Cargo-insurance-project.docx

INTRODUCTION

What is clear to many cargo insurance (a type of property insurance), but why is it necessary? The purpose of this article briefly and simply explains the need for this operation. It is worth noting that the insurance of goods in the European Union is mandatory. We have it voluntarily. Under the cargo insurance refers to the following operations: cargo insurance, insurance of dangerous goods, international cargo insurance, and property insurance of cargo. This is almost a complete list of what can be understood by the service of cargo insurance. Most often, insurance protects against unexpected circumstances. Cargo can be protected, or trust company, which had never been failures, but an unexpected and unpleasant turn of events, is always possible. Cargo can be damaged or even worse lost completely. Insurance guarantees at least compensation loss of cargo. To insure your cargo not far to seek, insurance carried by most shipping companies. The main thing to pay attention to the design contract for cargo insurance, it is not a mere formality, always checks to see whether the documents issued for transportation. Insurance can be arranged depending on the nature of the traffic. Company discharged or simple policy for each shipment or general policy. General policy is valid for all types of transport declared by the insured. In determining the amount of payment for a particular transport necessarily consider the following: - Long-term relationship with the insurer; - Statements of operations; - Classification of the goods; - Choose the insurance coverage; - Conditions of carriage; - Statistics of the insured losses. Insured - a wise decision to resolve unexpected problems. And they believe, often occur in our country transportation. Undue risk always leads to losses. Take care of your property, with the support of professionals and proven companies.

TYPES OF CARGO INSURANCE 1

1) MARINE CARGO INSURANCE 2) TRUCK CARGO INSURANCE 3) AIR CARGO INSURANCE 4) RAILWAY CARGO INSURANCE

HOW TO VALUE CARGO FOR INSURANCE? Normally, the insured value is calculated by taking the FOB (free on board) value, adding the ocean or air freight, and adding 10% of that total. Thus, a shipment valued at $10,000 with $2,000 ocean freight would have an insured value of $13,200. We can frequently arrange higher buffer amounts upon request.

TYPES OF COVERAGE 2

The following are covered for when subscribing for cargo insurance:-

ALL RISK COVERAGE:This will cover merchandise for most types of perils that it may encounter. This coverage is intended for approved” or “general” merchandise—that which is new, export packed and not unusually susceptible to losses breakage, theft, pilferage, scratching and the like. All Risk coverage will insure against “…physical loss or damage from any external cause…” but specifically excludes the following:

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Improper packing

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Abandonment of cargo

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Rejection by Customs, FDA or other Government agency1

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Failure to pay or collect accounts

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Inherent vice (spoilage, infestation, failure of product to perform intended functions)

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Loss caused by delay2

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Loss of use and/or market3

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Nuclear

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Losses exceeding cargo policy limit

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Losses at port city more than fifteen days after discharge4

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Losses inland more than thirty days after discharge5

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Losses in South America after sixty days6

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Oceangoing barge movements (unless specifically endorsed)

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Goods subject to an On-Deck bill of lading

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Loss caused by temperature of pressure (air freight only) 3

Failure to notify air carrier of preliminary loss in timely fashion:   

Damage even days Hidden damage fourteen days Non-delivery 120 days

F.P.A. (FREE OF PARTICULAR AVERAGE):In insurance terms, this means “free from partial loss,” meaning that the insurance company is free from partial loss. F.P.A. is frequently referred to as Total Loss only because in order to recover anything under an F.P.A. policy, the customer usually must suffer a total loss of the goods. F.P.A. will cover perils of the sea, such as stranding, sinking burning, or collision of the vessel. It will also cover land perils that are generally out of man’s control. F.P.A. coverage is usually written for used merchandise, waste such as scrap metal or waste paper and merchandise stowed on deck or as bulk cargo.

W.A. (WITH AVERAGE):With Average coverage is basically F.P.A. that is extended to provide for protection from damage caused by exceptionally heavy weather. Both F.P.A. and W.A. can usually be extended to include theft, pilferage and non-delivery of an entire shipping package.

WAR RISK:“Marine” insurance (this also includes air insurance) always carries a companion policy covering war risks such as hostile actions and leftover mines. This insurance carries additional premium that is usually two to three cents per $100 of insured value. However, war rates for countries such as Iran and Lebanon are noticeably higher, for obvious reason.

DUTY INSURANCE Duty and I. R. Tax do not accrue for goods that are totally lost in transit, but partially damaged goods are frequently dutiable at full value. Depending on the duty rate, insuring the anticipated duty amount may be prudent. Both require companion war coverage that is usually about half the regular war coverage.

WHAT IS GENERAL AVERAGE?

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General Average means, literally, general loss. It can be involuntary, such as a collision involving another ship. When a General Average loss occurs, each party involved participates in the loss. General Average originated in the days of Marco Polo’s spice trains. Marco Polo put together large groups of individuals with camels who would foray into China and other countries, trading for spices and other goods. If, during their trip, they were attacked and one trader lost his camel or his goods, the others in the train would chip in and replace his losses. This noble thought survives in current transportation law so that when a vessel runs aground, incurring substantial damage to the vessel, all of the firms having cargo on board the vessel help to pay for the repairs. General Average liability is the first reason for purchasing cargo insurance. All types of insurance cover General Average. There are many stories of customers that have steadfastly refused to purchase cargo insurance, only to be involved in a General Average condition that cost up to 25% of the value of their goods. Everyone should have cargo insurance, even if they think their cargo is not worth covering. The liability for General Average makes it essential.

CARGO INSURANCE EXCLUSIONS:Most Cargo Insurance Policies do not reimburse for losses caused by improper packing or when customs officials reject the delivered goods. Other claims that are excluded from most Cargo Insurance Policies include: Abandoned cargo Other party failing to pay Spoilage or other damages due to the product’s nature Losses caused by shipping delays Employee dishonesty Damages at port cities more than 15 days after cargo were unloaded. For example, improperly packed rice can expand and spoil while in-transit. This would not be covered under standard Cargo Insurance Contracts.

TYPES OF CARGO INSURANCES

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1) MARINE CARGO INSURANCE:Marine Cargo Insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.

ORIGIN:Maritime insurance was the earliest well-developed kind of insurance, with origins in the Greek and Roman maritime loan. Separate marine insurance contracts were developed in Genoa and other Italian cities in the fourteenth century and spread to northern Europe. Premiums varied with intuitive estimates of the variable risk from seasons and pirates. The modern origins of marine insurance law in English law were in the law merchant, with the establishment in England in 1601 of a specialized chamber of assurance separate from the other Courts. Lord Mansfield, Lord Chief Justice in the mid-eighteenth century, began the merging of law merchant and common law principles. The establishment of Lloyd's of London, competitor insurance companies, a developing infrastructure of specialists (such as shipbrokers, admiralty lawyers, bankers, surveyors, loss adjusters, general average adjusters), and the growth of the British Empire gave English law a prominence in this area which it largely maintains and forms the basis of almost all modern practice. The growth of the London insurance market led to the standardization of policies and judicial precedent further developed marine insurance law. In 1906 the Marine Insurance Act was passed which codified the previous common law; it is both an extremely thorough and concise piece of work. Although the title of the Act refers to marine insurance, the general principles have been applied to all non-life insurance. In the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of London company insurers) developed between them standardized clauses for the use of marine insurance,

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and these have been maintained since. These are known as the Institute Clauses because the Institute covered the cost of their publication. Within the overall guidance of the Marine Insurance Act and the Institute Clauses parties retain a considerable freedom to contract between themselves. Marine insurance is the oldest type of insurance. Out of it grew non-marine insurance and reinsurance. It traditionally formed the majority of business underwritten at Lloyd's. Nowadays, Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this form is known by the acronym 'MAT'.

PRACTICE:The Marine Insurance Act includes, as a schedule, a standard policy (known as the "SG form"), which parties were at liberty to use if they wished. Because each term in the policy had been tested through at least two centuries of judicial precedent, the policy was extremely thorough. However, it was also expressed in rather archaic terms. In 1991, the London market produced a new standard policy wording known as the MAR 91 form and using the Institute Clauses. The MAR form is simply a general statement of insurance; the Institute Clauses are used to set out the detail of the insurance cover. In practice, the policy document usually consists of the MAR form used as a cover, with the Clauses stapled to the inside. Typically each clause will be stamped, with the stamp overlapping both onto the inside cover and to other clauses; this practice is used to avoid the substitution or removal of clauses. Because marine insurance is typically underwritten on a subscription basis, the MAR form begins: We, the Underwriters, agree to bind ourselves each for his own part and not one for another. In legal terms, liability under the policy is several and not joint, i.e., the underwriters are all liable together, but only for their share or proportion of the risk. If one underwriter should default, the remainders are not liable to pick his share of the claim. 7

Typically, marine insurance is split between the vessels and the cargo. Insurance of the vessels is generally known as "Hull and Machinery" (H&M). A more restricted form of cover is "Total Loss Only" (TLO), generally used as a reinsurance, which only covers the total loss of the vessel and not any partial loss. Cover may be on either a "voyage" or "time" basis. The "voyage" basis covers transit between the ports set out in the policy; the "time" basis covers a period of time, typically one year, and is more common.

