PRESENTATION TO UNESCAP FROM AKTIV ASPAC · Aktiv Aspac, a member of the Aktiv AG Group based in Munich, Germany, recently inked a memorandum of agreement between the Federation of

PRESENTATION TO UNESCAP FROM

AKTIV ASPAC

13TH JUNE 2012

Logistic Operator Liability Insurance

ILLIP

Protection scheme to care for customers goodsBy EDWARD R. HENRY [email protected] by SAM THAM

Aktiv Aspac, a member of the Aktiv AG Group based in Munich, Germany, recently inked a memorandum of agreement between the Federation of Malaysian Freight Forwarders (FMFF), Aktiv Aspac Sdn Bhd and Multi‐Purpose Insurans Bhd.

Today’s Trend

Marine Insurance

The Link between Trade and The Freight Forwarder

Freight Forwarders Liability Insurance

Q&A

Today’s Trend

Marine Insurance

The Link between Trade and The Freight Forwarder

Freight Forwarders Liability Insurance

Q&A

Index of Contents

What is a Freight Forwarder by Jeff Coppersmith A clip fromYouTube

The WORLD today depends a great deal on trade

Trade Surplus and Deficit figures are economy of the country

In 2008 world merchandise in dollar terms (which includes price changes and exchange rate fluctuations), world merchandise exports increased by 15% in 2008, to $15.8 trillion

Today‘s Trend

Trade ForecastThe WTO’s projected 3.7% growth rate for world merchandise trade in 2012

Merchandise exports and imports by region, 2011

• Marine Insurance – Unique Class of Business

• Underwriters are highly specialize

• Acts, Laws, Treaties and Conventions

• This covers the loss or damage of goods being transported internationally. Marine insurance policies also cover air, road and rail transport.

• Because freight forwarders and carriers are entitled to limit their liability, owners of goods who don't insure them during international transport will only be entitled to a fraction of the goods' real value.

The pressure of VAL services in the logistics chain have increase the demand of Logistics Centre

The main VAL activities are:

Trade Specialist

Trade Papers

Trade Advisor

Will you take responsibility?I could care less about the local delivery

complications. You’re the forwarder. End of discussion.

??

Will you learn my business?

If you know I normally ship DG, then “double

check” with us when you see a shipment which doesn’t indicate that

Remember, logistics is your business, not mine. I don’t expect you to understand

anything about my manufacturing, but I don’t care to understand the

intricacies of what happens once product leaves my dock.

FMFFINTEGRATED LOGISTICS LIABILITY INSURANCE

PROGRAM

FMFF Integrated Logistics Liability Insurance Program

1) Transport Documents Liability Insures against physical loss or damage to customers cargo, whilst being transported under the forwarder’s house bill of lading or airway bill. (AWB), FIATA BLs etc.

2) Errors & Omissions (E&O)Insures against loss or damage resulting from a wrongful act in the discharge of their duties on behalf of the organization. This includes:-delay of freight due to negligenceincorrect completion of house bills of lading/HAWB’s negligence selection of an airline, ocean carrier, packer, subcontractormisdirection or misdelivery of freightdelivery without house bill of lading (HBL) / house air waybill (HAWB)

3) Bailee Liability for Warehouse and Trucking Operations Insures against Legal Liability of a carrier of goods for reward for loss or damage to goods in their care custody and control.

4) Container and Transportation Equipment CoverageInsurers ‘all risks’ of physical loss or damage to container including trailers (transportation equipment).

5) Customs LiabilityInsures against negligence or unintentional breach of import and export regulations, fines and penalties.

6) Third Party LiabilityInsures against damage and consequential loss resulting from accidental bodily injury or property damage.

7) Demurrage, detention and storageWhere the Insured is held legally liable for demurrage, storage, detention or other charges arising directly out of the failure of the consignee or receiver to take delivery of the goods.

8) Fidelity GuaranteeCover loss or damage to the cargo due to infidelity, dishonesty or criminal act that is committed by the employees.

