With barriers to international trade slowly fading, businesses in Bangladesh are seizing the opportunity to reach new markets and expand their global footprint. But venturing into the world of international shipping isn't without its challenges. From the moment your goods leave the warehouse to their arrival at the destination, they face potential risks, including damage in transit, unexpected delays, theft, or even political unrest.
That's where shipping insurance comes in. Think of it as a safety net for your items, providing crucial financial protection against the unexpected. Whatever you’re shipping overseas, the right insurance policy can protect your business and ensure your peace of mind while you engage in international trade. Consequently, you can focus on what you do best: growing your business.
Understanding the global risks
Once you begin shipping goods from Bangladesh and across international borders, you’re exposing your business to several risks. So, it’s important that you are aware of these threats to help you prepare against them:
Transit risks
Even with the best planning, unforeseen events during transit can disrupt your supply chain. While your goods are moving, they can encounter accidents such as traffic collisions, train derailments, or shipwrecks, all of which can lead to cargo damage. Also, natural disasters like earthquakes, floods, and storms may cause significant disruption and damage to shipments. Additionally, your goods can get damaged due to improper loading, unloading, or storage during international shipping.
Political and economic risks
According to the 2022-2023 ICS Maritime Barometer Report, political instability is one of the major risks in international shipping, affecting everything from trade routes to port access. Conflicts, wars, and civil unrest can disrupt supply chains and lead to shipment delays or losses. At the same time, trade embargoes, with sudden changes in trade policies or sanctions, can halt shipments or increase costs. Furthermore, currency fluctuations and changes in exchange rates can affect the value of goods and impact profitability.
Customs and regulatory risks
Another challenge you may encounter is the complexity of international trade regulations. For instance, your goods may become delayed or held due to shipping documentation errors or non-compliance with import/export rules. Penalties can also be imposed because of non-compliance with regulations. In some cases, goods may even be seized by customs authorities.
Theft and piracy
Unfortunately, cargo theft and piracy remain a concern in international shipping. In fact, Statista data revealed that there were 115 reported pirate attacks against ships worldwide in 2022. These risks are particularly prevalent in certain high-risk areas and can result in the loss of goods, which can be costly to replace. At the same time, incidents of theft or piracy can negatively impact a company's reputation.
Types of shipping insurance coverage for international trade
The ideal insurance should cover your specific needs and the applicable shipping risks. Typically, you can choose from these types of shipping insurance policies:
- All-Risk Insurance: This is the most comprehensive option, providing coverage against a wide range of threats, including damage, loss, theft, and general average. Essentially, it protects your shipment from virtually any incident, except for those specifically excluded in the policy (like war or inherent vice of the goods). But because of its extensive protection, all-risk insurance is among the most popular choices for businesses shipping high-value or fragile goods.
- Named Perils Insurance: As its name suggests, this type of policy covers only the specific risks explicitly listed in the policy document. This could include risks like fire, stranding, collision, or sinking. While offering a more limited scope of coverage compared to all-risk insurance, named perils insurance is often a more cost-effective option for businesses shipping less valuable or durable goods.
- Cargo Insurance: This type of insurance focuses specifically on protecting the cargo itself during transit. It covers various modes of transportation, including sea, air, and land, and can be customized to suit the specific needs of the shipment. Note that cargo insurance can be obtained as either all-risk or named perils coverage. Plus, it’s ideal for businesses involved in regular international trade.
Key factors to consider when choosing shipping insurance
There are several factors you must consider to get the ideal insurance coverage for your business requirements. Here's a breakdown to guide your decision-making:
Type of goods
While choosing the type and extent of your insurance coverage, think about the nature of the goods you’re about to ship. Here are some examples:
- Perishable Goods: Items like food and pharmaceuticals require specialized shipping insurance that covers spoilage or damage due to temperature fluctuations.
- Fragile Goods: Delicate items like electronics, glassware, or artwork need additional financial protection against breakage.
- High-Value Goods: Expensive items like jewelry, luxury goods, or important documents warrant higher coverage limits and potentially specialized insurance.
Shipment value
To ensure that you have adequate coverage for your shipment, you must have an accurate valuation of your goods. So, clearly declare the true value of your goods to the insurer. Also, remember to factor in not just the cost of goods but also shipping expenses, potential duties, and taxes when determining the total shipment value for insurance purposes.
Destination and transit route
The risks associated with international shipping can depend on the destination country and the chosen transit route. To assess potential risks like trade embargoes or political unrest, research the political and economic conditions of the destination country. Similarly, consider the route your shipment will take and any hazards like piracy, natural disasters, or infrastructure limitations that could impact the safe arrival of your goods.
Carrier liability
Another factor to consider is the limitations of the carrier's liability in the event of loss or damage. Most carriers have limited liability, meaning they are only responsible for a certain amount per package or unit of weight. On the other hand, you may find certain shipping insurance plans that provide additional coverage beyond the carrier's limitations.
Cost of insurance
While cost is always a factor, it shouldn't be the sole deciding factor when choosing shipping insurance. Get quotations from various insurance providers to compare premiums and coverage options. The goal is to choose a policy that offers the best value for your needs, balancing affordability with adequate protection for your goods and peace of mind throughout the shipping process.
Tips for a smooth exporting experience
Let's be real, international shipping can be a headache. But with careful planning, you can avoid a lot of potential problems. Here are some practical tips to ensure a smoother exporting experience:
- Proper Packaging: Adequate packaging is crucial to protect your goods from the physical dangers of international shipping. At the same time, it minimizes the risk of rejection at customs. So, use sturdy boxes, sufficient cushioning material, and appropriate labeling.
- Accurate Documentation: Ensure all necessary export documents, including commercial invoices, packing lists, and certificates of origin, are filled out correctly and submitted on time.
- Stay Informed: International trade regulations and shipping requirements are subject to change. As such, stay updated on the latest rules and compliance procedures to avoid potential disruptions to your shipments. You can also subscribe to industry newsletters, follow relevant government websites, and consult with expert services to keep abreast of any changes that may affect your exports.
- Partner with a Reliable Logistics Provider: Consider partnering with a reliable logistics provider like DHL Express, who can offer expertise and support in international shipping and insurance requirements. A trusted logistics partner can help streamline your shipping process, provide valuable advice on documentation and compliance, and teach you how to get tailored insurance solutions to protect your cargo throughout its journey.
Protect your shipments, secure your business success
Nobody wants to picture their precious cargo taking a hit due to natural disasters or ending up as a surprise gift for opportunistic pirates. While international shipping can be a wild ride, you can weather any storm with the right insurance. Besides, protecting your shipments isn't just about avoiding a financial hit; it's about peace of mind.
So, don't leave your shipments to chance. Start exploring your insurance options and find the perfect fit for your needs. And hey, why not make the delivery process even easier? Open a DHL Express business account and let the experts help you engage in international shipping with confidence and ease.
