Archives for the ‘Other Commercial Lines’ Category

Sprouting Legal Marijuana Industry Needs Secure Weed Trucks

Armed men transporting bundles of marijuana in unmarked vans might seem like an illegal activity, but in states such as Colorado and Oregon it’s a legitimate business.

There’s a growing need to transport cannabis from farms to dispensaries, and with Department of Transportation-regulated trucks and drivers legally barred from carrying the product, new transportation companies are stepping in to meet market needs.

Legal cannabis sales are growing at an annual rate of 17 percent and are expected to reach $13.3 billion in 2020, according to a report by New Frontier Data.

Recreational marijuana is now legal in seven states and the District of Columbia, and medical marijuana is legal in 29 states. California’s Proposition 64 – the “Control, Regulate and Tax Adult Use of Marijuana Act” – will go into effect in 2018 and make the state the largest legal marijuana market in the world.

Yet transporting the crop presents challenges, including the fact that it can’t cross state lines. Already, a number of companies are offering specialized transportation services for cannabis growers and retailers in some of the states that are pioneering the industry.

“Because the sector operates primarily in cash and has a small, valuable and untraceable product, security is a top concern,” said Noah Stokes, president and chief executive of CannaGuard Security, which is based in Portland and also services clients in Washington, Illinois and Florida. “Pound for pound, it’s like transporting gold. And there are no serial numbers on it. Customers have to pay in cash, and it’s all difficult to insure.”

CannaGuard started operations three years ago and now has a highly secured 40,000-square-foot warehouse, a fleet of armored vehicles and 140 employees, many of whom are military veterans.

“Although a state such as Oregon may produce “several hundred thousand pounds in a harvest season, most of the loads CannaGuard transports are in small portions, ranging from 10 pounds up to several hundred, to reduce liability and keep the vans small,” Stokes said. “We’re not loading up semi-trucks with product and driving them anywhere. It’s small quantities in box trucks and vans going up and down I-5.”

CannaGuard transports packaged cannabis and “edibles”– cookies and candies made with cannabis – between farms and dispensaries. And like most marijuana transporters, CannaGuard also hauls large amounts of cash. Because FDIC-insured banks cannot accept money from the cannabis business, those in the industry must store their cash in vaults or transport it to specialized banks.

Armored Cargo Vans Are The Vehicle Of Choice

Large cargo vans, such as the Mercedes-Benz Sprinter and the Ram ProMaster, are the truck of choice for most cannabis transport companies. CannaGuard outfits its vehicles with extensive tracking equipment that constantly notifies its command center about truck locations and any deviations from the route or erratic changes in speed. CannaGuard‘s vehicles also feature bulletproof glass, armor plating and a series of safe deposit boxes for which each customer receives their own electronic code. CannaGuard vehicles have other defensive measures, including a security fog that can be triggered from inside the cab.

“It fills the cabin with this fog or vapor that is so thick you can’t see through it. It also has plant-based DNA so that if the person gets it on their clothing or skin, it takes a month to get out,” Stokes said.

Denver-based Canna Security America serves more than 130 clients and 500 facilities in 14 legal marijuana states.

“Most dispensaries buy in small quantities of 10 pounds or less because of the short shelf life and security requirements, said Tom Siciliano, Canna Security America’s president. “Unlike beer trucks that might have consistent routes to bars and restaurants with predictable volume requirements, deliveries to dispensaries can be sporadic and one-off shipments. It’s not like what you would think from a distribution point. You’re not loading the full truck and just delivering it around town. It’s not quite that sophisticated yet.”

Staying Clear Of The Feds

The biggest issue is that marijuana remains illegal under federal law. Like the clients they serve, most of these transport businesses operate entirely in cash and don’t have access to traditional banking for financing.

Michael Julian, president and chief executive of MPS International in Murrieta, Calif., transports cannabis industry cash and said that many companies operating in the field are operating in a “gray area.”

“Because the trucks are so small and do not cross state lines, they do not have to operate under DOT regulations. MPS is licensed in seven states, but it still may be operating illegally in the eyes of the federal government,” Julian said.

The federal government has generally tolerated the growing marijuana industry, yet Attorney General Jeff Sessions recently said that he has “serious concerns” about the effect of legalization. If the federal government were to ramp up enforcement, most in the industry believe it would start with stern warnings to growers.

“If they decide to drop the hammer, you could be in trouble, but I would imagine that businesses like mine are pretty safe for now,” Julian said.

California’s Market

Many shippers are now keeping an eye on California’s market, which is set to start issuing licenses next year. The California Department of Food and Agriculture regulates cannabis agriculture and estimates that farms produced more than 13 million pounds last year.

The amount of marijuana grown in California is equal to or slightly less than Colorado, which historically is a heavy producer, according to Terry Garrett, a cannabis analyst based in California.

“We do know Colorado consumption rates given a few years of tracking experience, and it looks like it may reach $1.5 billion this year in the regulated market,” Garrett said. “I estimate consumption is $10 to $12 billion in California.” 

“California will need a large-scale distribution network to move product from farms and distribution centers to dispensaries around the state,” said Hezekiah Allen, executive director of the California Growers Association. “Due to the sheer size of the state, growth in the legal weed market will create logistical challenges, and there will be a significant demand for small, secured vehicles in the next few years,” Allen said.

But because big companies can’t participate, and smaller companies don’t have access to financing, it remains to be seen how the market will be served.

“The demand in California will likely be too big for CannaGuard to serve effectively, and the company doesn’t have the millions in capital required to invest in trucks, facilities and labor to scale,” Stokes said.

