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.