The Biggest Cargo Claims Challenges This Year

By Justin Murphy | July 10, 2024

Cargo claims are an inevitable part of the shipping industry, but the challenges associated with these claims are getting both more complex and frequent this year.

From increasing technological advancements to the complexity of global trade, the freight insurance industry is facing several significant hurdles that must be addressed.

Technology Use Within the Supply Chain

One of the biggest challenges impacting risk levels in the supply chain is the increasing use of technology throughout the shipping process. Digitalization might be shaping a more efficient market, but it also opens up new digital vulnerabilities.

Justin Murphy

For instance, the wider range of tech presents more opportunities for cargo criminals to infiltrate platforms and carry out fraudulent activity. In the last two years, we’ve seen an unprecedented leap in this type of sophisticated fraud. According to data from Truckstop, reported incidents of double brokering went up by 400% over the course of six months, which has unavoidably led to an uptick in corresponding claims.

Plus, with the growing implementation of automation, as well as digital platforms like transport management systems and load boards, shippers and carriers are more vulnerable to cybersecurity attacks and data breaches too. These attacks can compromise sensitive information, disrupt the supply chain and lead to considerable financial losses. To mitigate this risk, shippers and carriers must invest in robust cybersecurity measures and implement disaster recovery plans to ensure that the impact of any attack is minimised.

Navigating the Complexity of Global Trade

Another issue that’s contributing to the challenges in the cargo insurance industry is the sheer complexity of global trade. Goods are frequently transported across borders, through multiple jurisdictions with rules and restrictions to abide by along the way.

Navigating the laws and regulations that apply to a particular shipment can prove very complicated. This can lead to disputes during the claims process, which prevents insurance providers from reaching a settlement quickly and fairly. Some cargo insurance providers successfully payout in 14 days, while others provide windows ranging from 30 to 90 days.

Yet, regardless of the cargo insurance provider, it’s vital that shippers and carriers educate themselves on regulations that apply to their loads and have clear steps in place to resolve any disputes that arise.

Alternative Modes of Transportation

The rising use of alternative modes of transport in the freight community — such as air and rail — also poses a challenge to the cargo insurance industry. These different methods of shipping may each have varied levels of protection and liability, which can create confusion and complicate the settlement process, particularly when a single load is being shipped by multiple modes of transport. Not to mention, the U.S. intermodal freight market is only gaining traction; as recent figures show it’s projected to be worth $44.6 billion by 2032, which is sure to make intermodal cargo claims more common.

To try and counter the effects of this issue, shippers and carriers should ensure they have a clear understanding of the coverage and limitations offered by each mode of transport, and check they’ve got the right protection in place for each shipment.

Finally, as the volume of cargo insurance claims continues to increase, it’s crucial that the industry find efficient and effective ways to manage this influx. That could mean investing in the right staffing levels or adopting new technology, like automated claims solutions, to enable them to process and settle claims more efficiently.

There’s no shortage of obstacles facing cargo claims teams in 2024, yet with the right investments and preparations, these challenges can be overcome. By prioritising the adoption of new technology, streamlining processes, and focusing on customer service, the industry can ensure that cargo insurance claims are handled and settled as smoothly and justly as possible.

Murphy is director of claims at Loadsure. He has more than three decades of experience in the cargo and freight claims industry.

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