“There’s going to be a big demand, and where there’s an opportunity, people will rise to the occasion,” Allen says.


Source: Trucks

Cyberattacks Seek Industrial Targets

The malicious actors behind recent cyberattacks are increasingly targeting industrial companies, rather than individual users, according to a recent Kapersky Lab analysis.

The Kapersky Lab analysis shows supply chains will be increasingly threatened by cyber risk, as its logistics partners, suppliers and internal operations are threatened by malicious attacks. In fact, if the data suggests a trend, the recent cyberattack is unlikely to be the last roiling global logistics.

Such a pivot presents an increased threat to companies as a hack can affect not just systems and operations, but also human safety.  An analysis of the most recent attack shows at least 50% of the companies attacked last week were either manufacturing or oil and gas companies (which includes A.P. Moller-Maersk for its energy division).

 A look at the disruptions to A.P. Moller-Maersk shows how dependent global trade is on information systems. At the TOC Europe conference, Lars Jensen of cybersecurity firm CyberKeel told attendees he calculated the shipping line would suffer $2.7 million every hour its booking system was shut down. Even aside from lost revenue, which could amount to more than $60 million dollars, the disruption to Maersk also affects other lines with boxes on Maersk vessels, which remain unloaded as the Danish shipper seeks to right itself.

To date, Maersk continues its path to recovery and has only fully reopened 6(of 17) terminals that were affected by the June 27 cyberattack, reports. However, associated terminals and truck drivers are also being impacted by the fallout of the attack, according to the Miami Herald.

Ultimately, Jensen hopes the attack serves as an object lesson for the industry, which he believes is woefully unprepared and has an inherent digital weakness. Building resilience into digital products must occur at the time of construction to be truly effective. Though costly, the method of building in security from the ground up has proven more reliable, according to Jensen.

In the meantime, supply chain managers can add cyberattacks to their growing list of risks capable of disrupting operations.


Source: SupplyChainDIVE

Preparing And Making The Right Trucking Insurance Decisions To Protect Your Investment

Whether you are a trucking start-up or a seasoned small carrier, insurance is both a necessity and a nuisance with which to be reckoned.

More times than not a carrier’s owner isn’t as prepared as needed with the necessary information required for the lowest insurance quote. Many small and micro-carriers request quotes when their insurance is renewing in just a few days or weeks. That in itself creates a challenge for the insurance agent to gather the required underwriting information about the carrier, package it to fit the different criteria of the multitude of insurance companies, and provide the time for insurance underwriters to return a quote with their best rates. Trucking company owners need to know that to get the lowest possible rates, an insurance company requires both time and detailed information about the carrier.

This is not like calling your local car and home insurance agent, or going online to enter personal information to receive a quote for your car. For trucking insurance, you’re talking about a multitude of risks that need to be evaluated to determine the best coverage at the lowest cost.

To do this and to ensure no coverage is left out and unnecessary coverage is excluded requires time. The typical length of time spent gathering the underwriting information from the carrier, packaging the information in the required format for each underwriter, and then providing those underwriters with the time necessary to assemble a quality quote is two to three months.

If your insurance agent hasn’t contacted you 90 to 120 days out from your renewal date or if you are a start-up carrier, you need to contact the agent 120 days from the date you are officially opening for business. Anything short of that and you will most likely pay far more than you should for your motor carrier’s insurance.

What follows is a list of the detailed information you should be providing to your insurance agent. It’s best to have it packaged and ready to go. When insurance companies ask for documents, the faster they are produced indicates you’re on top of your company’s business and financial situation.

Keep in mind there may be other documents and information required for special situations and operations, so verify with your insurance agent what he or she needs.


– A list of drivers, including license numbers, dates of birth, and dates of hire.
– A copy of current safety program and any incentive program.
– A list of primary customers.
– Current company financial statements.
– Three- to five-year-loss runs with details on any large losses.
– An updated business plan.
– Website address as well as any brochures, newspaper articles, etc., that describe insured’s operations.


– A list of all facilities (buildings, tank capacity, etc.)
– Is vehicle repair or body work done on premises?
– Is fuel stored on premises? Describe type, amount, and storage.
– Are fuel pumps and tanks protected by concrete posts?
– Is the yard area fully fenced and lit at night?


– Are you involved in other operations besides trucking for hire?
– Are you involved in any warehousing of goods for others?
– Are drivers allowed to carry guns?


– What type of carrier is your company, i.e., common, contract, exempt, or private?
– List the types and percentage of hauling done for each (van, reefer, flatbed, liquid, etc.).
– Describe in detail what commodities are hauled.
– List major cities insured served and give percentage of overall operations to each.
– Does insured ever haul into or out of Canada or Mexico?
– Are any federal or state filings required?
– Are special filings (oversized, overweight, etc.) required?
– Is your company involved in any intermodal shipping?
– Does your company haul double or triple trailers? If yes, list percentage of each.
– Do you act as a freight broker/forwarder or arrange loads for others?
– Do you hire equipment from others?
– Do you hire contract lease operators under your authority?
– Is your company named as additional insured on its policies?
– Do you or your contract lease operators require non-trucking coverage (bobtail)?
– Is equipment ever loaned or leased to others? With or without drivers?
– Is your trucking company responsible for primary auto liability coverage?
– Do any contract lease operators need to be named as an ‘additional insured’?
– Is your carrier party to a formal interchange agreement?
– What is your carrier’s policy regarding passengers riding in trucks?
– Do you operate any vehicles that may need downtime coverage?
– Describe the current maintenance program for trucks and equipment.
– Are any vehicles altered, customized or have special equipment?
– Are all trucks equipped with fire extinguishers?
– Describe driver hiring, training and safety programs employed by insured.
– Are drivers assigned to specific trucks? Do drivers perform daily inspections?
– Are motor vehicle reports (MVRs) obtained for all new drivers? Are annual MVRs run for all existing drivers?
– What percentage of drivers are employees versus contract lease operators?
– Are any drivers under 25 years old? Over 65 years old?
– What are the maximum number of hours driven daily and weekly by drivers?
– Are pre-employment physicals required for all new drivers?


