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Why Cargo Insurance?

“Why do I need cargo insurance?”
The short answer is:
“Because you’re a shipper.”

If that isn’t enough for you, keep reading…

Cargo insuranse reduces shippers’ exposure to financial loss. Yet, so many shippers choose to risk importing and exporting goods without getting cargo insurance. Unfortunately, many shippers have suffered great loss for taking this risk. Below are six reasons shippers should get cargo insurance. Some of the reasons are dangers that can cause loss or damage to cargo, but the list actually goes well beyond that.

#1 – CARGO THEFT RISING
Cargo theft, especially through identity theft and fictitious pickups, is on the rise. We’re not even counting piracy, which is a major risk of cargo theft and loss in modern international shipping.

#2 – MORE CONTAINERS LOST AT SEA EVERY YEAR
Every year, containers are lost to sea. With the trend to megaships, carrying huge stacks of shipping containers across the oceans, cargo containers overboard have actually increased.
The World Shipping Council conducts surveys to find out approximately how many shipping containers are lost to sea in a year. Their 2014 update reveals a very significant rise in cargo containers lost to sea from their 2011 survey. The survey of the years 2011, 2012 and 2013 estimates that there were approximately 733 containers lost at sea on average for each of these three years, not counting catastrophic events. That number of approximately 733 shipping containers lost at sea during the 2011-2013 period is more than double the number of containers lost at sea for the previous period of 2008-2010.

#3 – CATASTROPHIC EVENTS HAPPEN
Storms, shipwrecks, explosions, pirate attacks… which have caused the loss of many shipping containers. In one event, an entire shipload or more of cargo containers can be lost.
The World Shipping Council defines a catastrophic loss “as a loss overboard of 50 or more containers in a single incident.”
When one includes catastrophic losses (as defined above) during these years, the average annual loss for [the years 2011, 2012 and 2013] was approximately 2,683 containers.
Catastrophic events like the Tianjin explosions in China’s port city or container ships taken by pirates wouldn’t even likely be included in the totals above because, while very large numbers of shipping containers of goods are lost, the cargo containers are not necessarily lost overboard to sea.

#4 – CARGO DAMAGE A COMMON OCCURENCE
As common as cargo theft or loss has become, even more common is cargo damage. Bad stowage and shore error are the largest contributors to damaged cargo.

#5 – GENERAL AVERAGE – EXPEDITE CARGO RELEASE
You may be required to post a bond and/or cash deposit in order to obtain release of your cargo following a general average – even though there was no loss or damage to your goods.
By purchasing insurance, your insurance company assumes the responsibility and expedites the release of your cargo in these instances. General Average is an internationally accepted principle where if certain types of accidents occur to the vessel, all parties share in the loss equally. You definitely do not want to find yourself in a General Average situation without insurance.

#6 – COVERAGE FOR LIMITED CARRIER LIABILITY
Carriers, by law, are not responsible for many common causes of loss that occur in transit (for example, acts of God, General Average, etc.).
Even when carriers are liable, carriers’ liability in the event of a loss is limited – either by contract in the bill of lading or by law. In most cases, shippers will only recover cents on the dollar from the carrier. Shippers should never count on the carrier that is shipping their goods to cover losses or damage that may occur over the course of a container ship voyage.

 

 

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News Flash April 2016

container failureShippers petition U.S. for relief from container weight rule

House lawmakers brushed aside calls at a hearing to slow implementation of the Verified Gross Mass rule, while other shippers said compliance should be straightforward.
Groups representing U.S. agricultural exporters and large freight consolidators at a congressional hearing Thursday insisted on federal intervention if ocean carriers refuse to compromise in implementing a pending international requirement for shippers to declare the weight of tendered containers before they are loaded on the ship, and attest to their accuracy, to prevent maritime accidents.But lawmakers indicated that they were not inclined to take any action.
“I don’t think this is a congressional issue. There’s not going to be legislation,” Duncan Hunter, chairman of the House Transportation & Infrastructure subcommittee on Coast Guard and maritime transportation, said. “ I think this is a deal that needs to be worked out between the shippers and the cargo owners.”American Shipper 4/15

