Is The Carmack Amendment Relevant In International Shipments?

International shipments are common in today’s global market with the result that it has become common for product shipment to cross borders to reach the consumer.  The distance and necessity for using different modes of transportation can lead to an increased risk for damaging accidents.

The Carmack Amendment provide a well-established procedure for handling such incidents that happen on interstate trucking shipments in the United States.  However, when an accident occurs in the domestic portion of an international shipment the applicability of the Carmack Amendment is a work in progress.

Currently the Carmack Amendment provides a  standardized national scheme of liability and damages for interstate rail and motor carriers in order to give certainty to both shippers and carriers.  One objective of the amendment is to relieve cargo owners of the onus of discovering which is the offending carrier among what is often a myriad of carriers involved in the interstate shipment of goods.

What is at question is whether the Carmack Amendment applies to multi-transit domestic segments of an international shipment which is covered by one contract such as a bill lading.

In a recent court case, Kawasaki Kisen Kaisha Ltd versus Regal-Beloit Corporation, the Supreme Court ruled that the Carmack Amendment does not apply to the domestic portion of a shipment that originated overseas under a single bill of lading.  Under the Carmack rules only the receiving carrier is required to issue a Carmack compliant bill of lading.  The receiving carrier as defined by Carmack is only the carrier who accepts the shipment at its point of origin. In the Kawasaki case the carrier, Kawaski received the cargo under a through bill of lading that covered the shipment to an inland location in the US and there was no rail carrier who was required to issue a bill of lading under Carmack. 

This Supreme Court decision thus limited Carmack application in international shipments.  However,  it left to open whether the Carmack Amendment applies when the goods intended for export are received in the US and whether it applies in instances involving a freight forwarder or other intermediaries.

More recent lower court rulings appear to expand the direction of the Kawasaki  Court Case with their conclusions that other bodies of law or contracts apply in the domestic portion of international shipments.  This trend of limiting application of the Carmack Amendment in the domestic portion of the international shipment provides strategies for carriers to avoid Carmack liability when drawing up contracts and in litigation.

Shipping Advantages Provided By an NVOCC (Non Vessel Owning Common Carrier)

Today when an International shipper is looking for their best options, they might want to consider the benefits of using a Non Vessel Owned Common Carrier (NVOCC).  These shippers are able to accommodate the needs of both large and small companies.  Many government agencies also regularly utilize the services provided by a NVOCC. 

According to an article in Maritime Journal, “The N.V.O.C.C. is a freight forwarder who sells a combined transport package incorporating a sea transit. He is not a ship owner, nor does he appear to be normally involved in the chartering of ships although no doubt he could do this.”  

OTI 

Prior to a company becoming a NVOCC, they will need to obtain their ocean transportation intermediary (OTI) license.  This means they will have to be qualified as a shipper by following a variety of steps required by the Federal Maritime Commission. 

Bills of Landing 

A NVOCC operates in the same way as any other cargo carrier.  They are able to issues bills of landing (BOL).  This is a document that confirms that goods have been taken on board a vessel.  It verifies the goods will be shipped to a particular destination and consignee for end delivery.  

Experience 

Most NVOCC shippers will have all the experience necessary to handle a wide variety of cargo types.  They will be able to do importing as well as exporting.  NVOCC shippers can handle everything from over sized items to temperature sensitive cargo and more.  

Tariffs 

NVOCC will file tariffs with necessary government regulatory bodies.  This will generate the required public tariffs.  

Experience 

An experienced NVOCC will know every important aspect of cargo shipping.  They will know how to successfully book space with shipping companies.  A NVOCC will be able to provide all required documentation for the shippers they utilize.  They will be able to coordinate the efficient delivery of cargo domestically as well as internationally.  

If you would like to know more about how an NVOCC (Non Vessel Owned Common Carrier) can meet your cargo shipping needs we can help.  Contact us today and learn more.

Excess Cargo Insurance Freight ASAP

In some instances, a standard insurance policy on cargo may not be enough to completely cover the load if it were damaged. As a result, many insurance carriers offer excess cargo insurance to help bridge the gap between what the original policy offered and the actual value of the loss at hand.

