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.