Over the years beachcombers have found more than seashells along the shoreline.
Back in 2002, three containers fell from a cargo ship just off the shore of North Carolina dumping more than 33,000 Nike sneakers into the ocean. These shoes eventually started washing ashore in the Pacific Northwest unfortunately the sneakers weren’t tied together so beachcombers had to search for matching pairs.
Each year, manufacturers around the world ship over 100 million containers on ocean freight carriers. These containers are the size of semi-trucks with an average size of 8-foot by 40-foot and can hold up to 58,000 pounds. It’s estimated that 10,000 of these large containers are lost at sea each year, Though some of these containers come open many more of them drop to the bottom of the ocean never to be seen again. With an increase in import and export business this number too will increase.
The main cause of cargo going overboard is weather. Even with advance technology and ways to track weather and storms there really is no way to stop it.
Another threat to ocean cargo is pirates. No not pirates as pictured in the movies, but gangs of thieves that will stop cargo ships, board them and steal the products on board. An increase in law enforcement in hot spots has reduced these numbers greatly but no completely.
Even with the above stated you still maybe wondering; why should I purchase ocean cargo insurance?
The simple answer is to reduce your exposure to financial loss. If you're an exporter who has not been paid for the goods at the time of shipment, or an importer who has paid for all or part of the goods prior to receiving them, you run the risk of suffering a financial loss if the goods are lost or damaged during transit.
Additionally, you may be required to post a bond and/or cash deposit in order to obtain release of your cargo following a general average even though there was no loss or damage to your goods. By purchasing insurance, your insurance company assumes the responsibility and can usually expedite the release of your cargo.
Lastly, your sales contract may obligate you to provide ocean cargo insurance to protect the buyer's interest or their bank's interest. This is especially true when selling goods CIP (Carriage and insurance paid to) or CIF (Cost, Insurance, and Fright). Failure to do so can not only subject you to financial loss if there is loss or damage to the goods, but non-compliance with the terms of your contract with the buyer can lead to loss of sales and legal problems.
Cargo insurance can be a confusing and choosing the right insurance a daunting feet so like many other aspects of the international logistics process it is wise to work with a professional. Freight forwarders are trained in all aspects of ocean freight process and help you navigate the seas safely.