Major causes of damage
Types of damage to cargo can involve either fire or water. Fire can be caused in several ways and the consequences may have a devastating effect on the cargo. The type of packaging and the goods carried will have an influence on how much damage is caused by water. For instance, coffee beans in hessian bags will more susceptible to water than a plastic product in a sealed container.
Fire
A fire on board a ship at sea, despite the abundance of water, is an extremely dangerous and difficult situation to deal with. Damage to cargo may be caused by:
- External causes such as engine room fire spreading to cargo holds
- Ignition caused by friction, spontaneous combustion external heat and/or chemical sources
- Smoke or water damage
Water damage
Water can be particularly destructive to goods and may result from several factors:
- Contact with rain or sea water
- Ingress due to defective shipping containers
- Condensation
- Flooding
Handling damage
A cargo should be able to withstand the normal rigours of the insured voyage and this includes different methods of handling and carrying; however, accidents such as dropping and collision with handling equipment are common.
Packaging is of paramount importance and one of the risk assessment factors to watch out for. A more detailed packaging reference table is contained within.
Piracy
There has been a dramatic increase in incidents of piracy in the last three years. With 469 incidents reported in 2000 and 335 in 2001, this is a major problem for governments, international shipping authorities and shipowners. It would be unwise to think that the problem has peaked as the diversity of locations has widened as has the severity of the attacks.
The piracy hot spots are the South China Seas, particularly the area around Malaysia and Indonesia, plus the Philippines, but an increase in cases has also been reported off the east and west costs of Africa and South America. The pirates are not opportunist thieves but highly organised criminals targeting high value cargoes, cash carried on vessels and the personal belongings of passengers and crew.
Having obtained the goods the pirates will often leave the crew wounded (sometimes fatally), drugged or bound and the vessel and it's remaining cargo vulnerable to the weather, winds and waves.
In recent years an increasing number of vessels and their cargoes have been hi-jacked, often whilst in port. The vessel is then taken to another port where the cargo is sold and the vessel renamed. It is then used to steal further cargo before finally, the vessel may be sold as scrap or be sold to an unsuspecting buyer. The "Phantom Ships" (as these renamed vessels are known) are becoming a major problem and may well have links with terrorist groups who acquire cargoes for violent activities. There is a real fear that such stolen vessels could be used as floating bombs.
Norwich Union Cargo provides cover in respect of loss or damage to cargo resulting from piracy as part of the standard cover for all risks under their policy.