Salvage Value — Valuation and Sale Proceeds in Import Cargo Claims
Interlink編集部What Is Residual Value?
Residual value refers to the economic value remaining in imported cargo after damage such as breakage, wetting, contamination, deformation, quality deterioration, or temperature deviation has occurred.
Even damaged goods do not always lose their entire value. While they may no longer be salable as new products, their value may still be reflected in calculating damages if they can be sold at a discount, used after repair, dismantled for parts, reused as raw materials, or sold as scrap.
Residual value differs from the cargo value before the incident. It also does not necessarily correspond to the actual amount recovered through sale of the damaged goods. It is necessary to distinguish between the residual value assessed before sale and the finalized recovery amount after actual sale.
In damage cost documentation, instead of simply claiming the pre-incident value or damage appraisal amount, the value remaining after the incident, the actual sale recovery amount, post-repair value, and parts or scrap value should be identified and, if necessary, organized as deductible items.
However, the confirmation of residual value alone does not automatically determine insurance compensation or carrier liability amounts. Insurance terms, scope of liability, damage mitigation measures, approval for sale or disposal, and the appropriateness of valuation methods are separately examined.
Scope Covered in This Article
This article covers the meaning of residual value in import cargo claims, the difference from sale proceeds, evaluation methods, reflection in damage amounts, its relation to repair, sale, and disposal, practical workflows, confirmation items by submission destination, and the involvement scope of freight forwarders.
| Item | Contents Covered in This Article | Contents Covered in Other Articles |
|---|---|---|
| Basics of Residual Value | The economic value remaining in cargo after an accident | Overall damage amount data, all documents submitted to insurers |
| Relation to Appraisal Value | Handling of residual value estimated before sale | Detailed explanations of appraisal reports and survey reports |
| Difference from Sale Proceeds | Distinction between estimated valuation and actual recovered amount | Sales disposal, sales details, payment records |
| Discounted Sales | Saleable value of cargo that cannot be sold as new | Sales disposal, damage amount data |
| Post-repair Value | Value remaining after repair and verification of depreciation | Repair quotations, Certificate of Non-Repairability |
| Parts Value | Parts value of cargo unusable as complete products | Manufacturer appraisal, sales disposal |
| Scrap Value | Evaluation of material and recycling value | Scrap sales, disposal costs |
| Relation to Disposal | Approach to confirm absence of sale or reuse value before disposal | Disposal costs, disposal certificates |
| Quantity-based Evaluation | Quantity classification of normal goods, damaged goods, sale goods, and disposal goods | Inspection costs, inspection reports |
| Freight Forwarder Involvement | Collection and organization of appraisal data, sales data, and quantity data | Responsibilities of freight forwarders, NVOCC responsibilities |
Main Situations Where Residual Value Becomes an Issue
| Situation | Reason Residual Value Is an Issue | Value to Confirm | Main Reference Documents | Practical Considerations |
|---|---|---|---|---|
| Only outer packaging is damaged | The product itself may retain normal use value | Product value, resale value after repackaging | Photos, inspection reports, repackaging quotations | Distinguish between packaging damage and product damage |
| Cannot be sold as new but can be sold at a discount | Retains sales value even if lower than usual price | Discount sale price | Sales quotations, sales records, sales detail statements | Differ between regular price difference and actual recovery amount |
| Can be used if repaired | Usage and sales value remain after repair | Value after repair, depreciation after repair | Repair quotations, manufacturer comments | Check not only repair cost but also post-repair value |
| Parts can be salvaged | Even if finished product value is lost, parts retain value | Value of reusable parts | Parts lists, manufacturer assessments, purchase quotations | Also confirm removal costs and marketability |
| Can be sold as scrap | Recovery value based on material and weight | Metal, raw material, recycling value | Weight records, scrap unit prices, purchase statements | Confirm net recovery amount including transport and sorting costs |
| Only part of the quantity is damaged | Need to separate normal and damaged goods | Value by quantity category | Inspection reports, quantity reconciliation sheets | Do not evaluate entire quantity at the same residual value |
| Partial sale, partial disposal | Value and costs differ by handling method | Recovered sales amount and disposal value | Sales details, disposal certificates | Ensure sales quantity and disposal quantity match |
| Quality assurance is not possible | Despite apparently usable condition, market value may drop significantly | Value for restricted use or alternative markets | Quality assessments, manufacturer responses, appraisal documents | Do not immediately assign zero value just because quality assurance is impossible |
Differences Between Residual Value, Assessed Value, and Sale Proceeds
In practice, residual value, expected sale amount, and actual sale proceeds are often confused. To clarify, this section distinguishes between the evaluation timing and the nature of each amount.