NYK rep reiterates no VGM, no load

NYK’s Bill Ferguson told the Critical Commodities Conference this week that carriers must refuse loading to a container without Verified Gross Mass data submitted or risk insurance issues.
A representative of the ocean carrier NYK Line this week told a conference in New Orleans that if the verified gross mass data is not submitted for a container, the carrier will not load that container when it arrives at a U.S. port.
Bill Ferguson, vice president, security services and environmental affairs for NYK Line (North America) reiterated a stance made by carriers in recent weeks as enforcement of the International Maritime Organization’s Verified Gross Mass (VGM) guidelines become clearer.
Speaking at the Critical Commodities Conference in New Orleans, Ferguson said it was likely that carriers would establish a so-called VGM cutoff one hour before existing cargo cutoff times. The VGM cutoff time would be related to shippers (who are responsible for calculating the verified weight) at the time of booking confirmation.
Ferguson did, however, say that the VGM cutoffs wouldn’t be absolute. Just as carrier work with shippers when containers don’t meet cutoffs to ensure a box is loaded, the same spirit is likely to occur with the VGM data sub

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News April 2016

heavy FCLSOLAS container weight rule to be discussed at Congressional hearing
The House subcommittee on Coast Guard and Maritime Transportation will hear testimony on April 14 about the International Maritime Organization’s controversial verified gross mass requirement, which goes into effect July 1.

FONASBA: Numerous Countries Unprepared for Container Weighing
There has been no guidance issued on the practical application of the measures regarding the implementation of the amendments to SOLAS VI.2 on container weighing in eighteen countries, a survey from FONASBA, an organization representing the global ship agency and ship broking professions shows.https://worldmaritimenews.com/archives/187643/fonasba-numerous-countries-unprepared-for-container-weighing/

Global Logistics—March 2016
What Keeps Supply Chain and Risk Managers Up at Night?
Every type of business risk has an impact on the supply chain. And when risk becomes reality, risk managers and supply chain managers work in tandem to keep goods and materials flowing.
http://www.inboundlogistics.com/cms/article/global-logistics-march-2016/

West Coast ports soon will prove their mega-ship readiness
By all accounts, the ports of Los Angeles and Long Beach met the challenge of efficiently handling the CMA CGM Benjamin Franklin when the 18,000-TEU ship, the largest ever to serve a U.S. port, came calling. In its initial visit in Los Angeles over the Christmas holiday, the port flipped the mega-ship in 56 hours, handling 11,200 container moves and averaging nearly 30 lifts per crane, per hour. The Benjamin Franklin returned in February, calling at the PCT terminal in Long Beach, with equally positive results.
http://www.longshoreshippingnews.com/2016/03/west-coast-ports-soon-will-prove-their-mega-ship-readiness/

Report: European airfreight carriers eye U.S. routes
European all-cargo operators Cargologicair and SW Italia have filed applications to launch routes to the United States, according to a report from industry news outlet The Loadstar.
http://www.americanshipper.com/Main/ASD/Report_European_airfreight_carriers_eye_US_routes_63590.aspx

Shipping industry faces risks from cybercrime and mega-ship salvage
Safety and shipping review identifies developments that will be causing sector headaches for years to come.
http://www.theguardian.com/environment/2016/mar/21/shipping-industry-risks-cyber-crime-mega

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Newsflash March 201

Ocean carrier group outlines VGM best practices

The OCEMA working group published recommendations for how and when shippers should submit SOLAS container weight verification data ahead of the July 1 implementation deadline.

