Shippers’ Academy Colombo workshop on cargo insurance
Monday, 8 July 2013 00:24
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To focus on importance of protecting cargo from origin to destination
Port of Colombo fire: 400 companies incurred massive losses as cargo not properly insured
Udeni Kiridena and Kumar Muttiah from Sri Lanka Insurance Institute to make presentations
massive fire in a Port of Colombo dock warehouse where cargo owners lost millions of rupees worth of goods and had to forgo export orders, has given a wakeup call to all traders and service providers. In line with this current issue Shippers’ Academy Colombo has organised a workshop to educate the industry on cargo insurance.
The Shippers’ Academy Colombo CEO Rohan Masakorala made the following observations:
When a shipment is made, companies expect their cargo to be in perfect condition hence do not really think about the possibility of losing the shipment. The market trend is to deliver the products in an absolute perfect condition, save any malicious intentions, however, it never runs through the trader’s mind the consequences if the shipment gets damaged, stolen or lost due to many reasons.
Once you have carefully crafted your international transaction, you don’t need anything to jeopardise the deal. Whether your investment is in raw materials, manufacturing costs, or finished goods, you need the surety that your proceeds of sale will be forthcoming.
Carrier and ports
If you read the back of any bill of lading, you will be shocked to find out that the carrier’s exposure for damage to or loss of your freight is inconsequential. Coverage is commonly limited to $500 per ‘customary shipping unit’, which, in many cases, is considered your full ocean container.
Air shipments are generally covered at around $ 9. per unit. Obviously, there are many shipments, which far exceed these value limitations.
Furthermore, carrier coverage is limited only to the period of time that the goods are in the carrier’s control, as opposed to door-to-door. Finally, the small amounts that carrier’s offer are payable only when it can be proved that the loss resulted from their ‘direct negligence’. In short, you cannot afford to count on carrier insurance.
Similarly when you have your goods handed over to third parties including a port, the limitations of insurance covered by those institutions would be far less than what one would anticipate.
Sales contract and terms of sale
Exporters, importers and traders who are shipping, storing raw materials and finish goods have to be very careful when entering into sales contracts as various terminology used in international trade can be tricky and costly if not understood properly.
The complexity of the supply chain and logistics handling can sometimes confuse cargo owners about the risks and liability. Therefore an important document is the
If your terms of sale make you responsible for any portion of the delivery chain, you’ve got a problem. Hence companies must make sure to understand where they should stop and what commitment they should bear when goods are shipped from point to point. The newspapers reported that over 400 companies have either not properly insured cargo or not insured at all at the Colombo Harbour incident recently.
The question posed by the Shippers’ Academy Colombo organised workshop to the trade is: “Are you insuring your valuable cargo with care and attention?”
Two experts from the insurance industry, Udeni Kiridena and Kumar Muttaiah, will make presentations to the trade on 11 July, from 3 p.m. to 5:30 p.m. at the Sri Lanka Foundation to educate on best practices on insurance coverage and talk of practical aspects and action to be taken for the valuable cargo exported or imported from origin to destination.
Interested parties may contact Shippers’ Academy Colombo on 0773820703 or register online on www.shippersacademy.lk.