| Category | Meaning | Determination Timing | Main Documents | Notes for Damage Amount Calculation |
|---|---|---|---|---|
| Residual Value | The estimated economic value remaining in the cargo after the incident | At assessment, inspection, or market confirmation | Assessment reports, inspection reports, market data | It is an estimated value and may differ from the actual recovery amount |
| Expected Sale Amount | Estimated expected sale price before selling | At quotation, bidding, or assessment | Purchase quotations, bid results, market price data | Later adjustments may be made for differences from the actual sale price |
| Total Sale Amount | Total price obtained when the damaged goods are actually sold | At contract conclusion | Sale details, invoices, contracts | Check whether this is before deduction of sale-related expenses |
| Actual Sale Proceeds | Amount actually collected and received | When payment confirmation is made | Payment records, bank statements, sale details | Verify consistency with total sale amount and any deductions |
| Net Recovery Amount | Amount remaining after deducting necessary sale and transportation costs from the sale proceeds | When related sale expenses are finalized | Sale details, transportation charges, commission statements | Which costs are deductible should be confirmed on a case-by-case basis |
For the same cargo, it is important not to deduct both the assessed residual value and the actual sale proceeds twice. Use the assessed value provisionally before sale, and after the sale, replace it with the actual recovery amount to clarify the evaluation timing.
Relationship with Damage Amount Documentation
The residual value is sometimes treated as a deduction item to avoid overstating the damage amount.
The basic structure can be organized as follows:
Pre-accident value or damage assessment value − Deductible residual value or sale recovery amount + Necessary accident-related expenses = Candidate Claim Amount
However, it is necessary to ensure that the residual value and sale recovery amount are not deducted twice, that the values for undamaged goods and damaged goods are not mixed, and that the quantities for sale, disposal, or repair are consistent.
| Calculation Item | Meaning | Main Documentation | Role in Calculation | Notes |
|---|---|---|---|---|
| Pre-accident value | The value the cargo would have had if no accident occurred | Invoice, Purchase Order, Sales Contract | Starting point for damage amount calculation | Do not confuse with sales price, cost, or insured value |
| Damage assessment value | The amount evaluated as value reduction due to the accident | Inspection Report, Survey Report | Used for partial loss and other damage assessments | Not necessarily the full pre-accident value |
| Residual value | The value assessed as remaining after the accident | Appraisal Report, Sale Quotation, Market Data | Candidate deduction from damage amount | May be an estimate before actual sale |
| Sale recovery amount | The amount actually recovered from selling the damaged goods | Sale Details, Payment Records | Organized as a confirmed deduction amount in some cases | Avoid double deduction with residual value |
| Accident-related expenses | Necessary costs such as repair, inspection, repacking, disposal | Quotation, Invoice, Work Details | Added as needed | Exclude normal or duplicated costs |
| Candidate Claim Amount | Amount prepared prior to claim based on supporting documentation | Damage Calculation Statement, Claim Letter | Basis for the claim amount | Different from the final insured or compensation amount |
Methods for Residual Value Evaluation
| Evaluation Method | Description | Commonly Required Documents | Strengths of Evaluation | Points to Note |
|---|---|---|---|---|
| Evaluation by Actual Sale | Sell damaged goods in practice to confirm recovery amounts | Sale details, payment records, pre-sale photos | Can demonstrate actual market transaction results | Verify the appropriateness of sale conditions, buyer, and price |
