In the world of logistics, unforeseen events can disrupt even the sturdiest of container vessels. The recent vessel sinking close to Taiwan’s Port of Kaohsiung serves as a clear reminder of this reality. In this article, we’ll explore essential strategies for addressing the aftermath of such incidents. From understanding Incoterms to navigating General Average and Maritime Insurance, we’ll provide concise guidance to help logistics professionals in handling the complexities of ocean freight.
“Incoterms,” an abbreviation for International Commercial Terms, are universally recognized regulations that outline the obligations of both buyers and sellers in international trade deals. At Cargo2U – a freight forwarding company/agent in Malaysia, we highly recommend exporters and importers consider utilizing the FOB and CIF Incoterms. These Incoterms can offer distinct advantages for managing container vessel sink crises.
Risk transfer in Incoterms acts like a signal for both the buyer and the seller to consider getting insurance for their goods. Once the risk transfers from the seller to the buyer, it means the buyer is now responsible for any potential damage or loss during shipping. This is a moment when both parties should consider protecting their goods through appropriate insurance coverage. It’s a way to ensure that in case of unexpected incidents, they’re financially covered and can prevent serious losses.
Under CIF, the seller takes responsibility for shipping and insurance until the goods reach the destination port. This can be advantageous in vessel sink crisis scenarios, easing the burden on the buyer in case of unfortunate incidents during shipment. The risk remains with the seller until the goods reach the destination port, as the seller is responsible for both the transportation and insurance of the goods during sea freight shipment.
Opting for the FOB Incoterm in managing a container vessel sink crisis provides a straightforward approach. With FOB, the responsibility for the goods shifts to the buyer as they’re loaded onto the vessel. With FOB, title possession and liability usually shift when the shipment leaves the point of origin. Under FOB, the risk is transferred from the seller to the buyer once the goods are loaded onto the designated vessel at the origin port.
Fair compensation is essential in vessel sinking crises to alleviate losses, ensure justice, and restore confidence. This assistance effectively eases the financial challenges faced by exporters and importers.
Responsibility for fair compensation involves several stakeholders:
General Average is announced when cargo is lost or the vessel is too damaged to fix. Its purpose is to fairly pay back those who are affected by the container vessel sink crisis. Unlike insurance, the General Average doesn’t prevent maritime losses but aims to reduce them effectively.
To calculate the General Average, you need to use the following formula:
General Average = (sum of Value of Contribution)/(Sum of Values Contributed).
Calculating the General Average is a highly complex process and takes a lot of work which is usually completed by a professional.
Maritime insurance protects against harm to vessels, transport, cargo, and terminals during the transfer of goods between ports. Its purpose is to reduce financial losses resulting from accidents, natural disasters, or other incidents for the policyholder. It is strongly recommended to secure insurance coverage with a secure and reliable freight forwarder to protect against these unfortunate occurrences.
Whether you’re uncertain about who to turn to or need comprehensive coverage for your shipping needs, Cargo2U has you covered. With our expertise in maritime insurance, you can trust us to safeguard your valuable cargo during transit.
Facing logistics challenges? Look no further. Cargo2U offers expert solutions customized to your requirements. Consult with our team of experienced professionals today and explore a range of logistics services in Malaysia, including air freight, sea freight, haulage/haulier & transportation. Let’s navigate your logistics journey together with the added advantage of the cheapest ocean freight rates from Malaysia!
