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Temperature control in cargo: mitigating risks and ensuring business success

08.07.23

In the modern competitive landscape, the logistics chain faces the challenge of meeting diverse customer requirements for efficient transportation of goods. Regardless of their specialization in handling general cargo, car haulage, or high theft-risk shipments, involved parties must be alert about adopting potential risks associated with each cargo type.

Like any type of cargo, transporting temperature-sensitive goods from point A to point B involves various logistics stages, some more or less complex. Once the cargo is loaded, several parties bear responsibility for its safe transportation, starting with:

  • The freight forwarder, who, according to the agreement, might be responsible for the cargo as a carrier.
  • The actual carrier, whose liability is regulated by the applicable international convention or transport law.
  • Or the warehouse operator, if the cargo is stored in a warehouse within the logistics chain, accepting contractual liability for the cargo according to specific regulations. For example, the General Conditions of the Nordic Association of Freight Forwarders (NSAB 2015) or in accordance with local law, where it might be liable for the full value of the cargo.

At any stage of this chain, special attention must be given to temperature-sensitive cargo compared to others. Numerous commodities require the maintenance of specific temperature regimes to preserve their quality, including food, such as meat, ice cream, vegetables, seafood, berries, pharmaceuticals, live plants, flowers, ADR and many others.

Drawing upon an analysis of past incidents, we would like to shed light on the critical concerns surrounding temperature-controlled cargoes, often referred to as “temperature out of controlled cargoes”. Unlike other types of cargo, where losses may be partial, any damage to temperature-sensitive goods can be catastrophic, resulting in the loss of the entire cargo.

Based on our experience, we have identified the most common factors affecting the occurrence of loss:

Human error: Mistakes made during the handling, transportation, or storage of refrigerated cargo

Inadequate monitoring: If the temperature and humidity levels inside the refrigerated container are not adequately monitored, potential issues may go unnoticed until it’s too late to salvage the cargo.

Equipment failure: Refrigeration units can break down or malfunction during transportation (faulty measurement readings, loss of antifreeze, other technical failures), leading to a loss of temperature control and potential cargo spoilage.

Power supply issues: Refrigerated containers require a continuous power supply to keep the temperature stable.

Weather conditions: Extreme weather conditions, such as high temperatures or severe cold, can impact the refrigeration system’s efficiency and the cargo’s overall quality

Insufficient insulation: Inadequate installation in the refrigerated container can cause temperature leakage and may not provide the required level of cooling or heating for the cargo

Improper loading: Incorrect loading of the cargo can obstruct the airflow within the container, leading to uneven temperature distribution and affecting the quality of the goods or mixing of pallets, wherein chilled goods are inadvertently transported alongside frozen products.

Improper packing: Packing is crucial to maintaining the integrity and quality of temperature-sensitive goods during transportation.

Why do we want to draw attention to this? The failure to recognize or deliberately ignore these risk factors can lead to significant losses for both: the insurer and the assured. Any incident related to this should be considered a red flag, as uncontrolled losses will result in:

  • Significant losses for the Insurer and the Assured
  • High insurance premium volumes renewing the policy with the current insurer.
  • Difficulties in obtaining insurance policy within the market due to the critical consideration of past loss statistics by the potential insurers.
  • The possibility that the current insurer will refuse to renew the policy.
  • The insurance premium volume becoming so high that it starts to impact competitiveness and business results.

To mitigate the occurrence of such situations, we strongly advise our existing and potential clients carefully consider these factors and be aware of these risks. Perform active measures to reduce the risks, and take measures to mitigate these risks, such as developing and implementing internal guidelines and providing initial and regular training to employees.

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