A Challenge to Shippers Who Would Never Dream of Controlling the Insurance
Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.
Buying CIF: Who’s really responsible if your product is lost or damaged in transit? According to internationally accepted trade terms, referred to as Incoterms, suppliers selling “CIF” (Cost, Insurance, Freight) are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to EXW, FOB, FCA, CFR or similar terms in order to control the selection, and thereby the quality, of insurance coverage.
How much is that insurance really costing you? Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.
Is the coverage your supplier purchased for you adequate? Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions
What’s the financial health of your supplier’s insurance company? Recent financial and catastrophic events have exposed the vulnerability of insurance companies to sudden economic devastation. Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. A.M. Best, Standard & Poor’s and Moody’s are among some of the world’s most respected. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).
How will your claim be handled? If insurance is arranged overseas, will you be forced to deal with an inexperienced, sub-contracted independent adjuster unfamiliar with the assessment of transportation related losses? Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.
Every Shipper Needs Cargo Insurance
Global trading involves risk; however, broad insurance coverage minimizes your financial risk. Don’t leave your livelihood up to chance! Statistics show that one ship sinks each day and you will experience a General Average loss every eight years. If you are depending on the carrier to cover losses, their responsibility is limited by law as follows:
Ocean Carriers $500 per shipping unit
A shipping unit may be defined as one ocean container.
Air Carriers $9.07 per pound
Truckers $.50 per pound
The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.
Are you familiar with GENERAL AVERAGE?
2019, year to date, there are a number of notable fire cases, with many resulting in General Average!
- Sincerity Ace – January 2019
- Maersk Honam – March 2018
- Maersk Kensington – March 2018
- Barcelona Ferry Excellent – October 2018
- Hyundai Auto Banner – May 2018
- MOL Prestige – February 2018
- Caribbean Fantasy – June 2018
Year built 2002, 100,003 dwt
Date of loss: 1/3/19
Part loaded with 4,000 teu
(capacity 7,551 teu.)
198 total loss, 462 damaged required survey
LOF salvage – security 32.5%
GA – security estimate 28%
Year built 2013, 115,060 dwt
Date of loss: 1/31/19
Part loaded with
(capacity 9,200 teu.)
947 containers affected
LOF salvage – security 15-20%
GA – security
Year built 2001, 68,196 dwt
Date of loss: 2/24/19
GA declaration on
March 12, 2019
GA – security estimate 10%
General Average – The Concept
- Formulated by the Ancient Greeks to deal with situations where cargo has been jettisoned.
- Basic principle – that which has been sacrificed for the benefit of all shall be made good by the contribution of all.
- Applies to maritime claims only.
- Is declared by the captain when there is imminent danger to the vessel, voyage or crew.
- You are contractually obligated, via the Bill of Lading, for unknown and undetermined costs.
How does it work?
- Value of the voyage is determined (vessel value plus value of all cargo on the vessel.)
- Participation is determined by the percentage that the value of your cargo bears to the overall value of the voyage.
- The loss amount is determined, and participation percentage is applied to the loss amount to determine security deposit.
- Shipper or their cargo insurer pay twice – first for the initial contribution, then for a bond covering future adjustments to that estimate.
- The great unknown (is my cargo OK?); delays – finding a port, unloading & sorting; has my shipment missed deadlines?
- LCL Freight – has everyone in my container paid? Freight is not released until all payments received.
Difficulties of preventing and extinguishing fires on the open sea, include:
- Ships are larger with more varied cargo.
- Crew are ill equipped to deal with these fires.
- Fire-fighting tugs are often days or weeks away.
- Prevention is difficult, with rising problems with mis-declared cargo.
- IMDG Code is evolving to impose stricter rules on dangerous goods (DG.)
Problems Facing the Industry
- Stricter rules on DG will lead to higher costs and more incentive on the part of shippers to avoid proper declarations
- Ship owners and shipbuilders need to improve fire-fighting capabilities with CO² systems being shown to be inadequate – cost benefit analysis – are potential losses greater than the prevention costs?
- National Cargo Bureau in NY found in 2017 that of 1,721 stowage plans inspected, 20% showed errors with DG
General Average will never go away, so how do we make that less painful?
- Awareness across all business units that losses & delays are part of any supply chain. Mission-critical shipments need more risk analysis to determine transport mode.
- Understanding of what to do when General Average occurs. This is best led by your cargo insurance provider meeting with your ‘team,’ not just the risk manager or CFO.
When was the last time your insurance provider did this for you?
Do they know how to handle a GA claim?
- Have a contingency plan or at least an understanding of how the event will unfold.
