PACKAGING EXCLUSION
1982 2009
4.3 Loss damage or expense
caused by insufficiency or
unsuitability of packing or
preparation of the subject-matter
insured (for the purpose of this
Clause 4.3 "packing" shall be
deemed to include stowage in a
container or liftvan but only when
such stowage is carried out prior to
attachment of this insurance or by
the Assured or their servants)
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4.3 loss damage or expense
caused by insufficiency or
unsuitability of packing or
preparation of the subject-matter
insured to withstand the ordinary
incidents of the insured transit
where such packing or preparation
is carried out by the Assured or
their employees or prior to the
attachment of this insurance (for
the purpose of these Clauses
"packing" shall be deemed to
include stowage in a container and
"employees" shall not include
independent contractors)
DIFFERENCES:
The obscure term “lift-van” no longer appears and the rather archaic term ‘servants’ is replaced by the word
‘employees’, with additional clarification that independent contractors are not to be considered as ‘employees’.
This important exclusion will apply when:
- The packing or preparation is carried out by the assured or their employees or
- The packing or preparation is carried out prior to attachment of the risk.
This brings the treatment of packing into line with the narrower exclusion that had applied to stowage in
containers. This is more logical and more favourable to the assured.
The new clause sets out the standard by which any insufficiency or unsuitability is to be judged – the packing or
preparation must be sufficient “to withstand the ordinary incidents of the insured transit.”

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INTERPRETATION?
28% Cargo Claim Due
To PHYSICAL DAMAGE

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 MAIN FACTOR OF CARGO DAMAGE
(SEA TRANSIT)

When the container is on board a ship

and the ship is sailing, there are 6 ways
in which the ship can move as shown
below.. When the ship moves, so does
the container and the cargo inside the
container

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 IMPROPER PACKING EXCLUSION
• This exclusion includes stuffing of goods in containers or liftvans.
• BUT not excludes loss caused by poor stowage when the same is carried out by a
container operator, other than the insured, after the risk has commenced.
• TRIGGERS where the insured has control or should have control of the stowage, such
as prior to transit or when carried out by the insured or his servants.
• Unless the policy specifically states that it covers the packaging, no claim is payable for
replacement of damaged packing material, unless the insured goods are also damaged
by an insured peril. In which event, it is customary for the percentage of depreciation on
which the claim is based, to apply to the whole consignment without special regard to the
packing.
• Includes improper preparation of the goods. For example, machinery may need to be
specially treated to prevent oxidation/ corrosion during the long ocean voyage

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“SUITABLE” OR “SUFFICIENT” PACKING

• A more practical approach would be to consider packaging as adequate if previous

sendings packed in a like manner have arrived regularly without loss, for a considerable
period of time.

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 Important factors to consider when packing
the cargo
• Plan the stowage of the cargo in the container
• Distribute the weight equally inside the container taking care not to exceed permissible weight
concentrations per square foot of deck

• Avoid concentrating heavy weights at one side or one end

• Stow heaviest items on the bottom for stability
• Box, crate or place on cradle the heavy items
• Ensure that incompatible cargo is not mixed in the container (like mixing clothing with
• Ensure that cargo that is susceptible to leakage or spillage is not stowed on the top of other cargo
• Observe hazardous packing guidelines

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BRAINSTORMING QUESTION?

• IF THE GOODS ARE FIRST MOVED WITHIN MILL /LOGISTICS DEPARTMENT OF A

FACILITY FOR PACKING OR PREPARATION DONE BY A THIRD PARTY PACKING
“CONSULTANT” AND THE PACKING AND PREPARATION WAS NOT UP TO
REQUIREMENTS”
COMMENT ON EXCLUSION.

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 ANSWER
EXCLUSION:
• This would still be excluded as the goods were moved for packing and preparation
– not for immediate loading.
• Institute cargo clauses attach when the goods are first moved “for the purpose of
immediate loading into or onto the carrying vehicle or other conveyance for the
commencement of transit

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 ONUS TO PROOF

• It is pertinent to note that if the insurance company denies liability on the grounds of
inadequate or unsuitable packing, the onus of proving the same lies on them. In principle
the underwriter has reason to suppose that the goods will be soundly packed.

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CASE STUDY:

• Unsuitability of packing or preparation can take many forms but a recent example
involved the use of damp timber by the company responsible for palletising the goods,
after the inland transit, ready to be placed in containers. As a result severe condensation
occurred during the voyage which penetrated the bagged titanium dioxide. If the
palletising had been carried out by the assured there would have been no claim, but
since the palletising was done by a third party during the insured transit the assured
could recover.

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STANDARD & CUSTOMARY
• In simple terms it should be said that packing should be such that it should withstand the
ordinary rigors of intended transit.
• For eg. Same bottles of drugs or chemicals can be packed in cartons when being
transported during inland transit but it should be palletized when being exported.
• Insurers often describe packing as standard and customary.
• Standard packaging in ships mainly can be divided into 2 parts
Containerized
Break bulk

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 CONTAINERIZATION
• It is locked, sealed and transported as a compact unit.

Disadvantages

• With repeated use many container develop cracks or holes which negates the advantage of protection against external risks

• Inadequate ventilation can cause condensation or container sweat damages to the cargo

• If internal packing and stowage is poor, then due to free movement of goods cargo will get damaged.

• The biggest challenge that damages remains unseen unless it is opened at the destination, leading to aggravation of loss.