| Evaluation by Multiple Appraisals | Assess value based on several purchase quotations from different parties | Appraisal reports, multiple quotations, market price data | Reduces reliance on a single party | Ensure consistency of conditions, quantities, and delivery location |
| Evaluation by Discounted Sale | Confirm possible sale amount at a price lower than the usual selling price | Sales records, reasons for discount, regular price references | Tends to reflect real market conditions | Do not confuse the difference from the regular price with the sales amount |
| Evaluation by Post-Repair Value | Verify use and sale value after repair and any depreciation | Repair quotations, post-repair inspections, manufacturer comments | Reflects value recovery after repair | Avoid double counting repair costs and residual value |
| Evaluation by Parts Salvage Value | Assess value for reusable parts individually | Parts lists, manufacturer appraisals, purchase quotations | Applicable even when finished product value is lost | Also confirm costs of removal, storage, and sale |
| Evaluation by Scrap Value | Confirm recovery value based on weight and scrap unit price | Weight tickets, unit price references, purchase details | Objectively reflects material value | Unit price varies depending on contaminants, sorting, and transport conditions |
| Evaluation by Quantity Classification | Evaluate by category: intact goods, discounted goods, parts, and waste | Inspection reports, quantity reconciliation sheets | Easy to address partial damage | Ensure total quantities across categories are consistent |
Residual Value by Damage Pattern
| Damage Pattern | Concept of Residual Value | Documents to Confirm | Related Actions | Points to Avoid Definitive Statements |
|---|---|---|---|---|
| Damage Nearly Total Loss | Check for component parts, materials, or scrap value | Photographs, inspection reports, purchase quotations | Sale for disposal, discarding | Do not assume zero value solely because it is unusable |
| Partial Damage or Partial Loss | Confirm value after repair, discounted sales, or value reduction | Repair quotations, appraisal, manufacturer comments | Repair, discounted sale | Do not determine damage amount based only on repair costs |
| Exterior Damage Only | When main body value is retained, focus is on repackaging costs | Photographs, inspection reports, repackaging records | Repackaging, normal sale | Do not classify exterior damage as total loss of the product |
| Water or Dirt Damage | Compare usability, discounted sales, parts reuse, and disposal | Quality inspections, photographs, sales quotations | Sale, repackaging, disposal | Do not finalize value based on appearance alone |
| Quality Degradation or Temperature Deviation | Include value in limited applications or alternative markets | Temperature records, quality assessments, manufacturer responses | Change of use, sale, disposal | Do not equate inability to guarantee quality with zero economic value |
| Quantity Shortage | Residual value usually cannot be confirmed for undetected cargo, but adjust when recovered | Shortage documents, recovery records, inspection reports | Claim amount correction, recovered goods evaluation | Do not maintain claim amount ignoring goods recovered later |
| Damage to Partial Quantity Only | Set different values for each quantity category | Quantity lists, photographs, sales or disposal documents | Partial sale, partial repair, partial disposal | Do not mechanically apply the same rate to all quantities |
Practical Workflow for Confirming Residual Value
| Step | Main Items to Confirm | Documents to Check | Key Points for Judgment | Actions if Issues Arise |
|---|---|---|---|---|
| 1. Identify Damaged Cargo | Confirm item number, cases, lot, and damaged quantity | Invoice, Packing List, Inspection Sheet | Determine quantity subject to evaluation | Separate undamaged and damaged goods |
