Exceptional reasons for Cargo freight forwarders to opt for cargo insurance cover?

Cargo freight forwarders play a crucial role in the shipping business. They deal with the transportation and logistics aspects of the shipping process facilitating the movement of goods from one place to another. Cargo forwarders are the intermediaries between the shippers and the carriers. 

In a shipping business, cargo freight forwarders are responsible for various forwarding freight services. This includes packaging, warehousing of goods, customs clearance, carrier selection, logistics coordination, tracking and monitoring of cargo, risk management, and insurance.

Responsibilities of global forwarders

1. Cargo forwarders coordinate with carriers for the transportation of goods from one location to another using various modes of transport. This includes air, waterways, road, and rail modes of transportation. Types of freight forwarders also vary depending on the mode selected for transporting the goods. For example, sea freight forwarders specialise in the shipment of goods via ocean.
2. Cargo freight forwarders ensure compliance in case of shipping documents and customs clearance.
3. Negotiates the freight rates and helps in carrier selection for shippers
4. They provide packaging and storage solutions to ensure the safety of goods in transit
5. Track and monitor the movement of cargo along with giving a real-time update to shippers.
6. Value-added services include cargo insurance, freight consolidation, and more. 

Exceptional reasons to opt for cargo insurance cover

The following are some of the exceptional reasons for freight forwarders to avail of cargo insurance:

• Protection against potential risks

Cargo transportation involves various risks like natural disasters, robbery, theft, accidental damage, or unforeseen events during transit. Cargo insurance can help mitigate these risks, providing financial protection against potential losses. Forwarders often handle valuable goods on behalf of shippers. Cargo insurance ensures protection against financial losses in case they are held responsible for the losses stemming from these goods-in-transit risks. 

• Legal compliance and contractual obligations

Trade can be domestic or international. And, the legal requirements in shipping may vary from region to region. This insurance can be a legal requirement for freight forwarders in some regions. Some contracts or trade agreements may require cargo insurance as a condition for shipment. Adhering to legal and contractual obligations is crucial to stay compliant in the shipping business. 

• Business continuity

Damage to cargo or loss stemming from unforeseen events during transit could disrupt the operations of the freight forwarders. This can also hurt the financial health of the cargo forwarder. Insurance helps maintain business continuity by covering losses and ensuring the ability to continue operations.

• Customer trust to Cargo freight forwarders

Offering cargo insurance demonstrates cargo forwarders’ commitment to protecting clients’ goods. It instils confidence in customers, fostering trust and reliability in the services provided by the freight forwarder.

• Competitive edge

Providing insurance coverage as part of the services can give a competitive edge to cargo freight forwarders. It can set them apart from competitors who might not offer similar value-added services.

• Risk management for Cargo freight forwarders

In international trade, cargo might be exposed to diverse risks across borders, including different climates, handling practices, and regulations. Further, cargo insurance offers protection against these diverse risks. It can be a great risk management tool for cargo freight forwarder to shield themselves and their clients against the diverse risks. 

• Peace of mind to Cargo freight forwarders

Having robust insurance coverage provides peace of mind to freight forwarders, knowing that they have a financial safety net in place to handle unforeseen circumstances. Not having one could significantly impact their business and financial stability.

However, cargo insurance coverage can vary widely based on the insurance provider, policy type, and specific details outlined in the contract. Cargo freight forwarders need to carefully review the terms and conditions of freight cargo insurance policies. 

Conclusion

Cargo freight forwarders allow shippers to focus on their core business while goods are transported securely and efficiently to their destination. Moreover, this insurance is an essential risk management tool for freight forwarders, ensuring protection against potential financial losses arising from the transportation of goods and helping maintain a reliable and secure supply chain.