Asses Risk to Determine The Insurance Needs

Cargo Insurance

Geo-political hotspots and natural disasters have combined to sharpen the focus on risk management for both carriers and shippers. Efforts to ameliorate the effects of such potential causes of loss will undoubtedly grow more intense in 2013. Cargo insurance will be as vital a tool as ever in risk management.

Successful attempts to mitigate loss anywhere in the supply chain will add to the bottom line in important ways. Potential commercial losses can be quantified as a first step toward developing strategies to limit such losses.

Potential Scenarios

Supply chain strategists try to ponder every possible scenario that may arise. Success in this area may literally determine victory or loss. Likewise, the advantages of mapping out alternative supply chain scenarios can be substantial. Complex analysis can be required to try to anticipate the unpredictable.

Only a few years ago, most would have scoffed at the nightmarish losses generated by a Japanese tsunami or by pirates off the Somali coast. Then, these heretofore unimaginable threats turned all too real.

It may be very demanding to assess risks presented by threats as diverse as terrorism and computer systems failure. The potential impact of accidents and quality control issues must be fully understood as well. The potential for changing export restrictions is another area to concentrate on. The analytical expertise required crosses many disciplines.

Probability Assessment

This invariably leads to another key effort -- probability analysis. Extreme risks can be identified, but there are never enough resources to address every possibility all the time. That is where statistical probability needs to be considered to mitigate risk.

A successful enterprise will tackle these challenges by successfully managing risk across widely divergent areas. It is possible to quickly respond to supply chain disruptions when the unexpected occurs. Those whom adapt are also effective at stabilizing their bottom line.

For further insight into how successful risk management can help your enterprise, please contact us.

 

Scrap Metal Scams, a Hazard for International Freight Forwarders

 

As prices for all metals continue to climb, there has been an increase in occurances of illicit scrap metal trading. International Freight Forwarding companies are often unwitting accomplices to these schemes. Recently, the British International Trade Association (BIFA) issued a warning to its members and to the international trading community about this issue. The UK Parliament had recently introduced a Scrap Metal Dealers Bill. This bill would make it illegal to pay for scrap metals with cash. The concept was that many scrap metal dealers use cash for their illicit transactions.

 

This concern was addressed by Peter Quantrill, BIFA Director General in an interview with Handy Shipping Guide. His advice was to urge freight forwarders to alert the proper authorities to any suspicions that they have about scrap metal shipments. The UK parliment felt that they had addressed the problem of scrap metal theft by making it illegal to pay for scrap metals with cash. The inadvertent result of such legislation is that the problem has been transferred to freight forwarders as criminals seek to export their stolen scrap metals.

 

BIFA is asking that its members report any suspicious looking shipping containers. Organized criminals use shipping containers to transport stolen scrap metals to various locations. Freight forwarders who handle these containers are in a position to recognize and report such suspicious activities.

 

Some indicators to look for are containers found in unusual locations such as brown fields, industrial units, farms and residential addresses. These unorthodox locations might indicate illegal shipments.

 

Although this warning was issued in the UK, shipping is a global activity and criminal enterprises often cross international boundaries. Freight forwarders across the globe can help to monitor and report instances of criminal activity. Knowing what to look for can help freight forwarders avoid becoming accomplices to criminals seeking to ship stolen scrap metals.

Protect Your Assets

As you know, a Freight Broker serves a vital role in the intricate machine that is freight movement. By connecting shippers and carriers who may not otherwise be able to find each other, you keep the industry humming.

Being a freght broker means investing large amounts of time learning the shipping industry inside and out. Then comes license costs, insurance, and surety bonds. This type of investment is too valuable to leave to any insurance. You must make wise choices. Not only are you expected to protect yourself, but you must look out for your shippers and customers as well.

Broker Shield Freight Insurance offers you a level of coverage that will protect you against unforseen cases that your Carrier's insurance company may not cover.

Broker Shield Insurance coverage provides you with all the protction you'll need. From contingent cargo, all-risk cargo, to third party auto liability and the standard Property & Casualty lines insurance we protect every facet of your business.

Our "value added" services set us apart from other insurance companies by including claims management and recovery services. We focus on making truckers responsible for any damage or theft, leaving your company to concentrate on moving freight. We conduct a contractual review of trading terms & conditions for both Shipper clients & Carrier agreements. We provide an evaluation of claims data and feedback, helping support your logistics chain. We have a training program that helps you understand the full scope of your exposures. We will also give you marketing materials that will help you to stand out amongst your competitors.

Don't risk your company's future with inadequate insurance, Contact us so we can help keep you moving.

A Brief Overview of the Carmack Amendment

The Interstate Commerce Act was established in 1887 to deal with the rise of the railroads and the growth of cross country travel and freight delivery. The intent was to regulate interstate transportation.

In 1906, the Carmack Amendment was added to the Interstate Commerce Act which was enacted by Congress to establish uniform federal guidelines for shipping across state lines. These guidelines were designed to reduce confusion surrounding a carrier's liability when there was damage to a shipper's interstate shipment.

The Carmack Amendment establishes the limits of liability for the carriers. The liability imposed is for the “actual loss or injury to the property”. There are no caps on liability the carrier assumes through the Carmack Amendment. Therefor, when the carrier takes possesion of the cargo they become 100% liable for the load.  

