TIA (Transportation Intermediaries Association) Conference and Expo

Transportation Intermediaries Association has decided to try something new. From April 9th to the 12th they will host their very first Great Ideas Conference and Exposition. The Expo will take place in Tucson, AZ at the JW Marriott Tucson Starr Pass Resort and Spa.

This ground breaking conference is slated to focus on the great ideas brokers and 3PLs needed to succeed. The first session will host five speakers. Each one comes from within the Association's own ranks. They plan to give short uplifting speeches to get the audience started. From there, participants can go through 16 educational sessions in 4 tracks covering 4 essential areas. These sessions will include fundamental, universal, expansion, and advanced learning.

Participants can mix and match any sessions to create a unique learning experience best suited to each individual need or desire. There are 6 general sessions that will be spread out through the trade show and education sessions with the purpose of furthering insight and knowledge base of all the industry.

 Third party logistics is a $162 billion dollar ever growing industry. The Transportation Intermediaries Association is the foremost supporting professional organization in this industry. The hope that the success of this conference and exposition will keep their market moving ever forward into the future.

Today's market is filled with a constant flux in rules and regulations that steadily affect day to day operations. Knowledge is the edge every business person needs to keep up with the changing times and the TIA wants to help everyone do just that.

We will be in attendance and look forward to seeing you all there!

Cargo Liability Insruance: Should Shipper's Share Liability with Railways

When it comes to Cargo Liability Insurance, North America's rail system is in a quandary.

Firstly, railroad operators are not allowed to refuse any cargo, no matter how hazardous it may be, as long as appropriate regulations are met. Secondly, current legislation deems railways liable for all damages incurred in any railroad mishap and up to an unlimited amount, even if the mishap did not occur due to railroad negligence. This is different from marine and air carriers who may limit their liability as a condition of carriage.

Backed by the Association of American Railroads (AAR), these rules have been under review since a disastrous accident in Quebec, Canada, last July forced a small railroad to file bankruptcy. 

Sixty-three (63) tank cars containing crude oil derailed in Quebec last July. Forty-two people died and the town center was destroyed. Reparations, including clean-up and compensation for death, injury, and property damage, will cost hundreds of millions of dollars. The small railroad, Montreal, Maine & Atlantic, had liability insurance of only $25 million. Overwhelmed by the costs of the accident, the company filed for bankruptcy a month later. 

Some believe the minimum amout of cargo liability insurance required by railways should be raised. This requirement alone may put some small railroads out of business. Others, like the AAR, insist that there simply is not enough coverage possible to adequately address catastrophic events like that in Quebec.

Other measures are taken when shipping hazardous cargo by rail. Trains carrying dangerous materials are designated as "key trains" and held to speed restrictions, prioritized over all other trains on the network, and are routed away from heavily populated areas when possible.

Railroad advocates insist the best solution is shared liability between shipper and railway as a condition of carriage. Such an arrangement will boost coverage in the event of an accident. Some claim it may also motivate shipping companies to take better safety precautions when preparing materials for shipment.

Hazmat shippers disagree, citing their rail transportation rates were already increased in order to compensate for risks. Shippers also claim that keeping liability assigned to railroads maintains higher standards for safety and accountability.

FMCSA (Federal Motor Carrier Safety Administration) Now Has Authority to Shut Down Noncompliant Carriers

Beginning February 21, 2014, the FMCSA (Federal Motor Carrier Safety Administration) will have the power to shut down any carrier with a demonstrated pattern of egregious noncompliance with federal safety rules.

Under the new rule, the FMCSA may suspend or revoke the operating authority of carriers who repeatedly violate safety regulations. It is also designed to better facilitate identification of chameleon or reincarnated carriers, who operate multiple entities in order to hide a failure to comply with federal safety regulations.

Notice of the proposed rule was first published in November 2012, and FMCSA welcomed public comment for 60 days. Many in the industry voiced concern that the pattern of noncompliance was not clearly defined. FMCSA responded that each organization called into question would be considered on a case-by-case basis. Furthermore, enforcement of the new rule was best performed with room for discussion and discretion.

The agency best defines "egregious" acts of noncompliance as more than simple negligence. Instead, the full text reads: "a willful, and possibly repeated, attempt to avoid compliance or shield noncompliance."

If a carrier is found to be in habitual noncompliance, the FMCSA will give notice to the carrier of potential consequences. The carrier then has the opportunity to respond and rectify the situation. 

The intention of the new rule, as the agency explains, is to target high-risk carriers and better insure the safety of travelers. 