Source: American Trucker

Maritime: The Next ‘Playground’ For Hackers

Cyber-security specialist CrowdStrike will be warning of the dangers the shipping industry faces from at hackers at Nor-Shipping 2017.

Appearing alongside the American Bureau of Shipping (ABS), CrowdStrike will lead a session focusing on the tactics, techniques and procedures of ‘invisible pirates’, and the actions the industry can take to rebuff them.

“Maritime has been described as ‘the next playground for hackers’,” said Crowdstrike’s John Titmus, director, EMEA – cybersecurity strategy advisor. “It’s an industry revolving around high value assets, moving valuable cargoes, that is transitioning to an increased reliance on digital systems. Smart shipping and the advent of broadband communication between ship and shore can unlock huge potential for the sector. Unfortunately that’s also true for the criminal fraternity.”

The joint CrowdStrike and ABS event takes place as part of Nor-Shipping’s Disruptive Talks program on May 31.


Source: Seatrade Maritime News

How The Insurance Industry Could Change The Game For Security

The recent growth in the cyber insurance market is already improving cybersecurity in some industry segments, and has the potential to do more — if the industry is able to address its data problem.

One area where cyber insurance has already made an impact is in the retail space, said David White, founder and COO at Axio Global, a cyber risk company. After the 2013 Target breach, it became very difficult for retailers to get a decent price for cyber insurance unless they had completely switched over to end-to-end encryption, or had a definite plan in place for doing that.

“I spoke to a large retailer at a conference a year ago who was wringing their hands because they could not buy cyber insurance — the sort that would cover a payment card data breach,” White said. “Their problem was that they had not allocated the funding to install end-to-end encryption and were not even planning to in the foreseeable future. The risk manager told me that they had approached the insurance market annually for several years and all she could get were ‘FU quotes.’ The cyber insurance industry has been a substantial force in driving retailers to adopt end-to-end encryption.”

Next, White said, he expects insurance companies to start insisting on anti-phishing awareness programs, strong network segmentation, and network hygiene controls for industrial control systems.

“A decent analog is the presence of sprinkler systems and other fire suppression systems as a consideration for property insurance,” White said. “Organizations don’t stop buying fire insurance because they install a sprinkler system, but they do get more attractive rates.”

“Insurance companies are helping set some general standards cybersecurity,” said Mark Sangster, vice president and industry security strategist at eSentire. “And it’s not just for the point at which the policy is written, he added. Insurers are adding language to contracts that require companies to maintain a particular level of security. For example, you must do annual cybersecurity training, and if you do those things, you can have the policy and it will cost you this amount. That’s like them saying, if you’re caught doing reckless driving, your auto insurance is null and void. I think they are one of the top influences at the moment when it comes to what cybersecurity policies and procedures need to be looked at.”

Insurance companies are asking for minimum controls, agreed Jenny Soubra, head of the U.S. cyber practice at Allianz Global Corporate & Specialty. But they’re also starting to go beyond that, with more services, she said.

“Pre-loss mitigation services offered by carriers have just become table stakes,” Soubra said. “Everyone wants their clients’ risks to be improved.”

And that translates to better security, she said, as companies become more aware of their vulnerabilities and take steps to close the gaps, train their employees, and reduce response times. But there’s a limit to how much insurance companies can actually do when it comes to measuring risk, she said.

Cyber Insurance Lacks Hard Actuarial Data, Technical Experts

According to Soubra, the insurance industry is still 30 to 50 years away from having a standardized cybersecurity data set, with relevant actuarial data, that it can pull insights from.

“The threat vectors are constantly evolving,” Soubra said. “There are new ways to get into the system, new types of ransomware are constantly being created. This, in turn, has the coverage that we’re offering constantly evolving. So we’re collecting new types of data that we weren’t collecting in the past. It doesn’t help that it’s difficult for insurance companies to share data. We need a way to standardize the data, share it, and repackage it in a way that would be useful.”

For example, insurance companies are often bound by non-disclosure agreements, and there’s no central body that collects cyber information — like, for the example, the Federal Aviation Administration does for airplane accidents and the National Highway Traffic Safety Administration does for driving.

“We need a way to standardize the data, share it, and repackage it in a way that would be useful,” Soubra said.

Instead, what happens is that insurance companies mostly sell coverage for loss of personally identifiable information and to cover the costs of business interruption due to cyber attacks, said Adam Thomas, principal at Deloitte Cyber Risk Services. The way it works is that companies looking to buy insurance fill out a questionnaire, then their insurance broker sets them up on a conference call with half a dozen carriers.

“It’s a high-level assessment — there’s not a lot of substantiation going on,” Thomas said.

And on the call itself, the carriers tend not to ask probing questions — they don’t want to give away their trade secrets to their competition, and they don’t want the client to think they’re hard to do business with.

“So that’s about as much due diligence as insurance companies do,” Thomas said. “And more recently, some of those calls have gone away because it was too much pressure on the customer.”

The cyber insurance industry doesn’t have anywhere near the kind of deep expertise as, say, property and causality, life insurance, or automotive.

