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Cargo Damage: 5 Common Risks and Types

If you offer cargo or freight handling services, then you know how devastating freight and cargo damage can be. The financial repercussions affect not only you but also the customer, the customer’s insurer, and the rest of the supply chain. 

We saw this play out in early 2021, when North Pacific storms caused the loss and damage of more than 700 containers, writes Steve Frothingham of Industry News. Companies like Trek Bicycle sued the shipping company for $337,000 in cargo damages. In a separate lawsuit, at least 17 companies and their insurers sued for $256,000 in damages over cargo lost in another storm, Frothingham says in the same news post.

Considering the sheer volume transported every year, it’s statistically probable that some cargo and freight will get lost or damaged. Flock Freight and Drive Research’s 2022 survey found that 45 percent of 200 professionals admitted to shipping partially empty truckloads. According to the same study, 86 percent of less-than-truckload (LTL) shippers experienced a damage claim in 2022. Other studies find that some extent of damage occurs in 11 percent of shipments.

At CargoProtect, we’re all about helping shippers like you combat these odds. Knowing the most common types of cargo damage can enable you to take proactive measures against claims. 

Look out for these causes of cargo and freight damage:

1. Physical damage.

Transit doesn’t always go smoothly. Whether you’re facing intense traffic or rough waters, any cargo or freight is at risk of getting dropped, broken, rolled around, and other shipping container damage, writes Diamond Star Port and Terminals Limited. These physical damages mostly come from poorly distributed weight, inadequate packaging, and improper methods for securing the cargo. 

2. Water damage.

Physical product damage during transportation isn’t the only risk factor for freight or cargo loss. Water can do serious damage to transported goods, as well.

According to articles by the International Forwarding Association (IFA) and Diamond Star, water damage exposure happens from:

• Holes, damaged sealing gaskets, or corrosion in shipping containers.
• Seawater regression.
• Inclement weather.
• Poor ventilation.
• Condensation or “container rain” from high humidity.

3. Cargo damage from contamination.

Cargo that’s poisoned or polluted becomes unsafe or unfit for consumption or use. According to Arviem, a cargo monitoring service, contamination occurs when cargo or freight is poorly separated from incompatible cargo, when staff fails to clean the space, or when cargo is improperly stored before shipment.

4. Infestation.

This type of cargo damage is not for the faint of heart. After all, no one wants to imagine their food and drugs being stored in a rodent- or insect-infested space. 

But in the world of supply chains, it happens. (See this story of a store chain that routinely shipped food, drugs, and cosmetics exposed to a rat infestation. The chain faced a $41.7 million fine.) Animal and insect infestations can later lead to contamination, Arviem says in their aforementioned article.

5. Reefer damage claims.

Last (but certainly not the least common), we have claims involving damaged shipments in refrigerated or “reefer” containers. 

Because refrigerated goods require specific temperature controls, any failures within the containers can harm the cargo, too. Arviem says anything from incorrect settings to human error can set off a chain of damaging events. By the time the reefer goods arrive at their final destination, they’re often ruined from decay, freeze damage, thawing, discoloration, and other problems affecting its sale and consumption, Arviem’s article explains.

Secure the ultimate protection against these types of cargo damage.

In addition to understanding the kinds of freight and cargo damage risks you face, there’s another way to proactively defend yourself against cargo-related claims. It’s with insurance.

Let’s reconsider our examples from the beginning. Unfortunately, expensive $337,000 and $256,000 lawsuits are not rare in this industry. But the companies in our earlier stories did not face those claims alone—and neither should you!

Click here to learn how CargoProtect’s specialized insurance programs sail with carriers and shippers in mind.