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Post Brexit trade deals put Marine and Transit Insurance on the agenda

The insurance profession was founded upon the principle of spreading the risk of maritime trading and as the UK government embarks upon the negotiation of post Brexit trade deals, it would seem to be an opportune time to reconsider the value of Marine and Transit insurance.

Written by Paul Brown on 30th March 2020

Post Brexit trade deals put Marine and Transit Insurance on the agenda

The insurance profession was founded upon the principle of spreading the risk of maritime trading and as the UK government embarks upon the negotiation of post Brexit trade deals, it would seem to be an opportune time to reconsider the value of Marine and Transit insurance.

The latest UK Port Freight Statistics, issued in August 2019, show that UK ports handled over 483 million tonnes of goods in 2018 and road freight statistics to March 2019 show that around 1.4 million tonnes of domestic freight and 9 million tonnes of international freight are travelling the UK’s roads every year. Such movement of goods often involves an international network of transportation across land, sea and air and with that complexity comes a whole host of risks that require close management by every part of the supply chain.

Of the myriad of ways that goods can be lost, or damaged, in transit the most common reasons are theft, accidental damage, and simply going missing along the route. Last year, half of the UK’s exports went to the EU, a territory where 8.2bn worth of goods were stolen last year.  And in the UK £54m worth of cargo was lost to theft in 2017, 84% of which came from vehicles.   

Organised crime plays a significant role in this but much of the theft is opportunistic and any commodity that offers thieves the chance to make quick money is at risk with tobacco, alcohol, electronic goods and even food all high on their wish list.

 

 

 

Many thefts take place before they even reach the port, when lorries and vans are parked overnight when there is little the driver can do to protect their cargo. However, even if the goods reach the port intact they can suffer one of the following:

  • Damage, or loss during loading or unloading
  • Damage in transit due to bad weather
  • Spoilage by water damage, or condensation in the container
  • Deterioration due to poor packaging
  • Spoilage of perishables if refrigeration units fail

Or, cargoes can even be jettisoned by a vessel's Captain to save the vessel.

So, what can be done?

With the range of diverse exposures in play and with so many laws and jurisdictions to contend with, exporting goods can be a complicated undertaking.

As an exporter of goods, it is possible and might appear easier to rely upon the insurance of third parties, but relying on the buyer of the goods, or a freight forwarder, to secure the safe arrival of goods, exposes a manufacturer's bottom line if adequate protection is not provided. For this reason, companies, should seek to take control of the insurance process wherever they can to ensure they have the cover they need.

Whether exporting, or importing, understanding the terms of trade or the ‘incoterms’ is vital. For example, it is advisable to purchase on an ex-works or 'Free on Board' (FOB) basis and sell on a 'Cost, Insurance and Freight' (CIF) basis. This gives both parties absolute clarity on where responsibility for the cargo lies at any given point of the journey and insurance plays a key role in defining those responsibilities. Whatever terms are used the risks inherent in global trading are many and complex, but working with an Insurance Broker that understands those risks and effects an efficient transfer of those risks into the insurance market can help put the manufacturer in control.

Figures issued by the Office for National Statistics (ONS) show that the number of SME’s exporting goods is on the increase and their ambitions require the ability to trade internationally.

To discuss your Marine and Transit insurance requirements contact Franklands on 01332 545720.

Source:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/826446/port-freight-statistics-2018.pdf

https://www.gov.uk/government/statistics/road-freight-statistics-april-2018-to-march-2019

https://www.tapa-global.org/news-detail-view/2019-is-already-another-record-breaking-year-for-cargo-crimes-in-the-europe-middle-east-and-africa.html

https://www.nmu.co.uk/wp-content/uploads/2018/09/BSI-UK-Cargo-Theft-Report-Q2-2018.pdf

https://shippingandfreightresource.com/cargo-theft-statistics-and-trends/

https://www.gov.uk/government/news/236000-uk-businesses-making-the-most-of-overseas-opportunities

 

 

 

 

 

 

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