managing the risks of global shipping presented by greg j. kritz,cic vice president roanoke trade...
TRANSCRIPT
Managing The Risks of Global Shipping
Presented by
Greg J. Kritz,CICVice President
Roanoke Trade Services, Inc.
www.roanoketrade.com
Over 200 Cargo Ships Sink Each Year
Average 20 Major Earthquakes per year
of 7 or higher magnitude
U.S. Cargo Losses Exceed $18 Billion
Annual Impact on U.S Economy
CARGO CRIME SOARING
Theft & Unexplained Shortages (shrinkage/Leakage)
4 Easy Ways to AccessAn Ocean ContainerWithout Leaving a Trace
30% of Cargo Losses NOT Preventable
844 Piracy Attackson Cargo Vessels2004 -2006
$16bn Year in Pirated Cargo
273 Hurricanes Hit USA1851-2005
92 Were Major Category 3,4 & 5
GENERAL AVERAGE
Ancient principle of equity in which all parties in a sea adventure (ship owner, cargo owner, and freight) proportionately share losses resulting from a voluntary and successful sacrifice of part of the ship or cargo to save the whole adventure from an impending peril, or extraordinary expenses necessarily incurred for the joint benefit of ship and cargo.
LOSS of BUSINESS INCOME:
IMPORTERS NIGHTMARE
A Property Insurance Policy Doesn’t Cover Loss of Business Income for Cargo Claims
What if these wereYours’ at Peak Season? $30M
Sampling of Regulatory Risks
Seizures for Failure to Timely File Advance Notice
Seizure for non-Compliance with Wood Packaging
Demand for Redelivery of Tainted or Suspect Product (FDA, AGR,…)
Anti-Dumping Duty Craze & Byrd Amendment
The Ugly Truth About Carrier Financial Responsibility
Ocean Carrier/NVOCC
Subject to terms of Carriage Of Goods by Sea Act (COGSA)
$500 per Customary Shipping Unit as described on OBL
Unit can be the container, a pallet, a crate, carton
Ocean carriers & NVOCC’s have 17 legal reasons not to
pay 1.Act,neglect,default2.Fire3.Perils of the sea4.Act of God5.Act of War6.Act of public enemies7.Government seizure8.Quarantine 9.Act or omission of shipper
10.Strike,lockouts, or stoppages11.Riots & Civil commotions12.General Average13.Inherent Vice 14.Poor Packing15.Poor Marks16.Latent defects17.Loss/damage outside control of carrier
Most Typical Carrier Defenses
“We didn’t pack it so we can’t confirm the number of pieces”
“You can’t prove that damage happened when cargo was in our care,custody & control.
International Air & Indirect Air Carriers
Subject to terms of the “Warsaw Convention”
$9.07 pound/$20 Kilo or 17 SDR Kilo if Montreal Protocol ($23.15 kilo)
What About Distribution Centers?
Warehouseman’s Terms & Conditions
Rule Unless Changed by Contract
Liability Typically a multiple of base rate
3PL’s and Forwarding Operations Often Limit Liability on Warehouse Receipts
Freight Forwarder & Customs Broker Liability
Unless acting as a carrier and issuing a freight bill, 3PL’s & forwarders typically are not liable for loss or damage
Customs Brokers use Terms & Conditions of service that Limit Their Liability to A Maximum of $50 per shipment
Action Steps
A. Identify Risks in Supply Chain Where You Have Financial Interest
B. Establish Clear Contracts with Buyers & Suppliers (Don’t Assume Incoterms Address It)
C. If you Import, Control the Insurance
Action Steps Continued…/
D. If You Transfer Risk to Insurer1. Protect Profits, Insure Selling
Price2. Raise Limits to Anticipate Peak
Accumulation & Lost Profit3. Move Inventory Coverage to
Cargo Policy – Flood, Quake,Profit
Action Steps Continued…/
D. If You Transfer Risk to Insurer..4. Add Airfreight Replacement5. Cover Extremes in Temperature6. Contingent Financial Interest7. Unexplained Shortages8. Payment on Account – Disputes9. Your Financial Interest
Admitted regardless of Incoterms
Thank You For Letting Me
Be With You Today !