Over 250 million containers are transported by sea each year, and each one must be accompanied by a shipping declaration. In a way, it’s kind of like a driver’s license. But instead of height, weight, and eye color, the shipping declaration includes all the info for each shipment.
The declaration will indicate the dimensions (length, width, and height) and weight of the load as well as other details, including specific information about the cargo, container identification numbers, and special handling instructions for customs clearance and for declaring dangerous goods (items that can potentially harm people or the environment).
If any aspect of the container is misdeclared, shippers could face heavy fines and sanctions and pose a danger to vessels, other cargo, and the people who operate ships and ports. Information on the shipping declaration is also included on the bill of lading, a legal document between the shipper and carrier that lists the goods being transported. So any misinformation on the declaration will likely be reflected on the bill of lading and could impact the shipment’s journey through customs. Accurately declaring the vital information of each load is part of every company’s responsibility in ensuring trade compliance.
Let’s dive deeper into the types of misdeclared cargo, the dangers they pose, and how the industry is responding to these challenges.
What is Misdeclared Cargo?
Misdeclared cargo is any load that has incorrect information on the shipping declaration or BOL. Critical information includes the weight and type of commodity inside the box. The entire shipping industry is built on the fact that the shipping information is accurate. Officials can’t individually inspect each of the millions of containers to ensure the physical contents match the shipping declaration.
About 10% of containers carry dangerous or hazardous goods, which can lead to disasters such as fires or environmental hazards like contamination and pollution if they are not stored, loaded, and unloaded in accordance with safety regulations. The industry has suffered several serious incidents involving vessel stability and containers lost at sea due to inaccurate container weights.
Misdeclared cargo may be the result of simple administrative errors or could be part of a plan to ship goods at a lower freight rate or lower duty. Illegal activity is a possibility as well, as criminals scheme to smuggle drugs or stolen property.
Types of Misdeclared Cargo
Incidents involving improperly classified cargoes range from simple customs fines to significant casualties involving pollution, wreck removal and crew injuries or fatalities. Vessel operators and shippers are exposed to a wide range of liabilities when regulations are not followed.
Weight. Overweight containers may cause cargo to shift or collapse, leading to leaks, chemical reactions, or fires. Crews and portside operations could also be impacted. Since 2016, shippers have been required to supply Verified Gross Mass (VGM) data to carriers. Carriers may apply severe financial penalties to overweight boxes.
Dimensions. Even if a container is not overweight, it may be overstuffed or have a weight imbalance like head / side / tail heavy, causing balance and handling problems at ports and on the vessel.
Commodity. Shipment owners may misdeclare cargo to avoid high shipping costs. Clerks may be confused by products with generic or similar names but with different shipping rates and physical properties.
Dangerous/Hazardous Goods. Shipment owners must apply the correct International Maritime Dangerous Goods (IMDG) code to classify substances that are dangerous during transport. If a container catches fire, it is essential for the carrier and the crew on board to know exactly what the container is carrying so they can use the appropriate firefighting strategy for that substance.
Smuggling. Traffickers intentionally mislabel or manipulate a shipment’s information to hide illegal goods, from drugs to exotic animals. Smugglers and drug traffickers may taint legal shipments by loading contraband in the port area or running shell companies to operate illegally.
Risks of Misdeclared Cargo
While putting false information in the bill of lading may seem like a harmless crime, cargo owners put themselves and others at risk. There could be dire consequences for the most innocent administrative error, as well as deliberate fraud.
Fire. Misdeclared dangerous goods are a leading cause of ship fires, contributing to 25% of all cargo-related incidents, according to Allianz’s Safety and Shipping Review 2025. Everything from children’s toys to mobile devices to automobiles that contain lithium-ion batteries poses a fire risk, so any cargo that does not indicate the presence of these electrical storage devices could increase exposure.
Lithium fires are especially hard to extinguish at sea, requiring special methods beyond standard firefighting systems.