The carrier and the shipper sign a contract named a "bill of lading". The Carmack Amendment allows some carriers to limit their liability in this contract. The amount they assume for cargo damage can vary, but it's generally around $1 Per Lb.
The Carmack Amendment supersedes individual state laws and ensures that all parties are treated with one set of rules. This also means that any state law claims can be dismissed, as the Carmack Amendment takes precedence.

There is a protocol for filing claims under the Carmack Amendment. In order to bring a lawsuit, a written claim must be filed with the carrier within nine months of the date of the delivery of the property. If no delivery was made, then the claim needs to be filed within nine months after a reasonable time for delivery has passed.

Feel free to contact us with any questions or concerns you may have about the Carmack Amendment or other shipping related laws. It's our speciality and we're happy to help.

What you need to know about International Cargo Insurance

If your business conducts business with ocean freight, purchasing insurance could be a valuable asset to stablizing your bottom line. Maritime law dictates that if a cargo ship need to jettison any cargo to preserve the lives aboard and the ship itself, all owners of cargo share the cost of the lost goods. You could still receive your products but also still receive a bill to pay for the lost goods of another patron.

Cargo ships sink and are attacked on a frequent basis.

• 1 dies and 14 missing after ship sinks in Philippines
• Pirates attack British cargo ship in Gulf of Guinea
• Battling Somali pirates in the Seychelles

These kinds of events should be expected. This is why having ocean freight insurance can help save you money. It not only allocates funds for lost cargo, but it also relinquishes your financial liability to recooperate the losses of the other cargo owners.

It is important to know who needs to provide the insurance. Sometimes the shipper exporting the goods will insure them until they reach the buyer. Insuring through a company in the United States can provide you some added advantage if you need to file a claim.

As always, document carefully the value of each item. This gives you standing in which to enforce your claim.

Be sure to take care in reading what type of coverage you are receiving. Some insurers will offer an "all-risk" type of insurance so that any event will be covered for you & others offer specified perils only. 

When needing goods shipped over seas, it is important to consider insurance for your shipment. If you don't, you could be financially responsible for the other customers' cargo too.

Do Freight Brokers Really Need Auto Insurance?

Freight Brokers wrestle with many questions when deciding cost management strategies. One of the biggest is whether or not they need Auto Insurance. The straight forward answer is absolutely. There are so many unpredictable, uncontrollable forces out there, (accidents, storms, hijackings, theft, vandalism) that it's impossible to avoid a lawsuit sooner or later, even if you have nothing to do with the incident. Just having your cargo there can put you at risk. If a truck gets into an accident, the first thing lawyers want to do is drag everybody they can into court. The average claim on an auto accident is about 2.6 million dollars. Without proper Auto Liability Insurance, such a claim can be devastating to a business. Liability costs for shipping skyrockets, severly impairing profitability.

There are many steps you can take to protect your assets and not face serious punitive damages as a result of death or injury from the movement of freight. One of the best steps is having someone with years of industry experience to review your current business model & current contracts in place. GSIS, Inc. is a leader in Risk Management education and Insurance Solutions. Our company is focused on educating our clients on risk management stratagies for the freight broker industry. We are always interested in spreading current news topics relating to the industry including major catastrophes and current laws that effect the Freight Broker/Transportation industry. Contact us at http://www.gsis.com

Here at Global Solutions Insurance Services Inc. we deal in the many forms of domestic and international trade insurance and our trained professionals help you choose a policy that fits your needs perfectly.

Avoiding a $26 Million Claim

Freight Broker Risk Management 101

You are a Domestic Freight Broker. You gave up your common carrier authority years ago. Now you enjoy the comfort of limited liability thanks to common law and don’t play by the Carmack Amendment. Right?

Many brokers believe that the separation of authorities will nullify the risk of being seriously affected by a lawsuit as a result of the movement of freight. However this is merely one step in a series of steps to help prevent being sued as anything other than a Freight Broker (which enjoys limited liability).

The other day I was reading an insurance policy wording and it was clearly set up to cover damages for a; Motor Carrier, Warehouseman, Freight Forwarder, Logistics ServiceProvider or Other Bailee.

A plaintiff’s attorney would read the policy wording and say “Eureka! We got them now. If they are a freight broker why would they buy coverage for a motor carrier, or freight forwarder? They are clearly holding themselves out to be something other than a freight broker. “

If an auto accident occurs injuring or killing a third party the average settlement is $2.6 Million. The average truck driver only carries $1 Million in liability coverage. What most attorneys do is drag everyone who had anything to do with the shipment into this case including a Freight Broker and those with the deepest pockets.

In recent court cases such as Travelers Insurance a/s/o Vera Bradley Designs v. Panalpina, Inc., 2010 WL 3894105 (N.D. IL. 2010). The courts have upheld the notion that even though you have sole freight broker authority, how you hold yourself out to be (i.e. the way you run your operations, contracts in place, broker/shipper/carrier relationships) plays a big role in how the courts will actually view your authority.  

There are many steps you can take to protect your assets and not face serious punitive damages as a result of death or injury from the movement of freight. One of the best steps is having someone with years of industry experience to review your current business model & current contracts in place. GSIS, Inc. is a leader in Risk Management education and Insurance Solutions. With tailor made products specifically designed for Freight Brokers you will not find yourself in this situation. When it comes to Freight Brokers, GSIS should be your first call & only call every time.