Risks Associated with International Shipment and their Management | LOTUS Containers

You might have come across people saying that international shipping is not a piece of cake but it can neither be called arduous if you play smart. While domestic shipment is confined to the national boundaries, international shipments outstretch beyond the national boundaries involving several risks and challenges that need to be managed well in order to provide smooth trading of cargo via shipping containers. The larger and valuable the asset, the greater is the risk.

No matter what type of cargo you’re transporting or which border you have to cross, building a strong intermodal transportation strategy is pivotal to avoid negative consequences. Your business needs to get your consignment to the right place and at the right time, efficiently and reliably. Risk management in international shipping is complex as it requires a smart and proactive cargo risk the management team always eager to solve every problem coming on the way.

Risks are not always associated with natural occurrences. They can be due to various reasons like machine failures, human errors, wars, fluctuating markets, demand, and supply, unanticipated climatic variations, etc. Several factors can interrupt the flow of cargo and affect business operations of container supplying companies to a great extent.

Adjoined below is a list of Common Risks and Counter Measures to Manage International Shipping

Credit/Counterparty Risk

Almost all businesses indulged in International shipping are exposed to this risk. Credit or counterparty risk is associated with not collecting an account receivable. It refers to the probability when one of the parties agrees to conduct business defaults on the contract of agreement.  Businesses can guard themselves in numerous ways like-

  •  Asking for full payment
  •  Developing an internal credit rating
  •  Limiting the credit allowance
  • Using a letter of credit
  • Considering credit insurance

Those who are new to the shipping container industry and are finding it difficult to understand the meanings of some of these essential shipping terms and jargon can read our blog on the same.

Foreign Exchange Risk

Foreign exchange rates are in flux incessantly. As freight shipping rates are calculated and carried out in US dollars the fluctuating foreign exchange rates disturb the value of international shipment anytime. It has a drastic impact on the cash flow, the company’s margin, and gross and net sales. That’s why it becomes crucial for businesses to have a strong working exchange policy to hedge against fluctuations and restrict exposure to currency volatility. 

Threats from Pirates

The threat to cargo does not only comprehend international shipment but domestic shipment as well. Cargo piracy is one of the most common threats that is noticed in shipping lines. Pirates target high-value cargoes containing assets like electronics, clothing, pharmaceuticals, etc. Thieves have been known to jump trains in order to grab valuable cargoes on the way. It is no doubt that today’s pirates are well aware of electronic surveillance and modern technologies such as GPS trackers which means the threat is not just observed on the port of origin or port of destination but also in its journey.

From using deception to intercept cargo containers carrying vehicles to blackmailing drivers to drive to another location, cargo theft has become one of the concerning factors most probably while handling valuable assets. Countries with unstable and weak political bodies and corrupt government agencies are highly prone to these risks. Therefore hiring a reliable supply chain planner working with a strong risk management policy is crucial to escape from such risks.

Container Shortage during High Season

The situation gets worse when shipping container companies get frustrated in addressing the bottlenecking of cargo storage space during the peak season. In such a case, shippers find it difficult to bring consistency in their international shipment. High season generally occurs during festive times like the Chinese New Year where several shippers are waiting to import and export cargoes from and to the country respectively. The unavailability of shipping containers on-time hinders the overall functioning of business creating an environment of chaos. There can be a shortage of the container types and container dimensions that you might need to transport your cargo.

Now when we have talked so much about the risks that are likely to occur while practicing international shipment, let’s take a look at some of the ways that can help to mitigate these in time.

Inspect your Carrier Company Well

Before you come into a contractual agreement with your carrier company, wait and inspect well about them- their history, services, customer feedback, etc. Determine how long they have been in the business. Hiring an experienced carrier company will always reduce your burden to zero as they have experts to tackle with each risk coming on the way. Properly inspect their equipment and distribution centers, business model, carrier’s track record, technological competencies, etc. Also, know whether they have manufactured their own shipping containers or have partnered with some container suppliers company. Finding their shipping containers irrelevant you can be buying shipping containers on your own and avail yourself only the intermodal transportation services.

Keep all the Necessary Documentation

In order to move your freight internationally, you would require complying with various rules and regulations, and documentation. Documents like Bill of Lading, Custom clearance, import permit certificates, cargo Insurance, etc. are some of the papers that depict the entire information related to your freight. Talk to your consultants and agents about the legal procedure of document verification and their submission in other jurisdictions. Last-minute hurry in preparing for these documents can hinder your shipment while getting done with this before time will help you to focus on accuracy, detailed description, and other information to feed properly.

Ask for Transparency and Clear Conversation

Transparency and good communication are important parts of risk management. The transparency of your shipment procedure is very important as it gives a clear insight into their work and also you can question them in between if you find anything misleading. It’s important to keep stakeholders informed with precise information. Tell them to inform every detail about cargo loading, custom inspection, boarding date, total transit time, and other related information.

Check Technology Competencies

It cannot be denied that technologies not only simplify your work but help to keep a keen eye on every work while maintaining the safety, security, and accuracy of data and projects. Hiring a Carrier Company well equipped with technical equipment is the prerequisite for smooth trade practice. IoT-enabled locking facilities and TMS enables tracking of shipment to give you surety of safe shipment. Digitally aided invoice generation reduces the chance of missing out on important information. With the real-time insight provided by TMS, you can well plan your activities and inform your exporter about the shipment delivery.


These are some of the preventive measures that can help you mitigate risks while carrying international shipments. But still, you never know what may come your way so you need to be very cautious until your freight reaches the final destination. Do not trust your carrier company with closed eyes. Inspect every detail and ensure that you are kept in the loop with the entire process of delivering your cargo in shipping containers to their destination.


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