An excess cargo policy is used only when the loss on the original policy exceeds its limits. It is considered to be a “follow form”, which means the languages and terms in this rider basically stay the same as the policy on which it sits upon. As a result, an excess cargo policy should be rather straightforward and easy to understand.

One of these policies could be needed when hauling loads that are valued at over $100,000. An excess cargo policy can typically cover loads valued at up to $1 million, although some may provide coverage for up to $10 million. A policy could also cover a number of other things besides cargo, including the removal of debris, cleanup of pollution after a cargo spill, and loss of income. The cargo itself could be covered a number of ways including:

• Physical damage
• Physical loss, i.e. theft
• Perishing due to equipment breakdown.

 

Excess cargo insurance is not intended for those who routinely carry high value loads. These individuals may want to consider a high value trip transit cargo policy instead, as this type of policy will cover up to 50 high dollar value loads per month. By insuring that each load is covered by the right policy, worrying about the loss of expensive cargo will no longer be a source of worry.

 

Cargo Insurance Considerations

When shipping supplies to your firm or products to customers, safety comes first. You want to ensure that you do not incur any losses owing to damage of the package in transit. As such, cargo liability insurancebecomes vital.

Although many business owners do not understand the growing business in ship transport, they applaud the introduction of shipping insurance. As Forbes puts it, “The cargo shipping business is highly cyclical, a fact that many ship owners have not seemed to have grasped.” Regardless of this, many acknowledge the purpose of shipment insurance. This coverage has seen many be compensated by the insurance firms due to the damages caused on their goods.

Given the importance of cargo insurance, it pays to trust only the best company with your package. The insurance firm you pick for the purpose has to meet the standards needed for cargo insurance services. This is in regards to insurance premium, rates of insurance and the services offered among other factors. Before you select any insurance company, see to it that you look at its history, reputation and the relation it has had with other clients.

The nature of your products also counts when it comes to cargo insurance. A firm may choose not to insure some products. Therefore, you have to ascertain that the products you have are included in the firm’s list of goods insured. The nature of the goods will also lead to the variation in costs, rates and other factors.

Consider exactly what the firm is offering you. Often, insurers will compensate for damages caused by any factor including third parties. This covers all scopes of damage. However, there are those that will compensate only against the factors that you stipulate. As such, you need to verify with the insurance firm what factors of damage they insure against.

Also, consider their claim policies. Will it take forever for a claim to be compensated? You have to ensure that the firm you are planning to buy the cargo insurance quote from has a favorable claim policy. Understand their special clauses, process and formalities involved when making a claim and such factors beforehand. This way, you are able to gauge whether the company is right for you.

The above are some of the parameters that you have to consider prior to selecting a cargo insurance firm. To learn more about cargo liability insurance, contact us.

The Significance of Contingent Cargo Insurance

Contingent Cargo Liability insurance is a secondary policy that freight brokers carry in order to cover some or all costs, not normally protected by a typical primary policy, that are involved with replacing, handling, storing, or disposal of cargo that is damaged, refused, or lost.  

Although there is no law requiring contingent cargo liability insurance, many carriers choose not to work with a broker who doesn't have it, because most often brokers forward claims to their carriers. If the carrier's insurance won't cover it, somebody still has to pay the expenses. As a broker without coverage for such an instance, your carriers can blame you for the loss even though you can't legally be held liable. Relationships between you and your carrier can suffer. 

Some benefits to having contingent cargo insurance are that it lets you compete with other brokers, since you don't have to worry about paying for lost shipments out of your own pocket, and if anything happens to a shipment, you can still get goods to consumers without too many undue delays.

There are two scenarios that may arise where you must have coverage. One is if you and a carrier sign a contract transferring liability to you. The other is when you choose a carrier who doesn't have proper carrier's insurance. Normally, this doesn't happen, but sometimes carriers unintentionally miss premium payments or they don't have a policy that covers as much as you would like them to. 

As you can see, the cost of carrying contingent cargo liability insurance is well worth the expense. Lost relations can be as devastating as lost shipments. This insurance helps to protect you from both.

