Marine Cargo Insurance Explained

In order to try and steer away from Brexitmania, we thought we would take a break and address marine insurance.  Whilst any form of insurance is never the most riveting subject of discussion, we all know it’s still very important.

Take the following news story for example, 277 containers washed overboard this container ship:

Containers Overboard

This footage clearly illustrates that accidents do happen and cargo ships loose containers perhaps more often than we may think. The seas that these vessels sail can get extremely treacherous so understanding how marine insurance works really is vital to any import export business.  It doesn’t take much to understand if your goods were to go overboard and you have to cover the financial loss yourself, it will likely lead to a serious dent in your cash flow and in some cases can be fatal to your business itself.

Are Your Containers Insured?

Two simple but very important questions come to mind when seeing this report of shipping containers being lost overboard:

  1. Were the containers insured?
  2. If so, was there adequate insurance cover to cover all the financial losses involved and would the shipper be able to make a successful claim with their insurance company?

So, the first question, “were the containers insured?”, might sound like a silly question to ask but many shippers falsely believe that their cargo is automatically insured  by the shipping line against loss or damage once the goods or containers are onboard.

It’s important to note that this is not always the case! You as the shippers should very carefully read the terms and conditions contained in the shipping line contract of carriage.  As much as we all hate to read the small print, it really is vital, as if you neglect this, you are taking a massive risk should there be any unforeseen circumstances.

The Contract Of Carriage

The Contract of Carriage is printed in plain speak, on page one of the Bill of Lading and is there for all to read, including you.  Make absolutely sure you read this and pay attention to all parts.

The contract of carriage will clearly set out the shipping lines liabilities under many different circumstances. Without going into the full detail of the many clauses that there can be, it’s very important to understand, you as the shipper WILL NOT receive full compensation for loss or damage of your UNINSURED cargo, except under certain circumstances, such as a General Average clause.  The scope of this clause and others is a little too much to delve into with this article but we do cover this in our online import export training course.

Adequate Insurance

Having “insurance” alone, as you may have guessed, may not be enough.  If you’ve taken the key step to have your cargo insured, you must go the extra mile and make sure that your containers have adequate insurance.

As with car insurance, you would not want to insure your lovely, brand new Ferrari with just third party, fire or theft, you would need to make sure you have adequate insurance, fully comprehensive to cover any damage in an accident or any other circumstances.

As Simple As Your ABC’s

Marine Insurance cover is either Clause A, B or C.

If you as the shipper have Clause A insurance cover, you are insured under “ALL RISK” insurance.  Therefore, were they your containers washed overboard in the above news story, your goods would be covered and you would be able to breathe a sigh of relief!

If you had Clause B cover, you would also be covered as containers being washing overboard is covered.  Again, take that sigh of relief, go and make a cup of tea and then call your insurance company!

However, if you as the shipper had Clause C Insurance cover, you would not be covered and you would have to suffer the financial loss of those containers being lost.

Hopefully this story illustrated that cargo insurance whilst it may not be all that interesting to talk about, it’s really very  important that traders fully understand what is and what isn’t  covered by their marine insurance policy.  Never leave it to in the lap of the gods and certainly never ask a third party to ”Insure my Cargo”.

You must take the responsibility for your own goods and be specific, making sure you have the correct insurance cover for your cargo, otherwise you may well be throwing the cost of your insurance premium overboard to the bottom of the sea with those lost containers!

Start Wine-ing And Get Exporting

Importing and exporting doesn’t have to be rocket science. Sometimes a simple idea can kick-off a successful career and doesn’t need to be over complicated.

In November 2017 a young lady, 23 years of age, enrolled on an online import export training course, which she completed and gained the understanding she needed to move goods around the world.

To Or From China?  Research Is Key

This young entrepreneur had been looking at China, as many do, to import goods to sell to Europe and on doing more and more research, came across an idea where she saw a gap in the market.  This gap however, was in the reverse direction, rather than import from China, she believed that exporting to China was more advantageous, in particular, exporting Spanish wine to China.

A simple product, a simple idea and something that can be relatively easily filled. Sometimes we don’t have to find some far out there, brand new product that no one has ever seen.  Keeping an open mind and let your research tell you what’s needed. Then trust your research and your gut feeling!

