You are here: Home / Archives for Insurance

Understanding Cargo Insurance

March 25, 2013 By Leave a Comment

The international shipping industry is responsible for carrying the majority of global traded goods and every day cargo valued in the billions of dollars move in and out of ports around the world. With this busy international traffic anything unexpected can happen and cause damages or loss on the cargos. In order to reduce possible financial losses, importers and exporters may purchase cargo insurance to protect against natural disasters, inclement weather, shipping accidents, thefts and other damages.

Carriers do in fact have liability as per their bill of ladings; however, you can not rely on the carrier to reimburse you for your loss or damages. First of all, steamship lines are accepting some coverage for the damages or losses under their responsibility while the goods are in their custody. This means that carrier liability does not cover door to door. Carriers are also exempt from certain causes of loss or damage (up to 17 under certain international conventions). From a monetary point of view, a carrier’s liability is often very limited. [Read more...]

Filed Under: Global Trade, Insurance, Supply Chain Planning, Uncategorized

Is Your Cargo Damaged? Here is the Cargo Claim Procedure:

February 25, 2013 By Leave a Comment

It is nothing but natural to feel uneasy whenever we hear the word damaged. May it be a single little item you purchase on the internet or your container as an importer and exporter you want it to reach its destination safe and sound. As a freight forwarder let me assure you that we want your cargo to be delivered without any damage as much as you do . However when it is inevitable, we must know the steps to be taken afterwards. Although the importance of it is not quite realized at the time of the shipment, Incoterms is the first thing shippers and consignees must look at once the news of damage comes up.


We covered the topic of Incoterms in previous articles, however needless to say, responsibility of the parties are determined depending on the term of the shipment. Also as your freight forwarder we strongly recommend to purchase cargo insurance which must be completed before the shipment is loaded since the insurance coverage provided may not cover the damage occurred, the covered declaration can be found at the back of each Bill of Lading. [Read more...]

Filed Under: Global Trade, Insurance, Regulations, Shipping Trends, Supply Chain Planning

Economic Cost of Natural Disasters

November 19, 2012 By 1 Comment

Globalization and global trade play an important economic role for countries around the world. Although trade is getting liberal, there are some trade barriers both intentional and unintentional. As we know the global economy and global trade are affected adversely in many ways by natural disasters. Hurricane Sandy showed us first-hand how much the cost of natural disasters to the global economy can be. In 2011, nations faced a tremendous amount of natural disasters. According to economists, the total cost of these disasters was $380 billion in 2011. The physical damage that the earthquake and tsunami in Japan caused has been estimated to have caused damages radning between $250 billion to as much as $309 billion, which is nearly four times the cost of Hurricane Katrina ($81 billion) in the U.S. According to economists, pre-estimates of Hurricane Sandy are that damage will range between $10 billion and $20 billion. Last year the cost of Hurricane Irene was $15.8 billion. For example the March 11, 2011, earthquake and tsunami that occurred in Japan followed by a nuclear crisis and shortage of electricity has had a considerable economic impact on the country but a lesser effect on world markets.

If we look at the 5 most costly natural disasters in history, we will see that the 2011 earthquake and tsunami in Japan is number one with an estimated $235 billion cost. [Read more...]

Filed Under: General Business, Insurance, Supply Chain Planning

Force Majeure

November 12, 2012 By Leave a Comment

This is a term that I kept hearing in maritime classes during my college years, and last week I saw many force majeure declarations from several carriers due to the catastrophic Sandy hurricane on the east coast. So what is a Force Majeure?

The french phrase translates to “superior force”, and is commonly available in many contract types. In maritime, it relieves the parties to the contract of their obligations and liabilities when circumstances beyond their control can prevent them from performing under the contract. Examples of circumstances that might require a force majeure are war, strike, riot, piracy and Act of God. A force majeure clause does not, however, excuse a party from its negligence or failure to perform under conditions that are ordinary or expected.

Three elements of Force Majeure

  1. Externality; circumstances have to be beyond the control of the parties
  2. Unpredictability; event must not be anticipated, if foreseeable party must be prepared for it
  3. Irresistibility; consequences couldn’t be avoided [Read more...]

Filed Under: Global Trade, Insurance, Regulations, Shipping Trends, Supply Chain Planning

Cargo Security

October 8, 2012 By Leave a Comment

Due to the complexity of the supply chain, it becomes important to have the security measures, procedures and protocols in place to maximize cargo security. It will have great benefits not only to importers but also to the importing country as a whole. Importers buy cargo from the other end of the world, sometimes without seeing who the actual factory is. There may be a war going on or some natural disaster might have hit the country of importation. A lot of factors effect the cargo security, of course not all of them are controllable but by following a few steps, importers can take control of the security of their cargo and minimize the risks which might be costly in the end.

During my career here at MTS Logistics, Inc I have dealt with many different scenorios that I could never imagined could happen to any importer. From radioactive nails on the seal to untreated pallets I have realized that it is actually the same problem that’s happening over and over again to importers, and since these containers are being rejected by US Customs many of the incidents result in the return of the whole container back to its origin, which is only one of many possible outcomes. In the end it is the importer who suffers due to loss in sales, unmatched due dates and loss of image. Depending on the frequency of these issues and the size of the importer, it might have negative impacts on the overall well being of the company. You are an importer and you are buying goods from the other end of the world and you would like to know what more you can do to secure the well being of your cargo but don’t know how to? I have listed a few major steps that need to be taken to maximize the security of your cargo. From complex precautions to more basic ones, here is what I think that every importer must do: [Read more...]

Filed Under: China, General Business, Global Trade, Insurance, Shipping Trends, Supply Chain Planning

Shipping Accidents and Disasters

November 18, 2011 By 1 Comment

Most of us that have been around in the shipping industry for a while have experienced terrible events, that directly effected our shipments and cargo. Delays, lost/found containers, broken cranes, damaged cargo etc.

But there are some people among us that have been hit by catastrophic events. I am one of those people. When I was working in Hong Kong in 2007, on a Tuesday night, I was watching television. There was a breaking news story about 2 vessels that had collided. When the anchor man said the vessel name, I was in shock. It was the same vessel that was supposed to arrive later that week, carrying my 100*40’ft containers of plastics cargo…. “MY VESSEL“! And yes, I was hearing these news on TV. [Read more...]

Filed Under: Casual Friday Corner!, Global Trade, Insurance, Regulations, Supply Chain Planning

Calculation of Damages

July 25, 2011 By Leave a Comment

Today I would like to draw your attention to an interesting judgement recently issued by a European Union Supreme Court in Germany.

A shipper instructed the defendant carrier to arrange for the road transportation of laptop computers from Germany to Italy. The shipper’s security guidelines were incorporated into the contract of carriage which stipulated that the driver had to spend his rest period at a specified site and that the vehicle was not to be left unattended.

The driver stopped at an unguarded service area, locked the truck, went to the rest room and had a coffee in the restaurant. When he returned, the truck and trailer had disappeared. Unsurprisingly, The Court decided that this was wilful misconduct under CMR, but the ramifications for the shipper were significant.
[Read more...]

Filed Under: Insurance