“You’d think they’d take their actuarial knowledge, analytical knowledge and amass a ton of information about the claims they paid out, what the underlying causes were, so they can improve their policies,” Thomas said. “And the reality is, they haven’t.”

Instead, the industry is struggling with a dramatic shortage of personnel and a problem with getting good actuarial data.

“Most people writing cyber insurance don’t have technical backgrounds,” Thomas said. “They come from writing some other type of property and casualty insurance. They need to hire better people — and collect more data.”

And the data is another problem. In cyber insurance, the risks change more quickly than in any other type of insurance. Cars don’t — yet, at least — deliberately try to find new ways to kill their drivers. Tornadoes don’t deliberately aim for trailers parks. But cyber criminals actively look for news ways around security controls, and when they find something that works not only does the news spread quickly to all the other criminals, but through the use of automation, botnets, crimeware-as-a-service and other tools the criminals can launch fast, massive attacks against, well, everybody.

Take ransomware, for example. SonicWall saw the number of attacks go from just 3 million attacks in 2014 to 638 million last year. That added up to $1 billion in profits for the ransomware industry. As a result, there are very few hard criteria for insurance companies to use when pricing policies. “It’s largely qualitative, not quantitative,” said Thomas.

They can look at the total amount of data at risk, and cost of responding to breaches and outages. Insurance companies also look at compliance — does the customer meet PCI or HIPAA requirements, or the new financial services regulations in New York State? And these kinds of guidelines don’t help much when the threats come out of the blue.

“Last year, our industry saw a large-scale cyber incident that never occurred before,” said Mike Donaldson, solutions specialist at Bay Dynamics. “We had a DDoS attack executed successfully across millions of endpoints that took down some major retailers.”

The number of vulnerable endpoints is increasing, he added, and now includes cars and medical devices and cameras. That means that an insurance company may be dealing with tens of thousands to millions of endpoints. “That makes it very challenging to assess risks,” he said.

Plus, many companies use third-party services — such as the cloud services providers hit by the recent DDoS attack. In some ways that creates the possibility of wide-ranging, catastrophic risks. But in other ways, using third-party services can improve a company’s risk profile, if the vendor is doing a particularly good job in security. So, for example, a car owner might pay a lower insurance premium if they buy a safer car.

“The cyber insurance industry has not leveraged the same telemetry to make the same kind of decisions,” said Rajiv Gupta, CEO at Skyhigh Networks. “Part of it is that the cyber insurance industry is much younger than the auto insurance or home insurance industry. And, in many cases, the industry is still not even aware that there is a way to objectively determine, or as objectively as possible, what is the security posture of a company.”

One issue is that, traditionally, the insurance industry has been backward-looking, said Steve Durbin, managing director at London-based Information Security Forum. But in technology, a focus on the past isn’t particularly helpful when everything changes so quickly.

“The challenge for insurance companies is more of a cultural or mind shift change that we have to embrace,” Durbin said. “Insurance companies will have to look at predictive analytics until we reach the point where they can combine them with actuarial data. Until then, i think it will be quite challenging for them.”

Uninsurable Risks

When there’s a lack of hard data or strict compliance requirements, getting cyber insurance may be difficult or almost impossible.

According to the Information Security Forum, there is currently little or no insurance available for catastrophic risks such as critical infrastructure failure or state-sponsored attacks, operational mistakes, reputation damage, industrial espionage, and loss of intellectual property or trade secrets.

According to the Ponemon survey, inadequate coverage was a major reason not to purchase cyber insurance for 36 percent of companies, tying for first place with the high price of premiums. And too many exclusions, restrictions and uninsurable risks were cited by 27 percent of respondents. And if a company does get coverage, it may be difficult to get a payout.

“The onus is on the company to prove that their controls were adequate but they still got breached and the insurance company should pay up,” said Javvad Malik, security advocate at AlienVault. “It’s never an easy process. It doesn’t help sometimes that breaches don’t get discovered for months or years. It’s kind of like health insurance. Are you covered for existing conditions? This is where it really gets messy.”

The Problem Of Low-Value Policies

One of the reasons that insurance companies might not be doing as much research and analysis as they could, and requiring serious risk assessments on the part of their customers, is that the dollar values of the policies are still relatively low.

“They’re not risking a lot,” said Itzik Kotler, CTO and co-founder at SafeBreach, an automated penetration testing company. “As the industry grows, then they will revert into more means of measuring the risk.”

SafeBreach has insurance companies as customers, he said, but for internal security testing — not as a risk control for their clients.

“As the industry grows, and companies want to purchase bigger policies, with more money, then the question of how insurance companies will mitigate their risk will be more relevant,” Kotler said.

The global cyber insurance market is now over $3.25 billion, and is expected to reach $20 billion by 2020. The entire US insurance market is more than $500 billion, so that might not seem like much at first. But it’s a significant change for the industry.

“Insurance companies are extremely excited about the product because it’s probably the first new insurance product that they’ve been able to take it to the market in the last 80 to 90 years,” said Deloitte’s Thomas. “So there’s a lot of emotional excitement about it.”

And there’s a lot of room for growth.

According to recent research from the Ponemon Institute, the average company only has 15 percent of their information assets covered by insurance — compared to 59 percent for property, plant and equipment. That’s despite the fact that the average potential loss for the information assets is greater — $979 million, compared to $770 million.

Today, there is only a very small number of large writers, with over $100 million in cyber insurance premiums, according to a report by Betterley Risk Consultants.

There are several insurers in the $50 million to $100 million range, several more in the $25 million to $50 million range, and numerous insurers less than $25 million, the report said.

