The temperature controlled cargo supply chain can present operational challenges for all stakeholders due to the innate sensitivities of the cargoes transported. Clear, unambiguous and accurate communication is paramount.

Analysis of incidents revealed that there are a number of common errors and misconceptions that can result in deterioration or total loss of the cargo, as well as damage to the carrying equipment. This led to publication of TT’s Temperature Controlled Cargo StopLoss to provide general risk mitigation guidance. 

Analysis into reported losses indicates a variety of root causes, including poor pre-shipment practices (such as hot stuffing), physical damage to the reefer unit at some point during transit and equipment malfunction or breakdown. The most common thread, however, involved poor communication and clerical errors made by those who handle temperature controlled shipments.

The most common thread involved poor communication and clerical errors made by those who handle temperature controlled shipments.

Communication critical

TT’s claims data for 2020 suggest that around 35% of the subject incidents resulted from such clerical and communication errors. This ‘cool’ supply chain can be particularly complex, with several actors along the journey handling and taking control of a given shipment; it is at these modal interchanges where risk is elevated. This type of loss typically stems from deficiencies in communication between the contracting parties.

There were many instances where the set point temperature of the reefer cargo transport unit (CTU) was not correctly set, resulting most frequently in an elevated temperature for chilled or frozen cargoes, but on occasion the freezing of a chilled cargo. A simple error in communication a “+” instead of a “–“ or “DegF” instead of “DegC” can be catastrophic for the cargo being carried. Simple failure to follow instructions to plug the unit in throughout the voyage was also prevalent. Conversely, cargoes being shipped in non-operating reefers suffered damage when operators plugged in the unit, despite the lack of instruction. 

One of the key learnings taken from the analysis is the importance of clear, accurate and unambiguous instructions. Leave nothing to doubt and ensure that each contracting party through the entire supply chain receives instructions in sufficient time to act up on them. 

Technology to check

The integrity of the cool supply chain is paramount, since many of the cargoes shipped are destined for human consumption, whether foodstuffs or medicines. The capability to trace, monitor and manage temperature controlled cargoes continues to develop. Deploying sensors within the cargo stow provides those in the supply chain the opportunity to understand and record data on a granular level. However, while these serve to provide an audit trail, such technologies are reactionary.

TT has recently collaborated with ReeferPulse, a global leader in AI-based predictive maintenance solutions for reefer units, to increase the Club’s understanding of the underlying risks through the cool supply chain from the vast volumes of available data. Such data provide insight into the operational performance of the equipment, allowing operators to reduce costs through energy use and emissions, but also identifying anomalies in equipment performance. As a result, it is possible to implement preventative maintenance, saving on costly equipment breakdowns and consequent cargo claims.    

While recognising the importance of operational efficiency, a data driven solution also draws focus to understanding the cargo risk landscape too, allowing interested parties the opportunity to mitigate risk, maintain cargo integrity and importantly achieve customer satisfaction. 

An interesting revelation from the data was the high number of short temperature breaches, either through short periods of power outage or being off power as the container changes modality. On average, such temperature breaches may occur in up to 14% of all cool shipments. In the majority of instances, such short breaches are not catastrophic, and may not compromise cargo integrity, but clearly do introduce an increased risk that may result in small attritional losses.

In the context of ‘off power’ periods, an emerging risk that actors in the cool supply chain should consider is the availability of equipment. Gensets in some regions are increasingly difficult to source for either the first or final mile leg of the journey; while the thermal efficiency of modern day reefer CTU’s is generally very good, off power periods, however short, introduce risk. 

Responsible decisions

From a liability perspective, much will depend on the underlying sales contract, who the beneficial cargo owner is, who is in care, custody and control of the consignment – and therefore who is making the decision to complete certain legs of the transit off power. A shipper or consignee, the beneficial cargo owner, might for instance be willing to take such risks, certain in the knowledge that the thermal protection of the reefer CTU will maintain the required set point and conditions, safeguarding the integrity of the cargo. 

For those actors in the supply chain, particularly freight forwarders and NVOCs, who might assume a contractual liability for such decisions, it would be prudent to undertake a thorough risk assessment to understand the sensitivity of the consignment and the availability of necessary equipment to maintain the cargo adequately. Where equipment is not available or instructions are received contrary to expected practice, it might be prudent to seek written confirmation of instructions or a letter of indemnity from your principal in order to protect your position.

Undertake a thorough risk assessment to understand the sensitivity of the consignment and the availability of necessary equipment to maintain the cargo adequately.

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We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.

We look forward to hearing from you.

Peregrine Storrs-Fox

Risk Management Director, TT Club