The International Union of Marine Insurance (IUMI) is drawing attention to the often-overlooked risks that non-compliant wood packaging material (WPM) can pose to international cargo shipments. In a new guidance paper, the association examines the insurance implications of non-compliance with International Standard for Phytosanitary Measures No. 15 (ISPM 15), the global standard governing wood packaging such as pallets, crates and dunnage in international trade.

IUMI Secretary General Lars Lange said: "While ISPM 15 is primarily a plant-health measure, its enforcement can create significant operational and financial consequences for the marine cargo sector. When non-compliant WPM is identified, authorities can detain shipments, require emergency treatment or fumigation, order repacking or destruction of the packaging, or require the consignment to be returned to its origin. 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."

Although ISPM 15 has been in force for more than 20 years, a sizeable share of cargoes are still being shipped on WPM that is unmarked or incorrectly marked, rather than actually breaching the treatment requirements. While the USA accounts for the majority of all notifications, the standard has been adopted by all the world's major trading economies, and rejections stemming from infringements occur in many countries worldwide. IUMI therefore argues that ISPM 15 should be applied equally across all jurisdictions, and not confined to the regions where enforcement is thought to be strongest.

The paper also issues a warning about fraud. "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. In some jurisdictions, notably the USA, cases have resulted in large civil penalties and even felony convictions," said Lange.

The guidance sets out a number of straightforward preventive measures. These include sourcing WPM from appropriately registered treatment providers, carrying out visual checks before loading, verifying that International Plant Protection Convention (IPPC) marks are present and legible, and retaining treatment certificates, batch records and supplier registration evidence. IUMI also recommends applying the same checks irrespective of the shipment's destination.

Particular exposure arises from groupage and consolidated shipments, the paper notes, where a single shipper's non-compliant dunnage or packaging can result in regulatory action affecting multiple unrelated cargo interests. This makes consistent checks before loading relevant not only to the individual shipper, but also to other cargo interests sharing the shipment.

For insurers, IUMI recommends recognising WPM sourcing and documentation practices as part of understanding the cargo risk, while acknowledging that documentation alone cannot substitute for effective operational controls.

Pascal Dubois, Chair of IUMI's Loss Prevention Committee, summed up the key messages: "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. 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. 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."

Source: International Union of Marine Insurance