Ensuring Safe Seas for Bulk Wine Shipping

In the world of bulk wine shipping, grasping the intricacies of marine cargo insurance is crucial. This field, unlike more uniformly regulated insurance areas such as cars, lacks a standard policy format, leading to a diverse range of coverage options.

Expert insights from Alison Levit from Albatrans shed light on the evolving nature of shipping risks. While improved schedule reliability has been a positive development, new challenges like increased theft and potential disruptions underline the significance of comprehensive and well-structured insurance contracts.

The Wine and Spirits Shippers Association Inc. (WSSA) has tailored insurance offerings that cater specifically to the wine and spirits sector. Their policies cover critical aspects such as temperature fluctuations, warehouse conditions, Container Transport Ready (CTR) damage, and issues specific to flexitanks.

Insurances for Everything

 In addition to these protections, WSSA places a strong emphasis on educating those involved in the shipping process, highlighting the importance of a well-informed approach to risk management.

All-risk insurance, a popular choice in this field, aims to protect against physical loss or damage from external factors. However, it’s essential to be aware of its limitations. For example, it doesn’t typically cover internal errors, such as improper packing or overloading.

The financial impact of these risks is substantial. According to the WSSA the ecnonoimic loss rose up to 313 billion USD in 2022 of which about 132 billion USD was insured. The majority of damages occurred due to natural disasters, such as hurricanes or floods.  

Bulging containers are a common insurance issue during bulk wine shipping. (Photo: Rainer Kexel INCASE AG)
Bulging containers are a common insurance issue during bulk wine shipping. (Photo: Rainer Kexel INCASE AG)

Efficient Shipping

Flexitanks, a significant innovation since their introduction in the 1980s of the US-Army to transport fuel to the front lines , have revolutionized the transportation of bulk liquids. With an impressive capacity—around 24,000 liters, they also offer superior space efficiency compared to drums and Intermediate Bulk Containers (IBCs).

Despite these benefits, flexitanks face challenges such as leakage and potential damage to container walls due to bulging. Compliance with best practice codes, although not mandatory, is crucial in mitigating these risks.

Environmental concerns are also significant, with the recycling of flexitanks hampered by materials such as aluminum barriers, essential for contamination prevention but difficult to recycle.Iso tanks present a more environmentally friendly option, offering advantages like reduced plastic waste and multiple uses (up to 100 times). They also provide insulation against extreme temperatures, which is vital in wine transport. However, these benefits come with higher costs and limited availability.

According to the WSSA, flexibags sometimes burst or ullage wine, resulting in oxidation due to low quality production. IN comparison, a ISO tank is more stable. In the career of a insurance man, he reported, he only had one problem as the rope of the crayon tore and the full tank fell to the ground, still being intact, suggesting it might be the safest option from the insurance point of view.

Flexibags stand out for their affordability and availability but are generally single-use, contributing to the issue of plastic waste. Insurance costs should be calculated carefully, including the overall value of the shipment and a 10% contingency for unforeseen expenses. Specific regions, like Mexico, may require higher insurance rates due to increased risk factor, including corruption at ports and thefts.

Statistical data indicates that about 10% of shipments encounter problems, but does not always involve complete cargo damage. The majority of claims are small, but can be beneficial for the importing party.

The financial impact of any loss, even non-damage related, can be significant. Insuring against CTR damage is particularly important as these costs can be considerable and are typically borne by the shipper.

Costs and Benefits

Every insurance comes with a  cost. Looking at the numbers, shipping insurance is a no-brainer.

Usually the shipping insurance depends on value of the product, adding all related freight charges, shipping costs, delivery costs, customs broker fees + 10%. High risk regions usually have a light increase of about 0,4%.

Final Thoughts

The complexity and ever-changing nature of bulk wine shipping highlight the importance of comprehensive insurance. Working with knowledgeable brokers and creating customized policies can provide robust protection against a wide array of risks. Staying informed and adaptable is essential, as is choosing insurance coverage that specifically addresses the unique challenges of shipping beverages.

If you are interested in learning more on the WSSA, click here

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Disclaimer

This text was neither commissioned nor compensated. It reflects exclusively my own opinion. 

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