| Written by Constance Stickler
The Significance of Container Claims in Logistics and Shipping
In today's complex logistics world, container claims play a critical role in maintaining supply chain integrity, safeguarding financial investments, and ensuring customer satisfaction. Understanding the importance of these claims is essential for any company involved in the transportation of goods.
Financial Protection
When goods are damaged, lost or arrive late, it can result in significant financial impacts, even total loss. Container claims provide companies with a mechanism to recover some or all of the costs associated with these incidents. This financial protection helps maintain profitability and reduce the financial burden on companies when unexpected problems arise.
Risk Management
Effective risk management is a cornerstone of successful logistics. By understanding potential risks and how to mitigate them, container terminals can reduce the likelihood and impact of these risks. Analysing the claims that occur highlights areas where the risks are most pronounced, allowing proactive measures to be taken to prevent future incidents.
Legal Compliance
The shipping industry is highly regulated and subject to strict rules for the safe transport of goods. Those who comply with these legal requirements not only avoid possible fines and penalties but also strengthen the company's reputation as a reliable and responsible company.
Customer satisfaction
Satisfied customers come back. Therefore, customer satisfaction is a crucial factor for business success, and it is essential to cause as little damage as possible. If problems do arise, container complaints offer a structured process for dealing with and resolving them. Honest and effective claims management shows a company's commitment to customer service and helps to build trust and loyalty.
Operational insights
The complaints provide valuable insights into operational aspects: Analysis of the claims data can reveal patterns and trends related to common causes of damage, loss and delays. This allows weak points to be identified and targeted improvements to be implemented.
Claims management as a competitive advantage
The ability to manage container claims effectively can be a significant differentiator. Companies that have robust claims management processes in place and demonstrate a proactive approach to preventing problems are more likely to retain and win customers.
Environmental aspects
Damage to containers can also have an environmental impact. Damaged goods sometimes have to be thrown away, creating more waste. And the additional transportation required to replace or return goods contributes to even more carbon emissions. So, preventing damage also helps minimise the environmental footprint. This commitment to sustainability is becoming increasingly important to customers and stakeholders.
Why a container damage checklist?
This checklist is a practical tool to comprehensively understand the types of container damage and the resulting risks, such as health and environmental hazards. In addition, proactive prevention can be systematically addressed by listing investigation and precautionary advice.
Identification of types of damage
These include physical damage such as dents, scratches or breaks caused by improper handling or accidents. Damage is also often caused by moisture penetrating, leading to mould, corrosion or product deterioration. Contamination can be caused by contact with substances that are hazardous to health, and if the container's integrity is compromised, pests can enter. Theft or loss of goods during transport also falls under possible damage. And, of course, temperature-related damage is an essential category affecting perishable goods or sensitive materials, as the entire contents of a refrigerated container are often affected, and there is a risk of total failure (read more about container damage codes).
Understanding Damage Causes
Physical damage is caused, for example, by handling errors, including gross errors when loading and unloading ships, trucks or trains. Transport incidents such as accidents, collisions or equipment malfunctions also occur. The holes that result in containers are damages in themselves, but can also cause further damage. For example, if moisture, water or other liquids penetrate, it can lead to immediate or slowly progressive destruction of the cargo, such as through mould growth. Damaged container walls and ceilings can also allow vermin to penetrate, from the tiniest insects, such as ants or termites, to smaller mammals, such as rats or even raccoons. But human intruders are also a danger, who can, for example, take advantage of damaged doors to steal the container's contents.
Inside the container, risks exist due to improper packaging techniques or inadequate packaging materials, both of which can lead to damage, for example, if the cargo inside the container tips over during transport.
Maintaining the temperature is of the utmost importance with reefers. Of course, the settings must be set correctly and maintained from the start of the journey. In addition, a sufficient power supply is of the utmost importance. Temperature-sensitive goods are often expensive, and these containers must, therefore, be handled with particular care.
Assessing Associated Risks
Apart from external damage, such as holes in or deformation of the walls or edges, defects can also occur inside the container, for example, on the wooden floor, due to leaked liquids or wood-eating insects such as termites. Moisture that penetrates under the protective paint or inside can lead to corrosion, which can have severe consequences for the stability of the container if it is not discovered in time.
If the container doors or seals are damaged, or holes in the side walls or ceiling are large enough for a human intruder to get through, cargo may be stolen from the container.
Among the goods transported by container are numerous dangerous goods, the release of which poses risks to human health and the environment. Highly flammable or explosive substances increase the risk even further (see also: WHS Australia and what it means for container terminals).
All damage has an impact - it causes work and, therefore, costs for its investigation, documentation and cleanup. In some cases, a quick fix can be found; in others, the entire cargo must be repacked into a new container (if a reefer fails completely), or a lengthy investigation must be conducted (if theft is involved).
If severe damage occurs, or worse, if such damage occurs repeatedly, serious compliance problems can arise, resulting in costs for the company itself, compensation costs to the customer and high fines.
There is another financial impact that is difficult to quantify: reputation damage. Damage caused negligently, coupled with sloppy damage management, can put off customers for a long time.
