyor to inspect steel cargoes and assist the Master in preparing appropriate clauses.

The answer to “When should steel be inspected and the B/L be claused?” is simple: Always. Steel cargoes are vulnerable to damage and contamination long before they reach the ship’s rail.

What is a Claused Bill of Lading?

A claused or “dirty” B/L includes remarks about any observed damage or irregularities, such as rust, dents or broken packaging at the time of loading. This contrasts with a “clean” B/L, which implies the cargo was received in apparent sound condition.

Given that hot rolled steel begins to oxidise very quickly after production, it is rare to encounter a shipment that is entirely free from rust or blemishes.

The Importance of Clausing

Clausing serves several key purposes:

Accurate Representation: Steel is prone to rust, dents and other imperfections. Clausing provides a truthful record of the cargo’s state at loading.
Legal Protection: A claused B/L protects carriers from liability for pre-existing damage, clearly distinguishing between issues that occurred before and after the cargo crossed the ship’s rail.
Clarity for All Parties: Clausing ensures all stakeholders are aware of any pre-existing issues, reducing the potential for disputes at the discharge port.
Insurance Claims: Insurers rely on the accuracy of B/L clauses and accompanying survey reports to assess claims. A well-documented clause can protect innocent parties from unjust blame.

Common Clauses for Steel Cargoes

Rust

We use simplified, effective terminology to describe rust conditions:

Rust spotted: Less than 15% of the surface affected
Part rusty: 15-75% affected
Rusty: More than 75% affected
Rusty with pitting: Severe rust with visible pitting (rare)

Damage Types

Broken Bands: Often observed during handling or transit
Gouged Edges: Typically caused by rough handling or contact with sharp surfaces
Telescoping: May occur during winding or due to forklift mishandling
Handling/Gear Damage: Caused by lifting equipment or improper stowage
Indentations/Crimping: Resulting from excessive pressure or impact during handling

Other Key Considerations

Contamination

Steel Cargoes can be contaminated during transport to the port, by droppings, dirt or even adjacently stored bulk commodities being loaded or discharged nearby. Some contaminants, particularly those containing chlorides, can cause corrosion and may even trigger a positive silver nitrate result.

Wetting and Hidden Moisture

Steel products, especially hot-rolled, are often stored outdoors and exposed to the elements. Even if the outer surfaces appear dry, water can be trapped between laps or turns of a coil or between stacked plates etc.

Clausing for Quantity Discrepancies

While many pre-shipment instructions specify that surveyors should not perform a tally, if a discrepancy is observed, it should be noted. Use terms like:

“Short shipment” – when fewer items are loaded than declared
“Over shipment” – when more items are loaded than declared

Example of Effective Clauses

A good example of a clause for a generic, undamaged cargo of steel beams loaded as single pieces from an open quayside during rain would be:

“Unprotected, All pieces with visible surfaces part rusty and wet all before shipment.”

This is succinct and to the point with no areas for confusion. This can be expanded upon, should there be additional damage or points of interest found:

“Unprotected. 53 pieces with visible surfaces rusty, remainder part rusty. 7 pieces with flange indented along length; 43 pieces reacting positive to the presence of chlorides. All pieces wet. All before shipment.”

What Doesn’t Belong in a Clause

When preparing clauses for Bills of Lading, it’s important to distinguish between what is relevant to the condition of the cargo and what, while potentially useful elsewhere, does not belong in the clause itself. Certain types of information, though often observed during loading, do not accurately describe the cargo and can lead to confusion or disputes if included.

“Loaded from open quay” – this describes the storage environment, not the cargo’s condition. While it may imply exposure to weather, it doesn’t tell us anything definitive about the cargo itself
“Loaded during rain/snow” – this is a weather report, not a cargo description. The clause should reflect whether the cargo is wet or dry, not the condition under which it was loaded
“Some cargo wet” – vague terms like “some” lack precision. Without quantification, such statements are open to interpretation and challenge
“Atmospheric rust” – this phrase attempts to explain the cause of rust, which is unnecessary and potentially misleading. The clause should focus on what is visible and verifiable, not speculate on origins
“Silver nitrate tests conducted” – while such tests may be useful and relevant in a report, they describe an action taken by the surveyor, not the condition of the cargo itself

These types of observations are often valuable and should be documented in the survey report, not in the clause. The clause must remain a clear, factual and objective statement about the cargo’s physical condition at the time of loading. Anything that introduces ambiguity, interpretation or context beyond the cargo’s state risks undermining its legal clarity.

Best Practices for Clausing Bills of Lading

When engaging a surveyor to oversee the loading of steel cargoes and clausing of Bills of Lading, it’s important for the appointee, whether shipowners, charterers or P&I Clubs, to understand the key practices that ensure the process is thorough, accurate and legally sound.

Thorough Inspections Matter

Steel cargoes often arrive in stages and not all may be present at the start of loading. A competent surveyor will remain vigilant throughout the entire operation, inspecting cargo before and during loading to ensure nothing is missed. This is especially important when dealing with high-value shipments or tight schedules.

Clarity in Documentation

Clients should expect clauses that are clear, concise and specific. Vague or ambiguous language can lead to disputes. The best surveyors use direct terms and quantify observations, such as the number of affected items, rather than general phrases like “some wet cargo”.

Visual records Are Essential

Photographic evidence is a vital part of the surveyor’s report. While not all images need to be included in the final document, a well-documented visual archive supports the written findings and can be invaluable in the event of a claim or dispute.

Communication is Key

A professional surveyor will maintain open lines of communication with all relevant parties; P&I Clubs, shipowners, Masters, crew, shippers and agents. Clients should expect regular updates, especially regarding the start and expected completion of loading operations.

Collaboration Reduces Conflict

Establishing a good working relationship with shippers and agents from the outset can make the entire process smoother. When clauses are issued, prior rapport can help avoid unnecessary friction and facilitate resolution.

Timely Reporting Prevents Problems

If damaged cargo is identified early, surveyors should notify the appropriate parties immediately. This allows time for replacement or corrective action before the cargo is loaded, reducing the risk of disputes later.

Experience and Training Count

Clausing is a skill that develops with experience. Clients should ensure that the appointed surveyor is not only qualified but also familiar with the nuances of steel cargoes and the expectations of different ports and stakeholders. A well-trained surveyor will know how to balance the thoroughness with practicality.

Final Thoughts

Appointing a qualified and experienced surveyor to oversee the loading of steel cargoes and the clausing of Bills of Lading is not just a procedural step, it’s a critical safeguard. These inspections play a vital role in ensuring transparency, protecting legal and commercial interests and reducing the risk of costly disputes.

Steel cargoes are inherently vulnerable to damage, contamination and environmental exposure. Without accurate, impartial documentation at the point of loading, all parties; owners, charterers, shippers and insurers, are exposed to unnecessary risk. A well-executed survey, supported by clear clauses and thorough reporting, provides the clarity and accountability that modern maritime logistics demand.

In a global trade environment where precision and trust are paramount, the value of appointing the right surveyor cannot be overstated.