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Shipping wine in an uncertain world: it’s all about managing risk

14 September 2021 Hollard
Moritz Denker

Moritz Denker

Jean Vincent Ridon

Jean Vincent Ridon

Even with the many challenges the wine industry faces, it continues to make an important contribution to South Africa’s economy. To support the sector as part of its purpose of creating #BetterFutures for all, Hollard Insure is sponsoring the Great Big Wine Survey for the second year running, which is why the risks related to shipping wine became a big focus at the August 2021 Grape Escape virtual event for Marine brokers.

“South Africa’s commercial operations and ports continue to operate despite global maritime activities being disrupted by the ongoing COVID-19 pandemic, as well as incidents such as the blocking of the Suez Canal and, closer to home, the recent cyberattack on Transnet’s operations,” said Hollard Head of Marine Cynthia Nanthalall.

Hollard Marine Senior Business Development Manager, Estelle Bond, noted the many challenges and risks related to shipping wine in bulk. Referring to the insurance industry’s complex, changing risk profile, she said wine not only has to be handled in the right conditions, but the means of transporting it are changing.

A major change is the shift from transporting wine in bottles, drums, or other containers to using flexitanks (massive flexible, durable bags holding up to 24 000 litres of liquid in the cavity of 20-foot shipping containers), explained guest speaker, marine surveyor, Moritz Denker, of Battermann & Tillery Group, who joined the event online from Germany.

There are many advantages to using flexitanks to transport precious commodities such as wine – it’s cheaper than more traditional methods. But the big increase in this mode of transport (around 1.5-million containers with flexitanks installed inside them are now transported every year, with 50% of them transporting wine) has also brought more risks.

These risks include installation errors, badly manufactured tanks, the presence of sharp objects, excessive product temperature during loading, the incorrect use of the heating system that can cause the tank to melt, and overfilling or underfilling of tanks, leading to ruptures and losses (a big enough hole will lead to all the wine in the tank being lost) – and subsequent claims.

There are specific requirements and standards for products transported in flexitanks, but the reality is that “it’s all about the money”, said Denker. Flexitanks usually have a capacity of 18 000 litres or 24 000 litres, but nearly all transported flexitanks are overweight based on the weight restrictions as per CTU-Code – with shipping companies accepting them and passing the responsibility of compliance to the container packers. This increases costs for cargo underwriters.

When it comes to wine, explained Denker, specially designed – and sometimes more expensive – flexitanks are required to prevent oxidation inside the tanks. In addition, fermentation can lead to a gas build-up, so tanks should also be equipped with a pressure relief valve to avoid rupture and loss.

Even “the smallest deviation”, such as a cap that is not placed perfectly, can cause leakage, resulting in high costs and claims, so correct installation and positioning of the flexitank are vital.

High temperatures – it can reach more than 60 degrees Celsius inside a container in summer – can pose another risk for the quality of the product if the shipper is not aware of this. All these issues – as well as damage caused by human error, during unloading, for example – can give rise to claims.

So, how can risk be minimised, and losses reduced?

Solutions include frequent staff training, using larger, 40-foot containers with tanks of less height and considering more rigid containers, implementing emergency agreements, and further improving standards, said Denker.

And how does the future look? Flexitanks, which cannot be reused, but only recycled, continue to evolve. With export volumes increasing, new irradiated, sterile and other systems are being developed; and 20-foot containers are being phased out to be replaced by flexitanks in 40-foot containers, he concluded.

Despite port terminal challenges and a five-week wine-export ban, South Africa’s wine export volumes in 2020 matched those of 2019, at 319.2-million litres.

Understanding the risks of transporting this valuable export product helps Marine brokers to provide clients with the best advice, cover, and service – something that is now more important than ever.

Quick Polls

QUESTION

South Africa’s Financial Sector Conduct Authority (FSCA) has the power to raise revenues by issuing administrative penalties and fines against non-compliant financial services providers, with this money flowing back to the Treasury… Does this, in your view, create a regulatory / government conflict of interest?

ANSWER

Absolutely, as conflicted as it gets
Maybe, I’m on the fence on this
No, the FSCA can do no wrong
The guilty must pay
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