The new rules comply with the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) and the Moving Ahead for Progress in the 21st Century Act (MAP-21). 

For the full text of the rule and to read industry comments and agency responses, visit the Federal Register: Patterns of Safety Violations by Motor Carrier Management.

International Freight Forwarding Group Advocates for Logisics Industry Input in UN Goals

The International Federation of Freight Forwarders Associations (FIATA) has advised the United Nations (UN) to seek more input from the logistics sector in the creation of their post 2015 Sustainable Development Goals (SDG). Noting that the emphasis on the logistics industry in the current plan is insufficient, FIATA asserts that the expertise of those in the International Freight Forwarding logistics industry is central to boosting the global economy and achieving sustainable growth.

The UN's Rio+20 Conference, held in Brazil in June 2012, resulted in an agreement to launch a process to develop a set of (SDGs), building upon the UN's eight Millennium Development Goals. (The Millennium Development Goals address extreme poverty, HIV/AIDS, gender equality, maternal health, childhood mortality rates, education, environmental sustainability, and global partnerships.)

FIATA's position is based on the imitation lag hypothesis and the life cycle (product cycle) theory. Simply put, imitation lags--delays--occur when one country does not have the technology to adopt and diffuse the imported technology of another country. The life- or product cycle theory describes the trajectory of a new product or technology. It is created in Country 1, matures and is shared with economically similar countries. Production standardizes and is outsourced to developing countries. FIATA asserts that the logistics sector is central to international trade and drives global economic prosperity.

In a position paper published by FIATA, the organization states that their global go-between position affords them unique insight into national policies and the limitations of those policies to have impact on local international communities. FIATA says the relationship between national policies and local economies--and their impact on multiple sectors--needs further analysis before appropriate SDGs can be achieved.

In addition to increased input of the international freight forwarding logistics industry, FIATA has urged the UN to involve many civil societies and relevant stakeholders in their discussions. 

Important Differences Between NVOCC (Non Vessel Owned Common Carriers) and Freight Forwarders

There are a number of interchangeable functions between NVOCCs (Non Vessel Owned Common Carrier) and freight forwarders.  However, in certain situations they have important differences which affect transportation protocols.  Knowing the differences can save time and unnecessary paperwork.

• NVOCCs often both own and operate their shipping containers.  At times, they also lease containers for their use or on behalf of others.  This capability allows them to cutout the middle man and makes the shipping process more efficient.  Freight Forwarders cannot operate this way.
• The United States and certain other countries require NVOCC operators to report their tariff to the proper government branch, thus creating a public tariff. There is a range country specific rules, including who is the designated point of contact and when contact is to occur.  Freight forwarders are not required to operate this way.
• Based on where they are operating, NVOCCs may have to assume the status of a virtual carrier.Depending on the jurisdiction, the NVOCC may be required to accept all the liabilities of the carrier.  Although this adds risk and responsibility to the NVOCC, it is considered to be worthwhile.
• Freight forwarding companies may act as either an agent or partner for a NVOCC.  The NVOCC does not need to be the agent or partner of a freight forwarding company.  This provides more flexibilty and allows NVOCCs to adjust based on the situation.

NVOCCs are frequently termed ship less shipping lines, acting similar to a common carrier, except that an NVOCC does not operate the vessel transporting the container.  The NVOCC brokers space on ships for the aggregate volume of its clients.  Volume garners lower rates which they then pass on to their shippers.  Shippers might choose the services of an NVOCC to avoid damage liability.  The NVOCC can be deemed a carrier who works for shippers and also a shipper to the carriers.

The services provided by a freight forwarder can also be undertaken by the NVOCC.  This includes having personnel available to handle the inland shipping when it reaches its destination, arranging for insurance on behalf of clients and clearing customs (end to end logistics).

FMCSA (Federal Motor Carrier Safety Administration): Safety Rules Coming in 2014

The trucking industry is expecting finalization for two major safety rules early in 2014: 1) mandated electronic logs (e-logs); and 2) a searchable database with driver drug and alcohol tests. A third is on-tap for later in the year: carrier safety fitness.

Mandated E-Logs

A great deal of controversy has surrounded the issue of e-logs--also referred to as electronic onboard recorders. Many drivers reference similar devices in the past as avenues for coercion, describing log boxes that beep every hour and require input during delays and sleeper berth time. Many consider the harassment responsible for driver sleep deprivation and therefore detrimental to highway safety.

The FMCSA (Federal Motor Carrier Safety Administration) conducted lengthy surveys regarding the potential for coercion and possible measures to protect against it. Survey results are being used to develop a coercion plan. This plan will be publicized via a Notice of Proposed Rulemaking early 2014 and then opened for public feedback.