PROTECTION AND INDEMNITY:A marine policy typically covered only three-quarter of the insured's liabilities towards third parties. The typical liabilities arise in respect of collision with another ship, known as "running down" (collision with a fixed object is a "harbor"), and wreck removal (a wreck may serve to block a harbor, for example). In the 19th century, ship owners banded together in mutual underwriting clubs known as Protection and Indemnity Clubs (P&I), to insure the remaining one-quarter liability amongst themselves. These Clubs are still in existence today and have become the model for other specialized and noncommercial marine and non-marine mutual, for example in relation to oil pollution and nuclear risks. Clubs work on the basis of agreeing to accept a ship owner as a member and levying an initial "call" (premium). With the fund accumulated, reinsurance will be purchased; however, if the loss experience is unfavorable one or more "supplementary calls" may be made. Clubs also typically try to build up reserves, but this puts them at odds with their mutual status. Because liability regimes vary throughout the world, insurers are usually careful to limit or exclude American Jones Act liability.

ACTUAL TOTAL LOSS AND CONSERVATIVE LOSS:8

These two terms are used to differentiate the degree of proof where a vessel or cargo has been lost. An actual total loss occurs where the damages or cost of repair clearly equal or exceed the value of the property. A constructive total loss is a situation where the cost of repairs plus the cost of salvage equal or exceed the value. The use of these terms is contingent on there being property remaining to assess damages, which is not always possible in losses to ships at sea or in total theft situations. In this respect, marine insurance differs from non-marine insurance, where the insured is required to prove his loss. Traditionally, in law, marine insurance was seen as an insurance of "the adventure", with insurers having a stake and an interest in the vessel and/or the cargo rather than simply an interest in the financial consequences of the subject-matter's survival.

AVERAGE:The term "Average" has one meaning: Average in Marine Insurance Terms is "an equitable apportionment among all the interested parties of such an expense or loss." General Average stands apart for Marine Insurance. In order for General Average to be properly declared, 1) there must be an event which is beyond the ship owner’s control, which imperils the entire adventure; 2) there must be a voluntary sacrifice, 3) there must be something saved. The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or damage to the ship, be it, voluntary grounding, knowingly working the engines that will result in damages. "General Average" requires all parties concerned in the maritime venture (Hull/Cargo/Freight/Bunkers) to contribute to make good the voluntary sacrifice. They share the expense in proportion to the 'value at risk" in the adventure. "Particular Average" is the term applied to partial loss be it hull or cargo. Co-insurance – is the situation where an insured has under-insured, i.e., insured an item for less than it is worth, average will apply to reduce the amount payable. An average adjuster is a marine claims specialist responsible for adjusting and providing the general average statement

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To insure the fairness of the adjustment a General Average adjuster is appointed by the ship owner and paid by the insurer.

EXCESS, DEDUCTIBLE, RETENTION, CO-INSURANCE AND FRANCHISE:An excess is the amount payable by the insured and is usually expressed as the first amount falling due, up to a ceiling, in the event of a loss. An excess may or may not be applied. It may be expressed in either monetary or percentage terms. An excess is typically used to discourage moral hazard and to remove small claims, which are disproportionately expensive to handle. In marine the term "excess" signifies the "deductible" or "retention". A co-insurance, which is typically governs non-proportional treaty reinsurance, is an excess expressed as a proportion of a claim in percentage terms and applied to the entirety of a claim. Coinsurance is a penalty imposed on the insured by the insurance carrier for under reporting/declaring/insuring the value of tangible property or business income. The penalty is based on a percentage stated within the policy and the amount under reported. As an example: A vessel actually valued at $1,000,000 has an 80% coinsurance clause but is insured for only $750,000. Since its insured value is less than 80% of its actual value, when it suffers a loss, the insurance payout will be subject to the underreporting penalty. The insured will receive 750000/1000000th (75%) of the claim made less the deductible.

TOONERS AND CHINAMEN:These are both obsolete forms of early reinsurance. Both are technically unlawful, as not having insurable interest, and so were unenforceable in law. Policies were typically marked P.P.I. (Policy is Proof of Interest). Their use continued into the 1970s before they were banned by Lloyd's, the main market, by which time, they had become nothing more than crude bets. 10

A "tonner" was simply a "policy" setting out the global gross tonnage loss for a year. If that loss was reached or exceeded, the policy paid out. A "china-man" applied the same principle but in reverse: thus, if the limit was not reached, the policy paid out.

SPECIALIST POLICIES:Various specialist policies exist, including:New building risks: This covers the risk of damage to the hull while it is under construction. Yacht Insurance: Insurance of pleasure craft is generally known as "yacht insurance" and includes liability coverage. Smaller vessels such as yachts and fishing vessels are typically underwritten on a "binding authority" or "lineslip" basis. War risks: General Hull insurance does not cover the risks of a vessel sailing into a war zone. A typical example is the risk to a tanker sailing in the Persian Gulf during the Gulf War. The war risks areas are established by the London-based Joint War Committee, which has recently moved to include the Malacca Straits as a war risks area due to piracy. If an attack is classified as a "riot" then it would be covered by war-risk insurers. Increased Value (IV): Increased Value cover protects the ship Owner against any difference between the insured value of the vessel and the market value of the vessel. Overdue insurance: This is a form of insurance now largely obsolete due to advances in communications. It was an early form of reinsurance and was bought by an insurer when a ship was late at arriving at her destination port and there was a risk that she might have been lost (but, equally, might simply have been delayed). The overdue insurance of the Titanic was famously underwritten on the doorstep of Lloyd's. Cargo insurance: Cargo insurance is underwritten on the Institute Cargo Clauses, with coverage on an A, B, or C basis, A having the widest cover and C the most restricted. Valuable cargo is known as specie. Institute Clauses also exist for the insurance of specific types of cargo, such as frozen food, frozen meat, and particular commodities such as bulk oil, coal, and jute. Often these insurance conditions are developed for a specific group as is the case with the Institute Federation of Oils, Seeds and Fats Associations (FOFSA) Trades Clauses which have been 11

agreed with the Federation of Oils, Seeds and Fats Associations and Institute Commodity Trades Clauses which are used for the insurance of shipments of cocoa, coffee, cotton, fats and oils, hides and skins, metals, oil seeds, refined sugar, and tea and have been agreed with the Federation of Commodity Associations.

WARRANTIES AND CONDITIONS:A peculiarity of marine insurance and insurance law generally, is the use of the terms condition and warranty. In English law, a condition typically describes a part of the contract that is fundamental to the performance of that contract, and, if breached, the non-breaching party is entitled not only to claim damages but to terminate the contract on the basis that it has been repudiated by the party in breach. By contrast, a warranty is not fundamental to the performance of the contract and breach of a warranty, while giving rise to a claim for damages, does not entitle the non-breaching party to terminate the contract. The meaning of these terms is reversed in insurance law. Indeed, a warranty if not strictly complied with will automatically discharge the insurer from further liability under the contract of insurance. The assured has no defense to his breach, unless he can prove that the insurer, by his conduct has waived his right to invoke the breach, possibility provided in section 34(3) of the Marine Insurance Act 1906 (MIA). Furthermore in the absence of express warranties the MIA will imply them, notably a warranty to provide a seaworthy vessel at the commencement of the voyage in a voyage policy (section 39(1)) and a warranty of legality of the insured voyage (section 41).

SALVAGE AND PRIZES:The term "salvage" refers to the practice of rendering aid to a vessel in distress. Apart from the consideration that the sea is traditionally "a place of safety", with sailors honor-bound to render assistance as required, it is obviously in underwriters' interests to encourage assistance to vessels 12

in danger of being wrecked. A policy will usually include a "sue and labour" clause which will cover the reasonable costs incurred by a ship-owner in his avoiding a greater loss. At sea, a ship in distress will typically agree to "Lloyd's Open Form" with any potential salvor. The Lloyd's Open Form is the standard contract, although other forms exist. The Lloyd's Open Form is headed "No cure — no pay"; the intention being that if the attempted salvage is unsuccessful, no award will be made. However, this principle has been weakened in recent years, and awards are now permitted in cases where, although the ship might have sunk, pollution has been avoided or mitigated. In other circumstances the "salvor" may invoke the SCOPIC terms (most recent and commonly used rendition is SCOPIC 2000) in contrast to the LOF (Lloyd's Open Form) these terms mean that the salvor will be paid even if the salvage attempt is unsuccessful. The amount the salvor receives is limited to cover the costs of the salvage attempt and 15% above it. One of the main negative factors in invoking SCOPIC (on the salvors behalf) is if the salvage attempt is successful the amount at which the salvor can claim under article 13 of LOF is discounted. The Lloyd's Open Form, once agreed, allows salvage attempts to begin immediately. The extent of any award is determined later; although the standard wording refers to the Chairman of Lloyd's arbitrating any award, in practice the role of arbitrator is passed to specialist admiralty QCs. A ship captured in war is referred to as a prize, and the captors entitled to prize money. Again, this risk is covered by standard policies.