“That’s more that 60 carriers that offer cyber insurance altogether,” said Marc Schein, risk management consultant at New York-based Marsh & McLennan Agency. “Some carriers are offering it as a standalone product, other insurance companies will offer it in a package.”

Source: CSO

Will Giant Drones Seriously Disrupt The Shipping Industry?

Unmanned aerial vehicles, or drones, are now used for all sorts of things, from taking out terrorists to delivering take-out.

Now a tiny start-up in California’s Bay Area is working on what it hopes will be the next big thing: large autonomous drones capable of moving freight across the Pacific Ocean more cheaply than conventional piloted cargo planes and faster than cargo ships.

Natilus Inc., of Richmond, Calif., is building a 30-foot prototype drone that could take to the air for the first time later this year. If all goes as planned, the firm will develop an 80-foot drone that will begin flying routes from Los Angeles to Hawaii in 2019. A 140-foot drone with a 200,000-pound cargo capacity could be flying routes to China starting in 2020.

Made of carbon fiber composites and powered by jet engines, the drones would take off from the water, eliminating the need for landing gear and long landing strips. It would land on water several miles from port before taxiing to the dock, where cranes would unload the cargo. The amphibious drones would cruise at an altitude of about 20,000 feet and would fly slower than piloted cargo planes.

“Commercial pilot airplanes don’t want to fly slower because it would take forever to get there and pilot fatigue becomes an issue,” Natilus CEO Aleksey Matyushev told NBC MACH in an email. “For drones, that is not the case.”

And with no crew to pay — and since reduced speed means reduced fuel costs — shipping via the drones would cost about half as much as shipping by piloted cargo planes, the company says. Shipping 200,000 pounds of freight from Los Angles to Shanghai via drone, for example, would take about 30 hours at a cost of about $130,000, the company says. Delivery of the same cargo by a Boeing 747 takes about 11 hours and costs about $260,000. (Moving the same cargo to Shanghai by ship would cost about $61,000 but would take three weeks.)

Natilus hopes to build hundreds of the drones and sell them to FedEx, UPS, and other companies, Fast Company reported. But with just three full-time employees, the firm might outsource some construction efforts. Matyushev said in the email that Natilus had been “talking with a couple of larger aerospace companies (to remain unnamed) to help us put the larger vehicle together.”

Matyushev sounds confident. But are cargo drones like the ones he envisions really going to disrupt transoceanic shipping?

Dr. John Michael Robbins, an assistant professor at Embry-Riddle Aeronautical University in Daytona Beach, Florida, called cargo drones “extremely feasible” in an email to NBC News MACH, adding “it will take some time” for them to be proven safe and efficient.

“The aircraft not only have to be built and tested in order to pass the rigorous process of certification, but society has to accept the technology in order for it to truly become commercially viable,” said Robbins. “The Federal Aviation Administration is still working on creating regulations regarding the commercialization of unmanned aircraft.”

But, Matyushev said, “The FAA has been nothing but supportive of the project.”


Source: NBC News

3 Types Of Insurance You Need For Your Import/Export Business

You’ll need insurance for many aspects of your import/export business, from your employees to your cargo.

Here’s the lowdown on the specific types of insurance to protect your business.

Insuring Your Employees

Once you hire employees, you’ll need to think about caring for them. Workers’ compensation insurance laws vary among states; check with your insurance agent for details in your area. Workers’ comp covers you for any illness or injury your employees might incur on the job. If your employees work in your home office and get injured there, your homeowners’ insurance may refuse to pay on the grounds that it’s actually a workers’ comp case. Check with your insurance agent regarding what you need, then make an informed decision.

Export Credit Risk Insurance

Thanks to the Export-Import Bank of the United States, you can purchase several types of export credit risk insurance designed specifically for the newbie exporter and small- to mid-sized enterprises. These policies protect you in the event that your foreign buyer decides not to pay you for either commercial or political reasons. The Ex-Im Bank (and the United States) hope policies such as these will encourage both you and your financial institution to take on higher-risk foreign markets.

Your menu options at Ex-Im are the following:

Small-Business Policy: This multibuyer policy requires that you insure all your export credit sales with Ex-Im; it’s designed to free you from the “first-loss” deductible of most commercial policies. To take advantage, you must have an export credit sales volume of less than $5 million in the past three years before application, your company must qualify as a small business under the Small Business Administration’s definition of the term and you must have been in business at least one year with a positive net worth. How do you find out if you qualify? Call the SBA’s Office of Size Standards at (800) 827-5722, or check its website.

Umbrella Policy: This policy boasts the same coverage and eligibility as the small-business policy above, but it allows you as an export management company or export trading company to act as an adminis­trator or intermediary between Ex-Im and your clients.

Short-Term Single-Buyer Policy: This one, which covers a single or repetitive sale, is for the exporter who doesn’t want to insure everything with Ex-Im. A special reduced premium is offered to small businesses.

Cargo Insurance

When it comes to cargo insurance, to mangle a well-known advertising maxim, “Don’t let your merchandise leave home without it.” The cost of the insurance usually runs about 1 percent of the insured value, although this varies with the type of goods and method of shipping.

What do you get for your money? Peace of mind, for one thing, as with all insurance. And, in the event of a cargo misadventure, your insurance coverage should include enough to repay you for not only lost or damaged products but for your extra time and trouble and those lost profits. You’ll want to purchase all-risk insurance, which covers your cargo against everything except man’s inhumanity to man — war, strikes, riots and civil commotion — and inherent vice in the cargo. What is vice, you ask? It refers to any sort of plague or pestilence that might attack your cargo, such as boll weevils in those gorgeous cotton blankets or E. coli on your Texas steaks.