Optional:-

7 Demurrage, detention and storage

RM50,000 per incidentRM150,000 policy period

8 Fidelity Guarantee RM100,000 per incidentRM150,000 policy period

1 Transport Document RM500,000 per incidentRM1,000,000 policy period

2 Error & Omission RM150,000 per incidentRM300,000 policy period

3 Bailee’s Liability RM150,000 per incidentRM300,000 policy period

4 Containers & Equipment

RM50,000 per incidentRM100,000 policy period

5 Customs Liability RM50,000 per incidentRM100,000 policy period

6 Public Liability RM500,000 per incidentRM500,000 policy period

The Benefits / Cover

MINIMUM RM3,000.00

0.35% ON GROSS RECEIPTS

(GROSS RECEIPTS LESS PAYMENTS TO SUB-CONTRACTORS AND OTHER PARTIES LESS CUSTOMS DUTIES AND SALES TAX)

ILLIP & Marine Cargo Insurance is One Package

MINIMUM RM3,000.00

0.35% ON GROSS RECEIPTS

(GROSS RECEIPTS LESS PAYMENTS TO SUB-CONTRACTORS AND OTHER PARTIES LESS CUSTOMS DUTIES AND SALES TAX)

ILLIP & Marine Cargo Insurance is One Package

INVESTMENT

PARTNERS

LOCAL DOMICILED RISK CARRIER e.g. MULTI PURPOSE INSURANS

INTERNATIONAL UNDERWRITING AGENCY Eg. GFHLLOYDS MARKET

SHORT INTRODUCTION OF GFH SET UP IN 1886FOCUS ONLY IN MARINE INSURANCEUNDERWRITE FOR 20 TOP INSURANCE COMPANIES • Allianz Vers. Insurance • AXA Vers. Insurance • R+V Allgemeine Vers. Insurance • Zurich Vers. AG • Victoria Vers. Insurance • Wurtt. Vers Insurance

Professional & Technical Advise.

Dedicated Claims Personnel

Leverage Ratings – Group Buying

One Stop Solution For Logistic Related Insurance

A Structured & Comprehensive Insurance Program

AA

Expand Presence In Asia.

Promote and Grow Marine Cargo Business

Branding – Marine & Liability Solution Provider

Promote risk management

Freight Forwarder’s Liability

Container Deposit Insurance

Marine Cargo Insurance

Director’s & Officer’s Liability

Asia Countries

What Do We Want To Achieve?To ensure all LO are adequately protected to all possible risk exposure i.e. balance sheet management.

To ensure various national associations members are protected from liabilities arising from business.

To promote proactive attitude towards risk management in running the business.

To provide efficient claims services to you and your customers.

Simple Process Flow

The difference between Liability and Cargo Insurance

CARGO INSURANCE= FULL VALUE INSURANCE

MontrealConventionSTC Hague/Visby

CMR

Cargo

Liability

Risks and Liabilities – Contractual liability

International Transport Conventions

MontrealWarsaw

CMR CIM

STCStandard Trading

Conditions

STCStandard Trading

Conditions

NATIONAL NATIONAL

LIMIT THE LIABILITY OF LO

Contractually apply MANDATORILY apply by law Contractually apply

including MTD Liability

Hague / Visby

Comparison of the STC’s Neighboring Countries

FIATA INDONESIA BRUNEI MALAYSIA SINGAPORE THAILANDFIATA INFA BRUFA FMFF SLA TIFFA/TAFA

SDR 2/kgSDR 666.67/pkg

Rp.10,000/kgMax.Rp.50 juta

B$1/kg/B$100/pkg

RM5/kgMax. RM100,000

SIN$5/kgMax.SIN$100,000

Bht.65/kg

Notes:1. STC usually determined by the Federation/Association in each country.2. Each country used their own currency.3. National interest member of the Association applied a liability mostly less than of which determined by the FIATA and the International Conventions on Transportation.

Claims Statistics for ILLIP from October 2010 to May 2012

Photographs 1 : Damage to Third Party Premises during discharging of the container from its trailer.

Photographs 1 : Damage to Third Party Premises during discharging of the container from its trailer.

1) General View 2) Side View 3) Building Structure was affected due to the accident

4) View on the side of the affected container

5) The frame of the Container is affected

6) Cracks line can be seen on the wall

Photographs 2 : Damage to Container, Trailer and its cargo during road accidentPhotographs 2 : Damage to Container, Trailer and its cargo during road accident

1) The driver was unable to control his vehicle and hit the roadside bush

2) Container Toppled beside the road

3) Top Rear View of the container

4) Cargo inside the container is badly affected

5) Another view on the cargo 6) Another view on the cargo

Photographs 3 : Professional Licensed forklift driver fails to read the mark and sign on the packaging resulting to cargo toppled

Photographs 3 : Professional Licensed forklift driver fails to read the mark and sign on the packaging resulting to cargo toppled

1) The forklift driver lift the cargo without checking the marking and caused it to fall

2) Initially there no physical damage noted on the machine

3) However, the machine is not functioning during the test, it was then discovered that there was a thin crack on the machine’s motherboard

4) Another view of the Chip 5) Another view of the Chip

6) It appeared that the chip is one of the vital parts for the machine and the replacement cost is about RM78,000.00.