MARINE INSURANCE ACT, 1906:The most important sections of this Act include: 4: a policy without insurable interest is void. 17: imposes a duty on the insured of utmost good faith. 13

18: the proposer of the insurer has a duty to disclose all material facts relevant to the acceptance and rating of the risk. Failure to do so is known as non-disclosure or concealment (there are minor differences in the two terms) and renders the insurance voidable by the insurer. 33(3): If [a warranty] be not [exactly] complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date. 34(2): where a warranty has been broken, it is no defense to the insured that the breach has been remedied, and the warranty complied with, prior to the loss. 34(3): a breach of warranty may be waived (ignored) by the insurer. 39(1): implied warranty that the vessel must be seaworthy at the start of her voyage and for the purpose of it (voyage policy only). 39(5): no warranty that a vessel shall be seaworthy during the policy period (time policy). However if the assured knowingly allows an unseaworthy vessel to set sail the insurer is not liable for losses caused by unseasworthiness. 50: a policy may be assigned. Typically, a ship owner might assign the benefit of a policy to the ship-mortgagor. 60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an actual total loss describes the physical destruction of a vessel or cargo.) 79: deals with subrogation, i.e., the rights of the insurer to stand in the shoes of an indemnified insured and recover salvage for his own benefit. Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy wording.

TYPES OF MARINE INSURANCE POLICIES:The major types of marine insurance policies are

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1. Time policy:Hull insurance is often sold in time policies, which cover risks during a stated period of time. An insured vessel is not bound to a particular route and all voyages within the stated policy period are covered. If a voyage is not complete at the policy's expiration date, many time policies contain a "continuation clause" extending coverage until the boat reaches its destination.

2. Voyage policy:Voyage policies protect a certain ship traveling a certain route regardless of length of time. In these cases the insurance would not be effective until the voyage begins and would terminate when the voyage ends. 3. Mixed policy:This policy is the combination of time and voyage policy. It, therefore, covers the risks for both particular voyage and for a stated period of time.

4. Floating policy:Floating policy is taken for a relatively large sum by the regular suppliers of goods. It covers several shipments which are declared afterwards along with other particulars. This policy is most situated to exporter in order to avoid trouble of taking out a separate policy for every shipment.

5. Valued policy:Under its terms the agreed value of the subject matter of insurance is mentioned in the policy itself. In case of cargo this value means the cost of goods plus freight and shipping charges plus

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10% to 15% margin for anticipated profit. The said value may be more than the actual value of goods.

6. Unvalued policy (Open Policy):Where the value of the subject matter of insurance is not declared but left to be ascertained and proved later it is called unvalued policy. 7. Builder's risk policy:This policy is issued for more than one year. This covers the risk of damage to vessels from the time its construction commences until its trail is completed.

8. Blanket policy:Under the condition of the blanket policy the maximum limit of the required amount of protection is estimated which is purchased in lump sum. The amount of premium is usually paid in advance. This policy describes the nature of goods insured, specific route, ports and places of the voyages and covers all the risk accordingly.

9. Port risk policy:This policy covers all the risk of a vessel while it is standing at a port for particular period of time.

10. Wager policy:-

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Where the assured has no insurable interest in the subject matter of insurance that is known as wager policy. As this policy has no legal effect so it cannot be taken to a court of law. If underwrite refuses to accept the claim the policy holder cannot take any legal action against him. It is, therefore, also called as gambling policy.

11. Special hazards policy:This policy covers special risks incident to piracy and war. It provides protection to insured under agreement against seizure, capture, detention and other war risks.

12. Composite policy:This type of policy is purchased from more than one under writers. If there is no any motive of fraud then insured will be indemnified by each under writer separately in case of loss.

13. Block policy:This policy is particularly purchased to gold diggers. It covers all the risks of damage to gold from the time of its recovery to its distinction. These types of policy have been introduced in Africa and are very popular in the mine fields of gold.

14. Hull insurance:17

Hull insurance covers physical damage to an insured vessel as well as salvage costs and limited property damage liability. It is similar to collision coverage for an automobile. Builder's risk policies protect these same vessels during construction until they are ready for operation.

EXCLUSIONS OF MARINE CARGO INSURANCE:Loss or damage due to Delay Loss or damage due to Insufficiency of packing Loss or damage due to insolvency, financial default of ship owners, etc.

COMPANIES IN INDIA OFFERING MARINE CARGO INSURANCE:GSI LOGISTICS PVT. LTD, NEW DELHI MARS SHIPPING AGENCY, MUMBAI URANUS CLEARING AND FORWARDING SERVICES, CHENNAI TRV FREIGHT SOLUTION PVT. LTD, NEW DELHI FLOMIC FREIGHT SERVICES PVT. LTD

A MARINE CARGO INSURANCE APPLICATION FORM 2) AIR CARGO INSURANCE:A type of insurance policy that protects a buyer or seller of goods being transported through the air. Air cargo insurance is designed to protect the insured against items damaged, destroyed or lost. Cargo insurance is offered through insurance companies, some freight forwarders and trade 18

service intermediaries. The amount of coverage and deductible required with this insurance varies, with each insurance provider.

PAST AND PRESENT OF AIR CARGO INSURANCE:The man has long dreamed of learning to fly. This dream was realized humanity in the last century with the establishment of the Wright Brothers first powered airplane. But it soon turned out that the possibility of air transport are not limited to transport people from one airport to another. Therefore, from the second decade of XX century began to develop actively cargo flights. And by the end of 1920, all formed at that time began to offer airline cargo delivery by air.

The air transports of the time are not known for carrying capacity. However, over time all aircraft reached great heights. If initially it was possible to carry on a plane not more than a thousand pounds of cargo, by the end of the third decade of the XX century, appeared in the air transport, air cargo has made possible to a million pounds of weight. And one of the first companies to include in the active development of air cargo was Boeing. This company belongs to the glory of creating the first mail plane in the U.S., known as the Model 40.

Before the Second World War, a commercial airline could not fully express themselves in the development of transportation because of the limitations. But in 1941, some of them managed to get permission for this activity. As a result, by American Airlines in 1942 have been mastered transcontinental cargo flights. And one of the first aircraft used by the company was a Douglas DC-3. This model is due to its flight and lifting qualities aroused great interest of the U.S. Army. By the end of the war were fired more than ten thousand of these aircraft. It is on the Douglas DC-3 that makes the first trucking company Lufthansa from Europe to America in 1957.

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Regular intercontinental air freight began with the appearance of Douglas DC-6. The model is designed for the transportation of cargo, entered service in 1949. It's a plane with excellent for the time characteristics, having increased capacity to withstand heavy payload, with a spacious interior - extremely popular air transport equally well used for the transport of persons, and for the delivery of goods.

The next stage in the development of trucking is the creation of a giant cargo and passenger Boeing 747. For the release of such powerful in size aircraft had to build a new plant in the United States, where they began to be produced from the 70's. The demand for huge Boeing began to decline only with the beginning of the new millennium. During this time, a lot of modifications as Boeing 747 passenger and cargo destinations. At the moment, for passenger airlines, this model is no longer sold, but airfreight famous «Jumbo Jet» still performs with surprising regularity. Current level of development of transportation by air creates more competition among the many companies offering trucking. And choosing among them is suitable for specific purposes can be difficult without the help of professionals. The company "Borger" is ready to take on the full range of services to ensure the safe delivery of any goods by air, on certification of goods and customs clearance to the construction of the optimal route, the choice of airline and freight forwarding to the destination.

COVERAGE:Warehouse-to-warehouse coverage for physical loss or damage to goods caused by an external event. Coverage for litigation and labor expenses incurred to prevent or mitigate a loss. 20

Coverage for landing, warehousing and forwarding charges incurred as the result of an insured peril. It can be extended to include inland transit and warehouse risks as well as coverage for war, strikes, riots and civil commotion, terrorism, theft, hijacking, shortage and non-delivery.

BRIEF OVERVIEW:Air cargo services are characterized by tighter control over its cargo due to short transportation time. Short transportation time and tight control reduce the cargo exposure to theft, pilferage and damage. Freight, packaging and labor costs can be saved dramatically with air freight services due to faster delivery and better security.

ADVANTAGES OF AIR CARGO INSURANCE:The first and the undeniable advantage air cargo are certainly operative. Because at the moment there is no faster shipping method than by air transport. And speed is a major factor in many situations, so often the high cost of the rapid movement of goods does not bother the owners of cargo.

Quick transportation of perishable goods - the main condition for the preservation of their quality. This category includes not only products that are easily stored, and for a long time, say, in a deep freeze. Speed of delivery is of particular importance in air cargo related to health care. These drugs with a limited shelf life, and organs for transplantation, and donor blood. This also is attributed transported plants and animals, as well as the press, that sounds pretty unexpected, but logical. Another advantage of air cargo is the ability to deliver to hard for all other transport areas. This is especially true for regions, the way in which to train and freight wagons block the mountains or rivers. Even in cases where the message cut off from the mainland area may land or water, often

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bring back the goods "on the chaise," using the roads and railways, and trucks and ferries or barges, repeatedly overloading the product. This method of delivery as a result is not only time consuming but also very expensive, so air travel in this situation is more suitable. And, of course, to the advantages of air cargo should include the safety of this mode of transportation. Sending goods by air do not worry about their safety, regardless of the distance, which he has to overcome. When air travel is lost nothing, does not deteriorate, and always delivered on time. And to provide even more reliable delivery of cargo by air, which not only help you make the best route to choose a suitable carrier and competently prepare all necessary documents, but will provide professional support to the shipping destination.

