The transport industry, especially when moving goods across borders, must continually adapt to changing regulations and security measures. This is particularly important when transporting goods to or through the UK. 

In our first article, What are the dangers and prevention opportunities for carriers when carrying cargo to the UK? we outlined the key areas that transport companies need to focus on to ensure safe and compliant operations when moving goods to and from the UK. As part of our ongoing commitment to helping transport companies stay ahead of regulatory changes, we believe it is essential to provide easy access to the latest updates from the UK Border Force. 

In February 2023, UK Border Force introduced a series of updates to the Clandestine Entrant Civil Penalty Scheme, which directly impacts transport companies operating at the UK border. The updated procedures impose stricter requirements on transport operators and drivers, with significant financial consequences for non-compliance. 

For many businesses, especially smaller carriers, these changes could be financially devastating, putting additional strain on an already challenging industry. 

Hence, it is crucial that the transport companies are familiar with how the penalties administered by Border Force have changed under the new regulations. The key changes are as follows: 

1️⃣ Significant increase in penalties

Under the new rules, even a single occurrence of clandestine entry can result in a penalty of £10 000. This is a significant increase from the previous version of the scheme, whеre the fine was £2000. Here we wish to emphasize that the driver and operator are both liable to a penalty and the operator is responsible for payment of the driver’s penalty as well as their own. 

2️⃣ Further on, greater responsibility for security

If your vehicle is found to be inadequately secured, you could face a fine of up to £6,000, even if no illegal migrants are discovered. This applies whether you are entering or departing the UK, placing further responsibility on transport operators to ensure their vehicles are thoroughly checked and compliant with the security requirements. The update aims to strengthen border security and reduce the risk of people being smuggled into or out of the country.

3️⃣ Complete Checklists

Driver must maintain a checklist for each journey, documenting each security measure taken, such as the use of seals. The checklist must include the specific seal numbers used to secure the vehicle. After every break, the driver is required to check the interior of the trailer and replace the seal, unless a customs seal has been fitted, in which case the customs seal cannot be removed. Once the inspection and any necessary seal replacement are completed, the driver must record the new seal number on the checklist. This step ensures that there is an up-to-date log of the vehicle’s security status. It is recommended that at least three checks are conducted before the vehicle reaches any port in England.

 

Fine Reduction

A new ‘Level of penalty: code of practice’ introduced by UK Border Force now includes a system of discounts that transport companies can claim to reduce the penalties imposed.  

Here are the key discounts that can be claimed:

1️⃣ Previous penalties 

If the driver and/or operator have not received any previous penalties for carrying clandestine entrants, this can potentially reduce the penalty amount. However, the operators must prove that they were in complience with the required measeruments. 

2️⃣ Financial circumstances – Financial means assessment 

The driver’s and operator’s financial situation can be taken into account. If they can demonstrate financial hardship, this may influence the penalty level. The responsible person (typically the operator or a director of the company) must write to the Secretary of State to formally request that means testing be applied to their case. The request must be supported by appropriate documentation that demonstrates the financial circumstances of the individual(driver) or company 3 months prior the incident – bank statements, wage slips, balance sheets, etc. These documents will offer a detailed picture of the company’s financial background and its ability to pay the penalty. 

3️⃣ Membership of the Clandestine Entrants Civil Penalty Accreditation Scheme 

The companies who are members of the Clandestine Entrants Civil Penalty Accreditation Scheme can benefit from a 50% discount on the imposed penalty, provided they meet the scheme’s conditions. By joining the accreditation scheme and proving compliance with these strict requirements, operators position themselves to not only avoid full penalties but also strengthen their defence if a penalty is imposed. 

In conclusion, for many transport companies meeting these new demands can be overwhelming. At Cargofort, we understand theese challenges transport companies face. With our expertise and extensive experience in representing cases across the industry, we can help you navigate the complexities of the new regulations and protect your material interests against unnecessary penalties. From securing the right documentation to providing ongoing compliance support, we offer the guidance and resources necessary to ensure that your business remains fully compliant, protected, and on track. 

The modern e-commerce landscape is fraught with unpredictable variables, from shipping delays to damaged goods, making cargo insurance not just a choice but a necessity for retailers. 
 

