High through the years of  2011 and 2013, cargo theft, as a result of fictitious pickup, declined by 18% last year, which is good news. The bad news is that the average value per theft increased 36% to $232,924, while most truckers only carry $100,000 worth of freight insurance.

To avoid cargo theft and losing shipments to carriers with more insurance protection, freight brokers or shippers should consider buying excess cargo insurance coverage.

So what defines cargo theft by fictitious pickup? Using false identification or bogus carrier names, criminals pose as legitimate truck drivers to trick companies into handing loads over to them which they subsequently sell on the open market. Because the crime sometimes occurs when victims neglect due diligence on carriers and drivers, it is under reported despite the fact that it represents 8% of reported cargo theft.

Thanks to the internet, it is easy for criminals to set up online phony companies to win transportation bids and obtain truck freight insurance. However, there are practices companies can do to thwart cargo theft by fictitious pickup.

• Subscribe to a reporting service such as FreightWatch, SC-ISAC or CargoNet to monitor area thefts and promptly report attempts and incidents of fictitious pickup to law enforcement agencies.

• Validate and vet third parties including brokers and carriers. Work together and communicate frequently with all members of your supply chain.

• Vet truck drivers and reduce liability with job applicant and employee screening of driving history and past employment. Use monitoring services to check for any changes to drivers’ motor vehicle records.

• Use technology such as intelligent routing, telematics, real-time monitoring, geo-fencing, GPS and shipper/carrier communication protocols to maintain chain of custody for cargo.

• Before releasing cargo, request and inspect both a government issued and company issued identification from driver in addition to the driver’s US DOT Medical Examiners Certificate. Capture biometric information such as a fingerprint and take a close-up photo of driver to get a clearly visible picture of the face. High-definition photos of ID’s are very useful for police investigations and criminal prosecution. Check all documentation such as bills of lading for accuracy and scan. Photograph truck and license plate, carefully noting tags, ID numbers and signage. ID Verify, available online, is a way to validate driver and transportation personnel identity. Remember to securely handle and store all collected personal information to protect privacy.

Using readily available information technology and sharing information with other members of the supply chain will effectively counter the growing threat of cargo theft, by fictitious pickup.

Shipping disasters happen all the time. According to the International Transport Workers’ Federation, approximately 2,000 seafarers lose their lives because of what goes on in the open sea. There are a number of working sea vessels that go across the ocean without mishap, but there are some that are not so lucky. This is why it’s important to work with a freight forwarder to help to protect your valuable freight while en-route with shippers interest cargo insurance.

Insuring Your Cargo

Just as you want to insure a package that goes across the country so you are not out the money when it doesn’t reach the destination, the same goes for heavy and high-end cargo that you may be shipping to some corner of the world. While your cargo is on a ship, hitting the bumps of the ocean, you want to be sure everything is insured.

Shipping losses occur every year and there have been issues where a container ship has capsized in the sea or been captured by pirates. There are approximately 20 million containers crossing the world at any time, though it could be any number of them that are lost, stolen, broken, or lost to the bottom of the sea.

A shippers interest cargo insurance policy, can be used to ensure that your cargo is in good hands throughout its journey.

Also Steamship lines are allowed under their trading terms a reflected on their bill of lading to limit their liability to as little as $500 per shipping unite, which could be an entire container.

Purchasing Shippers Interest Cargo Insurance

There are various polices that you can explore with shippers interest cargo insurance and the protection can provide you with peace of mind. You need financial protection within the freight industry and at GSIS, we’re here to help.

if you are not purchasing  marine cargo insurance and you are shipping something from one side of the world to the other, you could be at risk. Did you know that freight forwarders aren’t obligated to carry Marine Cargo Insurance? This means that when you ship something, there may be no financial protection in place.

What Marine Cargo Insurance Offers

Essentially, marine cargo insurance is the financial protection you need to avoid a major setback in the event that there is a major disaster once your cargo is placed on a cargo vessel. You don’t want to see your profits be washed out to sea.

Since carriers don’t want to work with people that don’t have the insurance, there is economic pressure for freight forwarders to have and offer cargo insurance. This will allow you to have more protection so you don’t encounter an issue with your shipment.

Disasters on the Water

In January 2015 alone, there have been multiple cargo ships that have sunk. In Scotland, a cargo ship sunk off of the north coast. In Vietnam, another cargo ship sank off the southern coast. With accidents like this happening, despite all of the modern technology, it is proof that nothing is ever as safe as you think it is.

Focusing on ways to protect your assets needs to be a top concern and that is why you should always seek insurance for your freight shipments. It is the only way to avoid a major financial setback in the event of a disaster at sea.

Call us at GSIS and learn more about the benefits of cargo insurance.