DISADVANTAGES OF AIR CARGO INSURANCE:High cost of freight air. When the delivery is not as per the mentioned time, it becomes in appropriate along with the value and importance of goods. In cases where it is not too high, air transport is simply not profitable. Therefore, for leisurely delivery cheap goods is another preferred type of transport, for example, by water, in the case of delivery of cargo from one continent to another, or trains, when the destination is on the same continent. In the latter case is not as popular, and delivery trucks. Another negative point may be difficulties with delivery of small loads by air. When it comes to small-sized goods, air cargo relevant is only when supplying them in large quantities. Otherwise, the cost of shipping will be higher than the cost of transported goods. But this deficiency can usually be overcome by choosing to air transportation of cargo delivery as urgent transport of small parties small items required infrequently.

FEATURES AND CUSTOMS OF AIR CARGO INSURANCE:International transport of goods is most often carried out by air, because it is the most rapid and secures way to deliver the goods. So you can carry not only lightweight and small things, but 22

also very significant in weight and size. Air Cargo can quickly move oversized cargo in small batches over long distances. Provided competent package and secure international air transportation cost with almost no loss of quality, regardless of the characteristics of the goods. In case of non-flying conditions or other unforeseen circumstances, there is air cargo insurance, which reduces the risks associated with this mode of transportation to a minimum. But the peculiarity of international air travel is that a great deal is also customs. Customs procedures remain virtually unchanged from the time of its formation. Moreover, they are similar enough for freight and passenger traffic. The main function of the customs authorities in both cases is the control of goods transported on international flights. That's what the customs officers at airports check. In international air travel for passengers checking the luggage at a special place on the airport. In the departure lounge customs, inspection is carried out before the registration desk. After customs clearance passengers are recorded in counters, they have to present a passport and issue the luggage of transportation. Next, there is a special check conducted for the presence of prohibited items for carriage. To prevent unauthorized cargo, Customs cooperate with services by air monitoring. Indeed, apart from the official flight, there are also private flights. And international air travel has a feature that consists of the fact that the foreign aircraft in the territory of any State may be inspected only in case of emergency. Therefore, the interaction of the air and ground services helps to take control of the airfield, checking all aircraft for possible hiding place of facts. There are certain rules governing international air freight. These rules are determined by the allowable size and weight, packaging, labeling and matching contents of consignment. Flight transported goods must comply with safety standards and do not pose a threat to other crew's baggage and cargo ship. There are clear instructions for the transport of perishable goods. Unfortunately, the rules are not always respected, and a violation of the tracking is also included in the task control services.

VARIOUS GOODS CARRIED IN AIR CARGO:23

Special Handling:Fragile item transport applies for those articles that because of their characteristics, form, or packaging may break or be damaged upon being transported by COPA AIRLINES COLOMBIA. This type of cargo must be properly packed with materials that protect, particularly with a cushioning material that keeps goods protected. Some of these articles include: computers, dishes/plates, cellular telephones, LCD and plasma TVs, ceramics, and crystal. All of these items must be in perfect condition and provided packaging that protects them during transport.

Perishable Goods:Goods that when not kept under certain conditions are affected in a way that compromises their essential qualities. Perishable goods include products such as: fruits, flowers, vegetables, meats, eggs, medicines and transplants, organs, fish, etc. This type of cargo is usually evaluated to make sure that there is no leakage and that internal packing is sufficient for absorption if any spillage does occur during transport.

Personal Belongings:Personal belongings must include a packing list in order to be received as cargo. If they are not accompanied by a packing list, they must be stamped with a shipping label that relieves Copa Airlines Colombia of any responsibility in losses during shipment. This includes luggage (excess luggage), and household items (moves). Passengers generally find out about this cargo service when they have excess baggage and prefer the service for its value.

Human Remains:Human remains include: 24

1. Cadavers: the human body. 2. Incinerated remains: ashes of a human body.

Cadavers: Must be embalmed and packed in this order: a zinc or iron metal box (hermetic), absorbent material, a wooden box (casket), cardboard, and finally a wooden crate with handles.

Incinerated Remains:Must be contained in a funerary urn, stored in external packaging, and contained with sufficient and proper cushioning material. Note:Human remains from individuals that have passed away as a result of an infectious disease must be cremated in order to be transported in any way.

Valuable Goods:Valuable goods are any that include gold, platinum, bank notes, securities, stock shares, cash, etc. For the transport of said goods, commercial agreements and procedures must be agreed upon before transport. Live Animals:Live animals may be accepted as air cargo provided they comply with the following requisites: They are domesticated or otherwise non-harmful animals. They are kept in cages or packaging that is suitable and safe.

Documentation:Dogs must be accompanied by vaccination documents. 25

Dangerous Goods Are articles or substances that may pose risks to human health, safety, security, property, or the environment. Types of Dangerous Goods:

Explosives such as firecrackers, fireworks, ammunition, bullets, sparklers, etc.



Gases such as extinguishers, camping fuel, aerosols, sprays, inhalers, lighters, oxygen bottles, compressed gases, etc.



Flammable liquids such as adhesives, glues, acetone, paints, resins, oil products, varnishes, perfume products, etc.



Flammable solids such as candles, metallic dusts (zinc, magnesium), lithium, sodium, activated carbon, etc.



Oxidants and organic peroxides such as fertilizers, ammonium nitrate, chlorine, oxygen generators, etc.



Infectious and toxic substances such as pesticides, herbicides, disinfectants, contaminated blood, infected samples, etc.



Radioactive materials such as smoke detectors, plutonium, uranium, and any other materials that give off ionizing radiation.

Corrosive substances such as acids, bases, mercury, ammonia, household cleaners, batteries, etc. Miscellaneous dangerous goods such as magnetized materials, chemistry sets, dry ice, motorcycles, vehicles, rescue materials, etc.

VARIOUS COMPANIES PROVIDING AIR CARGO SERVICES:26

Road Runner Logistic Services Pvt. Ltd, New Delhi Linear Freight Logistics India Private Limited, Mumbai BWI Logistics Private Limited (Import Agent), New Delhi Vrl Cargo Packers and Movers, Ahmedabad Phoenix International, Rajkot

WORLD'S LARGEST AIR CARGO CARRIERS:1. TOTAL SCHEDULED AIR CARGO TONNES-KMS FLOWN 2. FedEx Express - 14.579 million 3. Korean Air - 8.264 million 4. Lufthansa Cargo - 8.040 million 5. United Parcel Service - 7.353 million 6. Singapore Airlines Cargo - 7.143 million 7. Cathay Pacific - 5.876 million 8. China Airlines - 5.642 million 9. Eva Airways - 5.477 million 10. Air France - 5.388 million 11. Japan Airlines - 4.924 million

TOTAL INTERNATIONAL SCHEDULED CARGO TONNES-KMS FLOWN 1. Korean Air - 8.164 million 2. Lufthansa Cargo - 8.028 million 3. Singapore Airlines Cargo - 7.143 million 4. Cathay Pacific - 5.876 million 5. China Airlines - 5.642 million 6. FedEx Express - 5.595 million 7. Eva Airways - 5.477 million 8. Air France - 5.384 million 9. British Airways - 4.771 million 10. Cargolux - 4.670 million

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TOTAL DOMESTIC SCHEDULED CARGO TONNES-KMS FLOWN FedEx Express - 8.984 million United Parcel Service - 4.260 million Northwest Airlines - 0.949 million China Southern Airlines - 0.860 million American Airlines - 0.576 million Delta Air Lines - 0.557 million Air China - 0.531 million United Airlines - 0.525 million Cargojet Airways - 0.517 million China Eastern Airlines - 0.458 million

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AN AIR CARGO INSURANCE APPLICATION FORM 3) RAILWAY CARGO POLICY:29

Rail freight transport is the use of railroads to transport cargo as opposed to human passengers. A freight train or goods train is a group of freight cars or goods wagons hauled by one or more locomotives on a railway, transporting cargo all or part of the way between the shipper and intended destination as part of the logistics chain. Trains may haul bulk material, intermodal containers, general freight or specialized freight in purpose-designed cars. Rail freight practices and economics vary by country and region.

