Tony Parise is the chief operating officer of the Sorting Table, a Napa, California-based importer of fine wines. A few years ago, the Sorting Table received a container of fine wine imported from Italy that had sustained temperature damages. At the time, the standard insurance policy had the wine tested in a lab to see if it indeed was temperature-damaged. Tests concluded that the wines were not. However, not wanting to risk the reputation of his company, Parise and others decided to destroy the entire cargo container of wine. The Sorting Table took a loss of nearly $200,000 on the fine-imported Italian wine.
Keeping shipped goods such as seafood, meat, produce, and pharmaceutical products properly refrigerated is not a new operation for cargo liners.
For years, refrigerated containers have been supplied with basic temperature recorders and sensors that provide temperature data at the end of a trip. However, as technology in the world of logistics continues to grow, more reliable and accurate equipment has emerged. This innovative technology has enabled insurance claims on damaged cargo to be more unbiased and clear.
Consider the efforts of Maersk Line, a carrier who is well-known for their work in shipping refrigerated items. They have equipped 270,000 refrigerated containers with sensors that communicate through cell phone networks and satellites to a central computer. If the temperature of a container gets too hot or cold, the central computer will adjust the temperature of the container, as well as relay any maintenance needs or repairs that must be done. In addition to the effectiveness of maintaining desired temperatures, shippers investing in the sensors can better monitor temperature changes and back up the insurance claims that they are making.
This relatively new technology will most likely start in the field of produce which is lower-risk than more expensive items that must be gauged for temperature, such as medications and fine wines.
As the cargo being shipped becomes more expensive, it becomes more of a priority to make sure that imports are insured. The Munich Reinsurance Company, one of the pioneers of utilizing temperature sensors in cargo containers, charges approximately 25 to 40 percent more for this insurance policy than for standard cargo insurance. For this additional cost, the sensor provides an hour-by-hour record of the cargo temperature throughout the entirety of the trip.
This rate increase is well worth it, considering the monetary loss that could occur if items are indeed temperature-damaged. In addition to financial losses, a company’s reputation is often at stake if they sell damaged products. New temperature sensors and insurance policies also hold ocean carriers to more scrutiny and a higher standard of operations. In other words, they keep them honest about the services they are providing to their customers. Whereas there used to be a grayer area in proving that desired temperatures were maintained, the latest technology from Munich Reinsurance will be definitive in supporting insurance claims with concrete evidence.