PICKING UP STEAM

Port Management In The Asia Pacifc

November-December 2013
www.LogAsiamag.com
MCI (P) 121/07/2013 PPS1672/01/2013 (022917)
MARINE RISK INSURANCE EXPLORED
SINGAPORE LEADING THE WAY
GTMS INS AND OUTS

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WhIIe attendIng a conIerence earIIer
thIs year, one oI the attendees comment
ed durIng a break that some oI the topIcs
covered by the presenters were not as
"ground breakIng" as he wouId have IIked
It to be.
He was oI course correct but was remInd
ed just earIIer that week that whIIst It Is
aIways good to Iook at newer concepts and
practIce, we aIso need to ensure that we
get the IundamentaIs oI good suppIy chaIn
and IogIstIcs practIce correct. AIso, oIten
there Is no need to reInvent the wheeI,
when emuIatIng or ImpIementIng trIed and
true methodoIogIes or best practIce couId
reap the same II not better outcomes In a
shorter perIod oI tIme.
The remInder receIved oI thIs was In the
Iorm oI a potentIaI Insurance cIaIm that
Ianded on my desk recentIy because the
coIIeague who wouId normaIIy handIe thIs
was not avaIIabIe at that poInt oI tIme. n
thIs case, It was a product trucked Irom
SIngapore to MaIaysIa that had arrIved
damaged and the consIgnee IocatIon want
ed to make a cIaIm agaInst our marIne In
surance poIIcy - and oI course wanted thIs
cIaIm to be resoIved aImost ImmedIateIy.
BE PRACTICAL
have been drIvIng and cars and trucks Ior
years and perhaps IIke most peopIe mIght
have been InvoIved In an accIdent or two.
Every tIme am InvoIved In an accIdent that
does not InvoIve cargo, assess whether
submIttIng a cIaIm through my Insurance
company Is worthwhIIe or whether shouId
Iook at settIIng the IncIdent "prIvateIy".
I Insurance Is InvoIved there Is the oIten
KEEPING THE
FAITH WITH
MARINE
INSURANCE
RAYMON KRISHNAN discusses the appropriate
measures that shippers should take and
consider when making a marine insurance claim.
tedIous process oI havIng to IIIe a report
wIth the Insurer, havIng a survey done,
possIbIy makIng a poIIce report and then
havIng to waIt a Iew days Ior the assess
ment outcome. UnIess you pay a hIgher
premIum, the vehIcIe wIII then gener
aIIy need to be repaIred at a workshop
approved or assIgned by the Insurance
company. When thIs happens, you are
just another Insurance repaIr case to the
repaIrer and you may or may not be
satIsIIed wIth the work carrIed out or the
servIce you receIve.
To compound the Issue, when It comes
tIme to renew your Insurance, you may
IInd your premIums Increased regard
Iess as to whether or not you were the
party who caused the accIdent. ThIs whoIe
exercIse couId be tIme consumIng and
oIten not the smoothest oI processes.
n the event oI a cargo cIaIm, sImIIar IogIc
couId possIbIy be appIIed. The IIrst thIng
we ought to do Is to consIder II makIng a
[ The IIrst thIng one ought to do Is to consIder II makIng a cIaIm Is worth the ensuIng hassIe. ]
cIaIm Is worth the ensuIng hassIe. As an
exampIe, In the mentIoned IncIdent, the
externaI packagIng Ior a rush order arrIved
at our IacIIIty In KuaIa Lumpur wIth water
damage. ThIs shIpment was supposed to
be cross docked and sent to the customer
to IIII a backorder.
Upon receIpt, the IacIIIty segregated the
product and InIormed saIes that the order
couId not be shIpped untII It was "sIgned oII"
by someone In the LogIstIcs department.
SaIes oI course wanted repIacement
product to materIaIIse overnIght and thIs
cIaIm IuIIy covered and compensated by
our corporate poIIcy or by our 3PL. As an
aIternatIve, they wanted the green IIght
to proceed to deIIver product that was
not damaged beIore a survey couId be
arranged. t was oI course not that sImpIe.
ThIs was a hIgh demand product so we dId
not have Inventory avaIIabIe to resuppIy
thIs product ImmedIateIy and beIore gIv
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15
Ing approvaI to repackage the part oI the
shIpment that was not damaged, a survey
needed to be arranged through our under
wrIters.
AIter a Iew days oI "anxIety" where every
man and hIs dog weIghed In wIth an opInIon
on what to do, It was decIded that sInce the
water damage onIy appeared to aIIect one
paIIet and appeared to aIIect onIy the top
coupIe oI Iayers, we wouId take the rIsk and
unpack the product to see what exactIy was
damaged. When we dId thIs, we dIscovered
that the product was not damaged and aII
that was needed was Ior It to be repacked
Ior shIpment and sent oII to the customer.