Here are key reasons why e-commerce retailers should consider cargo insurance:

 

1️⃣ Protection Against Financial Losses

E-commerce businesses, especially those dealing in high-value or fragile items, face a significant risk of financial loss during transportation. Cargo insurance provides a safety net, covering the cost of lost, damaged, or stolen goods, thereby protecting your bottom line.

 

2️⃣ Cost-Efficiency in the Long Run

While some retailers may hesitate, believing insurance premiums outweigh potential losses, the opposite is often true. The cost associated with replacing lost or damaged high-value inventory, not to mention the potential impact on customer satisfaction, can far exceed the cost of annual insurance premiums.

 

3️⃣ Adaptability to the Value and Fragility of Goods

Cargo insurance is not a one-size-fits-all solution. For high-value and delicate products, insurance that covers the entire journey, including last-mile delivery, is invaluable. Conversely, for low-value goods, opting for coverage that excludes last-mile services might be more cost-effective, highlighting the flexibility of cargo insurance to meet specific needs.

 

4️⃣ Peace of Mind for You and Your Customers

Knowing that your goods are insured creates peace of mind, allowing you to focus on growing your business. This assurance can also be extended to your customers, enhancing their trust in your brand, knowing their purchases are protected against unforeseen circumstances.

 

5️⃣ Industrial Wisdom and Tailored Solutions

Not all e-commerce retailers will have the same insurance needs. Learning from your industry peers and analyzing what others are doing to mitigate risks can provide valuable insights. For more tailored guidance, partnering with a trusted logistics consultant or insurance broker, like CARGOFORT, can help you navigate the complexities of cargo insurance, ensuring you have the right coverage to match your specific business needs.

 

In a world where the unexpected has become the norm, cargo insurance stands as a critical defense mechanism for e-commerce retailers. By safeguarding against losses and providing flexibility to adapt to different types of goods, cargo insurance ensures that retailers can operate with confidence, secure in the knowledge that their interests, and those of their customers, are well protected.

CARGOFORT

Welcome to the present time, where the digital transformation of cargo insurance is revolutionizing the world of logistics. Innovative technologies are reshaping the landscape, streamlining processes, reducing risks, and fostering seamless communication among supply chain stakeholders.

At Cargofort, a digital insurance broker founded on technology principles, we have embraced this digital revolution. We recognize that digitization is not just a buzzword, but a fundamental shift that is already shaping the industry. With API connections and the integration of artificial intelligence, we are at the forefront of this transformation from day one, leading the way in risk management and claims handling.

 

Exploring the Benefits of Digitalization where this revolution makes a significant impact:

 

1️⃣ Unveiling Transparency at Your Fingertips

Embedded platforms and data analytics take center stage, bringing end-to-end insurance processes to life. Through these advanced technologies, stakeholders gain access to secure transaction records, reducing paperwork and streamlining claims processing. This transparency allows for better collaboration and informed decision-making, paving the way for more efficient and effective operations.

 

2️⃣ Simplifying Processes for All

With user-friendly interfaces and intuitive digital platforms, the complexity of cargo insurance is simplified. Businesses of all sizes can manage policies, secure quotes, and access necessary information independently. The elimination of cumbersome procedures and intermediaries streamlines processes, saving valuable time and effort.

 

3️⃣ Embracing Proactive Risk Mitigation

Real-time tracking and monitoring capabilities are the game-changers in risk management. Digitization enables businesses to assess risks, detect and address potential disruptions in their supply chain in real time. With proactive risk mitigation, businesses can ensure continuity, protect their assets, and maintain a competitive edge.

 

4️⃣ Revolutionizing Claims Handling

Digitalization has revolutionized claims handling, enhancing the efficiency and accuracy of the process. Advanced technologies, such as automation, data analytics, and AI, enable faster claims processing, improved accuracy in assessing damages, and seamless collaboration between insurers and claimants. This results in quicker settlements, reduced administrative burdens, and enhanced customer satisfaction.

 

In the present time, Cargofort continues to be an industry trailblazer, embracing technology to provide innovative solutions. Our dedication to digitalization has allowed us to adapt seamlessly, shaping the future of cargo insurance in the present.