| 2. Record Post-Accident Condition | Photograph damage such as breakage, water damage, staining, deformation | Photos, Inspection Reports | Preserve condition before disposal | Add missing photos and quantity records |
| 3. Confirm Usability and Saleability | Verify if cargo can be used or sold for normal purposes and markets | Responses from shipper, manufacturer, delivery destination | Check if normal value is maintained | Document reasons for unusability |
| 4. Check Repair and Repackaging Possibility | Confirm repair costs, repackaging costs, and post-repair value | Repair Quotations, Repackaging Quotations | Verify economic feasibility of restoration | Obtain Certificate of Non-Repairability if needed |
| 5. Confirm Discounted Sale Possibility | Check if sale below regular price is possible | Sales Quotations, Buyer Responses | Assess marketability and sales conditions | Obtain multiple quotations |
| 6. Confirm Value of Parts and Scrap | Confirm value of reusable parts, materials, and weight-based value | Parts Assessment, Weight Slips, Unit Price Data | Verify net recovery value including processing costs | Standardize collection conditions for comparison |
| 7. Confirm Sale or Disposal Policy | Decide quantities for sale, reuse, or disposal | Approvals from stakeholders, Processing Classification Table | Avoid unauthorized disposal | Pre-check with insurance company and others |
| 8. Document the Evaluation Amount | Organize residual value, expected sale amount, and evaluation basis | Evaluation Reports, Market Data, Quotations | Clearly state evaluation date and conditions | Correct any discrepancies in evaluation conditions |
| 9. Confirm Actual Sale Results | Confirm sale quantity, unit price, total amount, and received payment | Sale Details, Payment Records | Check differences between estimated and actual recovery amounts | Update damage amount calculation accordingly |
| 10. Reflect in Damage Amount Documentation | Organize deductions, additional charges, and the Candidate Claim Amount | Damage Amount Calculation Sheet, Claim Letter | Avoid double deductions and quantity discrepancies | Reconfirm reference document numbers |
Relation to Sale and Disposal
When damaged cargo is actually sold, the amount recovered from the sale serves as an important concrete reference for the residual value.
| Check Item | Details to Confirm | Required Documents | Reflection on Damage Amount | Notes |
|---|---|---|---|---|
| Quantity Sold | Which item numbers, cases, and quantities were sold | Sale details, inspection report | The recovery amount corresponding to the quantity becomes a deduction candidate | Match with the damaged quantity |
| Sale Unit Price / Total Amount | Unit price, quantity, total sale amount | Sales contract, invoice, details | Basis for actual sale amount | Confirm whether tax included/excluded and currency |
| Amount Received | Actual amount collected | Bank records, payment records | Organized as the confirmed recovery amount | Delineate accounts receivable and unpaid balances |
| Sale-Related Expenses | Costs such as transport, sorting, brokerage | Invoices, work details | Calculate net recovery amount as needed | Deductibility should be individually confirmed |
| Validity of Sale Amount | Market price, multiple quotations, sale conditions | Market price data, quotation comparison table | Supports reasonableness of low-price sale | Clearly define terms for affiliated company transactions |
Relation to Disposal Costs
Disposal is considered when reasonable options such as normal use, repair, repackaging, discounted sale, parts utilization, or scrap sale are not feasible, making the disposal necessary.
The mere fact of disposal does not automatically prove that the damaged goods had no residual value. Records should be kept to confirm the potential for resale or reuse before disposal.