A group of 18 ocean carriers on Monday outlined what they consider best practices for shippers to submit container weight verification data to comply with a forthcoming amendment to the International Maritime Organization’s Safety of Life at Sea (SOLAS) convention.
The SOLAS amendment requires that shippers certify the verified gross mass (VGM) of loaded cargo containers to carriers prior to them arriving at container terminals, and is due to come into force July 1, 2016.
The VGM requirement has been decried by beneficial cargo owners as onerous on U.S. exporters, and shippers and forwarders have also bemoaned a lack of clarity regarding implementation and enforcement of the rule.
The 18 carriers, under the auspices of the long-running Ocean Carrier Equipment Management Association (OCEMA), have been meeting for five months to provide clarity surrounding how and when the container weight verification data should be submitted.
On Monday, OCEMA released a set of recommendations and a process map to help shippers understand how VGM data should be submitted. Though the suggestions are not binding in and of themselves, OCEMA said in no uncertain terms that carriers would not load cargo without the VGM being submitted in the prescribed timeframe.
“Similar to the concept of ‘no docs/no load’ that is already in place, if the ocean carrier does not receive VGM prior to the VGM cutoff time, the container cannot be loaded aboard the vessel,” OCEMA said. “Instead, it will be sidelined until the next available sailing by which time the shipper must have made arrangements for the provision of VGM. The treatment of any costs or other circumstances arising out of a shipper’s failure to timely provide VGM will be a matter for individual ocean carriers to determine in accordance with their applicable tariffs and service contracts.”
According to the recommendations, the VGM can be submitted either electronically as an electronic interchange data message (an EDI message called VERMAS with a code of 304 has been established for VGM), via electronic ocean freight portals such as INTTRA, GT Nexus, and CargoSmart, or via the carrier’s own electronic portal.
“(For electronic bookings) when the receiving cutoff time is determined to be at the close of the business day, VGM cutoff will be at noon of that day,” OCEMA said. “Regardless of the receiving cutoff time, the carrier will advise the shipper of VGM cutoff at time of booking. For VGM submitted through alternative methods, VGM cutoff will be determined by the ocean carrier, but will typically be earlier than for electronic submissions to allow time for processing.”
OCEMA specified that electronic submission of VGM is “preferred and will expedite transmission of data,” noting that “some carriers may only accept VGM in electronic form.”
As for how export shippers go about verifying the weight of the container, OCEMA sought to bring clarity surrounding one of the two methods the VGM rule allows. The so-called calculation method stipulates that shippers or forwarders total the weight of all cargo and packing materials inside the container and add the tare weight of the container. Export shippers have argued they shouldn’t be held responsible for verifying the weight of equipment they don’t own or maintain.
“It is acceptable for shippers to rely upon the tare weight being made available by the ocean carrier,” OCEMA said. “The shipper would not be certifying the accuracy of the container tare weight printed on the container.”
OCEMA’s recommendations have been eagerly awaited by an industry seeking some sort of direction as to how to proceed with the IMO requirements. The process has been even more fraught in recent weeks as the countdown to the deadline approaches and the U.S. Coast Guard stated it would not police shippers regarding VGM submission. That has left the responsibility to enforce the IMO guidelines in the hands of ocean carriers. The USCG has said it can only regulate U.S. flagged vessels, and that submission of VGM was a commercial matter between shippers and carriers.
“The new rules will require all industry participants to make some changes, but the OCEMA Best Practice is intended to make the process as painless as possible for all stakeholders,” said Robert Cannizzaro, vice president of marine and terminal operations, Hamburg Süd, who chaired OCEMA’s VGM special working group.
The working group OCEMA conferred with industry stakeholders on various technical aspects of the best practice in recent months. Awareness of the rule seemed to intensify in December, when INTTRA released results of study suggesting a significant lack of preparedness for the VGM rule.
Two weeks ago, INTTRA released a new eVGM product aimed at helping shippers and forwarders submit the data to carriers in both parties’ preferred formats. Other technology companies, such as CargoSmart, have suggested they are ready to proceed with an electronic submission product once the variables surrounding the matter have been further clarified by the industry.
“Industry stakeholders have raised questions and asked for clarification of the VGM rules,” said Frank Grossi, chairman of OCEMA and executive vice president of COSCO Container Lines America. “OCEMA aims to address these questions with practical, common sense guidance.”
What is not up for debate, OCEMA asserted in the recommendations, is that VGMs must be submitted for a container to be loaded onto a ship.
“Carriers are faced with a clear legal obligation not to load a container aboard their vessels without the VGM as defined under the IMO rule,” said OCEMA Executive Director Jeff Lawrence.
“That said, OCEMA and its special working group want to do so with as little disruption to existing processes as possible,” he added. “We have 100 days until the rule goes into effect so we need to work together. The Best Practice will help the U.S. export industry and service providers reach the goal of efficient implementation of this important safety initiative.”
OCEMA’s best practices largely relate to how export boxes will be handled at U.S. ports for outbound sailings, but questions still linger about how the VGM rule will be implemented and enforced in foreign nations.
Jon Gold, vice president of supply chain and customs policy for the National Retail Federation, said “there are still a lot of questions about how the VGM will be implemented and enforced around the globe. U.S. importers are still waiting for information from their carriers on how this will be achieved at foreign ports.
“With less than four months until the July 1 implementation deadline, these questions need to be addressed so importers and their partners can make sure they are able to comply,” said Gold.
OCEMA members include APL, ACL, CMA CGM, COSCO Container Lines, China Shipping, Evergreen Line, Hamburg Sud, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, Maersk Line, Mediterranean Shipping Co., MOL, NYK Line, OOCL, UASC, Yang Ming, and ZIM.

