Covid-hit Lufthansa Cargo cancels all transit freight via Frankfurt hub

By Alex Lennane, (excerpted from loadstar.com) 26/01/2022

Lufthansa Cargo is the latest carrier to suffer operationally from an outbreak of Covid and has been forced to cancel all transit traffic through Frankfurt.

It has advised customers to cancel all transit bookings, saying in a note to customers this morning: “We unfortunately see no other option at the moment than to take some measures at the Frankfurt hub. As of now …  there will be a transit embargo for Frankfurt.”

It added that customers should cancel shipments which have not been delivered, while freight which has already been accepted will be dispatched “as soon as possible”.

LC added: “We firmly believe these measures will contribute to stabilisation and that we can gradually return to normal operations.”

One European forwarder told The Loadstar: “This is pretty staggering and will be painful.

“Either the cargo is trapped and not moving if in the network, or you have to book elsewhere with alternative carriers, which will then increase demand and undoubtedly mean rate increases on air cargo if Lufty is out of the game for any time.

Lufthansa Bans Freight Through Frankfurt Hub Due to Omicron

Carrier says transit embargo hits North America, Europe routes Frankfurt is a major transport hub for Covid-19 vaccines

By William Wilkes (excerpted from Bloomberg.com) January 26, 2022

11:04 AM EST Updated on January 26, 2022, 11:57 AM EST

Deutsche Lufthansa AG banned cargo from moving through its Frankfurt hub due to surging Covid-19 infections and related staff shortages in the German city.

The move will impact goods arriving from other parts of Germany, the rest of Europe and North America, according to an emailed statement Wednesday. Direct deliveries to Frankfurt — a major transport hub for coronavirus vaccines — are still possible, Lufthansa said.

Did you know:

• Many carriers will not take responsibility for loss or damage if a warehouse signs off clean on a POD, so it is important, before signing off, to note the condition of the cargo. Claims are usually time-barred, unless filed within a few days (standards vary by carrier). So alert your carrier to possible damage immediately. The best way to do this is by signing the delivery receipt notating damage! And be specific, for example, 8 glasses broken, 10 boxes crushed (Make ensure that you have the correct boxes or pallet count).

Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.

According to internationally accepted trade terms, referred to as Incoterms, suppliers selling CIF are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to control the selection, and thereby the quality, of insurance coverage.

Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.

Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions

Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).

Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.

Every Shipper Needs Cargo Insurance

Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:

Ocean Carriers……………………………$500 per shipping unit (a shipping unit may be defined as one ocean container).

Air Carriers…………………………………$9.07 per pound

Truckers……………………………………$.50 per pound

The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.

Are you familiar with GENERAL AVERAGE?

Ever Given, year built 2015, 199,692 dwt Date of Blockage: 3/23/21 Part loaded with 18,000 teu (capacity 20,000 teu.) Egypt alone believes it is owed at least $1 billion in compensation for the six-day shutdown and the cost of the refloat effort.

Yantian Express, year built 2002, 100,003 dwt Date of loss: 1/3/19 Part loaded with 4,000 teu (capacity 7,551 teu.) 198 total loss, 462 damaged required survey LOF salvage – security 32.5% GA – security estimate 28%

APL Vancouver, year built 2013, 115,060 dwt Date of loss: 1/31/19 Part loaded with (capacity  9,200 teu.) 947 containers affected LOF salvage – security 15-20% GA – security

ER KOBE, year built 2001, 68,196 dwt Date of loss: 2/24/19 GA declaration on March 12, 2019 NO SEPARATE SALVAGE CLAIM GA – security estimate 10%

There are a number of notable fire cases, with many resulting in General Average!

• Ever Given – April 2021
• Sincerity Ace – January 2019
• Maersk Honam – March 2018
• Maersk Kensington – March 2018
• Hyundai Auto Banner – May 2018
• MOL Prestige – February 2018
• Caribbean Fantasy – June 2018

General Average

• Basic principle – that which has been sacrificed for the benefit of all shall be made good by the contribution of all.
• Applies to maritime claims only.
• Is declared by the captain when there is imminent danger to the vessel, voyage or crew.
• You are contractually obligated, via the Bill of Lading, for unknown and undetermined costs. 

How does it work?

• Value of the voyage is determined (vessel value plus value of all cargo on the vessel.)
• Participation is determined by the percentage that the value of your cargo bears to the overall value of the voyage.
• The loss amount is determined, and participation percentage is applied to the loss amount to determine security deposit.
• Shipper or their cargo insurer pay twice – first for the initial contribution, then for a bond covering future adjustments to that estimate.

Hidden Costs

• LCL Freight – Freight is not released until all payments received.

Difficulties of preventing and extinguishing fires on the open sea, include:

• Ships are larger with more varied cargo.
• Crew are ill equipped to deal with these fires.
• Fire-fighting tugs are often days or weeks away.
• Prevention is difficult, with rising problems with mis-declared cargo.
• IMDG Code is evolving to impose stricter rules on dangerous goods (DG.)

Problems Facing the Industry

• Stricter rules on DG will lead to higher costs and more incentive on the part of shippers to avoid proper declarations
• Ship owners and shipbuilders need to improve fire-fighting capabilities with CO² systems being shown to be inadequate – cost benefit analysis
• National Cargo Bureau in NY found in 2017 that of 1,721 stowage plans inspected, 20% showed errors with DG

General Average will never go away

• Awareness across all business units that losses & delays are part of any supply chain. Mission-critical shipments need more risk analysis to determine transport mode.
• Understanding of what to do when General Average occurs. This is best led by your cargo insurance provider meeting with your ‘team,’ not just the risk manager or CFO.
• Have a contingency plan or at least an understanding of how the event will unfold.