Blog

18 / 12 / 2024

International cargo transportation: cargo insurance and risk management

Insurance is consistent and interrelated with risk management, since each cargo transportation is a separate situation for which it is necessary to ensure continuity and reliability throughout the entire journey, regardless of the method of transportation. Therefore, these two aspects are important in any logistical operation.

What types of cargo insurance is divided into?

Types of insurance appear depending on the needs and specifics of the transported goods. Thus, it can be:

   • Comprehensive — those who transport fragile or expensive cargo choose this option because it can cover most of the possible risks (damages, losses, delays).
   • “All the risks” — It covers almost any case that occurs during transportation, however, it is recommended to carefully study the terms of the policy, which may contain exceptions.
   • For individual risks — specify the specific risks that you are going to protect products from, if there are specific concerns and you need to approach the issue flexibly.
   • With limited liability — this option allows you to cover the main risks and is optimal for the budget.

Dynamics of the transport insurance market

It is also worth considering that the segment of transport insurance and risks is in constant dynamics and is evolving. The following aspects influence the formation of this market:

   • Advanced technology — digitalization and automation affect both logistics and insurance product management. For example, tracking technologies can reduce insurance fraud.
   • Changes caused by climate and ecology — To address the risks associated with these causes, special insurance products are being developed that strengthen the sustainability and environmental friendliness of transport operations.
   • The political situation — various political changes are taking place in the world, trade wars are underway, to which it is necessary to adapt, pave new routes and adjust international agreements.

What is CMR insurance?

An important new risk management tool is CMR insurance, which provides reliable protection against financial losses for one reason or another during cargo transportation.

The principle of CMR insurance

The principle of operation is quite simple:

   • This protects the carrier from sudden costs when it is clearly stated that he is not to blame.

Features of different transportation methods

Due to the restrictions that arose during the covid period, cargo turnover, as well as the redistribution of risks, have changed. The railway has shown the greatest resilience in this situation, as shippers have shown greater demand for this type of transportation.

The air method remains the fastest and safest, but also the most expensive type. Land transport is the most optimal in terms of cost, but the number of different risks is much higher (accidents, theft). Shipping costs are low, but insurance rates are always higher compared to other types of transportation. Possible risks here include:

   • stranding;
   • washing the cargo off the deck;
   • water damage;

Conclusion

Due to the large number of features that arise in matters of insurance and risk assessment, we recommend that you do not understand the details yourself, but rather involve experienced specialists who have the qualifications and necessary tools to work out the necessary documents in detail.