Westar International Forwarders, L.P.
26 E. Main Street, Carnegie, PA. 15106
Phone: 412-262-8077 e-mail: mgargiulo@westarusa.com
www.westarusa.com

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News March 2016

Congress Enacts First Major Customs Bill in over 20 Years
International Trade Update
President Obama signed the bipartisan Trade Facilitation and Trade Enforcement Act of 2015 (TFTE) on February 24. This is the first major customs legislation enacted since the Customs Modernization Act, Title VI of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182 (1993). The TFTE focuses on facilitating legitimate trade and enforcing existing trade laws, such as those relating to intellectual property and trade remedies. More…

NEWS FLASH: USCG tells shippers not to expect delays to SOLAS container weight regulations
United States Coast Guard officials made it clear at a Federal Maritime Commission hearing Thursday in Washington, D.C. the shipping industry will have to comply with International Maritime Organization verified gross mass requirements on July 1.

Fitch warns weight regulations can raise US ports’ congestion
Credit rating agency Fitch Ratings warned that the new container weighing regulations set to take effect on July 1, 2016 are generating uncertainty at US ports and can raise congestion. More…

Carriers respond to European Commission’s pricing concerns
Fifteen of the biggest shipping lines have offered to reform the way they announce price changes more…

More on ACE…
ACE Mandatory Use Dates (What are the ACE Mandatory Use dates?)
CBP is working to complete and deploy core trade processing capabilities in ACE by December 2016, a timeline supported by the White House Executive Order issued on February 19, 2014. As part of this transition, several mandatory dates have been established requiring trade users to file electronic data to ACE in lieu of legacy systems. More…

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News January 2016

ZIM delays IPO and its CEO resigns
Zim Integrated Shipping Services Ltd. has announced that Rafi Danieli is resigning from his role as CEO. The announcement comes three days after an Israeli newspaper claimed that the carrier delayed an initial public offering (IPO) on Wall Street reportedly planned for the first half of 2016. More

Manufacturers Group Backs Trans-Pacific Partnership
The endorsement is a major one for the 12-nation trade pact that must be approved by Congress. More…

CBP Chicago Finds Destructive Medfly in Air Cargo Shipment
CHICAGO—U.S. Customs and Border Protection (CBP) Agriculture Specialists conducting cargo inspections at the O’Hare International Airport recently discovered an infestation of Mediterranean fruit fly larvae (Ceratitis capitata) in three shipments of bell peppers from Spain. More…

Mixed fortunes for top US west coast container ports in 2015
The Port of Los Angeles recorded a 2.1% drop in container throughput last year to just under 8.2m teu, in contrast to neighbouring Long Beach, which handled almost 7.2m teu, a jump of 5.4%. More…

ACE and Automated Systems
CBP automated systems electronically support the facilitation of importing and exporting goods. By the end of 2016, the Automated Commercial Environment (ACE) will become the Single Window – the primary system through which the trade community will report imports and exports and the government will determine admissibility. More…

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Happy Holidays

Westar Xmas 2015

We wish you Peace, Joy and Prosperity throughout the coming year.
Thank you for your continued support and partnership.
We look forward to working with you in the years to come.