When considered in terms of ton-miles or tonne-kilometers hauled per unit of energy consumed, rail transport can be more efficient than other means of transportation. Maximum economies are typically realized with bulk commodities (e.g., coal), especially when hauled over long distances. However, rail freight is often subject to transshipment costs, which may exceed that of operating the train itself, a factor that practices such as containerization aim to minimize. Bulk shipments are less affected by transshipment costs, with distances as short as 30 kilometers (18.6 mi) sufficient to make rail transport economically viable. However, shipment by rail is not as flexible as by highway, which has resulted in much freight being hauled by truck, even over long distances. Traditionally, large shippers build factories and warehouses near rail lines and have a section of track on their property called a siding where goods are loaded on to or unloaded from rail cars. Other shippers have their goods hauled (drayed) by wagon or truck to or from a goods station (freight station in US). Smaller locomotives transfer the rail cars from the sidings and goods stations to a classification yard, where each car is coupled to one of several long distance trains being assembled there, depending on that car's destination. When long enough, or based on a schedule, each long distance train is then dispatched to another classification yard. At the next classification yard, cars are resorted. Those that are destined for stations served by that yard are assigned to local trains for delivery. Others are reassembled into trains heading to classification yards closer to their final destination. A single car might be reclassified or switched in several yards before reaching its final destination, a process that made rail freight slow and increased costs. Many freight rail operators are trying to reduce these costs by reducing or eliminating switching in classification yards through techniques such as unit trains and containerization. In 30

many countries, railroads are built to haul one commodity, such as coal or ore, from an inland point to a port.

A major disadvantage of rail freight is its lack of flexibility. In part for this reason, rail has lost much of the freight business to road transport. Many governments are now trying to encourage more freight onto trains, because of the environmental benefits that it would bring; rail transport is very energy efficient.

In Europe (particularly Britain) many manufacturing towns developed before the railway. Many factories did not have direct rail access. This meant that freight had to be shipped through a goods station, sent by train and unloaded at another goods station for onward delivery to another factory. When lorries (trucks) replaced horses it was often economic and faster to make one movement by road. In the United States, particularly in the West and Mid-West towns developed with railway and factories often had direct rail connection. Despite the closure of many minor lines carload shipping from one company to another by rail remains common. Many rail systems have turned to computerized scheduling for trains which has helped add more train traffic to the rails. Many businesses ship their products by rail if they are shipping long distance because it can be cheaper to ship in large quantities by rail than by truck; however barge shipping remains a viable competitor where water transport is available. Economies of scale are achieved because less labor and energy is required to haul the same amount of cargo. In some countries rolling highway trains are used; trucks can drive straight onto the train and drive off again when the end destination is reached. A system like this is used on the Channel Tunnel between the United Kingdom and France. In other countries, the tractor unit of each truck is not carried on the train, only the trailer. Piggy back trains are common in the United States, where they are also known as trailer on flat car or TOFC trains, but they have lost market share to containers (COFC), with longer, 53-foot containers frequently used for domestic shipments.

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There are also roadrailer vehicles, which have two sets of wheels, for use in a train, or as the trailer of a road vehicle. There are also many other types of wagon, such as "low loader" wagons for transporting road vehicles; there are refrigerator vans for transporting food, simple types of open-topped wagons for transporting minerals and bulk material such as coal, and tankers for transporting liquids and gases. Most coal and aggregates are moved in hopper wagons that can be filled and discharged rapidly, to enable efficient handling of the materials. Freight trains are sometimes illegally boarded by individuals who do not wish, or do not have the money, to travel by ordinary means, a practice referred to as "hopping." Most hoppers sneak into train yards and stow away in boxcars. Bolder hoppers will catch a train "on the fly," that is, as it is moving, leading to occasional fatalities, some of which go unrecorded. The act of leaving a town or area by hopping a freight train is sometimes referred to as "catching-out", as in catching a train out of town.

REGIONAL DIFFERENCES:Railroads are subject to the network effect. The more points they connect to, the greater the value of the system as a whole. Early railroads were built to bring resources, such as coal, ores and agricultural products from inland locations to ports for export. In many parts of the world, particularly the southern hemisphere, that is still the main use of freight railroads. Greater connectivity opens the rail network to other freight uses including non-export traffic. Rail network connectivity is limited by a number of factors, including geographical barriers, such as oceans and mountains, technical incompatibilities, particularly different track gauges and railway couplers, and political conflicts. The largest rail networks are located in North America and Eurasia. Long distance freight trains are generally longer than passenger trains, with greater length improving efficiency. Maximum length varies widely by system. See longest trains for train lengths in different countries.

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North America:Canada, Mexico and the United States are connected by an extensive, unified standard gauge rail network. The one notable exception is the isolated Alaska Railroad, which is connected to the main network by rail barge.

Rail freight is well standardized in North America, with Janney couplers and compatible air brakes. The main variations are in loading gauge and maximum car weight. Most trackage is owned by private companies that also operate freight trains on those tracks. Since the Staggers Rail Act of 1980, the freight rail industry in the U.S. has been largely deregulated. Freight cars are routinely interchanged between carriers, as needed, and are identified by company reporting marks and serial numbers. Most have computer readable automatic equipment identification transponders. With isolated exceptions, freight trains in North America are hauled by diesel locomotives, even on the electrified Northeast Corridor. Ongoing freight-oriented development includes upgrading more lines to carry heavier and taller loads, particularly for double-stack service, and building more efficient intermodal terminals and transload facilities for bulk cargo. Many railroads interchange in Chicago, and a number of improvements are underway or proposed to eliminate bottlenecks there.[4] The U.S. Rail Safety Improvement Act of 2008 mandates eventual conversion to Positive Train Control signaling. The Guatemala railroad is currently inactive, preventing rail shipment south of Mexico. Panama has freight rail service, recently converted to standard gauge, that parallels the Panama Canal. There has never been a rail line to South America, but a connection, FERISTSA, from Mexico to Panama, has been proposed in the past.

EURASIA:Coal awaiting shipment to an electric generating plant in Germany Train station in Tatarstan, Russia with container and tank cars 33

There are four major rail networks on the Eurasian land mass. Most counties in the European Union participate in a standard gauge network. The United Kingdom is linked to this network via the Channel Tunnel. The Marmaray project will connect Europe with eastern Turkey, Iran the Middle East via a rail tunnel under the Bosphorus when it opens in late 2013. Spain and Portugal are mostly broad gauge, though Spain has built some standard gauge lines that connect with the European high speed passenger network. A variety of electrification and signaling systems are in use, though this is less of an issue for freight, however overhead electrification prevents double stack service on most lines. Archaic buffer and chain couplers are generally used for freight, though there are plans to develop an automatic coupler compatible with the Russian SA3. See Railway coupling conversion. The countries of the former Soviet Union, along with Finland and Mongolia, participate in a Russian gauge-compatible network, using SA3 couplers. Major lines are electrified. Russia's Trans-Siberian Railroad connects Europe with Asia, but does not have the clearances needed to carry double-stack containers. China has an extensive standard gauge network. Its freight trains use Janney couplers. China has ambitious plans to extend its high speed rail network to neighboring countries and far westward, with an eventual goal of two day service to Europe. India and Pakistan operate extensive broad gauge networks. India also has substantial meter gauge trackage, but it has a Project Unigauge to convert much to broad gauge. Indo-Pakistani wars and conflicts currently restrict rail traffic between the two countries to two passenger lines. There are also links to Bangladesh and Nepal. India operates some double stack service without the use of the special well cars needed elsewhere. The four major Eurasian networks link to neighboring countries and to each other at several breaks of gauge points. Containerization has facilitated greater movement between networks, including a Eurasian Land Bridge.

SOUTH AMERICA:34

Brazil has a large rail network, mostly meter gauge, with some broad gauge. It runs some of the heaviest iron ore trains in the world on its meter gauge network. Chile and Argentina have Indian gauge networks in the south and meter gauge networks in the north. The meter cauge networks are connected at one point, but the only rail link between the broad gauge lines is currently not in service. Most other countries have isolated rail systems, if any.

AFRICA:The railways of Africa were mostly started by colonial powers to bring inland resources to port. There was little regard for eventual interconnection. As a result there are a variety of gauge and coupler standards in use. A Cape gauge network with Janney couplers serves southern Africa. East Africa uses meter gauge. North Africa uses standard gauge, but potential connection the European standard gauge network is blocked by the Arab-Israeli conflict.

AUSTRALIA:Rail developed independently in different parts of Australia and, as a result, three major rail gauges are in use. A standard gauge Trans-Australian Railway spans the continent. STATISTICS:Rail freight by network, billion tonne-km NETWORK NORTH AMERICA CHINA RUSSIA INDIA EUROPEAN UNION BRAZIL SOUTH AFRICA AUSTRALIA JAPAN

GT-KM 2863 2451 2351 607 391 269 115 64 20

COUNTRIES U.S., Canada, Mexico Finland, Mongolia Includes Pakistan 27 Member Countries Includes Bolivia Includes Zimbabwe

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In 2011, North American railroads operated 1,471,736 freight cars and 31,875 locomotives, with 215,985 employees; They originated 39.53 million carloads (averaging 63 tons each) and generated $81.7 billion in freight revenue. The largest (Class 1) U.S. railroads carried 10.17 million intermodal containers and 1.72 million trailers. Intermodal traffic was 6.2% of tonnage originated and 12.6% of revenue. The largest commodities were coal, chemicals, farm products, nonmetallic minerals and intermodal. Coal alone was 43.3% of tonnage and 24.7% of revenue. The average haul was 917 miles. Within the U.S. railroads carry 39.9% of freight by ton-mile, followed by trucks (33.4%), oil pipelines (14.3%), barges (12%) and air (0.3%). Railways carried 17.1% of EU freight in terms of tonne-km, compared to road transport (76.4%) and inland waterways (6.5%). BULK CARGO:Bulk cargo is commodity cargo that is transported unpackaged in large quantities. It refers to material in either liquid or granular, particulate form, as a mass of relatively small solids, such as petroleum, grain, coal, or gravel. This cargo is usually dropped or poured, with a spout or shovel bucket, into a bulk carrier ship's hold, railroad car, or tanker truck/trailer/semi-trailer body. Smaller quantities (still considered "bulk") can be boxed (or drummed) and palletized. Bulk cargo is classified as liquid or dry.

