Transit inventory is an important aspect in transportation as you seek to buy an insurance policy. It refers to the inventory that is shipped by the seller but has not yet reached the stated destination of the buyer. It is commonly referred to as pipeline inventory as the inventory is in transit. Either the buyer or the seller has to account for the inventory in transit depending on the shipping terms. Ideally, either of them should record goods in transit in their respective accounting records.
Important In-transit Inventory terms
FOB shipping point; It implies that the ownership is transferred to the buyer instantly as the seller ships the merchandise from his warehouse.
FOB destination point: It implies that the ownership is transferred to the buyer upon the final delivery of the goods.
Issues in Transit inventory
Transit Inventory is also referred to as Stock in transit. This can create hassle if the buyer does not have a system in place to record the inventory before the receipt. Under the FOB shipping point settlement, the supplier will receive the transaction at the point of shipment whereas the receiving company will only record it upon the receipt. Thus, no one actually records the inventory while it is in transit.
Transit Insurance is a significant part of inventory management
For example, a lot of machines are exported from China to India. These two locations are at a great distance and the delivery will take weeks to reach the destination. So all the machines that are being shipped are referred to as transit inventory. The insured material and while the goods are in transit it is the responsibility of the seller to carefully pack and store the product in an organized manner.
However, in this situation, an important question of ownership arises as neither does the seller nor the buyer possesses the inventory. If the inventory is in transit who has its ownership? To solve this, various kinds of In–transit insurance is required based on different types of transit inventory. Types of material insured based on their ownership mentioned in sales terms and conditions. Leading shipping companies buy cargo insurance policies to protect their goods from theft, or loss or, damage, or while in transit.
Get Motor truck Cargo Insurance
Best transport companies buy insurance policy on the freight hauled by a For-hire trucker. It covers your liability for cargo that is damaged or lost due to unforeseen causes. Damage of material such as collision, or fire. The load is accidentally dumped on a roadway. The insurance policy coverage also pays for the cost to remove debris or costs related to preventing further loss to damaged cargo and covers legal expenses.
Get Commercial insurance policy
Leading transport companies opt to secure Commercial insurance to protect their goods from loss or, damage, or theft while in transit. Secure your material is a type of insurance policy that also helps cover vehicles. Insurance used for business purposes such as trucks and vans. Commercial insurance also covers vehicle damage and driver injuries. As the transporters use vehicles as part of their business. Commercial insurance done online from professional transport company such as trukkyinsurance.