Searchable Database for Alcohol and Drug Tests

This proposal will require employers to report all positive test results and refusals to a clearinghouse. A prospective employer may--with the applicant's permission--access the database for individual records.

The database would be maintained by a third party, and records would come with rigorous privacy measures. Any driver testing positive would be required to complete a return-to-duty process and that would be reflected in the database.

Although employers would pay a fee to access the clearinghouse, drivers would be able to access their own records for free. Dispute and appeal procedures will be part of the final rule.

As with mandated e-logs, the final rule will be posted by notice and then opened for commentary.

Later in 2014...

A third major safety proposal is not expected to reach notice until later in 2014: standards for carrier safety fitness. As part of the Compliance, Safety, Accountability (CSA) Program, data in the Behavioral Analysis and Safety Improvement Categories will be used to determine whether or not a carrier is fit to operate.

Ocean Freight E-Commerce Standards for International Freight Forwarding

The EIPP Standards Advisory Board, established in 2010, is comprised of a self-funded global team of ocean industry leaders.  Conceived as a neutral forum for the top ocean carriers and international freight forwarding executives to partner with customers; its purpose is to expedite e-commerce best practices for success in a digital world.  This independent body has regular meetings to collaborate on, and advance e-Invoicing messaging and process standards for ocean freight commerce.  This November, the organization focused on enhancing the best practices already under development.  The discussion centered on three such processes.

One of the items on the agenda was A Payment Advice Process for invoice payments including the use of electronic messaging to provide remuneration information to collectors.  The process will ensure that all participants share understanding of how using remittance messages can automate IT processes for payment applications and proper payment verification.

Another discussion covered A Credit Note Process to streamline the issue and sending of electronic credit notes whose purpose is to correct prior invoices or shipments from ocean carrier to shipper.  In this case, it helps create a converged understanding of the process for exchanging messages in the ocean freight industry. It also supports the automation of credit note acknowledgement, confirmation, accounting, auditing, and reporting for tax purposes. 

Recognizing the value of electronic invoicing in enhancing customer collaboration, efficiency and cost savings;  the players in the ocean freight industry are becoming more demanding of improvements.  Further development of relevant EDI message guidelines will encourage adoption and sustained e-invoicing in ocean freight commerce.  Electronic invoicing standards which satisfy market demands will lead to instant information delivery, automatic routing to the appropriate parties and improved lead time for speedy invoicing.

Every day millions of tons of freight travel the globe.  Every step produces documentation related to logistics, schedules, exports, imports, custom clearance, duties and more.  Requiring critical focus, the management of information in ocean shipping is uniquely challenging due to the complexity of rate and contract administration.  Embracing established best practices of the latest developments in e-commerce will help advance and streamline the international freight forwarding industry

Disagreement Over The New $75,000 Broker Bond

Reports of the impact of the recently enforced $75,000 broker bond on property brokers is mixed. In effect October 1, 2013, brokers were given a 60-day grace period to comply with the increased surety bond requirements. The grace period ended December 1, and the Federal Motor Carrier Safety Administration's (FMCSA's) database has seen a reduction of over 8,000 brokers out of roughly 21,500.

The increased requirement has seen its share of controversy. Backed by the Transportation Intermediary Association (TIA), American Trucking Associations, and the Owner-Operator Independent Drivers Association (OOIDA), it was considered better protection for freight carriers. Supporters argued the $10,000 bond had been in place for 30 years and was no longer adequate to cover losses suffered by carriers jilted by fraudulent brokers. The new and higher bond was touted as proper course to ensure professionalism and legitimacy in the industry.

Others felt it was an unfair hardship inflicted upon small brokers who do not do enough annual business to afford the increased bond. The Association of Independent Property Brokers & Agents (AIPBA) has been the most vocal opponent of the change. In previous negotiations, the AIPBA had agreed to a $25,000 bond that would cover inflation, but argued $75,000 was excessive, overly punitive to small business, and a means for mega-corporations to monopolize the industry.

Estimates of revoked brokerage licenses has varied. Discrepancies in the numbers of affected brokers may be due to whether or not reported statistics include warning notices sent in November, inclusion of those who voluntarily surrendered their licenses, and inactive brokers who were simply cleaned out of the database after December 1. AIPBA maintains that over 8,000 valid and active brokers were shut down. The organization's petition to the U.S. Court of Appeals remains pending.

In the meantime, brokers who have had their licenses revoked may be eligible for reinstatement if they meet the higher bonding requirements.

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.