Britain granted short Brexit delay, won’t leave European Union next week
March 21, 2019, 6:22 PM GMT-5 / Updated March 22, 2019, 1:25 AM GMT-5 By Doha Madani
(Excerpted from nbcnews.com)
The U.K. has been granted a bit more time in figuring out the terms of its departure from the European trading bloc.
British Prime Minister Theresa May on Thursday won approval of her request for an extension to the deadline for the U.K. to exit the European Union, delaying the departure until either early April or late May.
Donald Tusk, president of the European Council, announced his consent to the extension on Twitter after a summit in Brussels. Tusk said he would push the deadline to May 22, but only if the U.K. Parliament approves a withdrawal agreement next week.
If British lawmakers fail to approve the Brexit deal — which they have already defeated twice — the deadline for departure will be on April 12.
After the second defeat of the withdrawal agreement she negotiated with the E.U., May asked European leaders for a short delay to the March 29 exit date.
The decision to grant the delay came a day after May delivered a televised speech to the public blaming Parliament for the Brexit impasse. It was met with anger from across the political spectrum.
Opposition Labour Party lawmaker Lisa Nandy, who indicated Wednesday that she might vote in favor of the prime minister’s deal when it next came before Parliament, on Thursday described May’s comments as “disgraceful.”
“Pitting Parliament against the people in the current environment is dangerous and reckless,” Nandy said in a tweet. “It will have cost her support.”
Dissatisfaction from within the Palace of Westminster — as the Houses of Parliament are known — echoes the feelings of many across the country. Nine in 10 Britons believe the United Kingdom’s handling of negotiations to leave the E.U. is a “national humiliation,” according to a poll conducted by Sky News and released Wednesday. One in three believe the primary responsibility lies with the U.K. government.
Because of the deep divisions that separate lawmakers, the prime minister’s settlement with the European Union has been crushed twice in the House of Commons — suffering the heaviest and fourth heaviest losses in parliamentary history.
Different factions believe that their preferred way out of the chaos — from a second referendum on Brexit to a general election, to a so-called soft Brexit or even no Brexit at all — has a chance of coming to pass.
Lawmakers voted last week to reject the notion of leaving without a deal on March 29 but part of Tusk’s conditions include they continue no-deal preparations.
If the country is forced to leave the E.U without a Brexit deal, most experts predict that it would be an unprecedented act of economic self-harm for the country.
May said in a statement shortly after Tusk announced his conditions that she would be returning to the United Kingdom on Friday to continue working toward passage of a withdrawal agreement.
“What the decision today underlines is the importance of the House of Commons passing a Brexit deal next week so that we can bring an end to the uncertainty and leave in a smooth and orderly manner,” May said.
The prime minister also acknowledged the tensions among lawmakers and said she respected the passionate view of members of Parliament that have incurred debate.
“I know MPs on all sides of the debate have passionate views, and I respect those different positions,” she said.
“Last night I expressed my frustration. I know that MPs are frustrated too. They have difficult jobs to do,” she added.
But May also refused to change course, calling on lawmakers to back her agreement and refusing to rule out crashing out of Europe without a deal if they did not back her.
Record Floods in Midwest
Record Midwest Floods Force Embargoes
Announcement Number: CN2019-16
To Our Customers,
As you are probably aware from numerous news reports, the Midwest has been hit hard by severe weather and record floods. Unfortunately, this series of weather events has caused significant damage to our rail network, which has made it necessary to issue embargoes for traffic originating, destined or moving through our network.
Numerous Union Pacific subdivisions and corridors continue to be out of service due to flooding and track washouts. The immediate effects of these storms include the following subdivisions:
- Omaha Subdivision (Missouri Valley, Iowa, to Fremont, Nebraska)
- Blair Subdivision (Fremont, Nebraska, to Missouri Valley, Iowa)
- Columbus Subdivision (Fremont, Nebraska, to Grand Island, Nebraska)
- Lincoln Subdivision (Valley, Nebraska, to Lincoln, Nebraska)
- Falls City Subdivision (Council Bluffs, Iowa, to Kansas City, Kansas)
Due to widespread flooding across our network, we have very limited reroute capability. As a result, Union Pacific is issuing embargoes. Because of the large number of impacted stations, please refer to the published embargo notices for the specific parameters.
Additional operational impacts may include delayed movement of manifest, bulk and intermodal trains through the impacted areas, including trains holding at strategic locations until service can be restored.
We appreciate your understanding and cooperation as we work through the vast impact of these weather and flooding events. We will continue to post updates on changing conditions as information is available.
