Evolving Risk Management Challenges In Transportation Presented by: Michael S. Brown TLC - San Diego...
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![Page 1: Evolving Risk Management Challenges In Transportation Presented by: Michael S. Brown TLC - San Diego - 2013 Executive Vice President, Avalon Risk Management.](https://reader036.fdocuments.us/reader036/viewer/2022070407/56649e455503460f94b39e76/html5/thumbnails/1.jpg)
Evolving Risk Management ChallengesIn Transportation
Presented by: Michael S. BrownTLC - San Diego - 2013
Executive Vice President, Avalon Risk [email protected] +1 (978) 607-0169
Premier Provider of Innovative Insurance and Surety Solutions
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Cargo Losses and Claims Trends
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US Cargo Theft1) FL2) TX3) GA4) CA5) NJ
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US Cargo Theft
199 Thefts Reported$133,711 Avg. Value
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US Cargo Theft
61% of Thefts From Unsecured Parking
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Mexican Cargo Theft
• 303 Thefts in Q1 2013• 61% were hijackings• Some highways deemed too dangerous for
carriers• 75 tons of grain stolen in one day• Rail theft of scrap metal
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Jammer Assisted Hijacking• Truck containing consumer electronics components hijacked
in Tlalnepantla, Mexico March 5, 2013• Truck equipped with hard wired fleet tracking system & two
covert tracking devices• Hijackers placed cellular signal jammer in passenger cabin of
the truck• Fleet tracking system & one covert tracker were disabled• 2nd tracker remained functional• State of Mexico Transportation Police intercepted truck within
45 minutes• Thought to be first successful attempt to use jammers in
Mexico
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Risk Management Challenges
• Vicarious liability & negligent selection claims• Hostage loads, carrier impersonation,
fraudulent drivers• Motor Carrier Insurance price competition
driving trend towards minimal coverage• Insurance Coverage transparency lacking
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California Air Resources Board
• CARB regulations impacting reefer units (TRUs) now in effect
• Penalties for shippers, consignees, truckers, drivers & broker/forwarder nationwide that hires trucker (US$1,000 each)
• Clean truck regulation in effect for CA based companies as well
• Idling regulation expected in October
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Hurricane Sandy – October 2012
Damage Estimates Now Total $50billion
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Cat 3 – 109mph winds – 285 Fatalities
250,000 Cars Damaged
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Avalon’s New York Office
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Hurricane Sandy
• Cargo damaged/destroyed/delayed• Significant impact on NY area businesses
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MSC Flaminia
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MSC Flaminia
• Significant damage to vessel & cargo• Unloading of containers took significant time• Undamaged goods subject to market
fluctuations highlight need to consider insurance cover for delay
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Vessel Damage Claims
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Vessel Damage Claims
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Vessel Damage Claims
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Vessel Damage Claims
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Vessel Damage Claims
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What Can Be Done?
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Carrier Qualification
• Authority & Safety Rating (Linhart v. Heyl)• Verify Identity (independent search)• Insurance (fraudulent certificates, appropriate
coverages, frequency of verification)• Other Considerations
– Credit– CSA Basics?– Insurance exclusions, warranties, scheduled
vehicle policies– Hints (GL coverage, coverage limits)
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Carrier Qualification
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Carrier Qualification
A Motor Truck Cargo 5/1/12 5/1/13 $100,000
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Carrier Qualification
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Broker Qualification
• Authority• Verify Identity• Insurance (E&O, Contingent Cargo, Contingent
Auto, Limits?)• Who writes Bond / Trust?• Is Bond limit voluntarily higher?• TIA Member?
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Communication & Cooperation
• Once Carrier / Broker vetted, verify that carrier retained actually picks up load– Communicate with shipper (Photo, DL#, unique
shipment ID, etc.)– Shipper authenticates
• Works in certain industries (pharma)• MAP-21 makes this easier by making
unauthorized re-brokering illegal
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GPS Tracking
• Wide array of options• Some devices sense light, temperature• Automatic alerts for change in motion, route
deviation, door open, temperature change, etc.
• Consignee cooperation can reduce cost• Have a plan in place to deal with GPS alerts
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Appropriate Degree of Control
• Too much control of driver can result in responsibility
• Regular driver communication, controlling route / manner of performing work, etc.
• Contrast between Hoffman v. Crane and Hayward v. C.H. Robinson
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Contracts
• Use standard contracts• Don’t go too far
– Can invalidate subcontractor’s insurance– Indemnification for one’s own negligence
problematic– Additional insured status on Auto Liability
problematic• Model contracts available• Add CARB verbiage to contracts
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Shipper’s Interest Insurance
• Coverage if carrier/subcontractor coverage fails
• Coverage for acts of god, general average, etc.• Full value door to door coverage air, ocean &
LTL moves• Regulatory defense protection may be
available
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General Liability Coverage Territory
• Most US policies cover events in US, Canada, etc.
• Limited coverage for international waters/airspace
• Improper packing / securement exposure• Endorse your coverage territory• Verify that subcontractors like packers &
craters do this as well
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Transportation Relationships
• 3PLs play a vital role in the process– Outsource transportation management– Efficiently add needed capacity
• Proper vetting important• Cooperation and information transparency
critical
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Thank you!