Bulk cargo constitutes the majority of tonnage carried by most freight railroads. Bulk cargo is commodity cargo that is transported unpackaged in large quantities. These cargos are usually dropped or poured, with a spout or shovel bucket, as a liquid or solid, into a railroad car. Liquids, such as petroleum and chemicals, and compressed gases are carried by rail in tank cars

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Hopper cars are freight cars used to transport dry bulk commodities such as coal, ore, grain, track ballast, and the like. This type of car is distinguished from a gondola car (US) or open wagon (UIC) in that it has opening doors on the underside or on the sides to discharge its cargo. The development of the hopper car went along with the development of automated handling of such commodities, with automated loading and unloading facilities. There are two main types of hopper car: open and covered; Covered hopper cars are used for cargo that must be protected from the elements (chiefly rain) such as grain, sugar, and fertilizer. Open cars are used for commodities such as coal, which can get wet and dry out with less harmful effect. Hopper cars have been used by railways worldwide whenever automated cargo handling has been desired. Rotary car dumpers simply invert the car to unload it, and have become the preferred unloading technology, especially in North America; they permit the use of simpler, tougher, and more compact (because sloping ends are not required) gondola cars instead of hoppers.

EXAMPLES OF DRY BULK CARGO:1. Bauxite 2. Bulk minerals (sand & gravel, copper, limestone, salt, etc.) 3. Cement 4. Chemicals (fertilizer, plastic granules & pellets, resin powder, synthetic fiber, etc.) 5. Coal 6. Dry edibles (for animals or humans: alfalfa pellets, citrus pellets, livestock feed, flour, peanuts, raw or refined sugar, seeds, starches, etc.) 7. Grain (wheat, maize, rice, barley, oats, rye, sorghum, soybeans, etc.)

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8. Iron (ferrous & non-ferrous ores, ferroalloys, pig iron, scrap metal, pelletized taconite), etc.) 9. Wood chips.

EXAMPLES OF LIQUID BULK CARGO:Non edible and dangerous liquids:

Dangerous chemicals



Gasoline



Liquefied natural gas (LNG)



Petroleum

Liquid edibles and non dangerous liquids:-

    

Cooking Oil Fruit juices Milk Vegetable oil Zinc Ash

HEAVY DUTY ORE TRAFFIC:The heaviest trains in the world carry bulk traffic such as iron ore and coal. Loads can be 130 tonnes per wagon and tens of thousands of tonnes per train. Daqin Railway transports more than 1 million tonnes of coal to the east sea shore of China every day and in 2009 is the busiest freight line in the world Such economies of scale drive down operating costs. Some freight trains can be over 7 km long. 38

CONTAINERIZATION:Containerization is a system of intermodal freight transport using standard shipping containers (also known as 'ISO containers' or 'isotainers') that can be loaded with cargo, sealed and placed onto container ships, railroad cars, and trucks. Containerization has revolutionized cargo shipping. As of 2009 approximately 90% of non-bulk cargo worldwide is moved by containers stacked on transport ships; 26% of all container transshipment is carried out in China. As of 2005, some 18 million total containers make over 200 million trips per year. Use of the same basic sizes of containers across the globe has lessened the problems caused by incompatible rail gauge sizes in different countries by making transshipment between different gauge trains easier. While typically containers travel for many hundreds or even thousands kilometers on the railway, Swiss experience shows that with properly coordinated logistics, it is possible to operate a viable intermodal (truck + rail) cargo transportation system even within a country as small as Switzerland.

DOUBLE STACK CONTAINERIZATION:Most flatcars (US) or flat wagons (UIC) cannot carry more than one standard 40-foot (12.2 m) container on top of another because of limited vertical clearance, even though they usually can carry the weight of two. Carrying half the possible weight is inefficient. But if the rail line has been built with sufficient vertical clearance, a double-stack car can accept a container and still 39

leave enough clearance for another container on top. This usually precludes operation of doublestacked wagons on lines with overhead electric wiring. China runs double stack trains with overhead wiring, but does not allow two maximum height containers to be stacked. In the United States, Southern Pacific Railroad (SP) with Malcom McLean came up with the idea of the first double-stack intermodal car in 1977. SP then designed the first car with ACF Industries that same year. At first it was slow to become an industry standard, then in 1984 American President Lines started working with the SP and that same year, the first all "double stack" train left Los Angeles, California for South Kearny, New Jersey, under the name of "Stacktrain" rail service. Along the way the train transferred from the SP to Conrail. It saved shippers money and now accounts for almost 70 percent of intermodal freight transport shipments in the United States, in part due to the generous vertical clearances used by U.S. railroads. These lines are diesel operated with no overhead wiring. Double stacking is also used in Australia between Adelaide, Parkes, Perth and Darwin. These are diesel only lines with no overhead wiring. Double stacking is used in India for selected freightonly lines.

SPECIAL CARGO:Several types of cargo are not suited for containerization or bulk; these are transported in special cars custom designed for the cargo. Automobiles are stacked in open or closed autoracks, the vehicles being driven on or off the carriers. Steel plates are transported in modified gondolas called coil cars.

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Goods that require certain temperatures during transportation can be transported in refrigerator cars (or reefers - US) or refrigerated vans, but refrigerated containers are becoming more dominant. Center beam flat cars are used to carry lumber and other building supplies. Extra heavy and oversized loads are carried in Schnabel cars.

VARIOUS COMPANIES IN INDIA OFFERING RAILWAY CARGO SERVICES:-



SAL Logistics Pvt. Ltd, New Delhi



AXIS Freight Solutions Pvt. Ltd, New Delhi



OMX, Delhi



A.R. Shipping and Logistics, Hyderabad



Royal Logistics, Chennai 41



Rays Logistics, Pune

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A RAILWAY CARGO INSURANCE APPLICATION FORM

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4) MOTOR TRUCK CARGO INSURANCE:Protection required under the Motor Carrier Act of 1935. The policy covers the motor truck carrier if it is legally liable for the damage, destruction, or other loss of the customer’s property being shipped. This includes lost packages, broken contents, and stolen articles. This insurance policy, without question, requires careful thought and evaluation prior to purchasing. In addition, the customer needs to be constantly evaluating the nature of his/her freight to make sure the coverage meets the demands. The Motor Truck Cargo policy can be, and usually is, tailored to meet customer's operations and exposure. Significant exclusions create many situations where there might be no coverage. A good insurance broker will ask the customer pertinent questions that properly address this concern. The Motor Tuck Cargo policy can also contain provisions to insure the cargo when it is in the customer's terminal or warehouse. This exposure results when the freight cannot be delivered the same day or is consolidated with other shipments. The coverage exists so long as there is no separate charge made for storage or warehousing. Similar to Motor Truck Cargo is the insurance policy which protects the customer for the freight his/her charge storage charges for. The customer needs to utilize a warehouse receipt, similar to a bill of lading, for the storage which specifies the terms of his/her storage contract. In truck cargo insurance, Whether the damage is caused by a collision, a fire, a load being accidentally dumped onto a roadway, or even being run over while waiting to be loaded, the related costs can be incredibly expensive. It’s not just the cost of fixing or replacing the vehicle, the carrier may face. It may well be the additional costs of replacing the goods in transit, compensating the customer and supplier or paying for the clear up and associated costs of pollution and debris removal. Never mind any legal expenses. These costs can be crippling to any business.