Why Every Shipper Needs A Freight Broker

You may have heard of freight brokers but are not sure of what they do. Simply defined, a freight brokeris a company that acts as a link between companies or individuals who need shipping services and certified motor carriers. It is worth noting that while brokers play a crucial role in cargo transportation, they do not in any way function as the carriers or shippers. The role of the broker is to identify the needs of shippers and then connect the shippers with carriers who are able to transport the goods at a reasonable price.

There are a number of reasons why you should consider using the services of a freight broker. For starters, you get the best prices for your shipments. It is the duty of the freight broker to find you the most affordable shippers available. Before settling on particular shippers, brokers take the time to compare bids from several companies.

Another reason to use freight brokers is that they help you save precious energy and time. Think of the amount of time you would spend searching for the most reputable and reasonably priced shippers. This is time that could be spent doing other important things. Having worked in the industry for a significant amount of time, the brokers know which brokers to use.

Though there are many freight brokers out, it is safe to say that they are all not equal. In order to choose the right broker, there are a number of things you should look for. Proper licensing is the first thing to look for. According to fleet owner: “Beginning Oct. 1 anyone acting as a broker or a freight forwarder, including motor carriers who broker loads, are required to register and obtain broker or freight forwarder authority from FMCSA. Brokers and freight forwarders will also not be subject to a minimum $75, 000 financial security requirement.” What this means is that you should only use freight brokers who have licenses from the FMCSA, or the Federal Motor Carrier Safety Administration. Hiring licensed brokers ensures that you are protected in case something goes wrong.

In the event that your shipment is lost or damaged, you need to be sure that you will be compensated. For this reason, you should choose a broker with insurance. In addition to liability insurance, good brokers also carry errors and omission insurance.

If you would like to know more about freight brokers GSIS is the company for you. Do not hesitate tocontact us today.

The Federal Motor Carrier Safety Administration (FMCSA) has updated regulations of a 17-part final rule to comply with Map 21, the two-year highway funding schedule that went into effect last year. 

Updates to the FMCSA's MAP-21

Among the updates, those in the transportation industry will see higher maximum fines imposed against those who violate regulations. Another change allows the FMCSA to put an entire fleet out of service if it has not secured proper registration with the Department of Transportation (DOT). Previously, only individual trucks without DOT registration numbers were put out of order. A carrier still operating although its fleet has been suspended will see stiffer penalties. Some debate continues as to whether or not the agency would put a large fleet out of order for a single truck violation.

Also under the rule, the FMCSA must perform safety reviews on all new motor carriers within 12 months (instead of the previous 18-month window) of receiving operating authority. More stringent prohibitions against drivers operating trucks on suspended or revoked commercial driver licenses (CDL) will be enforced. 

The new rule implements several increases in maximum penalties for regulation violations. Among them:

• Violating requirements for reporting, record keeping, and registration rises from $500 to $1000.
• If the violation includes hazardous wastes, the fine rises from $20,000 to $40,000.
• Failure to respond to a subpoena jumps from $500 to $10,000.
• Violating out-of-service orders has been increased to $25,000.
• First offense of evasion of regulations jumps from $500 to $5,000. Fines for subsequent evasion violations raise from $500 to $2,000.
• Nonfatal hazmat transport violation fines rise from $50,000 to $75,000.
• If the hazmat transport violation involves a severe injury or substantial property destruction, the fine jumps from $100,000 to $175,000.

The new rule includes technical fixes that hold Canadian and Mexican carriers to the same regulations as U.S. carriers.

As a "nondiscretionary ministerial action," the FMCSA was able to implement the new rule without the standard notice of proposed rule making and public comment.

Pirate's Moving West

The recent attack by Somali-based extremists at a mall in Kenya has renewed discussion about Somali pirate attacks along key shipping routes.

The International Maritime Organization (IMO) initiated a long-term anti-piracy project in 1998, and it continues today. Through regional seminars and workshops for government officials from piracy-riddled areas and using evaluations and assessment missions, IMO has worked toward regional agreements for anti-piracy measures.