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News September 2015

Philadelphia CBP Discovers 3 First In Port Pests
Officials say that agriculture specialists recently discovered three new pests in the Philadelphia area. More…

Tianjin Explosions Will Hike Insurance Rates
The explosions that rocked the Chinese port of Tianjin in mid-August will likely result in higher property insurance rates thanks to the losses that amount to billions of dollars.The explosions August 12 at a warehouse filled with toxic waste damaged a substantial area of the port and surrounding residential areas and resulted in over 100 deaths. The event highlights the growing risks present in industrialized areas, according to experts. More…

Stability Issues Impact Nearshoring Destination Choices

Eastern Europe is a Big Winner for Europe-Bound Shipments, Research Indicates
Manufacturing executives around the world continue to consider nearshoring—moving production from a far-off overseas location to a closer site—but there is evidence that the trend is slowing, according to research released by Alix Partners.More…

European Exports Increase During First Half of 2015
Euro Area and EU Goods Trade is in Surplus
Between January and June 2015, euro area exports of goods to the rest of the world rose to $1.13 trillion, an increase of six percent compared with the same period in 2014, according to figures released by EUROSTAT, the European Union’s statistics bureau, Imports rose to $1.0 trillion, an increase of three percent compared with the first six months of last year, resulting in a trade surplus during the first half of $130 billion compared with $85.9 billion in January to June 2014.

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News August 2015

New Service for Port of NY & NJ
American President Lines (APL), a subsidiary of Neptune Orient Lines, and SeaLand, a division of Maersk Line, have announced the formation of a Vessel Sharing Agreement (VSA) that introduced a new weekly service branded the ACX by APL and the NAE by SeaLand. The VSA nominated Global Container Terminals (GCT) New York in Staten Island as the terminal operator. The new service will serve ports on both the west and east coasts of Latin America, utilizing Manzanillo International Terminal, Panama as the service’s hub.

Trans-Pacific Partnership delegates fail to reach final deal; pharmaceuticals, cars, dairy key sticking points
Delegates negotiating a Pacific free trade agreement have failed to reach a final deal after several days of intense talks in Hawaii.

FMC gets real about port congestion
The FMC believes that infrastructure investment is at the core of the discussion, however, other factors must be addressed in the near term to ensure an efficient and reliable international ocean transportation system and the relevant supply chain.

More Ships Heading to U.S. East Coast Ports at the Expense of the West
U.S. East Coast bunker suppliers are seeing more demand opportunity this year as shipping traffic has surged following West Coast port congestion from a labor dispute and other problems, the Financial Times reports.

2015 Peak Season prospects are mixed
While nearly one-third of LM survey respondents note Peak Season has a significant impact on operations, industry experts say it will not be much to write home about this year.

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News July 2015

Panama Canal begins filling new Pacific locks
The Panama Canal has just taken another step forward toward the completion of the Canal Expansion Program by beginning to fill the Cocoli’s locks on the Pacific side, following a similar endeavor on the Atlantic side earlier this month.More…

ICTSI Oregon leads effort to end West Coast labor slowdowns
The Preventing Labor Union Slowdowns Act of 2015 (PLUS Act) was introduced last Thursday (June 18, 2015) in the US Senate to help prevent the type of maritime labour slowdowns at the Port of Portland and 28 other West Coast ports that disrupted domestic and international trade and nearly brought the US economy to a standstill earlier this year.
http://container-mag.com/2015/06/24/ictsi-oregon-leads-effort-end-west-coast-labour-slowdowns/

The Trans-Pacific Partnership Is About Much More Than Trade
The US congressional debate over granting Trade Promotion Authority (TPA) to the executive branch has been raging over the past few months.
http://americaneconomicalert.org/news_item.asp?NID=4766306

Statement by U.S. Trade Representative Michael Froman
on Senate Vote on Trade Promotion Authority/TTP, T-TIP

Today, the U.S. Congress made clear that the United States intends to lead on trade, deliver more, good middle class jobs and unlock opportunity for American workers, farmers, ranchers and small businesses across the country. https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/june/statement-us-trade-representative-0

What will happen to TTIP in the European Parliament?
MEPs will supposedly vote on the Transatlantic Trade and Investment Partnership (TTIP) resolution in July. Despite recent developments, the camp supporting it is still far stronger than the opposition, writes Doru Frantescu. http://www.euractiv.com/sections/trade-society/what-will-happen-ttip-european-parliament-315540

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