The Benefits of Using Cargo Insurance

Since the end of November, a spate of incidents at sea has led to the loss at sea of thousands of containers. Most were filled with cargo in transit between the US and Asia. Still, one westbound vessel lost several empty containers desperately needed to fill with export orders bound for America and Europe.

While this is the most obvious run of incidents in recent memory, cargo losses are not limited to only ocean shipments. These significant losses serve as stark reminders that when supply chains are stretched thin, any interruption that causes additional loss in resupplying and leads to additional financial burden can prove catastrophic to an importer’s business.

The first incident – and the largest – was the ONE Apus that lost nearly 2,000 containers in heavy weather and was forced to divert to Japan. As insurers – and shippers – were reeling from that loss, on January 16th, the Maersk Essen lost 750 containers, changing its voyage to discharge in Mexico rather than her scheduled (and overcrowded) port Los Angeles. Returning to Asia with a handful of exports and empty containers, the MSC Aries, on January 29th, lost 41 containers sailing from Long Beach to China.

This week, Maersk suffered another loss with their vessel, the Eindhoven suffering an engine stop in heavy seas near Japan. During the period she was without power, she lost an as-yet-unspecified number of containers. Due to arrive in Los Angeles on March 1st, the Eindhoven is diverting to the nearest Asian port capable of dealing with her situation.

What all these losses have in common for the shippers whose containers were lost is that the carrier’s master bill of lading stipulates their limitation of liability – usually $500.00 per declared package. Furthermore, all of the shippers on the vessel (also called ‘cargo interests’) will be required under General average to contribute to making whole those shippers whose cargo went overboard. 

Without cargo insurance, cargo owners must post a cash bond to secure the release of their cargo.

The process of dealing with a cargo loss in any mode of transportation can be time-consuming and not always resolved to the cargo owner’s satisfaction – which is why it is so important that shippers carry cargo insurance for their goods in transit.

How Sobel Network Shipping Co., Inc. Can Help You

Sobel Network Shipping Co., Inc. provides cargo insurance covering cargo in transit between a named origin and destination across all modalities during a shipment’s lifecycle. We insure with underwriters experienced in handling cargo claims and work to speedily review the facts and, after reaching their decision, make the shipper whole for their loss based on the coverage applied.

Sobel also works with individual shippers to secure specific annualized rates based on their volume, commodity, trade lane and loss history. Ask your Sobel representative for more details about a customized cargo insurance policy.

In our personal lives, we carry various insurances because we couldn’t afford the consequences of a loss. In the world of commercial cargo, cargo owners need to ask themselves the same question, “Could I financially survive the loss or damage of an entire shipment?” If the answer is “no”, then we suggest you contact us today for a quote.