Containers Overboard Are You Prepared?
Buyers and sellers experience cargo losses year-round. Because these events have small public impact, they are often found only in trade publications. For example, just this week, the MSC Zoe, one of the largest and most modern container vessels in service, lost approximate 270 containers overboard or damaged during a trans-Atlantic passage. The MSC Zoe was not alone. A fire broke out aboard the Yantian Express engulfing a number of containers and fire-fighting had to be suspended due to weather. The auto carrier Sincerity Ace is adrift, on fire, in the Pacific Ocean with approximately 3,500 new Nissan vehicles aboard after being abandoned by its crew. Each year many thousands of containers are lost or damaged and while some losses are spectacular, such as the breaking apart and sinking of a container vessel in the Indian Ocean last year, most are less visible. One thing all these losses share is the potential to hurt the unprepared buyer or seller.
Many importers and exporters are unprepared for the serious losses occasioned by these commonplace events. A surprising number of buyers and sellers have not obtained marine cargo coverage to protect themselves. The reasons vary but the most common are (a) that they believe the other party in the transaction will be responsible, (b) that the carrier will pay them for their losses, or (c) that their regular business insurance policies cover such losses. Marine cargo insurance premiums are typically a tiny fraction of the value of the goods but a well written all-risk policy from a reliable underwriter can protect against a wide variety of losses.
Such policies often go beyond the simple loss or damage of the cargo by the kinds of accidents that occurred just this week. Well written policies helped importers recover tens of thousands of dollars in demurrage and per diems resulting from terminal congestion in recent years. Such policies also protect against the effects of General Average.
To simplify, General Average can be declared by a carrier when, for example, the engines on a vessel fail and it must be towed to port by expensive ocean-going tugs who demand a portion of the value of the cargo as their compensation to save the cargo. When a General Average is declared the consignee cannot take the cargo from the terminal after arrival until they have settled all of the paperwork and additional payment required—delays and costs that cargo covered under all-risk insurance typically can avoid. General Average declarations are more common than one would think.
Receiving a check for the loss of $50,000 of cargo for a typical cost of under $200 is a far better result than having to replace the goods out-of-pocket. In short, marine cargo insurance costs a tiny fraction of the potential loss.
Krieger Worldwide can provide you with different types of marine cargo insurance (and other types of cargo and warehouse insurance) at competitive rates tailored to your needs. If you aren’t sure that you are adequately protected contact your Krieger Worldwide representative today and ask for an insurance review.