What is Distressed Cargo?

What is Distressed Cargo?

7/11/2014 Umut Türker 5099 Times Read

This particular term is often heard in the transportation industry quite often and it’s important to know what it clearly mean and its scope of application.

 

Cargo falls under the category of distressed when for any reason, the buyer refuses to entertain the original contract made to the shipper. One of these reasons could be unfavorable changes (according to the client’s perspective) to the reduction in prices of the said article for secondary sale. In such a situation, the concerned client suffers from the risk of bearing too much loss. Often such clients step back and the end result is the cargo not being accepted. It would become distressed.

 

Often, reasons not under control of either parties may also lead to situations where the cargo is led to a distressed state. If, for example, due to unfavorable weather conditions and other natural disasters a ship (through overwater routes) is unable to deliver the goods to the required port in the required time frame, the ship moves on to entertain the remaining commitments defined by other employments. The cargo which was supposed to be delivered at the first stop is now a dead weight for them for which they have no other choice but to label the said cargo as distressed.

 

Distressed cargo, since not fit for the original trade anymore, has to be sold to anyone who is willing to buy it for their own interests but almost certainly at a price considerably lower than the original price which was intended for the article.

 

We make international freight easier

No matter how many precautions anyone takes, due to the nature of international business, it’s impossible to exactly deduce and predict how supply and demand curve will turn out to be in the upcoming days. But by paying attention to the approximations and observations in geological and economics sphere, the probability of cargo leading to the distressed state can be readily minimized which is the approach we at www.freightarea.com take so that the odds for your company are always looking good.