The Importance of Cargo Insurance

By Nathalie Pasqualino, Account Manager Marine at Concordia

Sea freight is one of the oldest industries in the world but still plays a significant role in the global economy. Transporting ships and seaports account for about 90% of the global trade volume.

Maritime transport is a multi-billion dollar industry, but transporters and shippers are increasingly dealing with cargo thefts, shipwrecks and other disastrous events. According to SensiGuard’s Supply Chain Intelligence Center report, in 2017 there were 4,485 cargo thefts. The three countries with the highest cargo theft rate are the United Kingdom, Germany and Belgium. Ships are getting bigger and transporting more containers and there is a yearly increase in lost cargo. According to the 2017 Survey of The World Shipping Council, 1,390 containers are lost at sea every year. 

 

3 Main concerns

 

1. Route

The type of route whereby the goods will be transported is one of the most critical factors in the safeguarding of your cargo. Don’t automatically choose the shortest or fastest route because sometimes they can be the routes with the highest risk. Take your time to select the best route according to risk factors like weather conditions, travel time, political and economic stability, the risk of pirates, etc.

Overall, transportation by ship within Europe is safer because the ports have strict safety measurements and good quality ships.

2. Storage location

Something many businesses forget is the importance of the storage location - where your goods are stored before the transportation. This can be a warehouse, a container or a dock.

Sometimes the goods stay at the storage location for a few hours, but in some cases, it can take weeks or even months before the transportation is completed. This is why the condition and insurance of the storage place plays an important role in the safekeeping of your goods.

Make sure to minimise the risk of, for example, fires and leakages. Insure your storage place and avoid financial losses if something happens.

3. Incoterms

The Incoterms, or International Commercial Terms, are international standard agreements to help international buyers and sellers to transport their goods. They give a clear view of what should be covered by the buyers and the seller’s insurance during the transport. Next to this, it specifies the rights and duties of both parties.

As a shipper, you should know under what Incoterm you are doing business. There are eleven different incoterms, based on the term you agreed on with the other party you should take the adequate steps to insure the cargo additionally.

 

concordia

A shipper can suffer severe financial losses when dealing with cargo theft. You always have to know what is insured and what isn’t, so keep the specific Incoterms of your load in mind.

Failure to deliver the goods, theft, general damage, returned goods, loss or damage to the goods caused by strikes or wars and exhibition risks among others are all financial risks that may occur. We recommend having a tailor-made cargo insurance to minimise these risks of financial loss due to unexpected events.

At Concordia, we look for customised solutions for our clients. We try to understand their needs and translate them into solutions. Different types of goods require different conditions for transportation. We mainly distinguish five types of cargo: container cargo, liquid bulk, dry bulk, breakbulk and ro-ro. Take safety measurements all across the board. Safety measurements for the storage to make sure your goods do not get stolen. Safety measurements for the packaging, so the goods do not get damaged. During transport, keep the right air and temperature settings in mind.

After gathering all the necessary information, Concordia can prepare a tailor-made cargo insurance policy for your shipment and make sure you have full coverage against any potential risks during transport.

A concrete example from practice we would like to single out is from one of our customers. The client asked us to cover a shipment that went far beyond their existing insurance limit. In a short period, we had to look for extra capacity at the insurance companies. The high value of the cargo that would be transported on one ship was quite exceptional (EUR 82 million). This is not an easy job because of the increased risk due to the high-value cargo being shipped on one vessel. We succeeded in covering the entire cargo value. Our client was extremely satisfied and did not suffer from any financial risks thanks to his tailor-made cargo insurance.

Our clients choose Concordia because of the knowledge we have, our flexibility and for our speed of dealing with urgent matters. Do you need guidance to determine what insurance is the best for your shipment? Contact us today for a tailor-made solution.