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Ocean Cargo - Risky Busine$$

Aaron HowesVice President – Risk Management and Insurance

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Agenda

• Who is Expeditors Cargo Insurance Brokers (ECIB)

• Trends in the Industry

• Cargo Values

• Why Steamship lines don’t want high value pharma

• Questions

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Expeditors Cargo Insurance Brokers (ECIB)

• Wholly owned subsidiary of Expeditors International of Washington Inc.

• Full Service Cargo Insurance Broker

• Specialists in Cargo claims management

• Loss control and risk assessment analysis

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Trend - Issue

• Shippers / Manufactures trying to reduce freight costs

• Converting Air freight to Ocean Freight

• Shipments often become larger (consolidated)

• Temperature controlled – reefer

• Longer transit times

• Steamship lines become less willing to move high value

• Logistics / Risk Management look for a solution

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Crux of the Problem

• 40 Ft Furniture

• 40 Ft Xbox 360

• 40 Ft Reefer - Pharma

• @ 25K - $40K

• @ $1.2M

• @ 10M - $50M

Risk versus Reward

- total loss on reefer- Sensitive equipment

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Other issues

• You have insurance• $40M loss – yes you will get paid• Insurance company not happy – want their money back• Get it from the SSL (subrogation) or from you increase

premiums

• $40M loss – what does that do to your production ? Customers ?

• BIG PICTURE - more than just saving freight costs

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Questions?

© 2008