| Condition | Residual Value Consideration | Supporting Documents | Next Steps | Points to Note |
|---|---|---|---|---|
| Resale Possible at Discount | Evaluate residual value as the possible sale amount | Sales quotations, sales conditions | Consider sale to dispose | Compare reasonableness against disposal |
| Parts Can Be Salvaged | Confirm parts value and removal costs | Parts appraisal, manufacturer response | Consider parts sale or reuse | Confirm handling of leftover materials after removal |
| Scrap Value Present | Verify recovery value based on weight and unit price | Unit price data, weight certificates | Consider scrap sale | Check net value including transportation costs |
| No Value | Confirm difficulty of sale, use, or reuse | Appraisal reports, disposal rationale, photos | Proceed with disposal | Retain evidence supporting zero value |
| Partial Sale / Partial Disposal | Separate recovery amounts and disposal costs by quantity | Inspection list, sales details, disposal certificates | Calculate damages by processing category | Ensure total quantities match |
Relation to Repair Quotations
| Repair Condition | Concept Regarding Residual Value | Verification Documents | Reflection on Damage Amount | Points of Caution |
|---|---|---|---|---|
| Value recovered by repair | Post-repair usage or resale value is maintained | Repair quotation, post-repair inspection | Organize mainly around repair costs | Do not duplicate claims for both repair costs and value depreciation |
| Value depreciation remains after repair | Confirm the difference between post-repair value and pre-accident value | Manufacturer comments, appraisal documents | Consider value depreciation as needed | Abstract depreciation of secondhand value alone is insufficient |
| Repair costs are uneconomical due to high expense | Compare current resale value, parts value, and disposal cost | Repair quotation, purchase offer, disposal estimate | Compare economically rational handling methods | Exceeding cargo value by repair costs does not automatically mean total loss |
| Cannot be repaired | Confirm availability of parts, scrap, or resale value | Certificate of Non-Repairability, manufacturer comments, appraisal report | Organize damages after deducting residual value | Do not equate irreparability with zero value |
Main Documents Indicating Salvage Value
| Document | Details to Confirm | Role in Practice | Cross-Check with Other Documents | Points to Note |
|---|---|---|---|---|
| Appraisal Report / Purchase Quotation | Appraised value, quantity concerned, conditions, appraisal date | Indicates the salvage value before sale | Photos, inspection report | Standardize appraisal conditions |
| Sale Details | Sale quantity, unit price, total amount | Shows the actual sale results | Inspection sheet, payment records | Specify the applicable items |
| Payment Records | Payment date and amount for sale proceeds | Serves as a document confirming recovered amounts | Sale details, bank records | Distinguish unrecovered amounts |
| Discounted Sales Records | Regular price, discounted price, sales quantity | Indicates market value after the incident | Documents of usual selling prices | Explain differences from normal discounts |
| Scrap Purchase Details | Weight, unit price, purchase amount | Shows value as raw material | Weight tickets, photos | Check for deductions of foreign materials and haulage costs |
| Repair Feasibility Documents | Repair possibility, repair cost, post-repair condition | Basis for judging post-repair value and disposal method | Repair quotation, manufacturer’s response | Distinguish between non-repairable and zero salvage value |
| Inspection Report | Quantities of intact goods, damaged goods, sale items, discarded items | Basis for evaluation by quantity category | Packing list, photos | Ensure total quantities match |
| Disposal Reason Statement | Reasons why items cannot be sold or reused | Supports the absence of salvage value | Appraisal report, disposal certificate | Evaluation becomes difficult after disposal |
Differences in Confirmation Perspectives by Submission or Explanation Recipient
| Submission/Explanation Recipient | Main Confirmation Purpose | Matters Confirmed | Commonly Required Supplementary Documents | Matters to Avoid Definitive Judgments On |
|---|---|---|---|---|
| Insurance Company | Assessment of value to be deducted from damage amount | Evaluation method, sale possibility, actual recovery amount, quantity | Appraisal report, sales details, payment records, photos | Assuming the appraisal amount is the final deductible amount as is |
| Carrier | Verification that the claimed amount has been properly reduced and adjusted | Pre-accident value, quantity damaged, residual value, additional charges | B/L, Claim Letter, damage amount documentation | Assuming responsibility amount is fixed by residual value deduction alone |
| NVOCC | Consistency check of accident segment, damaged quantity, and claim amount | House B/L affected quantity, processed quantity, recovery amount | House B/L, CFS records, inspection reports | Assuming NVOCC can unilaterally decide sale or disposal |