Although IMO's work has largely been toward creating a network of consistent and collaborative anti-piracy measures, their emphasis continues to be on self-protection. The best defense is a well-protected merchant ship.

There has been success in recent years, which has largely been attributed to $3 billion in annual spending on shipboard security and navy patrols. Thanks to increased shipboard defense spending, attacks off the Horn of Africa have fallen 70% since 2011. At a time when company and state budgets are seeing massive cuts, there is worry that reduced spending on shipboard defense measures will lead to a rise in Somali hijackings.

The conditions favoring Somali piracy have not changed. Poverty and instability in the region feed extremist movements. Merchant ships passing through the Gulf of Aden between Yemen and Somalia continue to be at risk.

With increased piracy activity, merchants and freight forwarders would likely see steep rises in ocean freight insurance premiums. A 2008 report on Ocean Piracy and Its Impact on Insurance described a dramatic increase in insurance rates after a surge of piracy activity between 2007 and 2008. In 2007, it cost $900 to insure a container. After a rise in pirate hijacking, that cost rose to $9,000 in 2008.

Regardless, all warn against complacency. Declines in pirate attacks have come at a significant financial cost. As conditions in Somalia remain unchanged and as companies examine budgets, defense against piracy remains imperative. A well-protected ship and insured cargo are the best defense against attacks.

Government Shutdown Affects Maritime Academy

The government shutdown may end up delaying or even cancelling the careers of many midshipmen, sending a ripple effect through the maritime shipping industry.

Military academies are feeling the pain of the government shutdown, as commissaries are closed and even the Army and Navy football games cancelled. But they're still open for classes, albeit on a reduced schedule and with reduced services, as the Department of Defense considers them essential to national security.

But one Federal Service Academy is completely shut down because of the government shutdown: the US Merchant Marine Academy. The Merchant Marine trains sailors to serve in the civilian fleet, with options for serving in all branches of the military. Merchant Marine graduates end up in areas like shipping, dredging, and salvage, but have been activated to combat duty. Most notably, the Merchant Marine suffered the highest casualties in World War II, with upwards of 8,000 mariners KIA. 

Here's how the Merchant Marine Academy can be shut down: it's not part of the Department of Defense. The Merchant Marine is part of the Department of Transportation and thus, not considered to be "essential". So when the government shutdown came, the entire campus was shut down. Midshipmen are allowed to stay on campus for now, but basic services have been cut off. If the government shutdown continues for a prolonged period, the midshipmen may be sent home. 

The Academy has 720 midshipman, with a strict schedule to maintain. Some are scheduled to go to sea for training in November, but must meet their Academy requirements first. A long delay could jeopardize that. The Academy warns a shutdown of longer than a few days could jeopardize the Academy's accreditation. Mariners who are currently at sea will be allowed to continue to serve. But the Academy hasn't said what might happen if the shutdown lasts longer. 

The Need For Contingent Cargo Insurance

Whenever goods are transported across the country there is always a chance they may not make it to their destination.  If they do make it, they could be damaged.  This could be caused from ships being in bad storms, thefts, accidents and more.  In order to prepare for such a situation, there may be a need for added insurance beyond standard coverage for cargo.  

Contingent cargo insurance could be required if a freight broker is responsible for any lost cargo or damage not covered by other insurance.  The decision to purchase this insurance may be based on the type of contract between a shipper and the freight broker.  There are contracts that will make the freight broker responsible the cargo.  It’s also essential to have the right coverage if the carrier utilized fails to pay.  

This type of insurance enables brokers to establish a positive relationship with shippers and carriers.  It enables them to not be concerned about paying for losses on their own.  This can benefit the consumer by providing added protection in getting shipments to their destination.  

There are also policies available that cover any financial responsibilities associated with the transportation of the cargo.  There could be situations involving fraud committed by employees, pollution cleanup and more.  It can even cover such things as unintentionally breaking laws and regulations associated with moving different types of cargo.  

