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FreightWaves explores the archives of American Shipper’s nearly 70-year-old collection of shipping and maritime publications to showcase interesting freight stories of long ago.
In this week’s edition from the November 1980 issue, FreightWaves looks at shocking anecdotes from an insurance underwriter in the maritime industry.
Bizarre claims
Hitchhiking corpses; crushed legs; missing, rifled, smashed, bent, stolen, contaminated, and burnt containers — they’re everyday facts of life for Through Transport Mutual Insurance Association Ltd. The Bermuda-based firm is one of the world’s largest specialist marine underwriters for the container industry, and those represent just some of the mishaps and misdeeds on which the firm paid $6.7 million worth of claims in 1979.
The increased loss payments, which were up from $2.9 million in 1978, were noted in the association’s annual report, released June 30.
More business, heavy weather
The report noted that the increase in losses was due primarily to what it termed an increased volume of business written and a high incidence of heavy-weather damage claims arising during the 1978 year but paid during the 1979 year.
The necessary but humdrum statistics on claims paid out are of most interest to the association, of course, but they sometimes pale beside more interesting facts —the manner in which the losses occurred.
There were, naturally, the traditional losses for which marine underwriters have paid over the centuries — ships going aground and sinking and cargoes (containers in this case) being lost overboard when lashings securing them parted.
The advent of containerization in the world’s ocean trade has meant a variety of odd, and often bizarre, claims just as surely as it has increased the ease and efficiency of cargo handling.
Consider the case of a vagrant who hitched his last ride in a container being transported by motor freight from Houston to Oakland. Workers at the destination reported smoke coming from the container which was loaded with cotton bales. Firefighters quickly put out the fire, but when the container was unpacked, the body of a man and a bedroll were found among the bales. Authorities speculated that the stowaway died from asphyxiation, and since he had obviously entered the container without the owner’s permission, no claim was paid on his death.
The association, at any rate, wasn’t likely to be as fortunate in another case, involving the personal injury claim of a stevedore in Portland. The laborer suffered a crushed leg and an injured back when a heavy wooden crate he was attempting to unload from a container fell on him. His suit, for $800,000, contended that the crate was improperly packed at the point of loading, Hamburg.
US injury claims mushroom
Such cases, the report noted, are indicative of a trend, especially in the U.S., that has caused the association increasing concern. Such claims are especially distasteful since the owners of the containers themselves — the “members” insured by the association — are generally sued because of the negligence of employees of other concerns over whom they have no control.
In California, for instance, successful personal injury suits have been lodged against the owners of trailers in cases in which accidents had been caused by the negligence of the tractor drivers. The courts ruled that trailer owners were liable for a contribution to the awards since their trailers were integral parts of the “units” that caused the mishaps. That interpretation has not found favor in other states in the U.S. — yet. A similar suit has been filed against a member of the association in Texas. The suit was filed on behalf of motorists injured when their vehicle struck a trailer parked along the side of a road. It alleges that the trailer was improperly lighted. The haulage company whose tractor was towing the unit had limited liability insurance and has since gone out of business.
More ‘normal’ losses
Still, such unusual cases are naturally the exception rather than the rule. The vast majority of claims arise from more “normal” losses. Contamination by toxic substances carried in containers is not particularly unusual, but it can result in monumental claims for personal injury. One such incident fortunately did not, but the potential was there.
A member’s driver, after delivering a container from Rotterdam to London, discovered traces of powder on the bed of the trailer after discharge. The powder, it developed, was from a drum of arsenic oxide, a highly toxic compound, which had burst during transit due to a weak seal. Two of the consignments from the trailer had already been delivered, and it took a major government-media-carrier operation involving closing of the terminal and warning of the public through radio and the print media to avert injuries.
Refrigerated cargo losses
Refrigerated cargo losses have given rise to numerous and often quite substantial claims, particularly in arid areas such as the Middle East. One of the major problems in Middle East ports, the association report says, is inefficient monitoring of the temperature of reefer units. Many refrigerated cargoes have little tolerance to variations in temperatures, and significant variations are often found in the containers.
The scope of the potential of such losses may be gauged by the fact that a single container may carry a shipment of meat valued at $80,000.
Lost, strayed, stolen
Naturally, thefts from containers continue to represent a major source of claims, and, more abnormally, “lost” or “misplaced” containers have also caused some headaches. In Saudi Arabia, for example, members of the association have reported the astounding total of 400 containers “lost” since 1976.
The association engaged an investigator to track down the missing containers. Within six weeks of the beginning of the search, 70 units had been located. One of the major problems in such cases, the report states, is that local shipping agents frequently do not adequately monitor the movement of their principals’ containers.
Theft has long been a fact of life for marine underwriters, but just as efforts to combat the crime have proceeded apace with modernization of cargo containment systems, so has the ingenuity of criminals in overcoming them. For instance, the use of “one-seal” devices has recently come into wide use. The metal barrels of the devices are stamped with the carrier’s logo and an identification number and cannot be removed from the container without severing the restraining pin, serving notice of tampering.
In one case, an ingenious thief short-circuited the system by successfully removing the seals on containers destined for Apapa, Nigeria. A shortage in the cargo in the container noted in Apapa led to an investigation.
Here are more articles from the archives of American Shipper.
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