More blank sailings on the cards as ocean spot rates continue to tumble
Container spot rates are falling fast on all export routes from China in what should ...
Hapag-Lloyd is piloting an online insurance product as part of a digital offering to try to overcome the widespread practice of shippers relying on the limited cover provided under the terms of carriers’ bills of lading.
The line said it always took the “upmost care” of cargo, but “we also know that things can go wrong during transport”.
It added: “That’s why we are introducing Quick Cargo Insurance.”
The Loadstar understands that the motivation for Hapag-Lloyd’s insurance product was the catastrophic mid-Atlantic fire on its 7,500 teu Yantian Express in January.
The blaze broke out while the vessel was en route to Halifax, Canada, and destroyed 202 containers and damaged another 460 that were eventually discharged at Freeport in the Bahamas, with the casualty being subject to General Average (GA).
Under the maritime law of GA, all stakeholders in the voyage (including cargo owners) share the cost of the salvage and other associated expenses.
Shippers that had insured their goods simply referred the GA adjustors to their insurance company for security guarantees enabling goods to be released for relay to the original destination.
However, shippers with uninsured cargo were required to deposit GA security of approximately 60% of the CFR value (the cost of the cargo plus sea freight charges) before containers could be released.
The financial implications for shippers with uninsured cargo were extremely serious, not only due to the GA expense, but because the whole process can potentially take several years, which includes security bond refunds.
The GA bond process for the Yantian Express took several months to complete, which was blamed on the number of shippers with uninsured cargo who were unwilling or unable to pay the GA security charge and thus remove the lien from the cargo.
“Not every cargo transported by sea is insured,” said Ralf Belusa, managing director digital business & transformation at Hapag-Lloyd. “For instance, small and medium-sized customers often do not take out insurance for cost reasons.
“Now, with just a few clicks, the customer can select and take out insurance benefits. All contract documents are available immediately, so the load can be insured quickly and unbureaucratically,” said Mr Belusa.
“Quick Cargo Insurance proves that insurance does not have to be complicated and expensive.”
At present the insurance product, which is underwritten by industrial insurer Chubb in Germany, is limited only to containerised exports from Germany, the Netherlands and France, but the carrier said it planned to expand the offer.
The effective cover under German law is limited to €500,000 per policy, which has a number of excluded goods, including used furniture, personal and household effects and vehicles.
Meanwhile, underwriters continue to express their concerns over the potential risk from the exponential increase in the size of container vessels over the past decade.
One cargo underwriter executive attending a function at London International Shipping Week on Tuesday told The Loadstar ULCVs were “a big concern”, as the potential loss from a casualty could amount to several billion dollars.