Cargo Damaged During Shipment? Here’s What to Do Next

Damage to goods can happen at any point during their journey, and can result in a significant loss for the business. Whether it’s exposure to water, rough handling, theft or environmental causes, knowing what’s causing your loss and what you can do about it is crucial for your business. Having clear accountability and quick response can greatly increase the probability of a successful claim.

To know the exact procedure of how to claim for the damages of the cargo and how to get the maximum compensation, read the guide below.

How Often Does Cargo Get Damaged?

Few situations are more frustrating than opening a container at its destination and discovering that the cargo inside has been damaged. Whether the damage is caused by water, impact, or poor handling, the next steps you take can determine whether you recover your losses.

If you have an understanding of the process, you can have the best chance of getting cargo damage claims settled.

Damages by mode of transport:

• Air freight: 3-5% of shipments (mostly water damage, shifting containers, air damage)
• Sea freight: 4-6% (excellent handling, climate controlled)
• Road: 2% (impacts, weather)
• Rail: 5% (impacts, weather)

For a ₹100 lakh shipment, 2% damage = ₹2 lakhs loss. If you don’t have the proper insurance and documentation, it’s a 100% loss.

Who’s at fault for Damaged Cargo?

This is dependent on your INCOTERMS:

Incoterm	Responsibility
FOB (Free on Board)	Seller to be responsible for goods until they are off the ship. Buyer takes the risk thereafter.
CIF: Cost, Insurance & Freight	Transport and insurance is at the seller’s cost. The claims are generally the seller’s responsibility.
Delivered Duty Paid (DDP)	Seller to cover all travel to Buyer’s location.
EXW (Ex Works)	From the time you pick up, Buyer is responsible for any risk.

Real scenario: Shipment FOB Mumbai. Cargo damaged during ocean transit. Buyer assumes the risk = claim is made by the buyer. However, there is a possibility YOU may still be responsible if you packed it improperly.

The responsibility for claims is based on the chosen Incoterms. Be sure to communicate this with buyers prior to delivery.

What is the most Common Cause of Cargo Damage?

Water damage (40%):

• Container leakage (roof/walls)
• Water falling into an open receptacle
• Condensation inside (due to poor ventilation)
• Water damage to the port area such as when sea water enters

Impact/crushing damage (30%):

• Not stacking or tying items properly
• Rough handling by the port workers was the cause of the damage
• Shifting of cargo during voyage

Environmental damage (15%):

• Different temperatures (if applicable)
• Moisture damage of fabrics/electronic materials
• Saltwater corrosion

Theft/pilferage (10%):

• Ports – container break-ins
• Missing cargo upon arrival

Quality issues (5%):

• Product deterioration during transport
• Shelf-life expiration

Step-by-Step: What to Do If Your Cargo Arrives Damaged

Step 1: Check for damage immediately after arrival

Your container will arrive and you should check it as soon as it arrives:

• Inspect container for damage – dents, leaks, visible damage, etc.
• Open and inspect products – photograph any damage
• Take photographs, videos and create a detailed description
• Record the date and time
• Have an independent surveyor (if transporting a large value cargo)

Time: Must be done within 24-48 hours after arrival. If inspection is delayed, you may lose the case.

Step 2: Inform all parties immediately

Inform:

• Your freight forwarder – (FAK Cargo if applicable)
• The shipping line/carrier
• Your supplier of cargo insurance
• Your buyer (if applicable)

Why: Carriers have very short claim notification deadlines (typically 3 days). No Claim = Not in the window.

What to communicate:

• Container information
• The date that the damage was found
• Photographs and description of damage
• Preliminary damage estimate

Step 3: Report Damage to Carrier

Formal notice must be given within 3 days to the shipping line. Include:

• Bill of Lading (BL) number
• Container number
• Details about the damage (type, extent and estimated value)
• Photos (absolutely critical)
• Inspection notes (port records)

Note: If the goods are accepted as “Accepted” or “Undamaged” you will not have the right to claim.

Step 4: Gather all the necessary documents

To make the claim, gather:

Essential:

• Original Bill of Lading (or copy)
• Commercial invoice (with the value of the goods)
• A list of items that were in the container (packing list)
• Insurance certificate
• Multiple angles of damage – close-up photos
• Report of the port/surveyor inspection
• Provide a quote for repairs or invoice for replacement (if it was replaced)

Additional (as per cargo):

• Quality certificates (if product failed because the temperature/humidity)\
• Condition report to Carrier
• Email trail of notifications

Step 5: Determine the amount of the claim

Claim covers:

• The value of the cargo, either the invoice price or the market replacement cost of the cargo
• Freight charges (in some circumstances)
• In certain instances (insurance premium)
• Repair costs (goods can be repaired instead of replaced)

Does NOT usually pay for:

• Lag time losses in sales
• Rates for storage/demurrage (unless caused by a particular delay by carrier)
• The price of goods resold at a loss (unless agreed prior to contract)

Let’s assume that the value of any article sent for shipment is ₹50 Lakhs and it is damaged. Repairs cost ₹5 lakhs. Insurance = ₹5 lakhs (Repair cost not full value of the cargo).

Step 6: Fill out Formal Claim

Send all documents to the shipping line. Include:

• A formal claim letter (specific amount)
• All supporting documents
• Detailed damage description
• Repair estimate/replacement invoice

Typical response time: Carriers will usually respond within 30-60 days.

How Long Does a Cargo Damage Claim Take?

Complexity	Timeline
Documented, simple and clear damage	30-45 days
Debates over the cause or blame	60-90 days
The insurance company had to carry out an assessment	60-120 days
Legal action needed	6-12 months+

Tip: If you have all the documents needed, most carriers will settle a claim in 45 days or less.

How to Prevent Cargo Damage in the First Place

• Insurance (0.5-1% for all-risks)
• Carrier selection (reliable and proven carriers)
• Route planning (using temperature-controlled containers for temperature-sensitive goods)
• Moisture protection (using silica packets and moisture barriers for goods that require moisture protection)

The Value of Cargo Insurance

• A shipment worth of ₹50 Lakhs and damage of ₹5 Lakhs.
• With insurance: You get to keep ₹5Lakhs.
• With insurance (₹25,000 premium): You’re compensated ₹5 lakhs, net loss = ₹25,000

Insurance is a cost of 0.5-1% of cargo value, but covers for 100% loss. It’s inevitable for shipments of more than ₹10 lakhs.

Key Takeaway

Cargo damaged in shipping happens. Being prepared is all that matters: Don’t forget to keep a record of all this, notify right away, gather evidence, file by the time limit, and provide a detailed record of all this in your claim.

Looking for freight forwarding services your next order by cargo but worried about damage & claims?

Don’t panic. From damage surveys to claim documentation, to communicating with carriers to ensure proper compensation by the law, FAK Worldwide handles it all.

Connect today and let the expert handle it all.