Insights to Help Your Business

Out to Sea

Can your business stay afloat if a container goes overboard?

Cargo ship full of shipping containers going through turquoise water

What’s the story: If your container of goods is lost at sea, you may not be covered for the loss.

Why it matters: When something goes wrong in ocean transit, it can be a long and expensive battle to win a claim that may result in a small recovery.

Growing Ships

  • 1948: 525 ft. – capacity: 96 TEU
  • 1982: 745 ft. – capacity: 3,400 TEU
  • 2013: 1,300 ft. – capacity: 18,340 TEU
  • 2023: The record for largest container ship in the world is 1,312 ft. – capacity: 24,346 TEU

The Carriage of Goods by Sea Act (COGSA) is a U.S. maritime law that dates back to 1936 and may greatly limit the liability of the carrier, or even make them immune from any liability at all. Discover the liability limits and what you can do about it below.

Possible COGSA Limitations
1. If something goes wrong, carriers are expected to pay cargo shippers $500 per package, or customary freight unit (CFU). But since the legal definition of a “package” or “CFU” is still vague, carriers may define it in their terms.

2. The specific laws that apply to any incident can vary from country to country and tariff to tariff. In litigation, interpretation of these laws and tariffs can also differ from court to court.

More exceptions to the rules
Making it more complicated to get compensated for damage or loss at sea is that the maritime laws allow carriers to deny liability for many reasons:

  • Act, neglect or default of the carrier in the navigation or in the management of the ship
  • Fire (unless by fault of carrier)
  • Perils, dangers and accidents of the sea (e.g. storms)
  • Act of God
  • Act of war
  • Act of public enemies
  • Arrest, restraint or seizure
  • Quarantine restrictions
  • Act of omission of the shipper or owner
  • Strikes, lockouts or labor stoppage
  • Riots and civil commotions
  • Inherent defect, quality or vice of the goods
  • Insufficiency of packing
  • Insufficiency or inadequacy of marks
  • Latent defects not discoverable by due diligence
  • Saving life or property at sea
  • Any other cause arising without the actual fault of the carrier

An All-Risk Cargo Insurance Policy Can Help
Access a superior loss-protection alternative to carrier liability.

  • Bottom-line protection. Coverage up to the full sales value of your goods.
  • Real insurance. All-risk coverage customized for your unique business.
  • Savings. It may cost less than excess liability coverage.
  • Time. 90 days to report and file a concealed damage claim.

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