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  • Writer's pictureJodie

5 Important Reasons Why You Need Cargo Insurance

“Why do I need cargo insurance?”

Very often the answer to this question is “Because you’re a shipper” and if you’re not convinced, continue reading.

Many shippers who perform import and export are doing it at risk without cargo insurance and true enough, a lot of them suffer from great losses and regrets.


You see, shipping cargo is a long journey and is highly prone to danger. The process of handling your container goes from one person to another, involving companies and ports and logic will tell us that when more parties are involved, the higher the risk. Because to err is human.

Any carriers, disregard its size or popularity, you can expect that in the case of damage or lost, they will do their best to avoid responsibility.

Imagine the value of the goods you are delivering and in the event of an incident how much of it would be covered by the carrier?

Here are the five important reasons of why your freight forwarder encourages you to pay a little extra for cargo insurance.

1. Cargo Theft is on the rise

Cargo theft can happen through identity theft and fictitious pickups and it is becoming more rampant these days. Piracy is the primary risk of cargo theft and it has caused undesirable losses in modern international shipping.

And even the most careful shippers can fall victim to cargo theft which is largely inevitable.

2. More containers are lost at sea

According to World Shipping Council, more than 700 containers are lost at sea every year, not including those caused by catastrophic events. And this figure is increasing year by year, especially with the trend heading towards megaships with huge stacks of containers.

Cargo containers overboard is also beyond shippers’ control, which is another factor that leads to container lost.

3. Catastrophic events

As a matter of fact, natural happenings are almost impossible to avoid. Events such as storms, shipwrecks, explosions and pirate attacks are among the many catastrophic occurrences that are common in the shipping industry.

When things like that happen, it is even possible that an entire shipload could be lost. World Shipping Council defines a catastrophic loss as “a lost overboard of 50 or more containers in a single incident” in the sea.

However, cases like the Tianjian explosions in China port city would not be accounted in the above totals because the cargo containers, though lost in large numbers, were not lost overboard in sea.

4. Damage of cargoes are very common

According to a statistics by UK Club (based on the percentages of the cargo claims they handle), “…25% of cargo damage is physical, 14% is temperature related, 11% containers lost overboard, 9% theft and 8% shortage.”

Cargo damage happens all too often, probably because there are too many opportunities of damage, due to the involvement of different parties in handling in your containers.

Bad stowage and shore error are the two leading contributors to damage though the list of reasons is much more than that. Here are some other examples being highlighted by UK Club:

  1. poor container condition

  2. wrong choice of container

  3. overloading

  4. lack of export packaging

  5. wrongly declared cargo

  6. poor distribution of cargo weight

  7. wrong temperature settings

  8. heavy container stowed on light

  9. lack of clear carriage instructions

  10. stack weights exceeded

  11. heat sensitive cargoes placed on or adjacent to heated bunker or under direct sunlight

  12. inadequate ventilation

5. Part of Contractual Requirement

Shippers may be obligated to purchase insurance as part of their sales contract’s requirement. This is to protect the buyer’s interest or their bank’s interest, especially for shipment under incoterms CIP or CIF.

There are times that shippers overlook the need of getting insurance and they can be held responsible, in the case that something happens.

Failure to getting your cargoes insured may not only subject you to financial loss if there is damage to the goods, but non-compliance to the terms of your contract with the buyer may lead to legal matters or loss of sales.


As a freight forwarder, we will do our best to protect clients’ interests and of course, their goods and shipments. Insurance has proven to be a crucial part of logistics, of which its absence can lead to unnecessary trouble and financial loss.

Should you require insurance services, kindly entrust us to do it for you. While we do not have the power to prevent all incidents, we will, in our best of capabilities, do all we can to support and protect you in the event that a damage or lost occurs.

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1 Comment

Fazura Bangum
Fazura Bangum
Oct 25, 2021

Hello ask how much cost 1 contanier shipping cargo from Malaysia to Philippines

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