 

Embrace the digital revolution and unlock new possibilities with cargo insurance. Join us on this transformative journey and stay tuned for more insightful content as part of our Cargofort Insights series, where we dive deeper into the exciting world of digital transformation in the cargo insurance industry.

CARGOFORT

1. What is Forwarder’s Liability Insurance?

This type of insurance product is chosen by owners and managers of forwarding companies who want to run a successful and sustainable business, despite the risks they take in carrying out their activities. “Forwarder’s Liability” insurance covers the contractual liability of the insured company for the transport, forwarding and logistics contracts it concludes with its customers. This is because the freight forwarder is liable not only for damages caused by its employees, but also for those caused by its chosen subcontractor. This condition is valid for any type of contract and transport and is regulated by the applicable transport law or Convention. For example, in the case of a land transport contract, Art. 3 2 of the CMR Convention 3 defines this condition.

Why do we mention contractual liability? Precisely because it is the basis of the type of coverage and the series of insured risks that are mandatory for this policy to be an efficient tool in case of damage. A little below we will pay special attention to this topic.

 

2. Why is Forwarder’s Liability Insurance necessary for every forwarder on the market? 

Like many other insurances, this one is also not mandatory. However, the logistics industry has imposed the requirement that companies have this type of coverage. It confirms that the company is insured with an insurance decision that would indemnify the contracting authority. Even in the event of claims due to non-fulfillment of the terms of the contract.

Due to the different activities and services they perform, freight forwarders conclude different types of contracts, which can be for: 

• transport 

• forwarding 

• storage 

• logistics activities 

These different types of contracts predetermine the need for “Forwarder’s Liability” insurance to cover the terms and requirements of all of them. As well as the Convention and law under which they fall. For example, when a freight forwarder concludes a contract for land transport, he is a contracted carrier. According to Art. 3 CMR Convention, he is liable as such, even though he has subcontracted the transport. This means that in case of damages, shortages, thefts and delays, the forwarding company bears full responsibility according to the applicable Convention. It cannot be released from responsibility due to subcontracted transport. Here, the freight forwarder is not a commission agent or an operator. In the role of carrier under the concluded contract, he organizes the transport and invoices remuneration for the service rendered. 

We pay special attention to this fact, because according to our research, there are over 1000 forwarding companies in Bulgaria. Many of them still believe that the forwarder is not a party in case of damage. This is completely wrong, in the case of a concluded contract according to the example above. 

In the case of a land freight forwarding contract, things are different. When such an agreement is in place, the freight forwarder most often acts as a commission agent. This means that he only has to find a carrier for his principal, and the remuneration invoiced by the freight forwarder is only his commission. The carrier provided by the freight forwarder should invoice its freight. From our practice, we can confirm that we have not encountered such a case. You yourself understand that the forwarder does not have many advantages to enter into such a contract. Other than limiting its liability for claims related to non-performance. 

Freight forwarders also contract for sea, air and rail transport (using a subcontractor). This means that in order to be adequately covered for all the responsibilities they bear under each of these contracts. Companies must have chosen insurance that covers exactly such risks.

Freight forwarders carrying out warehousing and other logistics activities for their customers should also have the right coverage. They are liable to the owner of the goods for damages that occur while they are in their control. 

 

3. What risks does Forwarder’s Liability Insurance cover? 

“Forwarder’s Liability” operating insurance must cover the risks associated with the activities that the insured company carries out. All damages, shortages, thefts, delays in delivery. Wrongly shipped goods to another address. Errors and omissions of the forwarder that have resulted in financial damages must be covered.

For example, in warehousing and logistics activities, damage during loading and unloading operations is the most common: incorrect stacking and arrangement of goods. Cargo loaded into a vehicle for another destination. Damage from natural phenomena.

When the freight forwarder has the correct coverage for the above, as well as for other existing risks, the insurer will cover the claims directed at the company. In the absence of insurance or adequate insurance, the freight forwarder carries a huge financial risk for the entire company.

