Lost cargo: what it is, causes and what to do

Lost cargo in transport operations is a problem that affects both the transport company and the customer.

Cargo loss occurs when freight does not reach its intended destination, for reasons such as robbery, theft, logistics errors, security failures, infrastructure problems or situations that prevent delivery. Even if it does not happen very often, you need to be prepared and have an action plan to deal with this type of incident.

Learn more below:

• What is lost cargo?
• How does cargo get lost?
• What should you do when cargo is lost?
• How does the transport company's liability work when goods are damaged or lost?
• What is the best prevention strategy to avoid lost cargo?

What is lost cargo?

A lost product is cargo that did not reach its destination as planned.

When goods are considered lost, it means they have gone missing somewhere in the supply chain and can no longer be traced or accessed by either the transport company or the end customer.

In practice, the problem can arise for a range of reasons, such as route planning errors, administrative failures, robbery, theft, problems in transit or failures in the controls used throughout transport.

How does cargo get lost?

Cargo robbery or theft

Cargo robbery or theft is one of the most common causes of lost goods. These situations can occur on high-risk routes or when security measures are not implemented or are insufficient.

Robberies can also happen at unplanned stops, in unsafe storage locations or along sections where the operation should already have planned for additional care.

Logistics planning errors

These errors can occur at several different stages of the operation, such as route planning, organizing documentation, checking cargo or communication between the parties involved.

In this type of scenario, lost cargo can involve delivery of goods to the wrong place, incorrect dispatch, mixed-up packages, failures to record movements or failures in coordination between distribution centers.

Failures in transport security measures

Transport security failures, such as monitoring systems that do not allow quick action when deviations occur or the absence of security protocols, can also contribute to lost cargo.

Without appropriate security measures, goods become vulnerable to a variety of risks during transport, from criminal attacks to operational errors that could have been noticed sooner.

Weather and infrastructure problems

Adverse weather conditions or failures in transport infrastructure, such as poor roads, roadworks or flooding, can divert cargo from its intended course, delay the operation and make it harder to locate or deliver it to the agreed destination.

These problems are often unpredictable and require flexible, adaptable logistics planning, with alternative routes, clear communication and procedures for recording decisions made during the incident.

Traffic accident

Collisions, rollovers or other types of accidents can cause considerable delivery delays and require a quick response to minimize losses and reallocate cargo, if possible.

This is not always a case of lost cargo, since in most cases the cargo can still be tracked and located, but is damaged or destroyed. Even so, the operation needs to document what happened, activate applicable coverage and advise the customer on the next steps.

What should you do when cargo is lost?

When cargo goes missing, immediate, strategic action is essential to minimize the impact.

The first step in a case of loss or damage is for the transport company to conduct an internal investigation to understand what happened and, if appropriate, compensate the customer according to the terms of the transport contract, consignment note, declared value and insurance policies taken out.

It is important to keep detailed records, operational documents, proof of receipt, route information and evidence of decisions made to defend against unfair claims and facilitate the insurance claim process.

Transport companies should also have clear policies and procedures for dealing with these situations, ensuring a quick and fair resolution for all parties involved.

Another action that should be taken is to review and adjust operational and security practices to prevent future cargo loss incidents, including cargo checks, communication between teams, training and updates to the risk management plan.

How does the transport company's liability work when goods are damaged or lost?

Legally, in Brazil, the transport company's liability in road freight transport covers the period between receipt of the cargo and its delivery to the recipient.

This means the transport company is liable for losses resulting from missing or damaged cargo in its custody, except where it can demonstrate an excluding cause, such as force majeure or a fortuitous event.

The transport company's liability for damaged goods or lost cargo is governed by a combination of transport contracts, applicable legislation, the consignment note, the value declared by the shipper and insurance terms.

It is therefore important to distinguish the coverage and obligations associated with freight transport. Brazilian legislation provides for mandatory insurance for road freight carriers, including liability coverage for cargo disappearance, such as RC-DC, as well as insurance and conditions that must be linked to a Risk Management Plan (PGR, in Brazil).

What is the best prevention strategy to avoid lost cargo?

Vehicle monitoring

Having a vehicle and cargo tracking and monitoring system is an efficient way to keep track of cargo location and react faster to deviations, unplanned stops or significant route changes.

This reduces the chances of cargo loss and increases the operation's ability to respond quickly to deviations, especially when this monitoring is connected to clear communication and decision-making procedures.

Standardized security procedures

Whether during transport or vehicle loading and unloading, standards for carrying out activities need to be established.

Establishing these procedures so they are safe reduces the risk of damage and loss during operations. It also helps the team know how to check packages, record discrepancies, handle documents and contact those responsible when something does not go as expected.

Identifying vulnerabilities

Frequently auditing fleet processes helps identify and correct failures that could lead to lost cargo.

These audits can examine critical routes, stopping points, communication with drivers, document checks, loading and unloading records and incident history. The sooner a vulnerability becomes apparent, the greater the chance of correcting the process before it turns into a loss.

Risk management and containment plan

Developing and maintaining contingency plans to deal with cargo loss ensures a quick, efficient response to minimize the impact.

Your risk management plan should map all likely situations a driver might face and identify the best action for each moment. This should be communicated and made available to drivers so they know how to act in each case.

In addition, when the operation involves mandatory insurance and coverage against cargo disappearance, keeping the PGR up to date helps align prevention, incident response, documentation and insurance claims.

If you want to keep learning about strategies to bring greater safety, savings and productivity to your company's transport operations, download our complete fleet management guide for free. Download it here (in Portuguese).