Cargo / Freight insurance for Clothing
The chances of loosing a shipment are probably just as big a the chances of winning a big lottery price, but in business one should always expect the unexpected. This page lists some of the problems that will occur when you loose an LCL shipment or a full containerload and wheter you will be better off taking out insurance on every shipment or not.
With profit margins of garments being as minimal as there are they days, every nickel you spend extra really does count, so if there is no good reason to pay extra for insurance, why would you?
Cost of insuraning shipments of Garments
First and foremost, there is the insurance premium. This is not the only deciding factor when choosing between insurance or risking an uninsured shipment, but it certainly is a big one. In our experience the average premium lies between 2.3 and 3.0 promille, so that is 0.23% - 0.30%. On top of this there may be some adminstrative charges, taxes or stamp charges, but those amount to a very small total.
What can you claim from the shipping line for uninsured transports.
This is where it gets a bit tricky. Insurance companies that are based in the USA will say: The maximum liability by shipping lines for goods to/from the USA is only US $500 per one package, where a sea container is deemed as one package. (COGSA rules). If you send the goods by air freight, which is not very common in our business, the maximum liability is $20 per kilo (Warsaw convention).
In article 4 of the The Hague Rules as amended by the Brussels protocol 1968 we read: " Unless the nature and value of such goods have been declared by the shipper before the shipment and inserted in the bill of lading, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding the equivalent of 10,000 francs per package or unit or 30 francs per kilo of gross weight if the goods lost or damaged, whichever is the higher.
(b) The total amount recoverable shall be calculated by reference to the value of such goods at the place and time at which the goods are discharged from the ship in accordance with the contract or should have been so discharged.
The value of the goods shall be fixed according to the commodity exchange price, or, if there be no such price, according tot eh current market price, or, if there is no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality. (c) Where a container, pallet or similar article or transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned. Except as aforesaid such article of transport shall be considered the package or unit.
(d) A franc means a unit consisting of 65.5 milligrammes of gold of millesimal fineness 900. The date of conversion of the sum awarded to national currencies shall be governed by the law of the Court seized of the case.
(e) Neither the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result.
(f) The declaration mentioned in sub-paragraph (a) of this paragraph, if embodied in the bill of lading, shall be primâ facie evidence, but shall not be binding or conclusive on the carrier.
(g) By agreement between the carrier, master or agent of the carrier and the shipper other maximum amounts than those mentioned in sub-paragraph (a) of this paragraph may be fixed, provided that no maximum amount so fixed shall be less than the appropriate maximum mentioned in that sub-paragraph.
(h) Neither the carrier nor the ship shall be responsible in any event for loss or damage to, or in connection with, goods if the nature or value thereof has been knowingly mis-stated by the shipper in the bills of lading."
Either way, we can safely say that the compensation offered by the shipping lines will not be sufficient to cover even a small percentage of the lost goods, let alone the extra charges that will involved in replacing those goods.