Type of containers

• General purpose box containers

• High cube general purpose box containers

• Open top containers

• Flat rack containers

• Refrigerated containers (refer containers)

• Bulk containers

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BREAK BULK
• Break bulk cargo is non containerized
• usually transported as individual pieces due to
cargo often being oversized and overweight.
• Cargoes include goods such as construction
equipment, oil and gas equipment, windmills,
yachts and steel etc.

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COMMODITIES AND ITS PACKAGING
• Bagged cargo
the commodity itself has to be robust to withstand outside pressure and compression, for
the bags will only hold the contents in one place and will not provide protection against
external damage. Such commodities might typically be fertilizers, grain (rice, maize,
wheat, etc.), Seeds, dried fruit, sugar, coconut, coffee, fresh vegetables, frozen offal
(meat from carcasses), flour, copra, small items such as shells, raisins, etc., Mail, salt,
mineral sands and ores, meal (fish, seed, copra, etc.), Dried blood, dried milk etc..

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• Fibreboard boxes and cartons
fibreboard boxes and cartons are very widely used for the sake of economy and efficiency.
Although comparatively cheap, they are able to withstand normal transport hazards and
protect the contents against loss or damage. They may be particularly suitable in the case
of goods carried in containers from the point of origin to the destination provided the
goods are not fragile. But if the containers have to be unloaded at the port of discharge for
further transport to their final destination, they may have to be placed on pallets and
securely strapped in order to protect them from pilferage and damage. Depending upon
the nature of the commodities, cartons of the right type of suitable strength and sizes
should be used.

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• Wooden cases
these have stood the test of time and their main advantage is that they have the wall
strength to support superimposed loads. They are more expensive than the carton-type
packing due to the cost of wood. Wooden cases are particularly suitable when the goods
are carried by conventional methods and, when they are sensitive to heat, dampness,
etc. The goods may require protection by way of packing with layers of insulating
material, tar paper, sealed plastic covering etc. There are different types of wooden
cases, including those made of plywood, which are being increasingly used by exporters.

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Bales

For certain trades, the use of hessian-wrapped bales is suitable, particularly when the product
permits pressure baling or compression by banding. It is, however, vulnerable to pilferage,
damage by handling using looks, etc..

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• Drums, barrels, casks
these are generally used for liquids such as latex, chemicals, whisky, detergents, oil,
molasses, casings, paints, powders, granules and other solids such as chemicals,
cement, some ores and scrap metal.

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• SHRINK WRAPPING
Dry chemicals, granular and powdered substances in bags cannot be easily strapped on
to a pallet. When these items have to be unitised, bags are stowed on the pallet and
interlocked; a polythene sheet of suitable gauge is then draped over the bags. This unit
is then passed through a tunnel oven where polythene is heat-sealed tight, binding the
bags to the pallet to form a good unit load

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• Lift vans
when household goods such as tables, chairs, cupboards, glassware, brassware, etc.,
Have to be moved, especially from one country to another, they have to be packed in "lift
vans" which are unit loads specially built for the purpose. They are generally made of
wood, lined with waterproof material on all sides and additional metallic proofing on the
roof to prevent damage by rain and sun. These units are made to be handled by forklift
trucks and packed in ISO 20 foot containers.

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PACKING EXAMPLES

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IDEAL PACKAGING
Bundled aluminium containers for packing in a container,
Airbag dunnage to prevent cargo movement inside a container

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 Packing
Disasters

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Reefer cargo packing and preparation
Reefer cargo damage could occur due to:

• Improper stowage of the reefer cargo in the container

preventing proper air circulation
• Improper dunnaging of the cargo which allows the cargo to
move inside the container causing crushing
• Poor quality of the packaging material used
• Cargo should not be stuffed beyond the end of the t-floor
• Cargo should not be stuffed above the red load line
• Cargo must be stable on the floor and tightly wedged so it
doesn’t shift during passage
• Unit must always be set at the proper carrying ventilation
setting is of utmost importance and must be set at the correct
level
• As air will follow the path of least resistance, there should not
be any restrictions on air flow and any gaps between the pallets
and the doors must be closed using cardboard or even wood.

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 Packaging Disaster:
PERISHABLE PRODUCTS

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 Types Of Losses Due to Packing

• Physical Damage – Where Cargo Is Damaged Due To Dropping, Breaking Etc

• Wet Damage – Where Cargo Is Damaged Due To Water
• Contamination Damage – Where Cargo Is Damaged Due To Contamination
• Reefer Related Damage – Where Cargo Is Damaged Due To Reefer Equipment Or
Mishandling
• Infestation Damage – Where Cargo Is Damaged Due To Infestation

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CAUSE Of Losses Due To Insufficient
Packaging
• Bad stowage inside the container is the biggest cause of physical damage. Inside the container it relates to :
incorrect, improper and insufficient lashing and securing of cargo like not using enough dunnage, chocking,
lashing materials

 incorrect weight distribution like piling cargo in one area inside the container instead of spreading it evenly
improper loading of cargo like loading heavy crates/pallets on top of lighter crates/pallets which will affect the
stability of the cargo bad stowage may be a result of

negligence on the part of the shipper or the packing warehouse not taking proper precautions in packing the
cargo properly for transit

lack of knowledge in handling certain types of cargoes like steel coils, granite blocks and other heavy and
special type of cargoes

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