As with any industry, shipping and transportation will come under the challenge to design contracts with partners and clients in a way that legally avoids administrative fines and penalties. In addition to these risks there are country-specific fines affecting the business of international freight forwarding, creating a need for consistently updated knowledge regarding ocean and air freight in particular. Domestic freight companies should, under usual circumstances, only be concerned with state laws and fiscal penalty, however these are no less important in seeking to implement best practices for risk management.

Effective risk management takes all potentially occurring risks into consideration using all the tools available. Energy Resource Programs (ERPs) are an example of a modern and prevalent tools within an industry containing information that can be used to mitigate losses via data. In addition to this, proper training of employees and crisis management plans should all be in place. Software, while valuable, does not eliminate all possibility for mishap. Compliance and regulatory issues will also be imperative parts of a risk management strategy as the requirements of corporate responsibility in the both fiscal and environmental fields are increasing. A proactive implementation of advanced compliance management systems, for example, can eliminate possible risk before it becomes financial burden.

Although basic strategies can create the best possible corporate governance strategy, there is no crystal ball detailing the future of government regulation. It’s important to stay as educated as possible. For example, explanation of risk and fraud by government definition should be properly explained to staff, however consulting on the varying changes that can happen within the space of one year can be extremely valuable to a company’s risk mitigation intel. Regulatory changes that happen within the industry could impact companies significantly, an example of this being MAP-21. This regulation, although put in place to increase freight safety and combat and increased fraud, put bonding requirement prices for brokers up to $75, 000. This was an increase of $65, 000, inciting confusion and financial uncertainty for freight companies and brokers alike.

However what does the future of international fraud protection look like? It’s difficult to say, but protection against data theft and other forms of fraud has proven to be a continuous challenge within transportation and logistics companies even domestically. Ever-increasing forms of competition in the domestic and international freight market, has encouraged but not organized specific forms of collaboration between both types of carriers. This dynamic is not only present within the transportation and logistics industry. Certain countries provide little delineation between customary business practices and what would be legally defined as fraudulent within the United States. It will be important to plan for changes in the ever globalized world of freight and logistics.

If you are an ocean Freight Forwarder or Non-Vessel Operating Common Carrier (NVOCC) handling cargo destined to or from the United States, being licensed and bonded as an Ocean Transportation Intermediary (OTI) is a mandate.  OTI Bonds warrant completing all contracts with shippers and carriers.  NVOCC and Forwarder compliance with Federal Maritime Commission regulations protect and ensure the shipping public.

Although bonds do provide a level of asset protection, it is important to keep in mind that a bond is not insurance. The main difference being that a bond or surety is a guarantee sponsored by a third-party regarding the arena of international trade.

Acceptable proof of the carrier’s financial responsibility is underwritten by a surety company approved by the U.S. Department of Treasury and on their List of Approved Sureties.

Both the Freight Forwarder and NVOCC have set bond amounts. Concerning the Federal Maritime Commission (FMC) and U.S. Customs there are two basic classes of bonds required.

OTI Bonds

Freight Forwarder – required to obtain and carry a bond in the amount of $50,000 in addition to $10,000 for each additional operating location

NVOCC – required to obtain and carry a bond in the amount of $75,000 in addition to $10, 000 for each additional operating location

Outside the U.S. the bond the minimum requirement is $150,000

U.S. Custom Bond

Importers are also required to post a cash equivalent or the bond itself with the U.S. Customs Service to ensure compliance of all laws and regulations pertaining to commercial goods brought into the country. Unlike OTI bonds which protect the shipper and carriers, this bond protects the interest of the U.S. Commerce.

There are three bonds most common in the freight industry.

• Activity Code 1 Importer also known as Broker Entry Bond
• Activity Code 2 – Custodian of Bonded Merchandise
• Activity Code 3 – International Carrier Bonds

Penalty

If the (FMC) determines that you are operating without proper proof of financial responsibility you will face paying stiff fines.

Non-compliance with government laws and regulations will result in stiff fines and license revocation. Protect all contracts with shippers and carriers by promptly complying with OTI Bond guidelines.

If you have questions or would like more information about our services contact us today.

As a freight forwarder, you regard yourself as a vital middle man. You negotiate all the transportation, paperwork, and customs hurdles to ensure safe seamless transport of cargo from your shipper to his consignee. But as you know all too well, in certain situations you can also feel like you’re the middle man in a game of dodge ball.

When you arrange a pickup from a shipper you can be held liable for any damage done to the cargo by the trucking company since you provide him with your bill of lading to be filled out. And should the goods be lost in transit you can find yourself liable for the fully insured amount. Normally the transportation company would pay the claim but what if they or their insurer denies the claim?

