1 © 2000 expeditors high risk countries – continental africa algeriaethiopianiger...

1© 2000 Expeditors

High Risk Countries – Continental Africa

Algeria Ethiopia Niger

Angola Gabon Rwanda

Benin Ghana Senegal

Botswana Guinea Somalia

Burkina Faso Guinea Bassau

Sudan Cameroon Kenya

Tanzania Central African Republic

Liberia Togo Chad

Libya Tunisia Congo

Mali Uganda Cote d’Ivoire

Malawi Western Sahara Dem. Republic of the Congo

Mauritania Zambia Djibouti

Morocco Zimbabwe Equatorial Guinea

Mozambique Eritrea Namibia*note Egypt and South Africa are not considered special risk countries

2© 2000 Expeditors

High Risk Countries – Political Risk

• Honduran President Ousted in

Coup

• Sunday, June 28, 2009

• Primary Industries

– Coffee

– Sugar

– Wood

– Textiles

3© 2000 Expeditors

High Risk Countries – Currency Risk

• A form of risk that arises from the change in price of one currency against another

• If a firm is buying and selling in different currencies, then revenue and costs can move upwards or downwards as exchange rates between currencies change

4© 2000 Expeditors

High Risk Countries – Kidnapping

• Kidnapping for ransom

– More than 8,000 people are kidnapped every year worldwide – 6,000 in

Latin America alone (Fielding Worldwide, Inc., 2009)

– The ideal victim of a kidnapping is a mid- to high-executive professional

working for a multi-national corporation overseas

• Hostage taking as labor negotiation

– Caterpillar

– 3M

– Molex

5© 2000 Expeditors

High Risk Countries – Hijacking

• Train Assault in Mexico

• Saturday, December 27, 2008

• A heavily armed group of 40+ hooded men in 12 pickup trucks detained a train

• This is the first time that an entire train has been detained in Mexico since 1919

• a

6© 2000 Expeditors

High Risk Countries – Hijacking

7© 2000 Expeditors

The new pirates

8© 2000 Expeditors

Piracy

• 80% of all international freight moves by sea

• 10 million+ cargo containers are on the ocean at any given moment

• 2008: 293 incidents reported: 111 took place off the Somali Coast, 815 crew members taken hostage.

• Nearly every government group monitoring sea piracy believes these numbers are seriously undercounted

• Piracy is estimated to cost between $13 and $16 billion every year

9© 2000 Expeditors

Piracy

10© 2000 Expeditors

Freight Carrier Legal liability•International Carriers are governed by Conventions and Acts such as The Carriage of Goods by Sea Act (COGSA) and the Warsaw Convention (Air).

•These conventions allow carriers to limit their liability

•International Ocean $500.00 per customary freight unit•International Air Freight $28.00 per kg or 17 SDRs/kg

•Trucking and Warehousing varies from Country to Country.

–This limited liability creates a financial exposure for the actual owners of the goods – the result – Cargo Insurance

11© 2000 Expeditors

Is The Freight Carrier Liable ?

12© 2000 Expeditors

When are Ocean Carriers NOT Liable?

Neither the carrier or ship owner will be responsible for loss or damage arising or resulting from:• 1. Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier

in the navigation or in the management of the ship. • 2. Fire, unless caused by the actual fault or privity of the carrier. • 3. Perils, danger, and accidents of the sea or of other navigable waters.• 4. Act of God. • 5. Act of war. • 6. Act of public enemies. • 7. Arrest or restraint of princes, rulers or people, or seizure under legal process. • 8. Quarantine restrictions. • 9. Act or omission of the shipper or owner of the goods, his agent or representative. • 10. Strikers or lockouts or stoppage or restraint of labor from whatever cause, whether partial or

general; Provided that nothing herein contained shall be construed to relieve a carrier from responsibility for the carrier's own acts

• 11. Riots and civil commotion's. • 12. Saving or attempting to save life or property at sea. • 13. Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or

vice of the goods. • 14. Insufficiency or packing. • 15. Insufficiency or inadequacy of marks. • 16. Latent defects not discoverable by due diligence. • 17. Any other cause arising without the actual fault and privity of the carrier without the fault or

neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

13© 2000 Expeditors

Is The Freight Carrier Liable ?

14© 2000 Expeditors

Know your Freight Carriers

• Cargo Theft is a major problem• FBI estimates:

• U.S. - $12 to $20 billion in annual losses

- Los Angeles = $2 million per day!

Worldwide - $30 to $50 billion in annual losses

15© 2000 Expeditors

Know your Freight Carriers

• Same old problems:– Pilferage / “smash and grab” / “onesie twosie”– Crimes of Opportunity – Inside Jobs– Organized crime – still around – growing in some areas

• Newer problems:– Gang activity– “Bogus drivers” / “Bogus traffic stops”– Armed hijackings / shootings / gas attacks

16© 2000 Expeditors

Know your Freight Carriers• What is your Freight provider doing to guard against these risks?

• Minimum security standards?• CCTV• limited access to warehouse

• Background checks for employees?• Background checks for 3rd party contractors?• Process to limit exposure points? • Where is your cargo sitting over the weekend?• Alternating driving routes / pick up times?• You get what you pay for !

17© 2000 Expeditors

Regulations/Compliance

• ISF (Importer Security Filing)•Cargo Screening•C-TPAT

18© 2000 Expeditors

Cargo Insurance

• “All Risk” Open Marine Policies are available

- Coverage for Air, Ocean, Truck, Rail

• International• Domestic• Stock• Stock in process (stock through-put)

• When was the last time you REALLY reviewed your cargo Insurance program ?• Has your policy kept pace with your supply chain ?

19© 2000 Expeditors

MSC Napoli

20© 2000 Expeditors

21© 2000 Expeditors

Conclusion - What can you do to protect your organization against supply chain

lossesNot a conclusive list but a place to start

– Terms of Sale – INCOTERMS – when are you at risk?

– Shipping patterns - Concentration of value

– High Risk Countries – Where do you ship to / from?

– Know your Freight Carriers standards of care

– Evaluation of your Cargo insurance program

22© 2000 Expeditors

Expeditors Cargo Insurance Brokers (ECIB)

Diane Grand Regional Insurance Manager – North East

Based in Inwood New York516-371-3330

Caitlyn BellezzaRegional Insurance Manager – North East

Based in Inwood New York516-371-3330