With the summer weather and hurricane season looming, businesses that depend heavily on the shipping industry to move their products are left preparing for what meteorologists are predicting will be another above average forecast pattern for 2018. In 2017, the United States saw firsthand the devastation caused by Hurricanes Harvey, Irma, and Maria, while overseas in Asia monsoons were equally catastrophic. Logistics providers, of course, attempt to do everything in their power when scheduling to avoid these unpredictable storms for their customers, but the wrath of Mother Nature will always weigh heavily in the shipping industry.
When cargo becomes impacted by a major weather event, businesses that are not well versed in the fine print found within the shipping line’s terms and conditions are often unaware that their cargo is uninsured by the vessel line or logistics provider after it arrives damaged or does not arrive at all. Both shipping lines and logistics companies’ liability are protected legally by force majeure clauses within their tariffs or terms and conditions.
A force majeure is defined as an extraordinary event outside of a party’s control, such as a war, strike, riot, crime, or an event described by the legal term act of God (hurricane, flood, earthquake, volcanic eruption, etc.) which prevents a party or parties from fulfilling its duties under the contract.
For those weather-related activities not impacted by what would be defined as a force majeure, international conventions (which are industry standard on shipping and logistics company’s terms and conditions) provide further protection by putting limitations on liability, often times leaving businesses not to receive the full value for their loss.
So, what can businesses do to protect their interests? Smaller to mid-size companies will quite often not carry their own open cargo policy due to high premium costs. For those companies that do carry cargo policies, many times they will come with higher deductibles only covering them for worst case scenarios. This potentially could still leave companies with substantial losses and dissatisfied customers.
BDP International, Inc., a global logistics provider with over 50 years of experience in the industry, has focused on offering a cost-effective insurance solution for our customers as part of our marine policy that provides full coverage for our freight with minimal exclusions. Shippers interest insurance, also referred to as cargo insurance, allows logistics providers like BDP International to offer insurance for all primary modes of transport, including warehousing, at a low cost to their customers in comparison to what they may pay on the open market. BDP focuses on offering shippers interest as an alternative for those customers uninsured, underinsured or those that just do not want to see claim payments limited or denied as the result of industry standard liability limitations and force majeure clauses found in contracts and terms and conditions.
We also provide our customers the opportunity to pick or choose what shipments they would like to insure so they are not committed to an all or nothing offer.
For logistics companies like BDP International, with strong, trusted partnerships with transportation and insurance providers, there is not a significant level of concern that claims experience will outweigh the number of shipments being insured. BDP makes it very clear to customers that the same level of focus and due diligence must go into each fully insured shipment and that it is not an opportunity to cut costs in other areas.
BDP International’s overall experience in offering shippers interest has been an extremely positive one. It is a chance to provide transparency between the company and our customers by being upfront about the liability limitations and exclusions that are industry standard and present a solution to those that may want that extra level of comfort that their shipment is fully insured.
Providing an insurance solution upfront when implementing a new customer allows us to demonstrate that we are doing everything we can to protect our customers’ interests.
BDP International has seen its shippers interest offering almost triple globally over the past three years, and we will continue to focus on educating both our internal teams and customers about the benefits of shippers interest as well as the risks and exposures that come with not being properly insured. Should you have any questions or concerns related to shippers interest, please feel free to contact me directly.