| Buyer/Appraiser | Confirmation of cargo subject and sales conditions | Quantity, condition, delivery terms, cost burden | Photos, target list, appraisal request form | Assuming the appraisal amount always equals the actual sales amount |
| Warehouse/Disposal Operator | Confirmation of storage, delivery, sale, and disposal quantities | Outgate quantity, processed quantity, remaining quantity | In/out records, processing certification | Determining value solely based on warehouse records |
| Shipper/Importer | Explanation of final damage amount and recovery amount | Processing category, sale recovery amount, disposal costs, self-burden | Damage amount documents, sale/disposal documents | Equating residual value with final insurance payment |
Common Practical Issues
| Case | Common Issues | Documents to Check | Practical Measures |
|---|---|---|---|
| Sale price significantly lower than market value | Doubts about whether proper loss mitigation was conducted | Multiple quotations, market data, sale conditions | Document reasons for the low sale price |
| Large discrepancy between appraised value and actual sale price | Provisional deduction and final recovery amount do not match | Appraisal report, sale details, payment records | Update final damage amount based on actual sale results |
| Double deduction of appraisal value and sale recovery amount | Underestimation of damage amount | Damage calculation report, sale documents | Use only one deduction amount per evaluation timing |
| Confirmation of residual value started after disposal | Unable to verify sale, parts, or scrap value | Pre-disposal photos, disposal reason statement, related records | Standardize pre-disposal confirmation procedures |
| Value set to zero due to irreparability | Overlooking parts or scrap value | Certificate of Non-Repairability, parts appraisal, purchase quotations | Differ between irreparability and zero economic value |
| Applied the same residual rate to all quantities | Damage condition, part number, and processing method differences not reflected | Inspection sheets, photos, appraisals by part number | Evaluate by quantity category |
| Mismatch between sale quantity and inspection quantity | Unclear sale targets or remaining quantities | Inspection sheets, sale details, warehouse outbound records | Reconcile part numbers, cases, and quantities |
| Low-price sale to related company | May not represent an independent market price | Transaction conditions, multiple quotations, relationship documentation | Demonstrate price-setting process and rationale |
| Only confirmed scrap sale amount | Net recovery amount including transport and sorting costs unclear | Purchase details, transport costs, labor costs | Separate total recovery amount and related costs |
| Did not consult insurer or others before sale | Disputes over evidence preservation or disposal method | Notification records, sale approval, photos | Confirm beforehand for high-value or contentious cases |
Example 1: Confirming the Residual Value through Discounted Sales
For an electronic appliance with a pre-accident value of 1,000,000 yen, suppose the product itself has no damage despite significant damage to its outer box, making it unsellable as a new item in a regular store, but it could be sold as an outlet item for 300,000 yen.
In this case, the product’s intrinsic value is not completely lost. The actual recovered amount of 300,000 yen should be recorded as the resale recovery value and, if necessary, deducted from the loss amount.
It is important to document the normal selling price, reason for discount, sales volume, buyer, sales details, and payment records, clarifying that the discount is due to accident-related condition, not normal sales promotions.
Example 2: Valuing Irreparable Goods as Used Parts
Consider a machine valued at ¥800,000 before the incident, which has been deemed irreparable. However, some components such as the motor, control unit, and sensors are still reusable, and a purchase quotation of ¥150,000 has been obtained for the parts as a whole.
Even if the machine is irreparable, the overall economic value does not immediately drop to zero. The parts’ value of ¥150,000 is considered the salvage value.
Prepare documentation including Certificate of Non-Repairability, a list of reusable parts, condition of the parts, removal costs, purchase quotation, and collection terms. If removal costs are substantial, separate confirmation should be made between the quoted amount and the practically recoverable value.
Example 3: Verifying the Reasonableness of Scrap Sale Amount
Assume that 2,000 kg of damaged metal products were sold as scrap at 50 yen per kg, resulting in a total sale amount of 100,000 yen.
In this case, verify the weight certificate, applied unit price, type of scrap, deduction for foreign materials, transportation costs, purchase details, and payment records.
