Shipping overseas is generally considered a safe and reliable method to transport goods. It is estimated that out of the 120 million containers shipped each year, just 10,000 are lost at sea. While that is such a small amount compared to the overall volume, would you want to be stuck with the bill if your container falls overboard?
Not only can containers fall off ships due to adverse weather, containers can also be mishandled at the port causing significant damage to the cargo inside. Containers can be dropped, they can be knocked over, and some can even catch fire due to dangerous goods being shipped.
Here's what happened in 2018 at a container port during a trans-shipment.
A dock worker mistakenly tipped over a container when moving it, causing half a dozen containers to tumble. The containers fells from up top and crushed the containers on the bottom.
The container you see here sustained most of the damage. It also had classic cars inside destined for Europe. Without shipping insurance, the owner of those vehicles would only receive a $500 reimbursement from the ocean carrier.
Due to current maritime laws, ocean carriers hold minimal responsibility for your cargo while it's in their care. According to Carriage of Goods at Sea Act, the liability from ocean carriers and freight forwarders is limited to only $500 per shipment.
There's also a marine term called General Average, which allows ocean carriers to voluntarily sacrifice cargo in an emergency. If an ocean carrier declares a General Average, the loss would be shared among the carrier and cargo owners. For example, if a ship is caught in a storm and the crew decides to lighten the ship, the ocean carrier can legally throw cargo overboard and hold the remaining cargo owners responsible for the loss. The carriers have the right to hold remaining cargo on-board hostage until the losses are evenly paid by the remaining cargo owners.
In 2018, when the Maersk Honam container ship en route to Suez caught on fire, crew declared General Average as hundreds of containers caught on fire. After the blaze was put out, cargo owners were forced to pay 54% of their cargo value in order to retrieve their containers. Just this year, Hapag-Lloyd had declared a General Average aboard the Yantian Express when a fire engulfed containers onboard.