Importance of buying insurance when doing international freight forwarding

Importance of buying insurance when doing international freight forwarding

International freight forwarders ship more than 100 million containers annually on ocean carriers. The dimensions of these containers are semi-trucks with an average size of 8 feet by 40 feet and can hold 58,000 pounds.

 

It is estimated that 10,000 of these large containers are lost at sea every year, and although some of these containers have been opened, many more fall to the bottom of the sea, never to be seen again. As the volume of import and export business increases, this number will also increase.


The main reason for the loss of goods is the weather. Even with advanced technology and methods to track weather and storms, there is really no way to stop it. Another threat to seaborne cargo is piracy.

 

There are no pirates in the movie, but gangs of thieves will stop the cargo ship, board the ship and steal the products on board. Increased enforcement in some areas has reduced these numbers considerably, but not completely.


 
Even with the above instructions, you may still be wondering; why should I purchase freight forwarding insurance? The simple answer is to reduce your risk of financial loss. If you are an exporter who has not paid for the goods at the time of shipment, or an importer who has paid for all or part of the goods before receiving them, you will face loss of goods.


 
Also, even if your shipment is not lost or damaged, you may be required to post a bond or cash bond in order to obtain your shipment on a common average. By purchasing insurance, your insurance company takes responsibility and can often expedite the release of your shipment.


 
Finally, your contract of sale may compel you to provide ocean cargo insurance to protect the buyer’s interest or the bank’s interest. This is especially true when selling goods CIP (shipping and insurance) or CIF (cost and insurance).

 

Failure to do so will not only expose you to financial loss if the goods are lost or damaged, but failure to comply with the terms of the contract with the buyer may result in losses and legal issues for the international forwarder as well.

 

Dantful freight forward have more than ten years of freight forwarding experience and can provide you with a lot of good advice to avoid preventable risks.

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