If the market price at the same time was 80 yen per kg, prepare to explain the reason for the 50 yen price based on factors such as quality, mixed materials, pickup conditions, and responsibility for transportation costs.
Example 4: When Partial Sale and Partial Disposal Occur
After inspecting 100 water-damaged items, suppose 40 can be sold at a discount, 20 can be used for parts, and 40 must be discarded due to mold.
Organize the 40 discount-sale items, the 20 items sold for parts, and the 40 discarded items as separate processing categories.
Align the quantities in the sales details, parts purchase details, disposal certificates, and inspection reports, reflecting both the sale proceeds and disposal costs in the same damage amount calculation report. Avoid applying the same salvage value rate uniformly to all 100 items.
Common Misunderstandings
| Common Misunderstanding | Actual Concept | Practical Notes |
|---|---|---|
| If there is a residual value, it must always be sold. | Value may be assessed by appraisal, post-repair value, or parts value, among others. | Keep documentation of the valuation basis even if no sale occurs. |
| Residual value does not exist unless an actual sale takes place. | The value may be evaluated before sale based on marketability or appraisal. | Specify the valuation date, conditions, and appraiser. |
| The appraisal amount and sale recovery amount are the same. | The appraisal amount is an estimate; the sale recovery amount is based on actual transaction. | After sale, confirm the difference from the actual result. |
| Both the appraisal amount and sale recovery amount should be deducted. | Do not deduct the same value twice. | Use one deduction amount corresponding to the valuation timing. |
| If repair is impossible, the residual value is zero. | There may still be value in parts removal or scrap. | Separate Certificate of Non-Repairability from value assessment. |
| If there is a disposal certificate, confirmation of residual value is unnecessary. | It may be checked whether there was any sale or reuse value before disposal. | Retain pre-disposal photos, appraisal, and statement of reasons. |
| If the sale amount is recorded, no explanation of validity is needed. | Extremely low sale prices may require clarification of the pricing process. | Save multiple quotations and market data. |
| Considering residual value means no claim can be made. | It is a deduction item to calculate the proper damage amount. | Clearly show calculations before and after deduction. |
| Residual value is irrelevant in cases of quantity shortage. | If cargo is recovered later, the claim amount should be adjusted. | Confirm recovered quantity, condition, and value. |
| The freight forwarder decides the residual value. | The freight forwarder can assist in collecting materials but is not necessarily the final appraiser. | Separate judgments between appraiser, shipper, insurance company, etc. |
Decision Checklist
| Confirmation Stage | Parties to Confirm With | Items to Confirm | Actions if Issues Are Found |
|---|---|---|---|
| Sorting of damaged cargo | Shipper, warehouse, inspection company | Quantities of intact goods, damaged goods, goods for sale, goods for disposal | Recreate inspection sheet to align quantities |
| Checking regular sale eligibility | Shipper, manufacturer, sales destination | Eligibility for regular sale, discounted sale, limited-use sale | Document reasons for unusable or unsaleable status |
| Repair decision | Manufacturer, repair service | Repair feasibility, repair cost, post-repair value | Obtain repair quotation or Certificate of Non-Repairability |
| Requesting appraisal | Purchasing agents, appraisal companies | Quantity, condition, delivery terms, appraisal date | Unify conditions and obtain multiple quotations |
| Before sale | Insurance company, shipper, possible liable parties | Sale method, sale price, evidence preservation | Obtain prior confirmation and approval as necessary |
| After sale | Buyer, accounting, shipper | Quantity sold, total amount, payment received, related costs | Update payment records and damage claim documents |
| Before disposal | Shipper, insurance company, disposal contractor | Confirmation of no sale or reuse value, disposal quantity | Retain photos, appraisals, and disposal reason documents |
| Scrap evaluation | Purchasing agents, warehouse | Weight, unit price, deduction for foreign matter, transport conditions | Obtain weight tickets and market price references |
| Calculating damage amount | Shipper, accounting, insurance company | Residual value, sale recovery amount, additional charges, quantity | Correct duplicate deductions and quantity mismatches |
| Claim Letter preparation | Carrier, NVOCC, potential liable party | Deduction amounts, basis for valuation, Candidate Claim Amount | Clearly indicate calculation formulas and attachment reference numbers |
Scope of Freight Forwarder Involvement
When a cargo incident occurs, the freight forwarder may assist in collecting and sharing inspection records, sale documents, assessment materials, and inventory records among the shipper, insurance company, carrier, NVOCC, warehouse, surveyor, buyer, disposal contractor, and others.