Example of claim according to type of coverage

1. Transport Documents

• On June 2011, Rep. of Korea's Yanghai Shipping (YSC Line), an intra‐Asia specialist, has ceased operations after filing for bankruptcy protection due to serious cash shortages, high bunker prices, rising equipment rental costs, fierce rivalry and the devastating impact of the March Japanese earthquake and tsunami, reported Korea's Maritime Press.

• Our client, Aimtrans Logistics has arranged shipment of 4x 20’ containers containing Evaporated Filled Milk under YSC Line.

• Due to the insolvency of the shipping line, the shipper have to unload their cargo into different container and ship the cargo via different shipping line.

• The shipper lodged a claim against Aimtrans Logistics amounting to RM10,309.68 being the cost to recall the container, gate charges and extra charges to transfer the cargo to new containers.

• Aimtrans Logistics is held liable due their negligence as they did not check the shipping line’s credit rating before arranging for the vessel.

Example of claims according to type of coverage

2. Error and Omission

• On 11th October 2011, our client, Regional Synergy (M) Sdn Bhd has wrongly deliver a cargo to Port Tanjung Priok, Jakarta.

• Investigation revealed that this miss delivery of cargo is due to wrongly load of the cargo into Jakarta shipment during stuffing process at Regional Synergy Warehouse.

• As the result of the miss delivery, the cargo has to be send back to Port Klang, Malaysia.

• The cargo owner lodged a claim against Regional Synergy amounting to RM8,036.42 being the cost to return the cargo to Malaysia.


3. Bailee and Warehouseman Liability

• Our client, Uniqtrans Logistics Sdn Bhd (Uniqtrans) has given a contract to provide warehouse storage by the Animal Feed Supplement importer, Ceres Nutrition Sdn Bhd (Ceres).

• On 30th November 2011, Ceres requested Uniqtrans to send their cargo containing 40 bags of BG‐Max (animal feed supplement) to Ceres Premises.

• However, after few round of checking, Uniqtrans confirmed that the cargo is missing from their warehouse.

• Ceres lodged a claim against Uniqtrans amounting to RM3,648.20 being the cost of the missing cargo.

• CCTV recording revealed that on 15th September 2011, Uniqtrans warehouse employee accidently release 40 bags of BG‐Max to a different client.

• It was evidenced that the loss is due to the negligence of Uniqtrans employee and Uniqtrans is liable for the loss.


4. Container & Transportation Equipment

• On 2nd January 2011, 1 x 20’ container was reported missing at the consignee premises. Shipping line claiming against the consignee amounting to RM4,594.10 being the depreciated value of the container.

• The consignee redirect the claim to our client, Eastrex Group. According to the consignee, they have finished discharging of cargo from the container on 19th December 2010 and requested Eastrex to arrange for container collection. However, Eastrex do not inform the haulage company to collect the container from the consignee premises due to oversight of the consignee email.

• Eastrex is liable for the missing of container and their Liability Insurance respond to the loss.


5. Customs Liability

• On 27th April 2012, our client, Worldwide G‐Logistics is being compound/fined by Custom Department of Malaysia due to wrongly declaration of cargo.

• Based on the custom declaration form K2, it was noted the cargo of 680pcs of car wiper (Car Accessories) is declared under Household Product.

• Investigation revealed that the employee of Worldwide – G do not properly check on the HS code given in the Custom Tariff book.

• The custom compound/fined is amounting to RM5,000.00.


6. Third Party Liability

• On 5th January 2012, our client, NYS Shipping & Forwarding Sdn Bhd’s employee driving the haulier and hit the third party warehouse gate while delivering the cargo.

• After interviewing the driver, we discovered that he wrongly make the adjustment on the distance between warehouse gate and the trailer and this resulted to the accident.

• The third party lodged a Police Report and claim an amount of RM13,500.00 being the repair of fencing/gate and the cost to remove the debris.