The Importance of Insurance in Air Cargo Transport

Although air cargo transport may seem to cover only movement of special or very specific cargo, the truth is that it includes all types of goods and materials, including perishable goods or live animals.

Transport may require a single journey from origin to destination or involve several flights or transfers at different airports and countries. All of this in relatively short and, in principle, very competitive, but usually costly, timescales.

It is easy for a seller/shipper or a buyer/consignee of air cargo to fall into a subjective interpretation of the conditions governing it. In particular, and in relation to the security of this sector, in view of the stringent security measures to which citizens and their luggage are subjected on air journeys both in airport facilities and on aircrafts, it is natural to infer that this means of transport is extremely safe in order to move our goods from one country to another.

In this context, it is reasonable to think that cargo insurance is not perceived as necessary or relevant as it would be in other types of transport, such as maritime transport, with longer crossings and cargoes being subject to different manipulations by operators of all kinds, or in land transport, where shipments are exposed to damage due to breakdowns, delays, or theft. However, this is a line of reasoning that must be contested mainly because of two important issues:

(i) air cargo is subject to damage, delay and loss, even if the airports of origin, transshipment and destination are located in countries with high security measures and fully standardized protocols;

(ii) the international regulation affecting the carriage of air cargo protects the figure of the carrier by establishing limitations of liability that are applicable to them, in many cases even when the figures of fraud or gross negligence of the carrier may occur.

Specifically, if we look at the Convention for the Unification of Certain Rules for International Carriage by Air (Montreal, 1999) and its subsequent amendments, it states that even when there may be intent or gross negligence on the part of the carrier in failing to comply with all types of security or safekeeping measures with respect to the goods or the ULD, the carrier always has the right to limit his liability to 22/SDR/kilo based on the weight of the damaged/missing cargo (updated in Spanish Official Gazette of 16/07/20). Therefore, if the limitation of the carrier’s liability is applied, the sums to be recovered by the affected shippers based on the wight limitation are usually low when, on the contrary, in most cases the value of the transported goods is high.

Although the Warsaw Convention is still in force in certain countries and at national level, we have the obsolete Air Navigation Act of 1960 regulating air cargo, and both regulations admit in certain cases the breaking of the carrier’s limitation of liability, we cannot forget that the Montreal Convention is of massive application, and specifically to all air transport between member states of the European Union. Moreover, as Spain is a party to the MC, if the non-EU country of origin or destination of the affected cargo has also ratified it, the transport will always be subject to it.

Therefore, in the absence of a prior express declaration of value with payment of a supplement to cover us to a greater extent in the event of damage/missing cargo, in our experience at AIYON, we consider it highly advisable to insure air cargo, which is not risk-free even at the most secure airports and at the hands of the most prestigious airlines.

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