You might also want to consider general average insurance. This protects you in the event of someone else’s cargo loss. Say the ship carrying your containers runs afoul of stormy weather. The captain decides to jettison a portion of the cargo to save the rest, and they dump somebody else’s stuff into the briny deep. Fine, you say. Not quite. According to maritime law, even though your merchandise has made it to port safe and sound, you can’t take possession until you’ve paid for your share of the loss.

Let’s look at another scenario. Say the other party in your transaction has purchased insurance — for example, the exporter who’s shipping to you CIF (cost, insurance and freight) but you’ve got a funny feeling that their coverage isn’t too reliable. Not to worry. You can purchase a contingent policy, which is about half the price of regular insurance and will serve as backup insurance in the event of a catastrophe.

As a newbie trader, your best bet will be to purchase insurance through your freight forwarder, who has a blanket policy, or directly from the air carrier. As you grow, you may wish to purchase a blanket policy of your own, which will cover you for everything you ship over the course of a year.

Avoiding Insurance Claims

Out on the high seas, your cargo may be subjected to rough and stormy weather. On the docks, it can be equally buffeted about by tough longshoremen. What can you do to help ensure your cargo doesn’t become a marine insurance claim?

1. Pack with dock loading and unloading procedures in mind.

Your cargo may be slung around (or skewered) by anything from a forklift to a sling or net, and then, if it survives that, left outdoors to rot. Often, cargo is “stored” on port decks or out on airplane cargo tarmacs, without any covering. If you’re unfamiliar with overseas port operations and don’t have the right packaging, you can lose cargo.

2. Pack to expect Mother Nature’s worst.

Container loads can shift during heavy seas and storms. Someone else’s cargo can smash into yours — or vice versa. A sea voyage may be good for a human’s health, but it can be murder on merchandise. Think heat and humidity, salt air (which is incredibly corrosive), rain and sea spray. When any or all of this gets into your containers, you can end up with rust, blistering, mold, mildew and moisture damage.

3. Pack to expect human nature’s worst.

Some people just can’t resist somebody else’s goods. Theft can be a problem, especially when containers are left on the docks for a long time. With all these potential disasters in mind, pack smart. Use adequate packaging materials; make sure your merchandise is cushioned against blows. Waterproof everything possible. Have package exteriors shrink-wrapped. Use waterproof lining on interiors. Coat exposed metal parts on machinery, for example, with grease or some other rust arrester. Use heavy strapping and seals. Discourage theft by eliminating trademarks or content descriptions on container exteriors.


Source: Entrepreneur

Uber And The Freight Business: Collaborative Partner Or Disruptive Competitor?

With over 30 million users a month in 425 cities in 72 countries, some would say that Uber is fast changing the face of global road transport.

The start-up, which was founded by Travis Kalanick in 2010, has severely disrupted the taxi industry in many cities around the world. And now it seems, Kalanick, whose company is now worth a staggering $70 billion, has his eyes firmly fixed on unsettling the logistics sector by establishing a new business line, Uber Freight. In August 2016, Uber issued a statement of intent by purchasing Otto, an autonomous truck company for over $600 million.  Recently, in an interview given to The Economist, Uber estimated that it could draw “20 percent of its future profits from trucking.”

So how exactly does Uber plan to turn the global freight business on its head? What are its aspirations? Details are sketchy and opaque at present. On contacting Uber’s media relations team, a spokesperson would only confirmed that it “didn’t have anything more to share on this subject at the moment,” but promised to reach out in the future when it did. But while Uber’s communications team chooses to remain tight-lipped, Kalanick has been fairly bullish about his company’s ambitions.

“Uber is definitely “getting into the trucking business,” Kalanick told German-owned online newspaper, Business Insider late last year.

Since giving the interview, according to Business Insider, Otto has begun advertising vacancies in both Illinois and California, which many recognize as the heartland of the U.S. logistics brokerage. And Eric Berdinis, a senior product manager for Uber Freight, has gone even further.

In October last year, Berdinis told Business Insider, “Uber’s aim is not just to create, develop and engineer self-driving truck apps that freight operators could buy and use, but to build a marketplace that would allow self-driving trucks to flourish.”

So, what will this new marketplace look like? More important, what are the unique selling points – the differentiators – that Uber believes sets it apart from traditional freight models? At the heart of its offering, says Business Insider, is a leading-edge freight app, not too dissimilar from its ride-sharing platform, which Uber hopes will enable shippers to connect to trucks in real time, thus eliminating middlemen, such as brokers altogether.

But with brokers earning as much as 20 percent in commission, some say, in theory at least,  that the new model that Uber is championing, in which the fee paid to Uber by the shippers is determined by supply and demand, could spell danger for the brokerage industry.

While only time will tell if Uber’s Freight offering is successful, it has a longer term vision in mind, seeing Uber Freight as a staging-post for mass autonomous truck take-up. As part of its blueprint, it plans to reach out to carriers and shippers with a symbiotic blueprint. In return for granting early adopters access to its technology platform, Uber hopes to benefit by collecting advanced driving data to feed its algorithms, which it sees as a stepping-stone to automation.

However, while Uber has made no secret of that fact that its ultimate goal is automated fleets, it stressed to Business Insider that “self-driving vehicles won’t be substitutes for human drivers in all situations.” But, for many in the industry, Uber’s masterplan raises some fundamental questions. Namely, can Uber, with its fledging autonomous freight business, really compete with established freight, haulage and logistics operators? Many have not only spent decades perfecting their service.

