Inside
this issue:
Obtaining the proper coverage in the
event of ocean carrier insolvency
Increased limitations on IATA air
waybills effective Dec. 30, 2009
FMC ruling allows OTIs to use
unlicensed agents
Commercial bankruptcies continue as
U.S. moves out of a recession
FMCSA proposes higher UCR fees and
reviews HOS
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Obtaining the proper coverage in the event
of ocean carrier insolvency
As reports continue to speculate on the
billions of dollars in losses that container lines will
amass in 2009, analysts are projecting that by year’s end,
ocean freight will accumulate a combined loss higher than in
air freight.
With statistics showing plummeting trade figures, ocean
carriers are experiencing losses in every trade lane. As a
result, bankruptcies and an unhealthy level of consolidation
in the liner shipping industry are inevitable, carriers
maintain. Drewry Shipping Consultants predicts a global
decline in container volume of 10.3 percent in 2009,
followed by only a 1 percent increase in volume next year.
If problems persist, Mitsui O.S.K. Lines Ltd., the world’s
largest shipping line by fleet size, told Bloomberg that its
container unit may be unprofitable for two more years.
The Economic Advisory Board of Dun & Bradstreet cautions
that some ships may be arrested as a consequence. A shipper
whose containers are stuck on the vessel of a carrier that
goes bankrupt could find the containers slapped with a lien
placed by the carrier’s creditors. Or an ocean carrier that
has leased slots to a NVOCC might put a lien on a shipper’s
containers booked by the NVOCC if it defaults on contractual
obligations. The costs and delays associated to free cargo
from a ship’s arrest can be considerable and an attorney
often needs to be involved.
Obtaining the proper coverage is important, especially with
the increased risk of ships being detained in transit. The
potential liability for extended delays, especially for
those products with limited shelf life, is increasing.
Review your current Cargo Insurance policy for important
clauses, such as Extra Expense/Insolvency, which would cover
the extra expense a shipper incurs from the termination of a
voyage at a place other than the final destination because
of the insolvency of the carrier.
Professional Liability policies will include coverage for a
company’s negligence in selecting a carrier or subcontractor
on behalf of a customer. In the event that a vessel or its
cargo be detained or arrested because of the insolvency of a
carrier, Avalon’s policy will cover the costs associated
with recovering the cargo. Extra expenses may also may be
covered under the Sue and Labor clause, where if action is
not taken, the shipment would be considered non-delivered.
Avalon provides multiple coverage options specialized for
our customers’ unique insurance needs. Our Combined Transit
Liability (CTL) program offers Errors & Omissions Insurance
with Cargo Legal Liability Insurance. Coverage provides for
attorney fees, court costs and settlements. With Cargo
Insurance, Avalon can expand the protection you offer your
clients and reduce your own exposures. Cargo Insurance is
the smart solution to protect your customers’ goods. |
