Cargo and freight claims: what the surveyor looks for

Two routes to recovery

A cargo owner normally has a claim against its own cargo insurer and, separately, a potential claim against the carrier, freight forwarder or warehouse responsible for the goods. The insurer pays under the policy and then pursues the carrier by subrogation. Protecting that recovery right is a condition of most cargo policies, so the owner's actions in the first days matter to both claims.

Cargo policies in the London market are often based on the Institute Cargo Clauses, with clause A giving the broadest all-risks cover and clauses B and C covering named perils. Exclusions for insufficient packing, inherent vice and delay are common across wordings and are frequently raised.

Notice periods and time bars

Transport conventions impose short deadlines. Under the Hague and Hague-Visby rules for sea carriage, written notice should be given on delivery or within three days for damage that is not apparent, and suit is generally time barred after one year. The CMR convention for international road carriage and the Montreal Convention for air cargo have their own notice periods and limitation rules. Missing them can defeat the recovery against the carrier even if the insurer pays.

How a cargo survey is conducted

Once damage is noticed, the consignee should note it on the delivery receipt, avoid accepting goods as in good order, and contact the surveyor named on the insurance certificate or appointed by the insurer. A joint survey with the carrier's representative is ideal, because it reduces later arguments about where and when the damage occurred.

The surveyor records the condition of containers, seals, packaging and goods, takes samples where contamination or moisture is suspected, and establishes the quantity affected. They will also look at how the goods were stowed and whether temperature, humidity or shock recorders show an incident in transit.

• Bill of lading, air waybill or CMR consignment note
• Commercial invoice, packing list and insurance certificate
• Delivery receipt with written reservations
• Container seal numbers and photographs on opening
• Data logger readings for reefer or sensitive cargo
• Notice of claim sent to the carrier and any reply

Putting a value on damaged goods

Cargo is usually insured for its invoice value plus freight and a percentage uplift, commonly around ten per cent, to reflect expected profit and costs. Where goods are partly damaged, the loss may be settled by a percentage depreciation agreed after a salvage sale, by reconditioning costs, or by treating the goods as a total loss and selling them for salvage.

Disputes arise over the salvage value achievable, whether reconditioned goods are commercially acceptable, and whether undamaged items lose value because a set or batch is incomplete. Each approach needs market evidence rather than assertion.

Where goods are sold as salvage, the insurer will usually want a say in the method of sale. A properly advertised sale or competitive bids from salvage buyers produces a figure that is harder to challenge than a private arrangement with a single buyer.

Temperature-controlled and high-value consignments

Pharmaceuticals, food, electronics and fine art raise particular questions. For reefer cargo, the dispute often turns on whether the temperature deviation happened during carriage, at a terminal or before loading, and on whether the goods actually lost their commercial or regulatory fitness. Data logger records, reefer unit downloads and pre-shipment temperature certificates are the decisive evidence.

High-value goods attract theft and concealed loss arguments. Insurers will examine seal integrity, weight checks at each handover and the security arrangements agreed in the policy, which may require approved routes, guarded parking or tracking devices. Where these conditions were not followed, the cargo owner may face a refusal even though the theft itself is undisputed, so compliance records should be kept for every shipment.

Arguments insurers commonly raise

Typical defences include inadequate packing for the journey, inherent vice of the goods, pre-shipment damage, unexplained shortage without evidence of theft, and the delay exclusion for perishable cargo. Where general average is declared after a casualty at sea, the cargo owner must also provide security before release, an area where expert guidance is particularly helpful.

When the cargo owner needs its own expert

For routine small claims the insurer's surveyor and a good broker are often sufficient. Independent help becomes worthwhile when the loss is large, when cover is denied on packing or inherent vice grounds, when goods are specialised and their residual value is hard to judge, or when the carrier disputes liability and time bars approach.

A specialist for the owner can attend the survey, commission an independent report, prepare the claim file, notify carriers properly and coordinate with lawyers on recovery. They should be candid that carrier liability limits under the conventions may cap what can be recovered from that side.

Habits that protect future claims

Agree packing standards with suppliers, use data loggers for sensitive goods, train warehouse staff to inspect and photograph on arrival, and keep a simple checklist of notice deadlines for each mode of transport. These steps cost little and make every later claim stronger.

Cargo claims are won on prompt notice, a thorough joint survey and solid valuation evidence. Engage specialist support early when the loss is large or the insurer questions cover.