Protect Your Goods and Your Business: The Importance of Cargo Insurance

In the world of freight forwarding and logistics, the safe transportation of goods is a priority. However, the journey from origin to destination is often unpredictable, with a variety of risks at every turn. At Wallis Shipping, we emphasise that cargo insurance is a critical component of any shipping process, offering essential protection against loss, damage, theft, and unforeseen incidents that may occur in transit. Here's why taking out cargo insurance is a must for every shipment.

What is Cargo Insurance?

Cargo insurance offers protection of your goods while they are being transported, whether by road, rail, sea, or air freight. It also covers goods while they are waiting at a port or being held in storage, ensuring they are protected during the entire transportation process. The key benefit of freight insurance is that if something happens to your shipment, you will receive compensation based on the value of your goods, as outlined in your commercial invoice.

Why Cargo Insurance is Essential

Shipping goods across the globe is a complex and often risky process. Various factors such as natural disasters, extreme weather, or conflicts can affect a vessel’s voyage, and these events are impossible to predict. Even if the cargo owner has meticulously planned the logistics, there are many situations beyond their control that can put their shipment at risk.

For example, let’s say a customer’s container is aboard a vessel that encounters a fire or a minor collision, and the vessel owners declare a “General Average.” In this case, the customer's container may not be directly damaged, but because a general average has been declared, everyone with cargo on the ship is financially involved in resolving the situation.

What is a General Average?

General average is a maritime law principle that requires all parties involved in a voyage (ship owners, cargo owners, etc.) to proportionally share the costs incurred from a voluntary act, such as sacrificing part of the cargo, to save the ship and the rest of the cargo during an emergency. This means that even if your cargo is unaffected, you are still responsible for contributing to the overall loss and costs related to the incident.

For example, when the Ever Given vessel blocked the Suez Canal in March 2021, general average was declared. The costs associated with refloating the vessel and dredging the canal were significant, and all cargo owners involved in that voyage had to pay their share. Without insurance, this financial burden could be devastating.

The Risk of Not Insuring Your Cargo

Imagine another scenario, such as the recent Baltimore bridge collapse, where the total losses are estimated to reach $3 billion. If you’re a cargo owner without insurance in such an incident, the financial consequences could be catastrophic. Many cargo owners who have tried to cut costs by not insuring their goods have ended up bankrupt due to lawsuits and hefty claims for damages.

The unfortunate reality is that incidents like these happen more often than one might think. Fires onboard vessels, collisions, or groundings are not uncommon, and owners can be quick to declare general average even for relatively minor events. Without insurance, you could face overwhelming legal and financial responsibilities that could seriously harm your business.

The Solution: Comprehensive Cargo Insurance

At Wallis Shipping, we strongly advise all our customers protect themselves and their shipments by taking out cargo insurance. We offer tailored insurance solutions* through our annual open cargo policy, ensuring that you are covered for:

• Loss, damage, or theft of goods
• Contribution costs under general average
• The raising of a general average guarantee to release your cargo**

Should an incident occur, our insurance provider will handle all aspects of your claim, from arranging surveys and cargo recoveries to managing the administrative process. Our goal is to make sure you’re not only financially protected but also supported in dealing with the complexities that can arise after an unfortunate event.

Want To Find Out More About Our Open Cargo Insurance Policy?

At Wallis Shipping, we help our clients navigate the complexities of global shipping while ensuring they have the protection they need. Get in touch today by emailing info@wallisshipping.co.uk or call us on 01206 751133 to discuss how we can help you protect your cargo on its journey across the world.

*price varies depends on the value of your cargo and its destination, however % costs are reasonable.

** this must be issued and paid by the cargo owners, before any cargo is recovered and released.