Whether you are an importer, exporter, or freight forwarder this is a very important article that will show you how to prevent risks during freight transportation and avoid inconveniences with your CARGO INSURANCE policy and claims when they show up.
On Cargo Insurance whether for domestic ground or international shipments there are some major perils that you should have into consideration.
Collision or Tipping of the Conveyance
For truck transportation, your first tool is the Federal Motor Carrier Safety Administration’s (FMCSA) tool for shippers and 3PL’s (third party logistics) called Snapshot. Snapshot is a free online tool that allows shippers to look up a carrier using the carrier’s USDOT number, MC/MX Number, or name to get a peek at the carrier’s safety record. The safety rating in this tool is a ‘satisfactory’ or ‘unsatisfactory’ with no letter or number grade.
Even if a carrier has a ‘satisfactory’ rating, look at their numbers and compare them with other carriers of similar size and service. Pay attention to crashes, tows, and out of service numbers. If these numbers are considerably higher than other carriers of similar size and service, it should give you a red alert. Higher numbers could indicate careless operational practices.
So on all those news, we saw on a daily basis of cargo spilled onto highways that came to our mind immediately when we talked about collisions and related topics while you may think this threat is out of your control, it isn’t totally.
Even if a carrier has a ‘satisfactory’ rating, look at their numbers and compare them with other carriers of similar size and service. Pay attention to crashes, tows, and out of service numbers. |Road photo created by welcomia – www.freepik.com
Cargo Handling and Securement
This category refers to the way Cargo is handled, loaded and packed by the shipper, freight forwarder or whoever handled their own freight.
Keep in mind empty spaces are always bad. Whether within your palletized freight or around it, empty space leaves room for damage. Carton crush itself may not damage the freight, but it could start the pallet to fall apart and compromise the condition of the cargo.
Compound this by the pallet possibly getting stacked on by another pallet and both pallets may tip inside the conveyance or during handling. The best practice is to always build crates and care about the safety and protection of the freight. Since crating isn’t always practical and is more expensive than others, ensuring each carton is uniform in size, full, and laid out on the pallet besides shrink wrap and pallet banding is always a good option too. It depends of course on various factors such as the commodity, value, dimensions, weight, etc to establish the proper packaging.
The next empty space to be aware of and prevent is around the pallet. Typically the inner dimensions of a standard van trailer or container are larger than the dimensions of pallets side by side in the trailer and there is often space at the end of the trailer for movement. Empty space allows for pallets, crates or boxes to move and slide when in transport.
The best answer is cardboard or inflatable dunnage placed in empty spaces throughout the trailer. The dunnage isn’t that expensive and does a great job of protecting your freight. In addition, if the trailers you load typically have space at the end of the trailer, ask your carriers to use block and brace materials to lock and secure at the end of the truck.
LTL transportation presents special challenges for all parties involved attempting to reduce freight damages. LTL carriers take control of the freight at their trailer door reducing the amount of control shippers have over mitigating freight damages. Having a good, hard to damage, packaging on your freight becomes more important than ever. As a shipper you can also have the LTL company designate your freight ‘do not stack’ or ´fragile´ or ´handle with care´. This will help prevent damages in transit as well as heavy items being stacked on top of your pallet.
Another weapon against damaged freight (and ‘lost’ freight) is collecting and using data on all losses for LTL freight. Most LTL companies don’t advertise their loss records and will give a vague answer if asked directly unless they are a shining example of freight protection for the industry. It’s up to you.
Lastly, Truckload damage rates are less than LTL due to the cargo not being handled at cross docking locations and the carrier’s terminals along with the shipper get to load the freight. Less handling is almost always better and since you loaded it you can use the dunnage mentioned before. Additionally, truckload contract carriers often carry $100,000USD of cargo coverage while LTL often only offers cargo insurance by the pound based on the freight class which may not fully cover your freight value.
The highest cargo theft rates in the country are in California, Texas, Georgia, and New Jersey.|Background vector created by upklyak – www.freepik.com
Theft happens everywhere. Do not think we are safer in the USA than other places. On the Ranking list the United States is in the top five for cargo theft globally in the company of Mexico, Brazil, South Africa, and Russia. Many shippers don’t report thefts in fear of their insurer raising insurance premiums. The FBI estimates the dollar amount to be between $15 billion and $30 billion every year. The following are a few things to keep in mind.
It is a misconception that only high-value freight gets stolen. As a matter of fact, due to sheer volume of shipments the commodity ‘food and drinks’ tops the list of stolen items. No one is immune to cargo theft. While it is true organized targeted thefts often focus on high value easily sold items, there are plenty of thefts that are crimes of opportunity.
Items such as laptops, cell phones, LCD TV’s, and other electronics and desirable theft commodities should be packaged in ‘blank’ packaging and the bill of lading should be as vague as possible. Bill of ladings and pallet labels stuck to the outside of pallets do not have to be specific for domestic transport. Cell phones and laptops can be stated as ‘miscellaneous electronics’ on the paperwork. Code numbers can be used for outer pallet labels with more specific manifests reserved for the inside of the pallet. If a thief of opportunity is poking around through the back of a trailer looking to steal several cartons, they may not wish to waste time and labor accessing cartons in a well wrapped and banded pallet. Although they will be sure to grab a carton that says ‘Apple or Samsung’ on it.
Cargo thefts increase by up to 40% over holiday weekends. While we take some well-deserved time off and vacations criminals are looking for new opportunities. The criminals know there will be as much, or more, unattended freight over extra-long weekends than there will at any time of year. If you have a choice, adjust your shipping schedule to have your freight delivering before the holiday or pick up after the holiday.
For truckload long haul make sure your driver has enough fuel and driving hours left to get several hours away from pick up. Also ask your carrier if the trailer your freight will ride in will be parked in a secured terminal for any layovers. The best trailer lock is of no value if the doors are removed from the trailer or a thief has plenty of time and a few tools in a remote area.
Deserted warehouses will also be the prime targets. Double-checking proper function of all security cameras, door and window locks, and checking good working order of all barrier protection like fences and gate locks are a must. If criminals do get in, there is no need to help them once they are. It is wise to remove the keys from all material moving machinery such as forklifts and yard dogs. Padlock all trailers in the yard even if they are empty and lock as many interior thru doors as possible. One tool I used to employ when there was room was backing the trailers rear end to rear end making access to the trailer’s doors more difficult. I also tried having the drivers back up against the building wall but that didn’t go very well if the driver was inexperienced.
Bonus Track: The highest cargo theft rates in the country are in California, Texas, Georgia, and New Jersey.
This article is in no way a comprehensive guide to all methods to prevent freight losses. It can however be an indicator there are steps you can take for little or no cost to help reduce losses. CARGO CARE SERVICES can help you to reduce these risks with our insurance policies and assist with all the process in case of claims, we have 12 years of experience in the cargo insurance industry.
Thanks to our Friend Tom O’Malley for all the help on this article.
Freight Loss Data supplied by CargoNet and Freightwatch International.