The shipping industry has had a rough couple of years. Just one of the many issues – and one of the costliest – is the growing number of containers that have gone overboard. Last year, 3000 fell into the water.
This year, the number is on track to be the same or greater. Besides the cost, these accidents are worsening the supply chain disruptions.
What causes containers to fall overboard?
In an effort to get as much cargo as possible on a ship to deliver everything from car parts to smartphones to their intended customers, containers are often loaded much too high. Couple that with the increasingly strong storms and other weather conditions and you increase the likelihood that the cargo won’t stay in place. Sometimes, the containers aren’t locked together properly when they’re loaded.
Overworked shipping workers sometimes make mistakes or are careless. According to one insurance company, human error plays a factor in at least 75% of all shipping accidents and fatalities.
As another insurance company founder says, “The increased movement of containers means that these very large containerships are much closer to full capacity than in the past. There is commercial pressure on the ships to arrive on time and consequently make more voyages.”
Often, these containers sink to the bottom of the ocean or sea. In one case, a ship actually broke in two during a storm and sank, with its cargo.
Who’s responsible for the financial losses?
The vast majority of containers make it to their destination in one piece. Even a few thousand is just a small percentage of the more than 220 million containers shipped annually. However, one loss prevention professional said earlier this year that “it’s almost 60% of the monetary value of all container incidents.”
Determining who is liable for losses and to what extent when goods are lost or destroyed typically comes under the Carriage of Goods by Sea Act (COGSA) of 1936. Liability will likely depend on whether a carrier used reasonable caution in loading and securing the containers. It’s important to have experienced guidance if you’re facing potential liability for a container accident.