Transportation risk refers to the risk of loss, damage, or delayed delivery of goods during transportation from the seller to the buyer due to natural disasters, accidents, human factors, etc. In foreign trade, transportation risk directly affects the choice of trade terms (such as FOB, CIF, DDP) and insurance arrangements. Usage scenarios include contract negotiation, insurance underwriting, and allocation of responsibilities. Notes: It is necessary to clarify the point of risk transfer (such as alongside the ship at the port of shipment, delivery at destination), and distinguish transportation risk from credit risk and exchange rate risk. Unlike 'transportation insurance', transportation risk is objective, while insurance is a means of transferring risk; unlike 'delivery risk', transportation risk specifically refers to the transportation stage, while delivery risk may cover production, packaging, etc. Foreign trade practitioners should combine Incoterms 2020 rules, specify the party bearing the risk in the contract, and it is recommended to insure against All Risks or Free from Particular Average.
📝 Examples
1. Under CIF terms, the seller bears the transportation risk until the goods are on board at the port of shipment, after which the risk is borne by the buyer, so the buyer should arrange insurance itself. (Note: Under CIF, the risk transfer point is on board at the port of shipment, and the buyer bears subsequent transportation risk.)
2. Due to the recent tension in the Red Sea situation, we recommend including transportation risk in the insurance coverage and choosing DDP terms so that the seller bears the entire risk. (Note: Geopolitical factors increase transportation risk, which needs to be managed through terms and insurance.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner