Better To Be Safe Than Sorry At Export & Import!

Better To Be Safe Than Sorry At Export & Import!

5/21/2014 Mine Yılmaz 3560 Times Read

The global spend on transportation of material and goods, is over $ 3 trillion. Most companies handle their logistics through 3PL providers.  The objective is to make this a seamless and painless experience.  To achieve that one needs to identify the all the players and processes and the key issues which can then be covered with due diligence.

For a typical trans-continental shipment you will first need to get the goods from your premises to the point of dispatch (sea port, airport), where the goods will be cleared through customs and handed over to the carrier who will then carry the goods to the destination port, where the same activities will be repeated.  So we have the shipper, the clearing agent and the carrier of goods. Freight brokers like are a good place to start.  Freight brokers are a platform where the shipper, shipping agent and the carrier come together to transact business.

Since there are multiple parties involved in the movement of goods, one of the critical areas to cover is that of insurance. Basically the goods need to be covered for full value against loss or damage throughout the transit. Insurance offered by the freight broker can act as a failsafe in case any other party in the chain through the transit process. Typically both the freight forwarder and the carrier will offer comprehensive insurance. It is important to ensure that the insurer will pay out claims at full insured value or if claims are paid as a percentage of insured value. You don’t want to be caught in a situation where you only get 60 cents to the dollar on your claim.

Liability of insurance depends on the negotiated contract between the shipper and buyer. FOB or free on board means the shipper carries the insurance liability till the goods are handed over to the carrier. Thereafter the buyer covers liability. CIF or cost inclusive freight means the shipper is responsible for insurance from his door to the buyers’ door.  It’s important to know the terms of contract and do due diligence on insurance offered by multiple parties. Better to be safe than sorry.