Arranging international ocean freight can be quite complicated and open you to all kinds of situations. While not all of them are in the realm of everyday occurrences, you should know they exist. Say, for instance, you contract with a shipping company who subcontracts with a company who registers or flag their vessels in a country other than their own, a country where safety, ship conditions, and manning are unregulated and left to the discretion of the ship’s owner. What is the ship sinks? Collecting on cargo loss would be difficult or impossible. And should you pursue redress it will be time consuming. Meanwhile you have a client demanding his own redress, and delaying it will put you in poor standing. So you compensate him and hope for the best. Yes, doing due diligence might have prevented the situation in the first place, but having contingent cargo insurance in place can save the day.

Contingent cargo insurance would cover you in either of the above cases. It not only covers loss or damage, but also theft in transit as well as some of the perils peculiar to rail or ocean shipping, such as derailment or piracy. While you are not legally required to purchase it, you may find that more and more shippers, before entering into an agreement with you, are asking if you have contingent cargo insurance. Shouldn’t it be a question you are asking yourself?

If you have product that requires shipping from one destination to another chances are you need a freight broker. There are several steps involved in transporting cargo and without the expertise of a broker it’s easy for important details to go unattended. Here are four ways a freight broker helps your business.

Insurance Provider

Freight brokers play a vital role in cargo movement, acting as the middle man between the shipper and carrier, negotiating acceptable rates. A business or individual can operate as a broker with mandatory licensing from the Federal Motor Carrier Safety Administration (FMCSA). In addition to acting as liaison they can assure owners of cargo, that coverage is in place with a Motor Carrier or they can offer options for cargo insurance coverage.

Understands the needs of all parties involved

The freight broker collects information from the shippers, carriers, and records the load activity of their clients including lanes. Attentive brokers network with the carriers focusing on lane preference and truck quantity to meet load demand. Data analysis enables the broker to formulate various strategies that attract and retain customers for the carriers and shippers.

Cash flow management

Whether you’re a shipper or carrier all aspects of “cost” are of foremost concern. Elevating fuel costs and high operating expenses have left a negative impact on truck availability, leaving both sides to face rising expense, while generating a worthwhile profit. Availability also referred to as “capacity,” has dwindled over the years, resulting in the pace of shipper rates and trucking costs being out of sync.

Company growth requires consistent monitoring in order to meet customer demand. Many brokers are detail-oriented with the ability to carry out various responsibilities such as cash flow management, invoice creation and making timely payments.

Prepares for the unexpected

Unexpected problems happen regardless of how concrete the plan of action. An experienced freight broker thinks ahead to address future challenges that can affect cash flow and client demand, while tending to current concerns.

If you are a shipper or have cargo that requires transportation from destination A to B, you need a freight broker. By using their knowledge of the industry and technological resources a broker provides you the motor and shipping coverage you need to run your business successfully.

To find out more information about the various topics concerning the freight brokers contact us today.

A 2011 court ruling which questioned the possibility of increased driver harassment under the forthcoming Electronic Logging Device (ELD) mandate expected in 2015 was the impetus for a recently completed FMCSA (Federal Motor Carrier Safety Administration) survey.

The ELD mandate will require most drivers to replace paper logs with electronic logging. In addition to calling out standards for the devices and documentation proving compliance, the mandate will also protect drivers from harassment.

When carrying out the survey the FMCSA questioned both drivers and carriers about the type and frequency of their interactions. 628 drivers were asked to comment on a list of 14 interactions. The amount of harassment occurring more than twice a month was reported as follows:

• Interruption of off-duty time with a message at unacceptable time. 28% (paper log) 29% (ELD)
• Contacted driver promptly about a new task so driver didn’t have to wait without pay. 4% (P) 6% (ELD)
• Required driver to wait for customer delays for more than 2 hours without pay. 16% (P) 22% (ELD)
• Required driver to wait more than 2 hours between loads without pay. 15% (P) 20% (ELD)
• Loads arranged to minimize delay time between loads. 3% (P) 7% (ELD)
• Paid driver for customer delays when picking up or delivering freight. 2% (P) 5% (ELD)
• Requested driver to meet a customer load schedule diver perceived unrealistic. 17% (P) 19% (ELD)
• Asked a customer to adjust a load schedule so it was realistic for driver. 4% (P) 4% (ELD)
• Asked driver to operate when he judged himself fatigued. 30% (P) 27% (ELD)
• Asked driver to shut down if he felt fatigued. 4% (P) 4% (ELD)
• Asked driver to log hours inaccurately to gain more work time or delay a break. 30% (P) 21% (ELD)
• Asked driver to log hours properly when driver could have gained time or delayed a break by being inaccurate. 10% (P) 8% (ELD)
• Amend driver log record after fact to gain more work time or delay a break. 22% (P) 16% (ELD)
• Ask driver to take enough time off duty to recover from fatigue. 4% (P) 4% (ELD).
• None of these. 42% (P) 42% (ELD)

Based on the results of the survey, the agency concludes that ELD logging does not cause increased harassment when ELDs are used to log HOS. In fact, the research shows that few truck drivers perceive harassment regardless of the method they use to log HOS. The slight differences in driver’s perceptions were statistically insignificant.