Many startups seeking to build trucking services have already tried and failed. Take Cargomatic, for example. In 2013, the California startup began to develop a real-time app, linking shippers to truckers and, more important, the available space in their trucks. While in theory the app made sense, in reality, according to Business Insider, only around 10 percent of the company’s business was generated through the platform. Perhaps, most tellingly, was Business Insider’s observation that the Cargomatic’s USP – the flow of real-time data between trucker, load and shipper – did not actually exist. Instead, information was being inputted manually and there was no real-time integration.

Five other match-loading startups, Convoy and CargoX, Transfix, CargoChief and TruckerPath are still attempting to blaze a trail, but Jonathan Wichmann, who worked as a consultant for Maersk for two years, says that the jury is still out as to whether startups can truly disrupt traditional markets. In an article written by Peter Tirschwell, a senior director of content within the IHS Maritime and Trade Group, Wichmann said that “the logistics business is not easy on the startups. There’s a reluctance among the big players to change their business models.”

But, it is a view that Evan Armstrong, the president of global third-party supply chain market research firm Armstrong & Associates, Inc., only partially agrees with.  There is very little that Armstrong does not know about transport, third-party logistics services and trailblazing startups seeking to corner the market for that matter.

In a recent conversation, Armstrong, whose market research firm recently produced a report titled “Digital Freight Matching – Capturing Technology-Based Efficiencies in the Trucking Industry,” related : “We carried out an in-depth analysis of the 27 digital freight matching companies that currently operate in this space. In short, our research revealed that while the startups were offering a high-degree of innovation, it still fell short of actually being able to solve many of the real-world challenges that the industry faces day-in and day-out. For example, while many of these apps are beneficial to the industry, in the way they harness real-time time data to accurately match a shipment to a carrier, or pinpoint truck stops; however, the transport sector is more complex than simple passenger ride-hailing. For example, there are different modes and equipment types, and no algorithm currently exists which neatly ties this industry together. If, for instance, you have a 2,000 kilo shipment destined for La Guardia Airport in New York, and the truck breaks down, the shipment cannot walk out of the truck and find another one. A reputable replacement carrier that can cover the load would need to be found quickly. At this point in time, human intervention is required to accomplish this exception handling.”

Armstrong continues, “So, it’s not that large third-party logistics providers such as C. H. Robinson and DB Schenker are not interested. They are. In June 2016, for instance, DB Schenker struck a deal with online freight platform, UShip Inc. to connect shippers with truckers online in Europe.”

However, Armstrong, who recently presented his findings at a roundtable logistics seminar at MIT, doesn’t believe any of these startups, Uber included, will be successful in disrupting the highly organic and innovative model that already exists.

“When we read the headlines about Uber Freight, it is easy to forget that multi-billion dollar, third-party logistics providers such as C.H Robinson, Coyote, TQL, XPO Logistics, DHL Supply Chain, and DB Schenker are already very efficient at managing transportation for customers. They have more carrier capacity and network scale, which drive superior pricing and operational performance, making them more competitive than any startup. “

Armstrong also thinks that industry-leading load board operations, such as DAT and Internet TruckStop, which help match million loads to carriers via their powerful applications, and freight trading platforms, like the Transport Exchange Group, which helps its 4,500+ member companies to reduce dead mileage and empty legs through several innovative online exchanges, also could make it very difficult for companies like Uber to flourish in the future.

“They have already developed integrated desktop and mobile applications for matching loads to carriers. The real-time technology has been programmed to understand the ‘load-matching’ requirements of shippers, brokers and carriers who operate in this highly nuanced logistics landscape. In addition, they have information on carrier regulatory compliance as well. Therefore, the software carries real-time reviews of carriers’ capabilities and insurance details, plus real-time updates when the load has been dispatched. The large scale of this existing visibility and collaboration is very hard to beat.”

So, does Armstrong see a future for Uber Freight?

“I don’t believe it can flourish as a company championing one stand-alone app. If it wants to grow, it will have to adopt a flexible and collaborative approach to the wider industry. Second, it will need to recruit world-class management staff who understand every aspect of the industry. And third, Uber Freight must put in place a transportation management/freight brokerage operation to support its application and allow it to ‘work out’ any transportation exceptions which may happen en route. While I don’t see it as being a threat to established players. Armstrong & Associates estimates the U.S. domestic transportation management third-party logistics sector to be worth $60 billion and its overall market potential is an estimated $380 billion, so there’s space for everyone to grow.”

But for anyone still fearing for the future, perhaps Armstrong’s telling anecdote will help provide some reassurance and prevent any more sleepless nights.

Recounts Armstrong, “I recently participated in a roundtable discussion at MIT which was centered on how Digital Freight Matching startups like Uber Freight were impacting the industry. In the room were over 25 experts from 3PLs and large shippers. While there was some interest in next generation freight matching apps, the discussion of apps got overtaken by shippers discussing Electronic Data Interchange, which is a problem that even a flashy app can’t fix.”


Source: SDC Executive

Logistics Managers Get New Tool For Calculating Customs Risk

Readers of the Global Logistics 2017: Customs & Regulations Update have learned from the expertise of a handful of industry leaders for the best market intelligence.

BPE Global, a leading trade compliance consulting firm based in San Francisco, has launched the Trade Policy Impact Calculator, a free tool accessible to logistics managers. The calculator offers a fiscal snapshot of possible trade changes and the impact to companies bottom lie.  The calculator is designed help CEO’s develop a strategic plan to ensure profitability under the incoming U.S. Administration.

