The impact of COVID-19 in the cargo industry

The recently COVID-19 outbreak has impacted our lifestyle in several ways. Most industries were not prepared for an outbreak, leading to multiple challenges to minimize the losses associated with COVID-19.

For the cargo industry, the main challenge relies on the lockdown and quarantine state that many governments and countries have declared as a prevention measure to reduce the spreading of the virus.

These measures have a consequence on the shipping schedule of cargo, leading to delays, reroutes, accumulation of the cargo, discharged short of their final destination and even the possibility of damages and deterioration of  goods.

Even though there are some exceptions to the quarantine and lockdown, this not mitigate the total losses that many entrepreneurs may have, also, after this situation ends, it could take months to solve every cargo contractual situation, to evaluate the potential losses and the coverage provided for the insurance.

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It is important to analyze all the clauses of your cargo insurance to be sure that, in this particular situation, your cargo is cover. | photo taken from Freepik

Delays

Most of the importers and exporters want to maintain their cargoes moving, to prevent delays and extra costs due to this, keep in mind, due to the reduced personal and restrictions, delays are inevitable.

In general, cargo insurance excludes the coverage of your cargo if the damages or losses are caused by delays. You can also decide if you want to store your goods or try alternative routes to have your cargo delivered its final destination.

Most of the time, additional cost for re-route are not cover by cargo insurance, other insurances might have clauses that cover your cargo for certain deviation or delays.

Therefore, it is important to talk with your insurer about the state of your cargo and the insurance clauses to know how you can proceed with the transportation of your cargo.

Accumulation of cargo

As a consequence of delays,  accumulation of cargo is another risk that affects your insurance. Cargo insurance covers your freight from damages or losses, but it is expected that your cargo is properly packed and stored to prevent this.

The problem is, due to the delays, warehouses and ports will start accumulating cargoes, exceeding  their capacity. It is most likely that your cargo is not being handled correctly leading to potential loss or damage.

Perishable goods are the morest affected ones. Cargo insurance covers your cargo for spoilage caused by a peril, but if the merchandise its spoil because of delays, you may have no coverage.

Deviation

This case affects the cargoes that already in transit. Some vessels reserve the right to arrive at another port if the final destination is considered a high-risk area. This deviation can cost you extra which may not be included in your insurance.

Force majeure

Force majeure is a clause that exempts freight forwarder and insurer from all responsibility of the cargo due to unexpected or uncontrollable situations. The problem is,  the causes that triggers a force majeure need to be expressly addressed in the contract to be valid.

We know that this situation is complicated, so it is better to count with a liable and serious logistic partner that advises and gives you the best solution for your cargo. In Cargo Care Services we constantly monitor the outbreak situation and we help you to prevent any damages or losses that may affect you.

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