However, the freight forwarder is not necessarily in a position to make final decisions independently on the residual value, fairness of sale price, irreparability, necessity of disposal, insurance payout amount, or carrier’s compensation amount.
| Category | Likely Support | Should Not Decide | Practical Handling |
|---|---|---|---|
| Identification of Evaluation Target | Verification of item numbers, cases, lots, and quantities | Legal determination of damage quantity | Obtain confirmation from inspectors and shipper |
| Photos and Inspection Documents | Collection of post-incident condition and quantity records | Determining residual value based on photos alone | Correlate photos with assessment and inspection reports |
| Assessment Requests | Coordination with surveyors and buyers | Final judgment on the appropriateness of assessment amounts | Standardize evaluation criteria |
| Sale Documents | Collection of sale quantities, unit prices, and payment records | Assuming sale prices are always fair | Confirm multiple quotations and market data |
| Pre-disposal Confirmation | Request verification of resale or reuse possibility | Final approval for disposal | Confirm with shipper, insurance company, etc. |
| Comparison with Repairs | Organizing repair, sale, and disposal quotations | Final determination of total or partial loss | Compare costs to post-incident value |
| Damage Amount Calculation | List of residual value, recovery amount, and additional charges | Final decision on insurance or compensation amounts | Organize as the Candidate Claim Amount |
| Notification to Stakeholders | Creation of notification records before sale or disposal | Determining legality of disposal based solely on notification | Preserve notification date, responses, and attached documents |
Practical Points
Residual value represents the economic worth remaining in damaged cargo after an incident and is an essential deduction factor for accurately calculating the loss amount.
In practice, residual value, expected sale price, and actual sale proceeds are distinguished. To avoid double deductions of both the pre-sale assessed value and the post-sale actual recovery, the timing of evaluation and calculation basis should be clearly defined.
Furthermore, even if cargo is beyond repair, parts salvage or scrap value may remain, so simply stating that the cargo was discarded does not necessarily mean it had no value.
Once disposed of, it becomes difficult to reassess the condition or market value of the damaged cargo. Therefore, before sale, disposal, or dismantling, it is important to retain photos, inspection reports, assessment documents, multiple quotations, and records of notifications to relevant parties.
When normal goods, discounted items, repaired goods, parts, scrap, and discarded goods are mixed, values, recovery amounts, and additional charges should be calculated separately for each quantity category.
Summary
Residual value refers to the economic value remaining in imported cargo damaged by an incident, including its post-accident usable value, resale value, parts value, and material value.
The residual value is assessed through pre-sale appraisal, discounted sales, post-repair value, parts salvage value, scrap value, etc. In some cases, it may be concretely determined by the actual amount recovered through sale.
When calculating the damage amount, it is important not to deduct the appraised residual value and the actual sales recovery amount twice, and to ensure consistency in the quantities of intact goods, damaged goods, sold goods, and discarded goods.
In practice, before carrying out sales, disposal, repairs, or dismantling, it is important to preserve photos, inspection reports, appraisal documents, multiple quotations, sales details, payment records, and confirmation with related parties. This clarifies how the residual value has been reflected in the claim amount.
Marine cargo insurance for ocean freight varies in conditions beyond just the premium. For the selection of coverage conditions and the interpretation of clauses, please consult with specialized insurance companies or agents.