 

4. How are Forwarder’s Liability Insurance claims resolved? 

With the right insurance partner selected and terms designed to cover all common contracts and activities, resolving claims and damages is a very easy and standard process. When a damage or other insured event occurs, the insurer should be notified in a timely manner. Then it remains for him to take the right steps to successfully adjust and close the case. When the freight forwarder receives a claim, the insurer checks whether it is valid and whether the insured and its subcontractor are liable. After that, it certifies whether the calculation and the value of the damage are correct. And then proceeds to the payment of insurance compensation. The next step the insurer takes is to go back to the responsible subcontractor (whose liability was committed at the outset) and recover the paid value of the damage. So that it does not remain in the damage under the insured forwarder’s policy. 

In case of an unfounded claim or an incorrect claim, the insurer rejects the claim on behalf of the insured and defends him if the case goes to court. 

 

5. Why is Cargofort all of the above and more? 

It is extremely important for such a solution approach to occur as in the example in point 4. The freight forwarder has chosen a professional partner to provide him with the best and relevant insurance coverage. To have the experience, resources and capacity to deal with any case that arises in an efficient manner. So that the freight forwarder does not have to be personally involved in every step of the process. It is of particular importance that the insured does not suffer damages and losses due to coverage limitations or poor control over the claim. 

Cargofort’s specialization and experience naturally led to the creation of a “Forwarder’s Liability” insurance product. A solution made up of all the necessary coverages – limits and professional handling of transport claims. So that shippers can rest easy and confident that their insurance cases are being finalized efficiently! 

The freight forwarding and logistics business is tense and dynamic, and decisions sometimes have to be made in seconds. 

By choosing Cargofort, you get the security and comfort that you have a reliable and adequate partner. A partner you can rely on for important insurance decisions! 

Cargofort – the most correct way for the successful and calm freight forwarder!

1. What is Cargo Insurance? 🤔

Cargo Insurance is a risk management tool designed for cargo owners, traders, freight forwarders and logistics companies. It provides protection for goods during transport. This is the most reasonable and safe way for companies to ensure that they are compensated for the exact value in an event of loss. Businesses that choose cargo insurance instead of keeping their fingers crossed for their shipments are aware of the many drivers in the transport chain. They are familiar with the many variable conditions and the likelihood that their cargo will be damaged or devalued by an external event. Does that mean they are negative, thinking that the worst could happen? Fortunately – no! Rather, it is market knowledge and realistic judgment. Statistically, very often something goes wrong with transports and losses occur due to unforeseen events.

The leading idea of ​​cargo insurance is to provide peace of mind when it comes to events during transport. The fact that you may have never had theft or damage to your cargo does not reduce your overall risk exposure. To understand why this view is incorrect, we need to look at how many problems there are annually with basic transport methods:

1.1 By sea – approximately 226 million containers are shipped each year [1] – reported losses, lost containers and cargo claims are the highest numbers ever, according to insurers, business analysts and brokers. In 2021 alone, about 54 large container vessels have been completely lost [2], and the exact number of partial damages and losses worldwide is quite difficult to determine.

1.2 By road – In 2021, about 65% of cargo thefts occurred from trucks [3] during transport from consignor to consignee.

1.3 By air and rail – these forms of transport are one of the safest, but there are still the same risks that threaten your cargo. The only difference is that statistically the percentage of events occurring is smaller.

2. Why do you need Cargo Insurance?📦

Cargo Insurance fully covers the material interest of your company, and you have control over what indicators you have insured. In case of damage, you or your broker / representative manage the development of the case. And you enjoy fast and correct payment of compensation.

Why is this important and beneficial for you?

Sometimes the transport chain is long. The contractual subcontracting goes through several freight forwarders and carriers until it reaches the actual carrier who performs the transport. This understandably leads to a reduction in control and communication. The possibility of something going wrong increases significantly.

Here are some of the main types of events where you can rely on cargo insurance:

•  theft of goods caused by inappropriate choice of parking by the carrier;

•  the entry of emigrants into the cargo space, which often leads to damage and decay of the goods;

•  the loss of entire containers and incidents of fires on ships are also incidents for which you will be able to benefit from full coverage;

•  the malicious actions of organized criminal groups and the diversion of cargo to another recipient and their   subsequent disappearance;

•  road accidents and weather changes can also be a reason to use your cargo insurance.

The main element through which cargo insurance has an advantage over other insurance coverages is the fact that it is a more comprehensive coverage. Unlike the carrier’s / forwarder’s liability insurance, cargo insurance is subject to significantly fewer limitations and exceptions. A common opinion is that if the forwarder / carrier is insured, then there is no need to worry about the owner of the goods. In fact, this is not the case at all, as liability insurance often does not cover the real value of the damage.

