They say it’s very difficult for people to learn from the experiences of others, and it’s true; under many circumstances, we tend to ignore what we’re told until a setback shakes us so much, sometimes worse than others, resulting in a tragedy that, although it later adds to our collection of experiences, could end up being unnecessarily detrimental to our life and business.
There are risks not worth taking, and one of them is allowing your merchandise to travel from China without maritime insurance coverage. That’s why we work hard to encourage our clients to secure maritime cargo insurance as part of good business practices, with the inclusion of this item in their cost structure from the beginning being fundamental for their peace of mind.
Think for a moment about this number: 7,800 TEU. Considering that a “TEU” is the cargo capacity of a standardized 20-foot container, we are talking about more than 9 million cubic feet of capacity! This commitment was highlighted in one of the most recent maritime incidents, when on March 6, the vessel Maersk Honam, which was attempting to cover the route between China and several European countries, suffered a terrible fire, the causes of which remain unknown.
Representatives from the Maersk group have stated that the ship is in General Average condition, which puts both the shipping giant and its users in a very complicated position. Due to this declaration, they will be forced to provide financial guarantees through their cargo insurance to cover rescue and contribution costs, where even those without insurance will be forced to take responsibility, according to Rafael Real, director of Tractio Risk Solutions in an interview for the newspaper El Levante from Valencia.
And we don’t want to scare you, but this is just one of three incidents that have occurred in the last six weeks, where the cargo on the Maersk Kensington and Maersk Shanghai vessels was also compromised, one due to fire and the other due to weather difficulties, respectively, complicating the entire operation and harming the interests of all involved.
Inherent Risks of Maritime Cargo Transport
After all the effort that goes into making your purchases in China and managing their importation, if you don’t insure your cargo during transit, you are putting your business at risk. Indeed, there are countless risks that cargo is exposed to, from the moment the goods are loaded until their arrival. Just to give you an idea:
- Complete or partial theft.
- Loading or unloading operations.
- Water damage, rust, contamination.
- Adverse weather conditions, storms.
- Grounding, debris, collision, shipwreck.
- Fire, freezing, explosion.
- Fraud by the captain, crew, or piracy.
- General Average, simple damage.
- Delays or lack of shipment.
Assuming this list extends much further with countless variables and possibilities, the most sensible thing to do is to transfer these risks to an insurance company, which, by its nature, will be in a better position to handle them and it will be no more than an inconvenience in the normal operation of their business, which could turn into a major financial loss for you.
Having your entire supply chain insured gives your operations a sense of importance, and the ideal would be to take out an all-risk cargo insurance policy where, even if the carrier is exonerated from all responsibility, regardless of the nature of the incident and the laws involved, someone will back up your interests at all costs.
The Importance of Having an Advisor to Protect Your Cargo
Now you may be wondering, what should I insure, how do I do it in the most convenient way, under what conditions will this negotiation take place, what are the rules of the game, and how does this commit me? The good news is that there’s no need to fear, you don’t have to do this alone if you can rely on trusted advisors to watch over your interests.
You should bet on strategic partners who allow you to address all cargo security matters in a responsible and fair manner, teams of professionals with legal and insurance experts who fully understand the structure of the maritime insurance contract and its complications, so you can minimize the risk of transporting your goods from China.
You need to find professionals capable of handling the most important aspects of the maritime insurance contract for your cargo, always looking out for your benefit, peace of mind, and the security of your operations:
- Contract durability.
- Insured’s interest.
- Risk coverage.
- Policy type.
- Type of policy (by shipment, open, floating).
Advisors capable of covering every detail and consolidating all relevant aspects into a single agreement with the sole goal of indemnifying any damage that may occur to your cargo once exposed to the various direct or indirect risks involved in transporting goods via maritime channels.
This will ensure that your purchases from China will reach their destination safely, covering any contingencies the vessel and its cargo may suffer at any stage of the journey and minimizing any economic repercussions this could have on your business in case something unexpected happens.