Businesses and individuals carry a variety of insurance products that protect them against an unexpected loss. Why? Because either the party at fault or an Act of God cannot provide the necessary financial compensation to make them whole. Cargo owners should similarly carry cargo insurance for their goods in transit. We are having a number of conversations with clients now because since November there have been four major losses on board containerships on the transpacific.
Whether air, sea or ground, the underlying asset-owning carriers have limited their liability for loss or damage to an amount which may not cover the full value of the goods affected by a claim. In a multimodal shipment, cargo may move by ocean, rail and truck between origin and destination and if a claim occurs, it can prove difficult to identify both the party responsible and the amount of compensation that can be both sought and recovered.
Cargo insurance, such as what RIM offers, provides comprehensive coverage from a named origin to a named destination. This is extremely important for cargo owners because the policies are underwritten by agencies whose core business is in support of trade and understand how to proceed when a loss occurs.
Since late November, there have been four losses at sea due to heavy seas to the ONE Apus, Maersk Essen, MSC Aries and Maersk Eindhoven. In aggregate, thousands of containers were lost and the ships forced to divert to other ports for damage assessments. Regardless of whether it was the cargo owner who suffered the loss or remaining interests on board the vessel coping with diversion delays and whose cargo will be subject to general average claims, the impact of these losses to already congested and delayed supply chains is palpable.
Cargo insurance is usually rated at ‘x’ per hundred dollars insured value. Rates and possible exclusions or deductibles vary based on commodity, trade lane and mode of transport. For shippers with very large annual spends, RIM can approach our insurance carriers with a request for special rates which may also take into account a history of previous claims or cargo losses.
While RIM cannot prevent the loss of cargo in transit in circumstances like this, we can work with our clients to help reduce their cargo insurance costs or loss exposure by consulting on matters such as packaging, supply chain security, limited information sharing and membership in programs like CTPAT that proactively protect supply chains worldwide.
For more information on cargo insurance, supply chain security and ways to insulate or protect your cargo in the event of loss or damage, contact RIM today.