Freight Insurance?

MOL Comfort

MOL Comfort

The recent accident involving the MOL Comfort is a reminder to the importing community about the risks involved in international shipping. The picture you are seeing above really is that of a vessel splitting in two. If you don’t believe it, take a look at the following pictures:

MOL Comfort: Front Half

MOL Comfort: Front Half

MOL Comfort: Rear Half

MOL Comfort: Rear Half

 

 

 

 

 

 

 

 

 

The vessel was sailing in the Indian Ocean when it encountered inclement weather. We still don’t have details explaining how the vessel split in two. At this moment, MOL has contracted with a salvage company to try to rescue as much of the cargo and hull as possible. MOL has already confirmed that some containers may have been lost or damaged, although they indicate that currently, a majority of the containers are still on the vessel.

While accidents like these are rare, they do happen. The question for those in the trade community is whether or not it is worthwhile to purchase freight insurance. While those in the trade community understand that freight insurance protects against potential damage, loss, or theft of cargo, many are unaware that freight insurance can also cover against General Average claims.

In cases like those involving the MOL Comfort, the carrier will almost certainly declare General Average. In such cases, those with cargo interest on board the vessel are required to help pay for losses and damages to the vessel. This can end up being a double whammy as not only does the owner of the cargo have potential losses related to damaged / lost / late delivery of cargo, but they have to pay the carrier to help make up for the damage / loss of the vessel.

If you don’t have freight insurance to cover your cargo, it is worth discussing with whomever helps arrange your transportation. Freight insurance may or may not make sense for different members of the trade community. Everyone has to make their own separate evaluation.

-Jimmy Ting

jimmyting@gwlcorp.com

tel: 650-873-9050 x1019

 

 

 

 

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