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Any goods which are being shipped are subject to a Bill of Lading. The bill is designed to protect the carrier, rather than the owner of the cargo and it stipulates very clearly the maximum amounts for which the carrier is responsible. These limits are very low if the goods are shipped by truck - typically the default on a standard bill of lading limits liability for the carrier to $2/lb. So if a Rolex watch (worth about $20,000) is lost in transit, the carrier would only have to pay around $5 as compensation – a long way from its true value, because it is so lightweight. However, as part of their risk management strategies, more and more companies want truckers to insure their goods while they are in transit as it allows them to transfer the risk to the cargo carrier. Therefore the focus then falls on the transport company to have the right insurance in place. Not all Motor Truck Cargo policies are the same. There are companies that typically use broad all-risk legal liability coverage which has been specifically designed to cover the risks faced by a trucking company hauling goods. Here are a couple of examples of what that means in practice: companies won’t recommend policies that exclude liability for a load if the power unit is detached from the trailer and the trailer is left unattended or where loads are not insured overnight unless inside a secure yard. In a nutshell, Insurance managers will only propose coverage for clients that will actually cover all the reasonable legal liabilities that a trucking company would expect to have covered, not just some of their operations. The companies approach is firmly rooted in the real world – meaning the customer is covered for the risks he is actually likely to face in the regular course of his business. By choosing a cost-effective policy from Insurance Companies cargo carriers will be able to rest safe in the knowledge that their goods will be covered in case something happens to it while it’s in their care. Insurance Companies can create stand-alone Motor Truck Cargo Insurance policies for cargo carriers business or include it in a wider cargo and vehicle insurance portfolio. They can provide coverage for almost any type of cargo – from logging and drilling equipment, livestock, mobile homes to other vehicles being transported and certain types of dangerous goods. As people would expect, there are certain exclusions in a Motor Truck Cargo policy, which companies would explain to people in detail to help them get the very best coverage.

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WHO NEEDS TRUCK CARGO INSURANCE? A growing number of risk managers require truckers to insure their cargo. You can meet that requirement with Motor Truck Cargo Insurance. It pays when you are responsible for damage to or loss of the cargo due to fire, collision or even hitting or running over the cargo that you transport on behalf of a client.

VARIOUS COVERAGES UNDER TRUCK CARGO INSURANCE:-

Primary Liability:Primary Liability Insurance coverage protects carriers from damage or injuries to other people as a result of a truck accident. This coverage is mandated by state and federal agencies and proof of coverage is required to be sent to them. Companies provide coverage limits ranging from $35,000 to $1,000,000. Pricing is dependent on region, driving records, and history of the trucking operation. Physical Damage:Physical Damage Insurance is coverage for carrier’s truck and trailer. This coverage is for repair or replacement for damage resulting from things such as collision, fire, theft, hail, windstorm, earthquake, flood, mischief, or vandalism to your owned vehicles. Truck Insurance pricing is based on the value of the equipment and usually pays a percentage of that value. This coverage may be required by the lien holder of the vehicle.

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Motor Truck Cargo:Motor Truck Cargo insurance is needed to protect the carrier in case of lost freight or damaged goods. There is a maximum load limit per vehicle with this policy. Truck insurance coverage limits can range from $10,000 to $100,000 with excess policies available upon request. Pricing for this insurance is mainly dependant on the type of cargo being hauled.

Trailer Interchange:Trailer Interchange Insurance is coverage for the legal liability of truckers for loss or damage to non-owned trailers and equipment which are in the insured's possession under a written trailer interchange agreement.

Non-Trucking Liability:Non-Trucking Liability provides limited liability insurance for owner-operators who are permanently leased to an ICC regulated carrier. It provides limited liability protection when the owner-operator is not on dispatch, nor pulling a loaded trailer. For example, this truck insurance coverage would apply when the owner-operator gets their truck washed or brings their trucks into a shop for repairs. Once the owner-operator is under dispatch, they are covered under the Primary Liability insurance policy of the company that they are leased to.

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ICC Authority:Interstate Operating Authority is permission granted by the federal government to transport regulated freight across state lines. Interstate Operating Authority is now granted by the Office of Motor Carrier Safety Administration under the auspices of the Federal Highway Authority. Unlike many of the other regulations governing interstate operations, there is no minimum weight threshold that requires compliance. Any vehicle operating for hire in interstate transportation of regulated freight or passengers must have operating authority. Our in-house ICC practitioner can handle all of your necessary filings.

PURPOSE OF TRUCK CARGO INSURANCE COVERAGE:The purpose of motor truck cargo insurance coverage is to protect truck drivers from liability for transported cargo that belongs to others. Coverage is available to common carriers who are available for hire by the general public, and contract carriers, who haul cargo under terms of a contract that is engaged with a specific entity.

DOCUMENTATION:In order to file a claim, the trucker must have a copy of the bill of lading, which is a document that lists all of the items that make up the cargo as well as its destination and dollar value. With a contract carrier, this information should be listed in the actual terms of the contract.

COVERAGE PERIOD:-

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Coverage begins when the trucker takes possession of the cargo, and ends when delivery is completed. In some cases, the bill of lading specifies a brief period for which the carrier is still liable for the cargo after delivery to allow time for the delivery to be picked up, if necessary. This normally does not exceed 72 hours.

DIFFERENCES:Coverage can vary depending on the insurance company. Policies may carry high deductibles or co-payments which could mean that the carrier could pay a significant portion of a claim out of pocket. Premiums can also vary depending on the commodity that is being hauled. Coverage can be scheduled--which provides specific coverage for each truck--or composite, which encompass an entire fleet.

LIMITS AND DEDUCTIBLES:When people purchase Cargo insurance, they have to select a limit for their coverage. This limit determines the maximum amount insured's insurance company will pay for damaged or destroyed cargo. People also need to choose a deductible. A deductible is the amount they agree to pay out of pocket when they have a claim. Choosing a higher deductible is an easy way to lower the price of their insurance, but they have to be sure to choose a deductible that they can afford to pay out of pocket at any time.

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RESTRICTIONS, EXCLUSIONS OR EXCEPTIONS TO TRUCK CARGO INSURANCE:Motor Truck Cargo Insurance can only be obtained for for-hire trucking policies of the below body types:         

Tractor Trailer (most) Dump Truck Cargo Vans Car Haulers Flatbeds Cement Mixers Box Trucks Pick-Ups (Dually) Motor Truck Cargo Insurance is not available for limos, buses, ice cream trucks, garbage trucks, hearses, or passenger vans.

In addition to restrictions on the body type, there are also cargo exclusions. Cargo type exclusions include:      

Shipping containers Live animals Property not included on a Bill of Lading Art Jewelry Money Paper 50

     

Pharmaceuticals Tobacco, alcohol, or contraband Property owned by the insured Radioactive or Explosive material Greater than 72 hour storage Property in custody of another carrier

Other restrictions and exclusions may apply. Motor Truck Cargo Insurance may not be available in every state.

TOP REASONS FOR PURCHASING TRUCK CARGO INSURANCE:Protect your financial interest:The insurance will automatically cover 100% of the insured invoice value, plus an additional 10%. The policy protects cargo against "all risk" of physical loss or damage from any external cause no matter what the percentage of loss, and with no deductible.

Enjoy peace of mind:Coverage begins as soon as the goods leave the shipper and/or supplier, continuing throughout transit to the final destination. Insurance remains in force for 30 days after cargo discharge or delivery, whichever occurs first. Concealed damage must be reported within three days of delivery, excluding Saturdays, Sundays, and holidays. Take advantage of competitive rates:Companies work hard to secure the best cargo insurance rates for their customers. Using the centralized purchasing department, companies have negotiated competitive rates with a major international insurance company.

Fast claims resolution:In the unfortunate event the insured do have a claim, the companies experienced staff works hand in hand with The Navigators Group to process the insured's claim quickly and without hassle. Claims are usually settled in 30 days or less.

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VARIOUS COMPANIES PROVIDING TRUCK CARGO INSURANCE: Hi Grow Associates, Raj Nagar  Sainath Insurance Advisor, Rammurthy Nagar  Pramod Kumar Insurance Advisor, Laxmi Nagar  Excellent Investment Advisors, Rajouri Garden  Cashless Insurance Point, Shastri Nagar

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A TRUCK CARGO INSURANCE APPLICATION FORM 54

CONCLUSION:Since there are the 4 major types of cargo insurance, people should choose the one which they find more convenient and also as per the priority of the goods to be transferred or received within a particular time frame. Also, choosing cargo insurance provides safety and guarantee to the product that has been shipped, in order to recover for any losses that occur during the shipment stage. And hence, subscribing for cargo insurance is very convenient as it saves time and energy and is also providing guarantee for the shipment of the goods.

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CASE STUDY Policy no.

