From my email inbox:
I read your importing book over 2 years ago and have been a self-employed importer / merchant ever since. I've also followed your blog religiously over the last few years. Through your writing, you've been a mentor to me and made a big impact on my life. I'd like to thank you for sharing so much of your thoughts and work.
I've been importing for over 2 years and have never, until now, run into any problems related to damage during transit. Unfortunately I have just had an important shipment destroyed due to water damage.
I did insure the shipment and have filed an insurance claim through my logistics provider. However, I am worried that I won't get a full payout due to the nature of the goods & damage.
The goods were cotton items. The water soaked the cartons and the cotton items wicked up the moisture and humidity. Some of the items were moldy and clearly damaged if you smell them. The cartons were visibly damaged but the items themselves were not visibly damaged because the water evaporated. In most cases, there aren't visible signs of the water damage on the items themselves. Nevertheless, most of the merchandise appears to have been contaminated with mold. It smells moldy or musty and I feel it is unsaleable due to the probability that there is some degree of mold contamination.
I am worried that the insurance company, when it sends a surveyor to inspect the shipment, will decide that the merchandise is not visibly damaged. It is hard to demonstrate the extent to which the items were damaged because it amounts to a subjective impression of how musty or moldy the items smell.
Have you ever had the experience of cotton items becoming wet, moldy or musty during transit? Do you think I'm going to have to fight the insurance company on the question of whether some items were or were not contaminated by the mold? And do you think it is worth retaining the services of a public adjuster to negotiate with the insurance company?
The insurance company has not yet sent a surveyor to inspect the damaged merchandise so I don't know what their judgement will be. Still, I'm wondering if I should start getting ready for a fight. What would you do in my situation?
A
Dear A,
I've never had problems specifically with cotton items, but plenty of times I've had damaged goods and surveyors come in to review. A couple of things:
Marine insurance is a small but profitable business, with an occasional big loss to cover for the insurance companies. Your loss is likely quite small, so covering it is nothing to them.
The marine surveyor who will come and look at the goods is very likely an independent contractor paid hourly and has no skin in the game. You can expect him to be thorough and fair. If the goods are unsaleable as you say, he will know this, and declare it as such. The slight challenge is if the goods were packed below standards, you might have a challenge, but that is unlikely if you indeed selected the best place in the world for your goods, and determined this largely by checking references on your supplier.
You loss will be covered only to 110% of the invoice value, so it will not cover lost business from inability to fill your customers orders.
This problem is another reason we never buy more than minimums from our suppliers, and prefer frequent shipment of minimum orders than large volume orders. It minimizes our exposure.
I doubt there will be fight. The inspector will come in, spend bout ten minutes, make notes and take pictures, he might even take a sample, and then send you a report with his findings, and they will send you a check with instructions for the defective goods to be set aside for collection. The check will have a statement on the endorsement side saying your cashing it settles the matter.
If you paid duties on these sweaters, then you can do what is called a duty-drawback once the defected sweaters are destroyed or exported from USA. Just keep the relevant documents and fill out this form...
http://forms.cbp.gov/pdf/CBP_Form_7551.pdf
I doubt you'll have any problems, so no need to spoil for a fight. If not, you can always duke it out later.
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