News & Insights

Containers overboard highlight cargo risks

Published 15 February 2019

Two Chevrolet Silverados, as well as mountain bikes, commercial laundry equipment, scissor lifts and numerous smaller goods are among the contents of containers that fell off a cargo ship off the east coast of New South Wales in June 2018.

This represents a substantial loss in value – the cars alone are worth a combined $300,000 – and highlights the need for shippers to have the right cargo insurance, says Gallagher National Head of Marine Stephen Rudman.

The Australian Maritime Safety Authority only obtained the ship’s manifest early in 2019, after the owner of the YM Efficiency, Taiwanese shipping company Yang Ming, failed to instigate any search and recovery action.

“This is a timely reminder that even with modern-day navigation systems and containerisation in shipping, accidents do still happen and more frequently than most people might realise,” Rudman says.

Shippers (cargo owners) are recommended to always arrange cargo insurance, ideally through an experienced marine insurance broker because liability can be problematic. There is often a level of confusion and misunderstanding with shippers and cargo owners that carriers are responsible for all loss or damage to their customers’ goods while in their care, however, the reality is that many cargo claims are denied by carriers,” he notes.

“If something happens to your goods while in transit, it’s highly unlikely that the carrier will be held accountable for the loss or damage to the value of the goods. Carriers strictly limit their liability. If you turn over any bill of lading or consignment note issued by the carrier you will find the fine print outlining exactly what a carrier agrees to cover.”

Extent of risk

Shipments by sea pass through many hands and are subject to a wide range of hazards, Rudman says. Some risks include

  • packing damage – a high percentage of cargo damage and accidents can be attributed to improper packing such as over-packed boxes, insufficient padding and incorrect stacking
  • cargo movement – with various types of movement occurring during a voyage, such as heaving, pitching, rolling, surging, swaying and yawing, some loss and damage to cargo shipments can become unavoidable
  • water damage – storms create huge waves that cause water to infiltrate cargo containers, causing damage to goods
  • overboard losses and jettison – strong winds can make a ship unstable during storms, which can result in some cargo containers being lost overboard. There are even instances when the ship is left with no option but to purposely jettison cargo overboard
  • fire – most dangerous cargo such as chemicals and ammunition have the potential to cause fire and explosions
  • sinking – strong storms can overwhelm ships, causing them to sink, along with the cargo. All cargo is generally lost in such situations unless salvage attempts are successful
  • pirate attacks – freight can be delayed for ransom or stolen
  • stranding – factors such as storms, groundings, government delays, port strikes, vessel collision and freight contamination can cause freight to be delayed or damaged.

“Overseas imports and exports involves cargo being loaded and unloaded from trucks and containers, through ports, customs and from warehouse to warehouse,” Rudman says. “Each step is necessary for your merchandise to ultimately reach you, but having your goods move through so many checkpoints increases the chance of damage and identifying where the damage occurred can be challenging. That’s where we can help.”

Stephen Rudman introduces the Gallagher marine team 


Want help ensuring you have the correct marine cargo cover?

Wherever you are in Australia, if you have any questions or you would like to find our more information or arrange cargo insurance please do not hesitate to contact an experienced marine broker at Gallagher.

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