To view the latest map of the flooding impact to our network and the best practices to follow during flooding events, please visit our Flood Planning and Recovery web page.
Tucumcari Subdivision Reopens
Union Pacific has reopened service over the Tucumcari Subdivision where we previously had an outage associated with weather and a derailment. Customers should expect continued delays over the next 48 hours as we begin to move traffic over the previously impacted area.
Midwest flooding grinds rail service to a halt
(excerpted from www.freightwaves.com)
March 18, 2019 Nick Austin, Director of Weather Analytics and Senior Meteorologist
Historic, catastrophic flooding continues in the Midwest after major snow melt and heavy rain last week. Some of the worst conditions are in eastern Nebraska and western Iowa, including Omaha. People and animals have been trapped by high water; bridges, roads and rails have been washed away. With neighborhoods practically underwater; homes, farms and ranches ruined; and lives at risk, the National Guard has come to the rescue. As recovery continues, transportation and freight movement – especially by rail – are suffering major disruptions.
Off the Rails
The flooding has caused significant damage to the Union Pacific (NYSE: UNP) rail network, which has led to embargoes for traffic originating, destined or moving through its network. On March 17, 2019 the company announced that the following subdivisions and corridors will continue to be out of service:
- Omaha Subdivision (Missouri Valley, Iowa to Fremont, Nebraska)
- Blair Subdivision (Fremont, Nebraska to Missouri Valley, Iowa)
- Columbus Subdivision (Fremont, Nebraska to Grand Island, Nebraska)
- Lincoln Subdivision (Valley, Nebraska to Lincoln, Nebraska)
- Falls City Subdivision (Council Bluffs, Iowa to Kansas City, Kansas)
Because the flooding across Union Pacific’s network is widespread, affecting a large number of stations, there is very limited rerouting capability. Specific parameters for embargo notices can be found here. Additional operational impacts may include delayed movement of manifest, bulk and intermodal trains through the impacted areas, as well as trains holding at strategic locations until service can be restored. To view the latest map of the flooding impact to the network, in addition to the best practices to follow during flooding events, visit Union Pacific’s Flood Planning and Recovery website.
BNSF Railroad, owned by Berkshire Hathaway (NYSE: BRK), also has several subdivisions currently out of service in many of the same areas as Union Pacific. BNSF’s North Region includes Nebraska and western Iowa, as well as other states devastated by a blizzard the day before the flooding began last week. Since March 15, BNSF crews have been assessing main line locations impacted by the flooding, and are making necessary repairs where possible in order to restore service. With the current extent of the flooding, service outages may continue in some locations for an extended period.
According to the company’s latest customer letter, the number of total trains held increased significantly late last week. While key performance indicators were positive versus the previous week, velocity and terminal dwell remain below average levels from March of last year.
Heavy Fog Causes Delays Ex-Shanghai
Heavy fog hit Shanghai port March on March 11, and remains, reducing visibility and stranding ships. Some sailings will be delayed.
This will affect the ETDs for vessels departing the port, which also will affect ETDs for ports calling after Shanghai. Two to three day delays to depart at Shanghai port should be expected. ETAs of all vessels may be affected.
Below are a few vessels affected by the fog in Shanghai port:
United States Will Terminate GSP Designation of India and Turkey
Washington, D.C. – At the direction of President Donald J. Trump, U.S. Trade Representative Robert Lighthizer announced today that the United States intends to terminate India’s and Turkey’s designations as beneficiary developing countries under the Generalized System of Preferences (GSP) program because they no longer comply with the statutory eligibility criteria.
India’s termination from GSP follows its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors. Turkey’s termination from GSP follows a finding that it is sufficiently economically developed and should no longer benefit from preferential market access to the United States market.
By statute, these changes may not take effect until at least 60 days after the notifications to Congress and the governments of India and Turkey, and will be enacted by a Presidential Proclamation.
Under the United States GSP program, certain products can enter the United States duty-free if beneficiary developing countries meet the eligibility criteria established by Congress. GSP criteria include, among others, respecting arbitral awards in favor of United States citizens or corporations, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the United States with equitable and reasonable market access. Countries can also be graduated from the GSP program depending on factors related to economic development.
The United States launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018. India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion.
The United States designated Turkey as a GSP beneficiary developing country in 1975. An increase in Gross National Income (GNI) per capita, declining poverty rates, and export diversification, by trading partner and by sector, are evidence of Turkey’s higher level of economic development.
