The International Union of Marine Insurance (IUMI) is highlighting the often-overlooked risks that non-compliant wood packaging material (WPM) can create for international cargo shipments.
A new guidance paper from IUMI examines the insurance implications of non-compliance with International Standard for Phytosanitary Measures No 15 (ISPM 15), which governs the use of wood packaging material such as pallets, crates and dunnage in international trade.
IUMI Secretary General Lars Lange explains: “While ISPM 15 is primarily a plant-health measure, its enforcement can create significant operational and financial consequences for the marine cargo sector. When non-compliant WPM is identified, authorities can detain shipments, require emergency treatment or fumigation, order repacking or destruction of the packaging, or require the consignment to be returned to its origin.
Disruption and costs
“The key message for marine insurers is that in the great majority of cases, the cargo itself will be undamaged - ISPM 15 non-compliance is usually not about physical damage to the cargo, it is about the disruption and costs that can arise when a regulatory authority intervenes.”
Although ISPM 15 has been in place for more than 20 years, a sizeable share of cargoes are still being shipped using WPM that is either unmarked or incorrectly marked rather than actually contravening the treatment requirements.
Whilst the US accounts for the majority of all notifications, ISPM 15 has been adopted by all the world’s major trading economies and rejections due to infringements occur in many countries around the world. Therefore, ISPM 15 should be applied across all jurisdictions equally and not limited to those regions where enforcement is thought to be strongest.
Rising cases of fraud
There is a further warning concerning fraud: “WPM marking is not difficult to forge and where authorities find a marked WPM to be infested, many will treat the marking itself as fraudulent rather than simply non-compliant. In some jurisdictions, notably the US, cases have resulted in large civil penalties and even felony convictions”, said Lange.
The IUMI paper recommends a number of straightforward preventive measures. These include sourcing WPM from appropriately registered treatment providers, carrying out visual checks before loading, verifying that International Plant Protection Convention (IPPC) marks are present and legible, and retaining treatment certificates, batch records and supplier registration evidence. IUMI also recommends applying the same checks irrespective of the shipment's destination.
The paper further highlights the particular exposure created by groupage and consolidated shipments, where a single shipper's non-compliant dunnage or packaging can result in regulatory action affecting multiple unrelated cargo interests.
WPM sourcing and documentation
For insurers, IUMI recommends recognising WPM sourcing and documentation practices as part of understanding the cargo risk, while recognising that documentation alone cannot substitute for effective operational controls.
The key messages are summed up by Pascal Dubois, Chair of IUMI’s Loss Prevention Committee: “In most cases ISPM 15 non-compliance is not about physical damage to insured cargo, it is about operational disruption such as detention, fumigation, repacking and delay cost. Although responsibility for compliant WPM typically rests with the shipper or packer, insurers should be aware that the supply chain behind a single pallet is often longer than it appears, which may complicate attribution and recovery.
“Lastly, simple, low-cost preventive measures such as the use of registered treatment providers and verifying IPPC marks and the package condition before loading can meaningfully reduce the likelihood of a rejection.”—TradeArabia News Service