Fines. Carriers are imposing hefty penalties for overweight or misclassified cargo, which poses safety hazards and complicates customs clearance. Containers may sit in yards for weeks while corrections are made.
Owner Liability. If a serious incident occurs on board, the cargo owner is typically liable for damages. Depending on the scale, other cargo owners may share expenses under General Average, such as costs of jettisoning containers. Liable cargo owners may also face penalties and legal action.
The risk of higher costs from penalties or cargo damage could far outweigh the potential savings on duties and customs fees. If the cargo owner has insurance and misdeclares, the insurance could be revoked.
Misdeclared loads may result in blacklisting, increased scrutiny, delays, higher costs, and license revocation.
How Does Misdeclared Cargo Happen?
After exploring the many risks, it’s helpful to understand how misdeclared cargo can occur in practice.
Misdeclared cargo often occurs by accident, but deliberate deception is common.
Shipping staff deal with many containers carrying all sorts of products and, understandably, may not know the difference between calcium hypochlorite and calcium chloride. However, the former is a hazardous chemical that many carriers will refuse to carry because it can cause fires and explosions. The latter is harmless salt.
Shippers may use trade names that make it difficult to identify the specific material while doing an HS code lookup. For example, calcium hypochlorite could be listed as a whitening agent or chlorinated lime. Turning to reference guides may not help. The IMDG Code for “calcium hypochlorite” results in six individual United Nations (UN) numbers, each corresponding to a slightly different set of requirements.
One shipment classified as synthetic resins, a non-hazardous material, was found to contain used lithium-ion batteries, a hazardous material with a high fire risk. That shipment sparked a fire at a terminal at the Port of Long Beach.
Given the current trade environment with rising tariffs, there can be a financial incentive to misdeclare cargo. Carriers often charge more for hazardous shipments or may prohibit them. Some shippers risk misdeclaration, hoping to avoid fees, but this endangers people, the environment, and infrastructure.
Criminals may misidentify an entire container load or stow illegal materials in a container that the owner is unaware of.
How To Identify Misdeclared Cargo
The majority of containers arrive at the port sealed, and the contents are not inspected. However, there are some indications that the shipment may not meet the requirements.
- Incomplete documentation, such as incorrect weight or volume declarations
- Shipment designation is similar to that for dangerous cargo, trade names, or synonyms.
- Last-minute bookings or amendments to current bookings
- No harmonised system (HS) code, or an irrelevant, harmless HS code to avoid supervision is being used.
Industry Efforts to Stop Misdeclaration
The shipping industry is collaborating to combat misdeclared and undeclared goods through several initiatives.
KYC. Carriers employ Know Your Customer (KYC) procedures, which involve verifying clients’ identities and business practices, to assess shipments and address the risk of accepting cargo that is not accurately declared.
Hazcheck Detect (HCD). Major carriers have signed on to the HCD, which screens booking data for specific pre-defined keywords and rules. Carriers can screen bookings throughout the process, including at final booking when shipping instructions and dangerous goods declarations are provided. Many users also screen any time the booking changes.
World Shipping Council’s Cargo Safety Program. The system uses a new AI-powered screening tool to help identify cargoes that pose a potential danger to crews, vessels, and the environment. Carriers representing 70% of global TEU capacity currently participate in the program. The digital screening tool, powered by NCB technology, scans millions of bookings for keywords, trade patterns, and risk indicators. Artificial intelligence and a shared-risk algorithm flag potential issues.
How To Reduce Risks with Properly Declared Cargo
Dimerco’s team, with deep industry expertise and commitment to compliance, works with customs agencies all day, every day. You can draw on our strong attention to compliance to keep this issue top of mind. We understand the risks and can help you prevent bigger issues from arising from misdeclared cargo.
Dimerco can assist with securing supply certifications worldwide and performing due diligence to mitigate the risk of misdeclaration.
To explore how your business can identify the benefits of long-term compliance outweighing short-term gains, get in touch with a Dimerco specialist.
If you’d like to know more about trade compliance, download our eBook: Trade Compliance 101: A Practical Guide for Global Shippers