21/2009/320 dated: 2.12.2003 specific marine policy

Consignor:

M/S Manav International, New Delhi

Consignment: Readymade Garments in container meant for export in 304 cartons Packing:

Container

Voyage:

From Delhi to Panama

Mode:

By Road/Sea

Sum Insured: Rs.67,93,000 on C&I + 10% (Rs.60,47,817 + 10%) Coverage:

ICC ‘A’ with War & SRCC

Bill of Lading: Delhi/0393 dated 8.12.2003 Invoice nos.:

03 & 04/2003 dated 4.11.2003

Status of container: Empty, noticed at consignee’s warehouse. Claim lodged: Invoice value US $ 134250 + 13425 + SF US$ 381 + Freight US$ 1985 = Total US$ 150041 Course of Action suggested: Verifications with various agencies involved in transit of goods from - consignor, carriers, shipping line, Custom Authority, local suppliers, fabricators, and consignee Document Verification:Export Sales for yr. ending 31.3.2003: Rs. 4,24,41,593; GP =Rs. 45,22,854, (10.6%) and NP= Rs.16,09,936 (3.79%) Export Sales for yr. ending 31.3.2004: Rs.1,40,22,966 including the consignment; GP= Rs.42,88,263 (30.58%) and NP= Rs. 19,79,320 (14.11%) Local sales if any: Nil

Valuation of Cargo: The policy is issued as per cover note = Invoice Value + 10% (USD 134250 + 13425 = USD 147675). Taking the 56

conversion rate at Rs. 46 the Sum Insured was worked out at Rs. 67,93,000. Documents for export: Credit sales without letter of credit. Original B/L, Invoice, Packing list, original shipping bills along with exchange control copy and export promotion copy were submitted to the Bank for the purpose of clearance of GR/SDF form. Transshipments:

The container carrying the garments was loaded at port of Nhava Sheva, India and was transshipped at port of Singapore and again transshipped at port of Hongkong and finally the container was discharged from the vessel APL Tourmaline at the port of Manzanillo International Terminal (MIT) Republic of Panama on 21.01.04

Previous similar claims: one similar claim by the same client in yr.2003 Claim Settling agent: M/S W.K Webster(Overseas) Ltd. Appointed to investigate into nature of claim and movement of cargo Indian Investigator: M/S J C & Co. Pvt. Ltd., New Delhi to investigate into as the consignor and consignee were closely related, to investigate into right from sampling, approval by importer, purchases of fabric, fabrication, finishing, packing and voyage details upto receipt of container at Consignee’s warehouse Brief facts of the case: 1. 1. The representative of the exporter visited the importer with samples and got the necessary order for export, but no record/evidence of such person having visited the importer to seek the order was produced 1.2. No samples approval by the importer or their photos were retained by the exporter nor any documentary evidence to have the sample-garments fabricated/manufactured was produced.

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2. The purchase order dt.20.9.2003 from the importer had following deficiencies: (i) No specifications, whatsoever, of the garments ordered have been given; and from the invoice and packing list, the goods have not been exported as per the order (ii) As per the terms or the order the consignor is responsible till the goods are received by the consignee in sound condition, therefore the consignee is not responsible for payment in this case. However the balance sheet of the consignor showed and outstanding amount due from the consignee only Rs. 49 lacs approx. against a consignment of Rs.60 lacs approx. 3.1. Purchases of fabric for manufacture of garment were arranged by one Mr. Mohan Lal under the name Ganesh Trading Co, Katra Neel Chandni Chowk, Delhi-06 and other firms with different addresses of which no trace was found out and firms seemed to be non-existent/bogus. 3.2 Surprisingly, even the purchases of the fabric started and delivered to the fabricators before the order of importer. 4.1 The issuance of fabric to fabricators started before the date of purchase order of the importer dated 20.9.03, without knowing the kind of garments to be fabricated 4.2 A good number of garments were received after the date of invoice dt.14.11.2003 but incorporated in the invoice and packing list dt.14.11.03 4.2 In certain cases there was no sign/trace of fabricator who raised their bills against fabrication of the reported garments 5. Corrugated cartons 655 were purchased before the import order for no reason explained 6. Details for garments not suitable for export sent for refinishing and repacking could not be substantiated by documentary evidence 58

Claim by Consignee: 1.1 On arrival of the container, the Importer Baby International found the custom seal number changed. Letter from the port to the transporter observed the numbers of both the seals of container were not visible. On contacting the shipping lines M/s Mitsui OSK Lines Ltd and insurance Surveyor Mc Larens Toplis, Panama the container was opened in the warehouse of consignee in the presence of representative of OSK Lines and the container was found totally empty. 1.2 The consignee handed over the orginal B/L dated 8/12/03 issued by M/s ARK Royale Agencies Pvt. Ltd. to their agent M/s Servicio International De Carga to obtain the copy of master B/L dt 23.12.03 of M/s Mitsui OSK Lines Ltd. dully endorsed in favour of M/s Baby International. At this point of time the consignee did not bring it to the notice of the Servicio International about the changes in the seal number except a monetary claim letter dt. 23.3.04 was later lodged on them for loss of entire consignment. 1.3 The delivery of the container were taken on 27.01.2004 through a driver of a trailer of M/S Intertrans by handing over the endorsed master bill of lading dt. 23.12.03 without any remarks of erasing of seal numbers. Normally delivery in case of illegible seal number should not have been taken without written communication to M/s Servicio International and M/s Mitsui OSK Lines Ltd. An open assessment delivery should be taken to find out the condition of the cargo inside the container. If any such open delivery assessment is refused then only the delivery should be taken under protest. More so when a similar empty container was received by Consignee’s group M/s M & M Fashions barely a few days ago, the consignee cannot afford to adopt such casual approach towards tampering with the seal numbers of container and engaging the same carrier M/s Intertrans to take delivery of container independently. 1.4 Further the wt 7600 kg of goods and tare wt 1600 kg of the container should have came to notice of the driver of Intertrans easily to judge the emptiness of the container 59

when the seal numbers were illegible. Consignee instructed the driver to take delivery of the container with a certificate from MIT mentioning about the invisibility of seal numbers. Invisibility of seal numbers did not ascertain if the seals were original or same. The conduct of the consignee shows that they were not worried about the cargo but to create evidence about the abnormality of seal numbers only at the time of taking delivery. The consignee should have insisted for open assessment delivery. The insured should have acted as if uninsured. Right of Recovery: The claimant has to establish that the goods have been lost/damaged whilst in the custody of any of the parties’ enroute, to protect the recovery rights. The consignee having noted invisibility of seal numbers should have gone for open assessment delivery to note the condition of the cargo. Nothing as such has been established or even attempted to be established. No monetary claim was lodged on M/s Mitsui OSK Lines Ltd N Delhi, India. Insurable Interest: 1.1 The purpose of insurance is to indemnify the insured for the financial losses suffered by him due to the operation of insured perils. The insured can suffer loss only when he has financial interest in the subject matter of insurance. This financial interest is called insurable interest as defined in the Insurance Act. Also refer ICC clause 11.1. 1.2 As per the sale contract between the consignor and the consignee- the consignor will be responsible till the consignee received the consignment in sound condition at their warehouse. The consignment will be shipped at the risk and responsibility of the Consignor insured. 1.3 If insured has no interest at the time of the loss, he cannot acquire it later after he is aware of the loss. Till the time of loss the consignee had not made payment to the consignor. However, later the consignor has confirmed that they have received the money of sale after some time of the loss. The policy was assigned in favour of the consignee. 60

Admissibility of Claim:1.1 The invoices and packing lists were not found authentic. Lack of Utmost Good faith was observed by the surveyor. 1.2 The insured did not act as if uninsured. The insured did not protect the recovery rights. 1.3 As per the BL of dt 23.12.03 of M/s Mitsui OSK Lines Ltd. Mentions place of delivery as Colon Door, which seems to be a case of door delivery. But the consignee preferred to take delivery at MIT port and made their own transportation arrangements from Port to their warehouse without any consignment note issued by the transporter, Intertrans. It shows that the contract of carriage entered into with the shipping lines was terminated by the Consignee and the consignee carried the container from MIT port their warehouse at their own risk and responsibility. 1.4 The contract of carriage was terminated at MIT port and the Consignee was duty bound to take open assessment delivery or delivery under protest after survey by insurance surveyor since there was apparent doubt about loss/damage to the cargo. 1.5 The claim of the consignee is not admissible for want of Insurable interest.

Question: was the valuation of covered?

What kind of policy was issued in this case? What the policy? Whether freight was

Question:

The rate of profit increased despite reduction in sale? Is the sale to single importer-buyer ! Does it Show some close link between seller and buyer ?

Question:

What is insurable interest? Whether the insurable interest in this case is transferred with the assignment of the policy in favour of consignee?

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Question:

What is recovery right? Why recovery rights are not protected in this case?

Question:

Should the claims have been lodged by the Consignor on the insurer instead of Consignee. What went wrong, where the open assessment survey should have been conducted to remove the doubts in this case?

References

1.

J. Franklin, The Science of Conjecture: Evidence and Probability Before Pascal (Baltimore: Johns Hopkins University Press, 2001), 273-278.

2.

Palmer, Sarah (October 2007). "Lloyd, Edward (c.1648–1713)". Oxford Dictionary of National Biography. Oxford University Press. Retrieved 16 February 2011.

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3.

Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. ("The Good Luck") [1991] 2 WLR 1279 and at 1294-5

Bibliography 

Birds, J. Birds' Modern Insurance Law. Sweet & Maxwell, 2004. (ISBN 0-421-87800-2)



Donaldson, Ellis, Wilson (Editor), Cooke (Editor), Lowndes and Rudolf: Law of General Average and the York-Antwerp Rules. Sweet & Maxwell, 1990. (ISBN 0-420-46930-3)



John, A. H. "The London Assurance Company and the Marine Insurance Market of the Eighteenth Century," Economica New Series, Vol. 25, No. 98 (May, 1958)



Roover, Florence Edler de. "Early Examples of Marine Insurance," Journal of Economic History Vol. 5, No. 2 (Nov., 1945),



Wilson, DJ, Donaldson (1997). Lowndes and Rudolf: General Average and the YorkAntwerp Rules. British Shipping Law Library: Sweet & Maxwell.

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