Lockdowns Drove New Interest in Fine Art — and Made Shipping It a Brush with Danger
Lots of people got into new hobbies during the pandemic. Some took up knitting, others nurtured sourdough starters and baked the occasional lopsided loaf.
Still others got into the high stakes world of fine arts collecting.
Digital auction apps have long been a part of the fine arts world — Christie’s launched its iPhone app in 2009 — but it took a pandemic, where people were stuck at home, for online art purchasing to really catch on. In the first half of 2022, collectors spent $180,000 on art work on average, per a survey from Art Basel, nearly doubling the $100,000 average spend in 2019.
“During the pandemic, we witnessed a dramatic increase in the number of online sales for art and other valuables,” said Rand Silver, chief risk officer at Treadwell. “I can tell you from personal experience that I did a fair share of ‘couch shopping’ during the pandemic, using auction consolidator apps.”
Yet as sales were booming, shipping these works of art was becoming a nightmare for collectors. Shipping bottlenecks, grounded aircrafts and other transportation delays meant works of art were stuck in transit for unknown amounts of time.
“There’s been massive backlogs at the ports, where containers were just sitting at the ports waiting to be boarded onto cargo ships or unloaded from cargo ships,” said Margaret Bussiere, senior vice president, National Fine Art Practice Leader with Risk Strategies.
A shortage of available vehicles for transport meant costs increased, too. Air freight rates are still 34% higher than they were in 2019, the Journal of Commerce reports.
“In many ways, it’s no different from other industries, where goods are being shipped across continents. There were supply chain disruptions; the cost of shipping has gone up,” Bussiere said. “The art world was not getting special treatment.”
When art gets stuck in shipping, it risks being damaged. A lack of climate controlled storage conditions, inattentive handling or improper packing can cause paintings, sculptures and other works to become mangled. To cut down on costs, some collectors are cutting corners when it comes to properly transporting and protecting their works, driving an increase in claims.
Cargo vs. Air Transportation Exposures
Perhaps the riskiest period of time for any art collector is when a painting is transported from one location to another. A Picasso hanging on the wall will likely stay on that wall, assuming it was properly installed. One in transit could be dropped or scratched. Leave it in musty conditions and mold could grow on the painting.
“There is a risk of physical damage when artwork is removed from its original location, during transit, and until it arrives at its final destination,” said Isabelle de St. Antoine, ACII, account executive with Aon/Huntington T. Block.
Sixty percent of all art damage claims occur while the works are in transport.
“The most frequent causes of loss for any fine art insurer are accidental damage and transit,” Silver said. “The most expensive claims are due to fire, theft and water, because those typically result in total losses, but transit losses are far more frequent.”
Because of the significant risks posed by transportation, fine art often travels with specialty couriers or, if shipped internationally, via air freight. Cargo shipping was only used for large sculptures or works that were sturdy enough to be exhibited outdoors, since there are few ways to control climate conditions on a ship.
“Shipping art via cargo ship can expose art to a range of climates over a longer period of time, and dramatic shifts in temperature and humidity can have [a] negative impact on condition,” Silver said.
With air shipping costs increasing, however, more and more dealers and collectors are turning to cargo shipping to cut down on costs.
“There’s a movement afoot to ship items via ocean cargo instead of air cargo,” Bussiere said. “As the costs go up, they’re more inclined to ship through ocean freight, which then results in an increase in claim activity.”
New Challenges, New Risk Management Tools
In addition to an increase in claims due to ocean cargo versus air shipping, many pieces of fine art are traveling with less protection than they did previously.
The pandemic halted the practice of in-person couriers making the journey with their works. These professionals would use their fine arts expertise to make sure the item was handled appropriately by packers and shippers during all stages of transport. At the height of COVID, this practice was deemed too risky. More people meant more possibility of spreading the virus.
Fortunately, like many things, fine arts couriers were able to pivot to a virtual model. During the packing process, they could Zoom in with packers and watch how they were handling the works. GPS devices allowed them to continue monitoring items for the duration of the shipping process.
“The use of virtual couriers during the pandemic to track artwork in transit included methods like physically tracking devices, which are located on the artwork themselves, or live streams from local crews to show the creating or unpacking or installment of artwork,” de St. Antoine said.
The Best Practices for Fine Arts Shipping
Even with new technologies to help ensure fine art items safely reach their destinations, insureds need to make sure they’re adhering to best practices.
Before transportation occurs, they should assess each work’s value and ensure they have the proper insurance limits to cover a total loss, should it occur. Then, they should create a report documenting the item’s condition. That way, they can prove it was damaged during transport.
It’s also important to make sure someone is on site to immediately receive any deliveries. “We’ve had instances where tight protocols were adhered to, but nobody was at the destination, so items went to warehouses that were not climate controlled,” Silver said.
Whenever possible, hire a fine arts transportation specialist. These “packers and shippers have expertise to pack and ship the items including the personnel, and the materials used to best protect artwork,” de St. Antoine said. They’ll make sure works travel and are stored in climate controlled environments. You can even book some services exclusively.
“For domestic shipments, it’s advisable to hire an exclusive truck if it’s available with minimal stops along the way, accompanied by a courier when deemed appropriate. When we talk about shipments by air, it’s advisable to have a courier accompany the shipment to ensure that the artwork is handled appropriately,” de St. Antoine added.
Before cutting corners to save on shipping costs, fine arts insureds should consider how a damaged painting or sculpture could affect their business relationships: “If our client is an art dealer, and they’re selling a work of art to a buyer, they’re trying to build relationships where they are hoping to have multiple sales over the course of years, [if] something gets damaged on route, it could potentially strain that relationship,” Bussiere said.
If you have any concerns over whether its safe to ship a particular work via a particular shipping method, check with your broker or your carriers. Their risk management teams will be able to provide claims trends that help you understand the risks involved.
“I’m not going to tell the client that they can’t ship something via ocean cargo, even if might be sensitive or fragile, if that’s what the client wants to do,” Bussiere said.
“I’m not going to stand in their way, but I will share with them. I’ll look at claims activity that we’ve seen from other clients so that they understand what the risks are.” &