Depending on the mode of transport, specific international conventions and transport laws apply. According to these regulations, the liability of the carrier / forwarder is limited to the weight of the goods. It is also regulated that in certain circumstances and events, transport companies are not liable for damages. This in practice leads to a significant number of cases, which are justifiably rejected by transport companies. Many of the claims do not find an adequate solution. This leads to a waste of time and money for cargo owners who have not insured their goods. We have hundreds of similar examples from our practice. We will analyze them in future materials on the subject.

 

3. What coverage can the cargo insurance offer? 📙

Here we will focus on the most complete coverage for “all risks”, namely Institute Cargo Clauses A. What is specific about thiese types of conditions is that they cover all “risks” that may arise during transport. Insurance protection includes all known and common risks such as: loss, damage, theft, fire, traffic accident, impairment and others. Under these standard conditions, only the specifically mentioned risks are not covered. For example: losses and damages caused by insufficient and inappropriate packaging. Damages due to delay. War damage, radiation and intentional action or inaction of the insured. Normal leakage or weight loss.

 

4. Who can benefit from Cargo Insurance? ❓

Any company that is part of the transport chain and has ownership can protect its material interests by insuring the goods. This can be a manufacturer, exporter, importer, buyer or seller. Anyone who organizes any type of transport by forwarder, carrier or courier. The insurance may be taken out by the consignor, consignee or one of their transport agents. It depends on the terms of delivery of the commercial transaction between seller and buyer.

Due to the intensive development and consolidation of their services, many freight forwarders and carriers are actively offering value-added services to their customers. They can take out cargo insurance on behalf and at the expense of their customers. That is how their cargo is insured against all risks during transport. This is a significant advantage for cargo owners who receive all services in one place.

 

5. How are claims solved? How can you receive compensation?💰

This one of the main advantages of cargo insurance. In the standard case of a complaint to freight forwarders and carriers, the claimant must prove the existence of liability under the applicable law. As well as prove the amount of his damage. However, in the presence of concluded cargo insurance, the steps to solve are easier. Also the term for decision and payment of compensation by the insurer is many times shorter. With this type of coverage, it is not necessary to prove which party is responsible for the occurrence of the event during transport. However, the responsibility of the transport company to which the transport is entrusted should be formally engaged. This obligation of the insured is a requirement of the insurer in order to be able to recourse to the responsible party.

6. Why Cargofort? 🔶

With Cargofort you have experts in the field of transport insurance, logistics and international transport law. You will be able to rely on them to effectively solve your damages and cases.

Cargofort is aware that you value saved time which you can use to grow your business. That’s why we’ve created intuitive software for quick notifications and policy changes. Notices and documents for damage are submitted through our online platform. We take full control of the case until compensation is paid. This includes correspondence with your client, subcontractor, insurer and all other parties involved. On demand, you receive up-to-date information about the development of the case. There is no need to actively participate in its resolution. This way, you stay focused on growing your business while Cargofort’s specialists solve your claims.

Cargo Insurance is not just another insurance that you take out without being sure what it will be used for. It is a key tool for security and protection of your goods during transport. Cargo Insurance guarantees that no matter what happens, your material interest will be protected.

By concluding it through Cargofort, you get an instant access to a  transparent and trusted partnership, innovative technological solutions, fast and efficient support!

Cargo Insurance with Cargofort is the most direct way to peace of mind and comfort for your cargo!

 

 

Bibliography:

[1] As indicated by British International Freight Association, “CONTAINERS LOST AT SEA – 2020 UPDATE”, accessed at:  <https://www.bifa.org/news/articles/2020/jul/containers-lost-at-sea-2020-update>

[2] The Safety and Shipping Review from Allianz Global Corporate & Specialty (AGCS) https://www.agcs.allianz.com/news-and-insights/news/safety-shipping-review-2022.html

[3] TT Club TAPA EMEA and BSI Annual Cargo Theft Report https://www.ttclub.com/news-and-resources/publications/tt-bsi-cargo-theft-reports/bsi-and-tt-club-cargo-theft-report/