The importance of declaring correct cargo details and consequences of cargo misdeclaration

cargo misdeclarationIncorrect cargo details and/or misdeclaration of cargo and its details has been the bane of many shipping lines over the years..

The consequences of cargo and weight misdeclaration were so severe that the IMO had to implement SOLAS VGM regulations..

However there are still several incidents of such cargo misdeclaration including hazardous goods which have caused several maritime disasters..

In this article, Peregrine Storrs-Fox, Risk Management Director of TT Club writes about the importance of declaring correct cargo details and consequences of cargo misdeclaration..

For over two years now TT Club has been promoting its Cargo Integrity campaign.  This focuses attention on all direct and indirect stakeholders recognising their responsibilities to improve all aspects of supply chain performance.


It seeks to tackle long term deficiencies which endanger lives, creates significant cargo damage and loss, and disrupts global trade. It is a diverse project, at its roots calling for significant cultural/behavioural change.

It is recognised that certain elements may require legislative change and technology deployment, but the general perceptions of risk is fundamental. Prime attention for the campaign centres on the widespread trend in misdeclaration of cargoes.

TT Club records indicate that as much as 66% of incidents related to cargo damage in the intermodal supply chain can be attributed in part to poor practice in the overall packing process, including not just load distribution and cargo securing, but also the workflow from cargo classification and documentation through to declaration and effective data transfer.

Critically, many of these attritional incidents could be avoided; these are calculated to cost MAT[1] insurers in excess of USD500 million each year, resulting in a probable economic loss to the industry of at least USD6 billion annually.

At the tip of the iceberg, for example, there are weekly reports of unitised fires on board ships, and historic average experience of a major ship fire every 60 days has been challenged in 2019.

This has, not unreasonably, led to calls to strengthen firefighting protections and capability for cellular ships. Nevertheless, it is significant improvements in cargo declaration and packing that will materially protect the supply chain.

Shipping lines have substantially ramped up their cargo management efforts. An initiative by Hapag-Lloyd saw the deployment of  a screening system, Cargo Patrol, aimed at identifying cargoes that may be undeclared DG at the time a shipper makes a booking, leading to more detailed investigation before acceptance.

Published information indicated that shipments transpired to be more than likely misdeclared in up to 5% of the ‘potential hits’ alerted by the system.  Extrapolating these findings across the total annual global container trade, it is estimated that there could be some 150,000 ticking container time-bombs each year carrying undeclared or misdeclared cargo.

Applying technologies is increasingly likely to pinpoint such fraudulent and incompetent activity.

As is so often the case, fires and explosions are the catastrophic result of a myriad of cargo problems that are observed. There are far too many errors in classification and declaration of commodities to be transported, often amplified by poor decisions and practices relating to packaging, packing, segregation and securing.

Such things compromise safety in a variety of ways, but most critically when the goods should rightly be described as dangerous in a regulated sense.

There are two internationally recognised codes, regulated by the UN’s International Maritime Organization (IMO) that guide, instruct and govern the safe transport of cargoes in containers and other CTUs; the mandatory International Maritime Dangerous Goods (IMDG) Code¹ and the Code of Practice for Packing of Cargo Transport Units (CTU Code²).

This guide provides key insights for all actors in the freight supply chain responsible for preparing unitised consignments for carriage by sea. The guide is intended to provide an overview of the key practical duties under the IMDG Code for each stakeholder, while not seeking to meet the mandatory training requirements.

The CTU Code stands as non-mandatory international law. Structured so that it may be incorporated into national legislation, the entire freight industry should recognise that many jurisdictions will rely on this detailed guidance in any litigation as demonstrating good industry practice.

TT Club stresses that all direct stakeholders need to become familiar with the contents, and develop ways to implement and encourage compliance with, the CTU Code.

The need for an increased level of training of those employed by shippers, consolidators, warehouses and depots to pack containers and other transport units is repeatedly demonstrated by incidents resulting in loss of life, cargo or asset damage, environmental harm, and supply chain disruption.

As a result, TT Club commissioned Exis Technologies to develop e-learning training courses for the transport industry; CTUpack e-learning™.

TT Club working with partners continues to put pressure on UN agencies, governments and the full range of direct and indirect stakeholders involved in the intermodal supply chain, recommending changes to improve safety, and identify practices and behaviours that can undermine certainty of outcome for trade in general and presents increased likelihood of incidents.

TT Club’s call for cargo integrity takes a broad approach, not relying on the power of regulation or the vigilance and discipline of carriers or port operators, but carrying the safety message far and wide, including engaging with indirect stakeholders, such as those involved in fiscal, health, security and anti-trust regulation, and embracing technical innovations that can assist in monitoring and condition reporting.

Naming such a range of influencers in the safety, security and environmental performance of the supply chain is helpful in recognising the challenge to achieve the significant culture change that is required, while prioritising efforts to engender such change.

About TT Club

TT Club is the established market-leading independent provider of mutual insurance and related risk management services to the international transport and logistics industry. TT Club’s primary objective is to help make the industry safer and more secure.

Founded in 1968, the Club has more than 1100 Members, spanning container owners and operators, ports and terminals, and logistics companies, working across maritime, road, rail, and air.

TT Club is renowned for its high-quality service, in-depth industry knowledge and enduring Member loyalty. It retains more than 93% of its Members with a third of its entire membership having chosen to insure with the Club for 20 years or more.

www.ttclub.com

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