With alcohol sales increasing significantly year on year and China’s middle class expanding, finer wines are more in demand. Also the explosion of Chinese tourism across the globe means that Chinese are travelling further abroad and finding a taste for quality wine and spirits.

With further research, our entrepreneur selected 3 wine producers in Spain and was grounded in negotiation techniques, therefore able to negotiate a solid and successful contract with them.  The wine supplier as you may imagine, was  only too happy to help her penetrate the Chinese wine market and was very helpful.

Stockist Agents

In China, after talks with several potential stockist agents, she selected one that fit her personal criteria and potential future expansion plans.

The first deal was agreed and signed and the stockists agents terms of delivery were CFR  Chinese Port subject to Incoterms 2010.  Our entrepreneur was familiar with and understood these Incoterms and able to make the necessary arrangements for the delivery.

She promptly contacted a freight forwarder in the UK and negotiated a freight rate for collection from the Spanish wine supplier and delivery to the specified Chinese port.  Her knowledge of Incoterms 2010 and the research she had conducted ensured she accepted a fair price for this delivery therefore maximising her profits.

Method Of Payment

The final part of the contract was to negotiate with her Spanish wine supplier,  a 60 day payment against a Bill of Exchange, availed by her bank and a 30 day bill of exchange, availed with her stockist agent thus enhancing her cash flow, giving plenty of time to receive funds from her stockist agent and make the payment to the Spanish vineyard.

The initial trial order was for 4 pallets of wine by LCL service, with the bills of lading to be produced and forwarded to the stockist agent, together with other commercial documents as a Cash against Documents Transaction.

Bring in a Range

After this successful shipment, the first consignment was sold to one outlet by the selected Chinese stockist agent and a partnership has now been agreed and contracted to jointly finance and purchase a Full Container Load (FCL) of Spanish wine.

With the potential to supply a range of products, negotiations are underway to bring in more related products to maximise this business relationship as joint profit margins.

 Lesson Learned

You can turn a relatively simple idea into reality if you follow some simple rules:

  1. Identify the product(s) you wish to buy or sell through solid research.
  2. Research the market you intend to sell to.
  3. Research and find several suppliers. Just one is risky as if there are any issues or problems, you may find yourself with no stock to sell.
  4. Negotiate commercially and legally sound contracts.

No business and making profit, doesn’t come easy.  Be prepared to put in the hard work, stay focused and keep yourself driven. Once you’ve navigated your first deal and made your first delivery, you’ll continue to learn and it will get a little easier each time.

Above all don’t “wing it” get trained in the practical aspects of importing and exporting or the risks of losing money are significantly higher.

What Is A Freight Forwarder and How Do They Help Me Export?

Knowing what a freight forwarder is and how they can help you with your exporting process is really important as at some point you’re very likely going to need to work with one.

When it comes to freight forwarding, there’s three main questions to answer:

  1. What is the role of a freight forwarder?
  2. How do I select a freight forwarder?
  3. How do I find a freight forwarder?

I ran my own freight forwarding company for many years so I am well qualified to answer all three of these questions and I hope it will become clear to you the advantages of using a freight forwarder.

Exporting Isn’t The Same As Going To The Post Office

So let’s dive straight in and answer the question, “what is a freight forwarder?”.  When exporting, the most important thing to know is how to move your goods from the warehouse to your destination.  Unfortunately, once your exports get to a certain size, it’s not as easy as going to the post office or Fed Ex, paying the fee and sending.

Exporting larger loads is a multi-step process and that involves knowing how to find the most competitive freight rates, booking that freight for shipping, having to complete all the export documentation which can include an export entry, Certificate of Origin and Bill of Lading to name a few. Gaining the knowledge for this is wise, so that you can understand, manage and control every step of the process yourself and therefore know firsthand where problems may lie in your export process and fix them in order to constantly streamline that process and become as efficient as possible. ABTS Training offers an online import export training course that will do exactly that; help you streamline your export process.

However, if you don’t have the time to study as you’re juggling what may feel like a million things, there’s freight forwarders. A freight forwarder will take care of all these tasks for you and will likeley offer other services such as export packing, warehousing and local transport. They become your adviser and hopefully someone you can trust.

What Can I Ask A Freight Forwarder?

In short, anything you want about how to get your goods from your warehouse to your destination.  For example, if you need to get your products to China, you may want to ask them:

  • When is the next vessel sailing for your Shanghai?
  • How much is it to ship a FCL to Shanghai?
  • What is the air freight rate for 40 kilos to Hong Kong?