We Iater aIso Iound out that the cargo
was damaged at our IoadIng bay In SIn
gapore and thereIore the 3PL concerned
was not responsIbIe. CIaImIng compen
satIon through them thereIore wouId
[ NegotIatIng a repIacement Ior a damaged product Is not a sImpIe aIIaIr. ]
[ 8y purchasIng Insurance, your Insurance company assumes the responsIbIIIty and can usuaIIy expedIte
the reIease oI your cargo. ]
not have been an optIon. beIIeve thIs
decIsIon at expedIency was made easIer as
the IackIustre saIes team concerned, need
ed the saIe to heIp make theIr month end
numbers.
WORKING THE ODDS
Another perspectIve to consIder In marIne
or cargo Insurance whIch Is seIdom taIked
about Is the optIon oI seIIInsurance.
The objectIve oI Insurance Is to reduce
our exposure to IInancIaI Ioss. I you`re
an exporter who has not been paId Ior
the goods at the tIme oI shIpment, or an
Importer who has paId Ior aII or part oI
the goods prIor to receIvIng them, you
run the rIsk oI suIIerIng a IInancIaI Ioss
II the goods are Iost or damaged durIng
transIt.
AddItIonaIIy, you may be requIred to post
a bond andJor cash deposIt In order to
obtaIn reIease oI your cargo IoIIowIng a
generaI average even though there was no
Ioss or damage to your goods. 8y purchas
Ing Insurance, your Insurance company
assumes the responsIbIIIty and can usuaIIy
expedIte the reIease oI your cargo.
LastIy, a saIes contract may obIIgate us to
provIde ocean cargo Insurance to protect
the buyer`s Interest or the bank`s Interest
In the Instance oI a saIe transacted through
a Letter oI CredIt. ThIs Is especIaIIy true
when seIIIng goods CP or CF.
FaIIure to purchase Insurance can not
onIy subject you to IInancIaI Ioss II there
Is Ioss or damage to the goods, but non
compIIance wIth the terms oI your contract
wIth the buyer can Iead to Ioss oI saIes and
IegaI probIems.
There are however numerous Instances
where the above wouId not appIy. I you
have Irequent shIpments, the aggregate
rIsk can be estImated accordIng to the
Iaw oI averages and the probabIIIty oI an
event occurrIng In the Iuture can be quan
tIIIed. A sImpIer way wouId be to Iook at
your hIstorIcaI cIaIm hIstory and measure
thIs agaInst the premIums you have paId
over the same perIod. I the premIums are
hIgher than the amount actuaIIy cIaImed,
seII Insurance may be consIderatIon.
There are many Iarge shIppers who adopt
thIs approach aIthough IuII or excIusIve
seIIInsurance Is rare, as a combInatIon
oI seIIInsurance and commercIaI Insur
ance usuaIIy provIdes the best cover Ior
the shIpper. ThIs wouId work sImIIar to an
excess or deductIbIe cIause In your car
Insurance poIIcy where you are responsIbIe
up to a certaIn amount oI damage.
ThIs does not mean that you shouId
ImmedIateIy stop buyIng Insurance on your
cargo but It couId perhaps be worthwhIIe
expIorIng thIs optIon. have adopted thIs
practIce over the Iast 20 years and have
saved thousands oI doIIars In the process.
PenuItImateIy, the area oI cargo Insur
ance Is Iar too compIIcated and dIverse to
adequateIy address In a coupIe oI thousand
words. The aIm oI thIs artIcIe Is threeIoId.
FIrstIy, whIIst It Is aIways good to Iook at
new theorIes and concepts to Increase
eIIIcIency and eIIectIveness, there are very
oIten "oId trIcks" that can be used to heIp
achIeve thIs.
SecondIy, thIs stepbystep summary oI
what to do In the event oI a cIaIm mIght
prove useIuI and IInaIIy, wIth seIIInsur
ance Ior exampIe, IookIng at Iess popu
Iar methods or adoptIng a conventIonaI
approach couId perhaps pay dIvIdends In
your suppIy chaIn.
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16
WHAT TO DO IN THE EVENT OF A POTENTIAL CARGO CLAIM
RAYMON KRISHNAN shares the steps to take in case of a cargo claim conundrum.
UnIortunateIy, not aII cIaIms wIII be
straIghtIorward or mInor. CIaIms are
oIten compIIcated and the outcome
couId have a sIgnIIIcant Impact to your
bottom IIne.