Implementation of preventive measures
The main goal of our container damage checklist is to show ways to reduce risk. In addition to proactive measures such as comprehensive staff training, what types of inspections should be carried out, and pattern recognition, these also include instructions on how to deal with damage so that at least no or only minor consequential damage occurs.
In addition to your own team, other stakeholders involved in the transport should always be taken into account, such as those responsible for loading the container. If problems arise with improper stacking of the goods in the container, this must be reported so that the same error does not occur again next time. The same applies to the correct declaration of the container contents. If incorrectly declared dangerous goods ignite, it must be questioned whether there is a history of similar incidents with this carrier. Joint efforts with suppliers to establish clear guidelines and expectations strengthen preventive measures throughout the supply chain.
Automation As a Preventive Measure
Implementing automation at container terminals is essential for preventing damage and consequential losses. Manual processes are always prone to errors and are often inaccurate.
OCR
An invaluable aid in assessing and monitoring the condition of containers is Optical Character Recognition (OCR), which, contrary to its name, can recognise more than just letters.
With the help of modern AI software with line camera technologies, the condition of containers can be digitally recorded at various locations, for example, at the gate or when unloading ships. Structural and surface deformations are automatically detected, ideally without trucks having to stop or cranes having to interrupt their move.
In addition, dangerous goods labels and whether a seal is present can be recognised. These are important indicators of how the containers must be handled or whether further inspections are necessary.
CWS
Collision warning systems (CWS) prevent accidents by alerting operators to potential collisions. In environments with the movement of large machines and heavy loads, such as container terminals, safety risks can drastically be reduced.
The systems help vehicles navigate through terminals without colliding with containers, equipment or personnel. Sensors detect obstacles and slow down or stop the vehicles if necessary.
Shock Sensor
Installing shock sensors in terminal vehicles can mitigate the effects of collisions. The incidents they record trigger a report, a warning, or even the vehicle being switched off, depending on the predefined severity. This ensures that no more damage is caused than that which has just occurred.
In addition to the real-time map, historical data can also be called up and replayed, which offers decisive advantages for investigating incidents. Not only that but the recordings can also be used to hold training sessions and expand or update safety protocols (see also: Unreported container damage).
Surveillance Cameras
Surveillance cameras can provide crucial information about the course of events, for example, by providing videos of the event from possibly even multiple perspectives.
They can also be used for prevention, though, on the one hand, through their deterrent effect and, on the other hand, in combination with motion detection functions that can detect suspicious movements and thus prevent theft, manipulation, or even vandalism.
Reefer Monitoring
The main reason for monitoring refrigerated containers is to ensure the correct temperature throughout the entire journey. But it can do more than that: in addition to the temperature, other parameters, including the humidity in the container, can be read.
An adequate power supply to the refrigerated container is the basis for maintaining the temperature. Reefer monitoring systems also monitor this and warn if the container is disconnected from the power supply for too long.
FAQ
How Have Container Claims Evolved Over Time?
Container claims have been part of logistics for many decades, evolving alongside the growth of global trade and the standardisation of container transportation.
Before standardised shipping containers became more common in the second half of the 20th century, goods were typically shipped in a variety of packaging, such as drums, boxes, and bags. Of course, claims for damaged or lost goods were a problem even then, but they were often handled on a case-by-case basis and rarely standardised.
The era of containerisation began in the late 1950s with the introduction of standardised shipping containers. This innovation revolutionised the shipping industry, finally providing a uniform method of transporting goods that had several advantages, including better protection for the goods and, therefore, minimising handling damage.
The introduction of standardised containers led to more uniform handling practices across shipping lines and ports. This allowed more straightforward guidelines for documenting and processing claims related to damaged, lost or delayed cargo.
In addition, the importance of accurate documentation was emphasised. Bills of lading, packing lists and delivery notes formed the basis for substantiating claims. Standardised forms and procedures streamlined the claims process and helped ensure compliance with international trade regulations.
Containerisation also led to changes in insurance practices and liability agreements between parties in the shipping industry. Insurance coverage was adapted to include specific provisions for containerised cargo and to take into account risks related to damage, loss, theft and, over time, environmental factors.
Takeaway
Efforts should not only focus on preventing damage but also on containing the consequences of damage that has already occurred, which is crucial for reducing claims. This can reduce financial losses and increase efficiency and environmental sustainability.
Automation, with a variety of technologies and measures, plays a crucial role in the pursuit of fewer damages and greater customer satisfaction. For more, download our extensive container claims checklist:
Delve deeper into one of our core topics: Port Automation
Sources:
(1) https://www.marineinsight.com/maritime-law/guide-shipping-container-dimensions/
Author
Conny Stickler, Marketing Manager Logistics
Constance Stickler holds a master's degree in political science, German language and history. She spent most of her professional career as a project and marketing manager in different industries. Her passion is usability, and she's captivated by the potential of today's digital tools. They seem to unlock endless possibilities, each one more intriguing than the last. Constance writes about automation, sustainability and safety in maritime logistics.