Contingent cargo insurance can also provide legal coverage should it be required.  In this situation all attorney fees are covered.  The expenses associated with any type legal defense are quite costly.  This type of coverage will be very valuable if any type of situation occurs that requires legal representation. 

If cargo is shipped by air, sea, truck and more it’s important to have an insurance plan that provides all the necessary coverage.  It is always best to analyze insurance needs based on the type of cargo, the shipping agreement and the method of transportation utilized. 

 

The $75,000 New Broker Bond and the 60 Day Phase in Period

As brokers and freight forwarders prepare for the $75,000 broker bond increase, the Federal Motor Carrier Safety Administration (FMCSA) has announced a 60-day phase-in period. The increased bond requirement deadline is October 1, 2013. Brokers and freight forwarders under FMCSA's jurisdiction must file BMC-84 or BMC-85 forms reflecting the new bond amount by this date. Notices will be sent to those not yet compliant on November 1, 2013. Then, the agency will begin revoking freight forwarder and broker operating authority registrations of those still not compliant on December 1, 2013.

The new $75,000 broker bond, part of MAP-21, still comes with its share of controversy. Although several organizations support the bond as a means  to guarantee brokers will pay freight bills as agreed and get rid of those who don't, others oppose it. The Association of Independent Property Brokers and Agents (AIPBA) filed suit against the FMCSA in July, asserting that the new bond will not accomplish what it intends (to weed out fraudulent brokers) and that it was established without regard for federal rulemaking procedures.

Small brokers worry of the bond's impact on their operations and capacity to remain competitive. While the increase may create only small ripples in large companies, it poses a significant hardship for smaller brokers. Some fear it will put small, reputable brokers out of business completely.

Although brokers are still required to have the new bond in place by October 1, the 60-day phase-in period may give those who need it a little extra time to prepare before losing licensure. Small brokers are urged to work with a good accountant and banker to strengthen the company's financial standing and secure credit.

AIPBA recommends small brokers seek legal counsel for what the bond and the additional phase-in time will mean for their companies. AIPBA is currently seeking clarification for what an October 1 canceled $10,000 bond will mean for a small broker. Will the broker be able to continue operations without a bond until December 1? Or will "patch bonds" be available through the transition period?

How The New Freight Broker Bond Could Effect You

Effective October 1, 2013 there will be a new $75,000 broker bond required that is an increase being implemented by the Federal Motor Carrier Safety Administration from the previous requirement of a $10,000 bond. This will apply for all ICC Property Brokers and Freight Forwarders. To better understand what is happening with this, we need to review some of the opinions of how this action is regarded, and what is currently taking place by those who oppose this section of the act.

The Moving Ahead for Progress in the 21st Century Act includes a $75,000 Bond provision that is being opposed by several groups. According to an article from Logistics Management, the Association of Independent Property Brokers & Agents (AIPBA) has filed a federal lawsuit against the $75,000 bond, claiming that it could cause shippers' freight rates to rise. "The brokers say that bond provision is illegal and anti-competitive." There are several points being argued against this bond.

Without going into a lot of political bickering, it can be summed up best by stating that it is being argued that this particular section of MAP21 pertaining to the new bond limit is unconstitutional. Therefore, a Federal lawsuit has been filed by the Association of Independent Property Brokers & Agents (AIPBA). According to a statement made by AIPBA President James Lamb, “We are seeking justice through the federal court system for the various small business players in the trucking industry that would otherwise be adversely affected.." It is expected that the U.S. District Court will decide this section of MAP-21 is unconstitutional and will issue an injunction prior to October 1.

In the meantime, talk to an expert to understand how this will directly affect you and your business. There are surety programs available for all sized Property Broker and Freight Forwarder companies. Filing a new bond from BMC-84 to replace the existing form will satisfy the requirement. And, keep in mind that the $75,000 bond is required for any Property Brokers that previously had the $10,000 bond as well as Freight Forwarders who are now also included under the new law.

