Clearit.ca's Blog on Customs Brokerage and News Updates
Last week, we talked to you about shipping during peak season and how to get your imports to port on time, even with the increased demand. This week, we’re going to talk about what happens when your imports don’t make it to port just right.
While not a reality anyone likes having to deal with, lost cargo is a fact of international trade. It’s hard to get a good grasp on the real number — cargo shipping companies and insurance brokers have both been accused of manipulating the data to be more or less favourable — but every year, someone loses their imports. Even more end up with damaged goods.
Damaged and lost imports, oh my — but you don’t have to take the loss! Cargo insurance will protect your goods, but keep in mind: not all insurance packages are equal.
Do I Really Need Cargo Insurance?
Wait, you might be thinking. Didn’t you say people manipulate the numbers? Why do I need cargo insurance?
There is no exact data point you can rely on for lost cargo, that’s true. Your imports risk being one of either 1,000 or 10,000 lost containers a year, and unless everyone starts cooperating to share real numbers, we don’t know who is more right. But what’s true is that some cargo is lost every year — shipping companies themselves admit to this.
Beyond loss, however, is damage. Damage is much more common than loss, but can be just as frustrating. Damaged merchandise needs to be discarded, repaired, or sold at a discount. Cargo loss is a frustrating waste of money, but much more rare than damage. Damage is the real reason you need cargo insurance.
What Kinds of Cargo Insurance are Available?
Whether you’re worried about loss or damage, cargo insurance is a good idea. Not all cargo insurance is equal, though!
Carriers typically offer their own insurance, and their focus will be on protecting themselves, not you. This means that while one carrier may offer a comprehensive insurance option that won’t leave you high and dry, another might — there’s no guarantee of consistency when you’re not the one choosing your insurance plans.
With a good cargo insurance package, your imports should at least be covered for:
- Loss (partial and total)
- Misrouting (shipment astray)
- Pirating and pilfering (yep, still an issue)
- Breakage and damage (less repair costs = happier importer)
Other areas of coverage you might want to watch out for — but won’t always need — in a plan:
- Storage coverage (for damage or loss in the warehouse)
- Rejection insurance (for if your imports are turned away by customs)
- Exhibition and show coverage (importing something temporarily for a show?)
- Political risk (because you simply can’t rely on political stability in international trade)
- Supply chain disruption (for when the supply chain falls through)
What If I Have More Questions?
Picking out the right cargo insurance for your shipment can be confusing. You don’t want to pay for expensive coverage you don’t need, but you also don’t want to be left high and dry. Every insurance company has their own offering, carriers want you to use their insurance but won’t insure everything… it’s a jungle out there.
Your best bet for honest advice about the right cargo insurance package for you? Your customs broker. We’re customs experts (there’s a test) and more importantly, our main focus is on helping you get your goods getting from point A to B in one piece, quickly, and at an agreeable cost to you.
Happy (and safe) importing!