The International Union of Marine Insurance (IUMI) has warned that non-compliant wood packaging used in international trade can trigger costly delays and regulatory action even when the cargo itself is undamaged.
In a new guidance paper, IUMI examines the insurance implications of failing to comply with International Standard for Phytosanitary Measures No. 15 (ISPM 15), which sets requirements for wood packaging material such as pallets, crates and dunnage used in international shipments.
“While ISPM 15 is primarily a plant-health measure, its enforcement can create significant operational and financial consequences for the marine cargo sector,” IUMI Secretary General Lars Lange said.
Authorities that identify non-compliant wood packaging can detain shipments, require emergency treatment or fumigation, order repacking or destruction of the packaging, or require consignments to be returned to their origin, Lange said.
“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,” he said.
ISPM 15 has been in place for more than 20 years, but cargoes are still being shipped with wood packaging that is unmarked or incorrectly marked, IUMI said.
The United States accounts for the majority of notifications, but ISPM 15 has been adopted by major trading economies worldwide and infringements have led to shipment rejections in many countries, the organisation said.
IUMI said companies should apply the standard across jurisdictions rather than limiting compliance measures to countries where enforcement is considered stronger.
The organisation also warned of the risk of fraudulent packaging marks.
“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,” Lange said.
“In some jurisdictions, notably the USA, cases have resulted in large civil penalties and even felony convictions,” he said.
IUMI recommends that companies source wood packaging from registered treatment providers, conduct visual inspections before loading and ensure International Plant Protection Convention (IPPC) marks are present and legible.
Companies should also retain treatment certificates, batch records and evidence of supplier registration, IUMI said, adding that the same checks should be applied regardless of the shipment’s destination.
Groupage and consolidated shipments present an additional risk because non-compliant dunnage or packaging used by one shipper can lead to regulatory action affecting multiple unrelated cargo interests, the paper said.
For insurers, IUMI recommends considering wood packaging sourcing and documentation as part of the overall assessment of cargo risk. It cautioned, however, that documentation alone cannot replace effective operational controls.
“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,” said Pascal Dubois, chair of IUMI’s Loss Prevention Committee.
“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,” Dubois said.
“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,” he said.