The IoIIowIng Is what shouId be done
when customers IInd themseIves In the
unIortunate sItuatIon oI receIvIng a
shIpment that has been damaged:
1. On takIng receIpt oI a contaIner at
port It Is the hauIIer`s responsIbIIIty
to check the externaI appearance and
condItIon oI the contaIner and check
that the seaI and contaIner numbers
match those on the 8III oI LadIng.
Any Issues or dIscrepancIes shouId be
recorded on the Interchange report and
sIgned by a port representatIve.
2. The consIgnee oI the shIpment shouId
aIso perIorm the same checks when the
contaIner Is deIIvered to the unstuIIIng
IocatIon. ThIs same ruIe appIIes Ior road
or LCL cargo, aIbeIt that InspectIon wIII
be done at the poInt oI unIoadIng when
the truck arrIves at your IacIIIty.
3. I there are any Issues wIth the con
dItIon oI the contaIner or consIgn
ment IIke Ior exampIe II there Is sIg
nIIIcant externaI damage that may have
caused damage to the contents, the
consIgnee shouId Ieave the contaIner or
consIgnment seaIed and unopened, take
photos oI the probIem(s), and notIIy the
carrIer`s IocaI oIIIce as soon as possIbIe.
Do not accept or "unstuII" the contaIn
er unIess agreed wIth the carrIer and
the carrIer shouId be asked to conIIrm
any agreement In wrItIng. ThIs Is be
cause: the IaIIure to notIIy carrIer`s IocaI
oIIIce couId jeopardIse any cIaIm, as the car
rIer must be gIven the opportunIty to survey
the contaIner, prIor to dIscharge or reIease
oI the contaIner. The same appIIes to road
IreIght; cargo wIth externaI damage shouId
preIerabIy be rejected or at Ieast segregated.
4. I the seaI number Is dIIIerent to that on
the 8III oI LadIng, consIgnee shouId notIIy the
carrIer`s IocaI oIIIce and the shIpper to seek
an expIanatIon prIor to breakIng the seaI.
5. I the contaIner or consIgnment Is deIIv
ered wIthout a seaI or II the seaI or packag
Ing Is broken, the consIgnee shouId sus
pect Ioss or damage - Do not dIscharge!
nstead, caII the carrIer`s IocaI oIIIce and
ask II they wIsh to arrange a survey or
to gIve approvaI to take pIctures and dIs
charge. You shouId ask the carrIer to con
[ AIways make sure that there are the reIevant documents ready wIth you beIore you proceed to
make a cIaIm to avoId unnecessary hassIe. ]
The IoIIowIng documents wIII be
requIred Ior each cargo cIaIm Ior
Ioss or damage. They are:
temIsed CIaIm Statement. On
your Ietterhead, detaIIIng the
extent oI Ioss and totaI vaIue oI
your cIaIm.
Copy 8III oI LadIng or reIevant
transport document IncIudIng a
copy oI the reverse sIde showIng
appIIcabIe Standard TradIng Con
dItIons (STC`s)
ShIppers CommercIaI nvoIce
ShIppers PackIng LIst
CopIes oI aII avaIIabIe deIIvery re
ceIpts
Copy oI wrItten cIaIm made
agaInst the shIppIng IIne or car
rIer together wIth any repIIes
CertIIIcate oI nsurance (II Insur
ance has been purchased Ior thIs
shIpment)
The above guIdeIInes and docu
mentary requIrements are by no
means meant to be an exhaustIve
IIst. HandIIng a cargo cIaIm couId
be a compIIcated Issue and It Is
aIways best to seek advIce Irom a
quaIIIIed source.
Raymon Krishnan currentIy
serves as PresIdent oI the
LogIstIcs & SuppIy ChaIn
Management SocIety and has
more than 20 years experIence
In the Industry.
IIrm thIs In wrItIng. ThIs shouId be done
prIor to contactIng the shIpper.
6. SImIIarIy, II the contaIner number dIIIers
to that on the 8III oI LadIng, the consIgnee
shouId notIIy the carrIer`s IocaI oIIIce and
the shIpper. Do not open the contaIner!
7. On openIng the contaIner, II the prod
uct Is damaged the customer shouId
notIIy the carrIer`s IocaI oIIIce and take
photos oI the product, prIor to "unstuII
Ing" the contaIner or breakbuIk.
Any cIaIm Ior damage caused by the cus
tomer movIng the goods wIII not be ac
cepted. As wIth the prevIous poInt (num
ber three): The IaIIure to notIIy carrIer`s
IocaI oIIIce couId jeopardIse any cIaIm,
as the carrIer must be gIven the oppor
tunIty to survey the contaIner, prIor to
dIscharge or reIease oI the contaIner.