A phone call or email to your freight forwarder may answer many of your questions and you’ll likely get  some free advice as you only pay when they undertake an export consignment for you and send you the invoice. As you can see, the advantage of using a freight forwarder is they are a one stop shop and will take care of the entire process for you. But as you know, when there’s an advantage, there’s many times, a disadvantage.

A Little Knowledge Weeds Out The Bad Eggs

The big disadvantage of completely relying on a freight forwarder is that, like in any industry, some freight forwarders can take advantage of the fact that you have little or no knowledge of exporting and charge you accordingly, you didn’t think freight forwarders work for free did you?

I stress only SOME, there’s bad eggs in every industry and the vast majority of forwarders are very professional and eager to help you. It goes without saying that a freight forwarder has to make a profit but that’s very different from ripping you off.

My advice is, by all means use the services of a freight forwarder BUT understand export procedures yourself so you have a working knowledge of freight rate structures and the real cost of producing export documentation. Once you know these facts you can work successfully with your freight forwarder and be sure you’re not being taken advantage of and working towards a solid long-term, professional relationship.

Know What It Costs Or It’ll Cost You!

Not knowing your costs has real consequences.  We had an exporter that joined our training course in order to gain the knowledge he needed to understand his export process from start to finish.  Until then, he had given all his exports to a freight forwarder and had never known what questions to ask or what the real-world cost was of exporting his goods.

He had worked so hard with suppliers, negotiated deals with them, found a market for his products, got the deals done to sell but at the last hurdle, he was taken advantage of.

As he had little to zero knowledge of freight rates and blindly trusted his freight forwarder this particular forwarder could see his lack of knowledge and as a result charged £7.06 per Kilo while a commercial rate was £2.60 per kilo. This ended up costing him thousands in extra fees that he didn’t need to pay and would have obviously given him a much, much healthier profit margin had he had that knowledge.

After completing our course, he fixed that problem and went on to build a very successful business.

The point of this example is to emphasise that it’s very wise to have a working knowledge of exporting, not to insinuate that all freight forwarders will overcharge the innocent. As I mentioned, I was a successful freight forwarder for many years without overcharging my clients. All my colleagues in the freight forwarding business gave a good service for a fair price.

Finding a Freight Forwarder

Finding a freight forwarder is as easy as searching for one on Google.  Finding one that’s going to work well for you, is slightly different.

Follow this very simple rule: make sure that the freight forwarder can give you the service YOU require not what they WANT to give you.

For example, if a freight forwarder is strong in sea and airfreight to South America and Australia and that they can offer you very competitive rates to these destinations but your market is the Middle East, this is not a well fitting partnership. This may sound obvious but many times I’ve seen savvy exporters use suppliers in one way or another that aren’t a good fit for them, just because a friend uses them or they have a good name in a certain area.

We All Have A Wish List

Before agreeing any business or contracts with a freight forwarder, you should make out a wish list with the level of service YOU require from a freight forwarder. Here is an example:

  1. Can you offer UK collection from my local suppliers (here name your suppliers address)? If so please quote.
  2. Can you offer competitive air freight rates from the UK to (your destination)? If so please quote up to 1000 kgs.
  3. Can you offer competitive rates FCL/LCL rates to (your destination)? If so please quote. (This is where a knowledge of Incoterms 2010 is needed).
  4. Please quote to prepare the following documentation: Bills of Lading, Certificates of Origin.
  5. Can you offer local warehousing and export packing? Please quote.
  6. Please name the contact person responsible for servicing my account.
  7. What are your terms of payment?
  8. Please send me a copy of your trading terms and conditions.

The above is just indicative of questions you should ask in order to get the service YOU require for your particular exports.

Finding A Freight Forwarder?

This is an easy answer thanks to Google. Just type in “freight forwarding in (here mention you town or city)” and you will be swamped with local contacts.

You can also check the BIFA website and they will supply you with a list of all Freight Forwarders who are members.

If you want to go it alone or use the services of a freight forwarder, either way you need to understand the business of exporting so take the time to get yourself up to speed.  You won’t regret it and it really will streamline your business and add to your profit margin.

Quick Guide

Hopefully our handy guide will help you.

What Is A Freight Forwarder