Interviews with the carriers supported the drivers’ assessment that harassment is not extensive. The publication, “Attitudes of Truck Drivers and Carriers on the Use of Electronic Logging Devices and Driver Harassment,” can be found in the Federal Register, Docket No. FMCSA-2010-0167. There is a 30 day public comment period.

It has been a little over a year since MAP-21 increased the required Freight Broker bond from a $10,000 to a $75,000 BMC 84/85 broker bond/Trust. Although, when it first was implemented, there were many naysayers, it seems the change seems to have helped the industry.

Better Brokers

One of the intended effects of MAP-21 was to push out those brokers who may have been engaging in fraudulent behavior and help to protect truckers, in particular, from falling victim to unethical business practices. Both the Owner-Operator Independent Drivers Association (OOIDA) and the Transportation Intermediaries Association (TIA) have been pushing for the bond to be raised for years. Although many expected this to cause a decrease in freight brokers, over the course of 2014 only one week saw a decrease in active licensed brokers compared with a significant drop off in the 4^th quarter of 2013.

More Permissive Freight Bond Market

One year after the adoption of MAP-21, the bond market has become much more permissive. Through working with a variety of surety companies such as International Bond and Marine, a freight broker bond can be issued without requiring collateral or information about net worth, financial statements and business financials.

Overall, this increase has helped protect truckers and brokerage firms alike. Many options are now available to help smaller firms obtain a brokerage bond and re-join the industry. In addition, this legislation should serve to placate organizations that successfully built a case around the notion that Freight Brokers were not paying for the services that put bread on their table & can help put our leadership focus back on other major issues in this industry.

When an ocean carrier issues a through bill of lading for transport terminating inland in the United States, the terms of the bill of lading govern the liabilities of all parties to the transaction. This includes the rail or motor carriers performing the inland transportation.

The case of Sompo Japan Insurance Company of America versus Norfolk Southern Railway brought before U.S. Court of Appeals for the Second Circuit brings this point to bear. In determining whether an Exoneration Clause contained in a bill of lading was enforceable, the court considered the authority of a common carrier intermediary (the NVOCC) to bind the cargo owners to the terms of the bill of lading issued by the ocean carrier contracted to transport the goods.

In this case, an auto parts producer hired an intermediary (Nippon Express) to organize the transportation of auto parts from Japan to the U.S. The intermediary issued a through bill of lading to the producers and engaged an ocean carrier (Yang Ming) to provide ocean transport and arrange inland transport. The carrier then issued its bill of lading to the NVOCC (Non Vessel Owned Common Carrier) and outsourced inland transport to the defendant Norfolk Southern Railway.

The cargo was successfully shipped trans-ocean to the U.S. and loaded onto a Norfolk Southern train. Subsequently, a derailment occurred in Texas and the cargo was destroyed. The insurance company reimbursed the shipper for the cargo loss and proceeded to sue the railroad for damages.

The bill of lading of the carrier contained an Exoneration Clause, which restricted the liability for cargo damage to the Carrier (on whose behalf the bill was issued, and its agents) and specifically excluded Underlying Carriers (the railroad) from liability. The parties concurred that the railroad companies (now defendants) were Underlying Carriers based on the intent of the bill of lading.

In its decision, the Second Court rejected the plaintiffs’ argument that the Exoneration Clause was ambiguous. The Court concluded that reasonable interpretation of the clause was that the provisions of the bill of lading made the ocean carrier the Carrier and companies relied on to assist with transportation could be liable to the owners of the cargo and entities subrogated to the owners’ interests.

The appellate court referred to the general principle that in a case of potential ambiguity, the rendering that achieves reasonable and effective meaning to all terms of a contract is better than one that leaves a segment meaningless.

In addition, the Second Circuit deliberated on the enforcement of the Exoneration Clause and established that it did not violate public policy by absolving a common carrier or its agents of all liability due to their negligence. Rather, the clause assigned the ocean carrier sole responsibility for all losses caused by it or any other party. The clause did not remove the liability of the railroad companies to the ocean carrier for damage caused by their negligence.

The appeals court rejected the plaintiffs’ argument that the intermediary was not authorized to agree to the clause in the bill of lading. The court referred to a U.S. Supreme court precedent establishing that an intermediary may arrange enforceable, reliable agreements with the carriers it engages in regards to liability limits for negligence causing damage.

This decision exemplifies the fact that, when an ocean carrier issues a through bill of lading for transportation to an U.S. inland point, the terms and conditions of that bill of lading will control the liabilities of all parties to the transaction including the inland carriers.

Shippers should keep in mind that when they contract with an ocean carrier or intermediary, an Exoneration Clause in the bill of lading will preclude claims directly against underlying carriers.