For more information on GSP, visit the USTR website:
New Regulations for Importing Composite Wood Products
Effective March 22, 2019 – and Informational Webinar
New Regulations for Importing Composite Wood Products Effective March 22, 2019 – and Informational Webinar
EPA TSCA TITLE VI WEBINAR FOR IMPORTERS MARCH 6
EPA has an upcoming webinar to review the TSCA Title VI requirements for importers of composite wood products. The webinar, March 6, will cover the import declaration requirements that go into effect March 22, 2019. Registration is required https://teregistration.cbp.gov/index.asp?w=151
PDF showing Compliance information, including overview, background, exemptions and standards:
Accreditation Bodies under the Formaldehyde Emission Standards Rule
Composite Panel Association
Table of Hardwood trees – “Hard” and “Soft” Hardwood, but all Hardwood (not Softwood trees)
Section 301 – 10% Duty Rate Extended
CSMS# 19-000095 – UPDATE- Section 301 Increased Duties Postponed
02/28/2019 04:46 PM EST
Automated Broker Interface
On September 21, 2018, the U.S. Trade Representative (USTR) published a Notice of Modification of Action in the Section 301 investigation providing for the imposition of additional import duties on over 5,700 full and partial eight-digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS) on goods imported from the People’s Republic of China (China). See Federal Register 83 FR 47974.
The rate of additional duties was initially 10 percent. Those additional duties were effective starting on September 24, 2018, and are currently in effect. Under Annex B of the September 21 notice, the rate of additional duty was set to increase to 25 percent on January 1, 2019. On December 19, 2018, USTR published a Federal Register notice changing the effective date of the duty increase to March 2, 2019. See Federal Register 83 FR 65198, December 19, 2018.On February 24, 2019, the President directed a further delay in the duty increase.
Until further notice, the duty rate for the goods covered by the September 21, 2018 Federal Register notice, as amended, will remain at 10 percent. The Section 301 duties currently only apply to products of China, and are based on the country of origin, not country of export.
FOR FURTHER INFORMATION:
For further information, please refer to USTR’s web site at USTR.gov and the Federal Register for official announcements on this matter.
Questions related to Section 301 entry filing requirements should be emailed to email@example.com. Questions from the importing community concerning ACE rejections should be referred to their Client Representative.
Related CSMS No. 18-000757, 18-000752, 18-000642
Come meet with BOC at TPM 19. We will be presenting on one of the panels and participating in the regatta on Sunday March 3rd. We hope to see you at these events or let us know if you would like to visit us; we will be holding meetings on the Island Trader. Further details can be found below. We hope to see you there.
BOC’s Patrick Fay Presents at TPM
When and Where: March 6th Wednesday 10:00 am – 11 am, Room 104B, First Floor Reimagining an Import Logistics Program: A 1A Auto Case Study. Session Chair: Peter Tirschwell, Panelists: Richard Higgins, Patrick Fay and Mike Prandato. Come join us!
BOC’s Yacht Team Races at TPM Challenge Cup
When and Where: March 3rd Sunday 9:30 am – 4:30 pm, Rainbow Pier (Near Gladstone’s)
Long Beach, BOC’s Yacht will race in the Regatta to try to win the TPM Challenge Cup! Come cheer on all the racers!
BOC’s Meeting Space on Island Trader
When and Where: Saturday March 2nd to Wednesday March 6th, Shoreline Village
(Near Yard House).
Please reach out to book a time with a BOC team member at BOC’s enjoyable meeting space on the water. BOCTPMMeetings@bocintl.com
BOC Proudly Partners with TPM19 as a Contributing Sponsor
Trump to delay further tariffs on Chinese goods
Excerpted from BBC.com news (2/25/19)
President Donald Trump has announced that the US will delay imposing further trade tariffs on Chinese goods.
The rise in import duties on Chinese goods from 10% to 25% was due to come into effect on 1 March.
Mr Trump said both sides had made “substantial progress” in trade talks, which sent Chinese stocks up nearly 5%.
He added that he was planning a summit with Chinese President Xi Jinping in Florida to cement the trade deal if more progress was made.
A report from China’s official news agency Xinhua also noted “substantial progress” on specific issues such as technology transfer, intellectual property protection and agriculture.
Mr Trump’s decision to delay tariff increases on $200bn (£153bn) worth of Chinese goods was seen as a sign that the two sides are making progress on settling their damaging trade war.
Last week, Mr Trump noted progress in the latest round of negotiations in Washington, including an agreement on currency manipulation, though no details were disclosed.
Sources told CNBC on Friday that China had committed to buying up to $1.2 trillion in US goods, but there had been no progress on the intellectual property issues.