The FMCSA (Federal Motor Carrier Safety Administration) Rejects Sand and Water HOS Requests for Exemption & Considers Livestock and Military Requests

The Hours of Service (HOS) of Drivers Final Rule went into effect February 27, 2012. Compliance date for all provisions was July 1, 2013. New regulations include mandatory home terminal time, 30-minute rest breaks, waiting time, and new distinctions between off-duty and on-duty hours. Since its publication in the Federal Register, the FMCSA (Federal Motor Carrier Safety Administration) has fielded petitions and requests for elaboration and exception.

Sand and Water HOS Exemptions Rejected Specialty truckers at oil- and gas-drilling operations are exempt from on-duty waiting time. The hours spent waiting at well sites may be recorded as "off-duty," thereby pausing the 14-hour maximum drive time. However, per an August 12 notice, FMCSA rejected a request to extend the same exemption to truck drivers carrying sand and water.
Critics of this decision feel truck drivers in the oil and gas industry are unnecessarily limited by confusing regulations. Others feel it's a double standard. One suggestion, proposed by the American Trucking Association (ATA), is to base the off-duty exception on whether or not the driver had the opportunity to rest while waiting at the well site and not just based on what the driver was hauling.

Livestock and Military Rest Break Exemptions Being Considered
Federal regulators are still considering exemptions to the 30-minute rest break requirement for drivers carrying live animals or sensitive U.S. military cargo.
Pointing toward the potential for harm to animals, drivers hauling livestock would not be required to take breaks at all. The National Pork Producers Council (NPPC) was granted such an exemption in July. However, that exemption expires September 9, 2013.

Advocates of the U.S. military cargo exemption state that continuous surveillance of sensitive military shipments are required. If the petition is granted, drivers would be allowed to watch their loads during breaks if they are a part of a two-driver team.

In both cases, the FMCSA may grant 90-day waivers until carriers can establish levels of safety similar to the original regulations. Longer-term exemptions may last up to two years and are then up for renewal if petitioning groups request a new exemption.

Court Says "US-Mexico Cross Border Trucking Program Will Live On!"

Despite appeals and lawsuits filed in June from the Owner-Operator Independent Drivers Association (OOIDA) and the Teamsters union, the U.S.-Mexico Cross Border Trucking Pilot Program will live on, says the U.S. Court of Appeals on July 26.

The long-haul trucking pilot program, overseen by the FMCSA (Federal Motor Carrier Safety Administration), was announced as part of the North American Free Trade Agreement (NAFTA) cross-border long-haul trucking provisions. Its stated aim is to test and demonstrate the ability of Mexico-based motor carriers to operate safely in the United States.

This pilot program allows Mexico-based motor carriers to operate throughout the United States for up to 3 years. Likewise, U.S.-based motor carriers receive reciprocal rights to operate in Mexico for the same period.

OOIDA's and the Teamsters' protests against the cross-border trucking program started as early as 2007 under a pilot program initiated by the Bush administration. Arguments continued in 2011 with the Obama administration's successor program. Complaints center primarily around questions of safety provisions: OOIDA and the Teamsters allege inconsistencies in requirements for physical examinations of drivers, licensing requirements, and drug testing. Specifically, protesters claim that U.S. truck drivers are held to increasingly rigorous standards for safety--standards not enforced in Mexican trucking programs. OOIDA purports that the pilot program gives Mexico's truckers an exemption from safety regulations and therefore creates a hazard on U.S. highways. Another claim rejected by the courts stated that the FMCSA program was too small to be scientifically valid.

Advocates of the program may point toward the explosion of trade between U.S. and Mexico as reason to continue. Total cross-border freight by train and truck surged almost 35 percent from 2007 to 2012, according to U.S. government data. Others, however, may cite data from the Bureau of Transportation Statistics and suggest the surge may have little to do with the pilot program. For instance, the Journal of Commerce (JOC), recently reported that of the more than 5.1 million border crossings in 2012, only 1,046 were completed under the pilot project.

The FMCSA To Cut $1.7 Billion in Costs From Paperwork Reduction

Good news for the trucking industry. U.S. Transportation Secretary Anthony Foxx announced on August 1, plans to reduce daily paperwork burdens on professional truck drivers thereby saving the industry an estimated $1.7 billion annually. Cost reductions will come after a change to requirements for daily Driver Vehicle Inspection Reports (DVIRs). Professional truck drivers will no longer be required to complete DVIRs unless a defect or deficiency is discovered.

Office of Management and Budget Director Sylvia Mathews Burwell declared this measure a significant step forward in the Obama Administration's May 2012 Executive Order to reduce regulatory burdens on the private sector. As quoted in the announcement posted by FMCSA (Federal Motor Carrier Safety Administration), Burwell applauded this change as a commonsense measure. "...the Department of Transportation is dramatically reducing paperwork burdens on the trucking industry, while continuing to protect public safety."
Currently, commercial truck drivers are required to conduct pre- and post-trip equipment inspections and file DVIRs after each inspection. Drivers must do so regardless of whether or not a problem is discovered. Internal studies indicated that only 5 percent of reports filed include issues. The DVIR process was assessed as the 19th most burdensome paperwork requirement, based on the number of hours needed to comply. The new proposal announced by Foxx will continue to require pre- and post-trip inspections. However, drivers will only be required to complete a DVIR if problems are identified.

Unchanged is the federal requirement for thorough annual safety inspections of all commercial vehicles in the U.S. Additionally, state and federal inspectors will continue to spot-check commercial vehicles randomly at terminals, weigh stations, truck stops, and at end points. Vehicles deemed problematic after inspections will continue to be removed from service until all noted safety problems are resolved.

The FMCSA Continues to Become More Efficent in Driver Compliance

Good news for the trucking industry. U.S. Transportation Secretary Anthony Foxx announced on August 1, plans to reduce daily paperwork burdens on professional truck drivers thereby saving the industry an estimated $1.7 billion annually. Cost reductions will come after a change to requirements for daily Driver Vehicle Inspection Reports (DVIRs). Professional truck drivers will no longer be required to complete DVIRs unless a defect or deficiency is discovered.

Office of Management and Budget Director Sylvia Mathews Burwell declared this measure a significant step forward in the Obama Administration's May 2012 Executive Order to reduce regulatory burdens on the private sector. As quoted in the announcement posted by FMCSA (Federal Motor Carrier Safety Administration), Burwell applauded this change as a commonsense measure. "...the Department of Transportation is dramatically reducing paperwork burdens on the trucking industry, while continuing to protect public safety." 

Currently, commercial truck drivers are required to conduct pre- and post-trip equipment inspections and file DVIRs after each inspection. Drivers must do so regardless of whether or not a problem is discovered. Internal studies indicated that only 5 percent of reports filed include issues. The DVIR process was assessed as the 19th most burdensome paperwork requirement, based on the number of hours needed to comply. The new proposal announced by Foxx will continue to require pre- and post-trip inspections. However, drivers will only be required to complete a DVIR if problems are identified.

Unchanged is the federal requirement for thorough annual safety inspections of all commercial vehicles in the U.S. Additionally, state and federal inspectors will continue to spot-check commercial vehicles randomly at terminals, weigh stations, truck stops, and at end points. Vehicles deemed problematic after inspections will continue to be removed from service until all noted safety problems are resolved. 

The MOL Comfort Ocean Calamity

The Carrier of Goods by Sea Act states that the carrier is responsible for vessel seaworthiness, the safety of goods in route, and the proper manning of the vessel. Items the carrier is not responsible for include negligence of the master navigator, fire, accidents at sea, acts of God, acts of war, seizure, mutiny, insufficiency of packing of goods, and other situations in which the ocean carrier's actual fault is in question. 

Without ocean freight insurance, a company can be held responsible and liable for such incidents. In order to protect your company and your assets, a viable and comprehensive insurance plan must be set in place.

In June of this 2013, the MOL Comfort ocean container vessel fractured in two separate sections during an incredible storm on the Indian Ocean. The vessel suffered extensive damage to the bow and stern; as a result, the ship surrendered all of its cargo to the sea. Presently, officials are still rooting for the cause to the catastrophe aboard the MOL that caused such devastating loss. 

A possibility that is currently under investigation points to structural weakness that caused the wreck of the UK container ship, the MSC Napoli, in 2007. The investigation into the UK ship's demise showed flaws which were concluded to have been caused by a change in the hull design of the ship. The MOL Comfort ship was constructed one year after the Napoli, at which time the change in design of the hull had not yet been corrected. 

Following the MOL disaster, Mitsui OSK lines pulled the six sister ships of the MOL in order to inspect their hulls. Each were designed and constructed around the same time and at the same shipyard as the MOL Comfort and the UK's MSC Napoli. It is feared investigation will show discrepancies in the hull designs. 

At this time, insurance agents in the US feel the MOL disaster will not effect current insurance rates for cargo carriers. It is certain Mitsui's MOL disaster will send shockwaves through the Japanese ocean shipping market because of he number of ships involved in the bad hull design. 

Ocean freight insurance is sometimes a company's only defense from potential disaster. It is important to have a thorough and comprehensive plan and agents that have the knowledge to protect your investment even in the most unique situations. For more information, please contact us.

The Bmc 84 Broker Bond may present some serious challenges to surety markets writing the bond

Many property brokers, freight forwarders and sureties are still trying to figure out all the fine details of the BMC-84 Surety Bond. Requirements of the bond were revised under the highway reauthorization law also known as MAP-21. The amount of the BMC-84 Surety Bond has been increased from $10,000 to $75,000. This new law mandates sureties to pay out claims in the following manner:

1. broker consents to payment
2. broker fails to respond following notice and the surety deems the claim as valid or
3. claim is unable to be resolved and is reduced to a judgement.

Sureties are now required to pay valid claims despite bond principal objections. Sureties must also respond to claims against the freight broker surety bond within 30 days. In addition, any action taken against a surety to recover a claim, entitles the prevailing party to recover attorney fees. However, it is not clear whether those costs can be collected along with the claim. Questions have also arisen concerning the possibility of the old BMC-84 freight broker's bond must be replaced with the new one. Some are asking if a rider or endorsement increasing the bond amount to $75,000 will comply with the new requirements. In answer, the FMSCA has announced that riders and endorsements will be accepted. One last big concern is the fact that there are still no clear cut guidelines outlining how a surety can be relieved of its liability even when the total amount of the bond had been paid out in claims.

With all these questions hanging in the air, sureties are anxiously hoping the new rules will be clarified soon

FMCSA Helps Veterans Move From Military to Civilian Life

More than 300,000 new jobs are expected in commercial trucking before 2020, according to the Bureau of Labor Statistics. On July 3, FMCSA (Federal Motor Carrier Safety Administration) announced almost $1 million in new grants to help train veterans and military families to fill these positions. 

The grants were awarded to six colleges across the country as part of the Commercial Motor Vehicle Operator Safety Training (CMVOST) grant program and could provide training for as many as 300 new commercial transportation students. The announcement was publicly applauded by the Disabled Veterans National Foundation as a smart way to keep veterans competitive in the job market.

Programs that aim to support military service men and women and their families may be inspired by federal initiatives such as the White House's Joining Forces. Joining Forces, announced by First Lady Michelle Obama and Dr. Jill Biden, in part provides employment and educational resources for veterans and their families. 

Some note that military personnel are naturally suited for the commercial transportation industry, as many service men and women have received training in operating heavy equipment and have fulfilled roles in managing supply chains within the military. With this understanding, initiatives such as the CMVOST's grant program are part of the commercial transportation industry's commitment to helping veterans and their families transition from military to civilian life. For example, in May 2011, FMCSA relaxed commercial learner permit rules to waive the skills test for individuals demonstrating at least two years of safe driving experience in military equivalents of commercial motor vehicles.

Transportation Intermediaries Association (TIA) launched its own Veteran Initiative in March of this year. TIA, partnering with the U.S. Chamber of Commerce, Paralyzed Veterans of America, and Troops to Transportation Logistics (T2TL) seek to connect returning and disabled veterans with TIA members who are looking to hire. The program has been successful. By June, TIA noted that over 350 veterans had been identified as qualified candidates for positions at over 60 TIA companies.