According to BPE president, Beth Pride, CFO’s will get bottom line costs for budgeting and forecasting purposes. COO’s will have estimates so they can develop proactive manufacturing and supply chain strategies to optimize margin.

Chief Counsels will understand the implications of U.S. trade policy impact on existing sales, service and manufacturing contracts. And Chief Marketing officers will be able to develop sales, marketing and pricing strategies inclusive of any increased or decreased Cost of Goods Sold (COGS).

Ms. Pride also notes that this free calculator allows logistics managers to take their company’s ACE data “and with the push of a button,” get a fact-based data sheet that shows the impact of the President Trump‘s proposed trade policies,

“The report is based on your actual import activity in 2016,” Ms. Pride says. “We let you insert your import value, origin and classification data into the calculator and then the calculator analyzes your data. It calculates how your imports in 2016 would have looked considering statements that the President made as a candidate during the campaign such as placing a 45 percent duty on imports from China and 35 percent duty on imports from Mexico.”


Source: Logistics Management

Underwriters Get Ready For Crewless Ships

Autonomous ships are being explored by the cargo industry, giving marine insurers about five years to determine the costs of covering a crewless ship for risks that can occur at sea.

And the lack of historical data typical of any new technology is complicating the process of underwriting the risks of unmanned ships.

“As insurers, we need to get data,” said Andrew Kinsey, a former ship’s captain and now a New York-based senior marine consultant at Allianz Global Corporate & Specialty S.E. “We need a method to safely and effectively implement unmanned vessels and get the data we need.”

He suggested a convoy scenario, where several unmanned vessels would be chaperoned by a manned vessel, “riding herd, like a sheepdog,” he said. An autonomous vessel would be best suited to replace dry-bulk carriers that operate in intercontinental trade, according to three-year research project Maritime Unmanned Navigation through Intelligence Networks, as these ships travel slowly, transporting cargo such as timber or steel in long, uninterrupted ocean voyages.

“The insurance industry has been at the forefront of most pioneering projects now covering drones, satellite launches, satellites in orbit, test flights, remotely controlled underwater vehicles and a number of other automated products,” Sean Woollerson, London-based senior partner at JLT Specialty Ltd., said in an email. “But a vessel being operated remotely from onshore will bring unique challenges in the developing of a fully automated complex key component for the supply chain.”

Those challenges include pirates, a fire at sea and the time involved to reach the ship if a computer malfunctions. Alan Jervis, founder of Marine, Transportation and Energy Insurance Experts, a consultant to the worldwide insurance, risk management, shipping and transportation industries based in Toronto, points out that a ship is different than other vehicles that may operate autonomously. For one, a cargo ship will be isolated on the ocean.

“One of the duties of the crew is to ensure the cargo is inspected, that it doesn’t leak or break through and cause a fire,” Mr. Jervis said.

Shipping services provider Clarkson P.L.C. puts the number of cargo ships operating now at 9,600. Though none are unmanned, crewless smaller vessels are expected to be in use in three to five years, with larger merchant ships, those carrying oil and heavier cargo, arriving in 10 to 15 years, according to the Royal Institute of Naval Architects, a London-based professional organization whose members work in the design, construction, maintenance and operation of marine vessels and structures.

Europe is prime territory for their use, facing issues such as increased cargo volume and environmental requirements and a decline in the number of sailors. So the Europe Commission funded the three-year MUNIN research project to investigate the possibilities of unmanned ships. MUNIN, completed in August 2015, used 10 years of global manned ship data to compare risks of manned ships to those of unmanned ships and projected that an unmanned ship would have one-tenth of the risk of a manned ship in foundering and collision, in which human error often plays a role. The analysis also predicted a savings of $7 million over a 25-year period per ship in fuel use and crew supplies and salaries.

“This is less about pros and cons of a crew and more about how insurers can analyze risk,” Tom Hoad, London-based head of innovation at Tokio Marine Kiln Group Ltd., said in an email. “Undoubtedly one of the benefits is that better informatics means that insurers might be in a better position to calculate risk. Risk managers use advanced modeling tools to determine risk. Perhaps one of the downsides, though, is the question of what new risk emerges from not having a crew.”

To Mr. Jervis, liability and a credible backup plan if something goes wrong at sea would be paramount to cover the millions of dollars of cargo generally on ships.

“There wouldn’t be anyone there if there was a breakdown of the computer systems,” Mr. Jervis said. “You could have a train break down in the city of Chicago and a crew could come in minutes, but the Atlantic can be a one-week voyage and the Pacific two to three weeks.

“When it comes to drone technology in any line of transportation, there is no one-size-fits-all approach. Insurers have to look at every risk on a case-by-case basis and decide what the individual threats are,” Mr. Hoad said. “Typically insurers calculate risk by comparing the known volatility of a similar class to the new one. For example, light aircraft gave the industry more data about unmanned aerial vehicles. But vessels have unique risks, such as pirates.

Although the Royal Institute of Naval Architects considers pirates to be “virtually a nonissue for fully unmanned ships, it cites the lack of crew to take hostage and the ease of creating control systems that cannot be operated by nonauthorized personnel.

“Pirates would need an ocean-going tug to steal the ship or cargo,” the Royal Institute of Naval Architects said in a January statement.

With 23 years in the Merchant Marines, including 13 as captain of five vessels, Mr. Kinsey disputes that, saying an unmanned vessel at sea would be at higher risk of piracy.

Speaking from experience with pirates, Mr. Kinsey said: “I believe that a human presence on board with active piracy measures in place is an effective deterrent to a pirate boarding.”


Source: Hellenics Shipping News