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Freight forwarders get lesson in risks of their trade
By Dan McCue
Staff Writer
Mayhem was on the mind of Greg J. Kritz of Roanoke Trade Services as he stood before a gathering of freight forwarders, customs brokers and transportation providers at the Embassy Suites Hotel in North Charleston.
Early on in his presentation sponsored by the South Carolina World Trade Center, Kritz, a South Florida native, talked at length about the prowess of the thieves who victimize the Port of Miami.
All have extensive theft-related arrest records, but few spend appreciable time in jail, he said. One, he recalled, became such an entrepreneur at the expense of importers and exporters, that his stash of stolen goods filled two huge warehouses in Hialeah, Fla.
As his audience hung on each anecdote, Kritz moved on to other risks, ranging from the rough handling of cargo to unforeseen regulatory problems. And then, of course, there are the pirates, seagoing marauders who are particularly active in the waters off Asia, Africa and Brazil.
Worst-case scenarios?
Certainly, said Rick Jones, office manager for the John St. James Co., a Charleston-based customs broker and international freight forwarder.
“But,” he hastened to add, “the reality is that these are situations which our clients’ shipments are exposed to on a regular basis.”
Which is exactly why the SCWTC sponsored the session geared toward helping the region’s importers and exporters mitigate their risks and potential for financial loss.
“Frankly, a lot of things have changed over the years,” said SCWTC Executive Director Mark Condon. “Given the costs and potential monetary losses involved, limiting risk and risk exposures needs to be a bigger part of business planning.”
To overcome these challenges, Kritz recommends securing all parts of the supply chain, routinely conducting regulatory compliance reviews and paying special attention to insurance and transportation contracts and bills of lading.
Nathaniel Hoyt, owner of the Hoyt Trading Company LLC and a relatively new importer of furniture from Indonesia, said Kritz’s presentation was an eye-opener.
“A lot of this information was new to me, and none of it was too comforting,” said Hoyt, whose Sullivan Island-based company sells container loads of furniture to larger retailers like FurnitureLand South and Crate & Barrel. “It seems that suffering a major loss in transit is simply a matter of time, and the best I can do is to limit the likelihood of it happening more often than is absolutely necessary.”
More dangerous than pirates
But it wasn’t the peril of the pirates Kritz mentioned that seemed to make the biggest impression on attendees. It was the ins-and-outs of dealing with their insurance, trucking and shipping companies.
To a large degree, that could be attributed to the role the attendees play in importing and exporting scheme of things. Customs brokers in the United States are regulated and licensed by the U.S. Customs and Border Protection. In general, only customs brokers are allowed to transact customs business on behalf of others.
Freight forwarders arrange for the transportation of goods as agent on behalf of a shipper. These services generally include providing all or most needed shipping documents, along with arranging related services, such as shipment routing, packing and arranging for marine insurance.
“So much of the protection offered by insurance is dependent on how well you word the agreement in the beginning,” Hoyt said. “And it seems that no matter how well you do that, there are still many ways out of a contract from the shipping company’s standpoint.”
The same point disturbed Jennifer Pontieri of Nova Gas, a Charleston-based shipper/consignee.
“We were not aware of all the loopholes of insuring shipments; all of the ‘extras’ that are generally not included in an insurance policy was new information,” Pontieri said. “Now that we’ve been a bit more educated about this, we’re going to request much more detailed information about our policies and ask questions that we may not have thought to ask in the past.
“Import-export is definitely risky for any parties involved,” she added. “Buyers and sellers are always at risk of losing substantial amounts of merchandise, which means dollars.”
Given the risks, it is vital freight forwarders and customs brokers in attendance communicate what they heard to their customers in as thorough manner as possible, Jones said.
“Since custom brokers and freight forwarders do not own the cargo, we would not implement the strategies mentioned within our company,” he said. “However, we definitely plan to use this information to educate our clients on ways they can improve in making their own operations and processes more secure.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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