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.