1. 1 © 2000 Expeditors High Risk Countries – Continental Africa AlgeriaEthiopiaNiger AngolaGabonRwanda BeninGhanaSenegal BotswanaGuineaSomalia Burkina FasoGuinea Bassau SudanCameroonKenya TanzaniaCentral African Republic LiberiaTogoChad LibyaTunisiaCongo MaliUgandaCote d’Ivoire MalawiWestern SaharaDem. Republic of the Congo MauritaniaZambiaDjibouti MoroccoZimbabweEquatorial Guinea MozambiqueEritreaNamibia *note Egypt and South Africa are not considered special risk countries

2. 2 © 2000 Expeditors High Risk Countries – Political Risk Honduran President Ousted in Coup Sunday, June 28, 2009 Primary Industries –Coffee –Sugar –Wood –Textiles

3. 3 © 2000 Expeditors High Risk Countries – Currency Risk A form of risk that arises from the change in price of one currency against another If a firm is buying and selling in different currencies, then revenue and costs can move upwards or downwards as exchange rates between currencies change

4. 4 © 2000 Expeditors High Risk Countries – Kidnapping Kidnapping for ransom –More than 8,000 people are kidnapped every year worldwide – 6,000 in Latin America alone (Fielding Worldwide, Inc., 2009) –The ideal victim of a kidnapping is a mid- to high-executive professional working for a multi-national corporation overseas Hostage taking as labor negotiation –Caterpillar –3M –Molex

5. 5 © 2000 Expeditors High Risk Countries – Hijacking Train Assault in Mexico Saturday, December 27, 2008 A heavily armed group of 40+ hooded men in 12 pickup trucks detained a train This is the first time that an entire train has been detained in Mexico since 1919 a

6. 6 © 2000 Expeditors High Risk Countries – Hijacking

7. 7 © 2000 Expeditors The new pirates

8. 8 © 2000 Expeditors Piracy 80% of all international freight moves by sea 10 million+ cargo containers are on the ocean at any given moment 2008: 293 incidents reported: 111 took place off the Somali Coast, 815 crew members taken hostage. Nearly every government group monitoring sea piracy believes these numbers are seriously undercounted Piracy is estimated to cost between $13 and $16 billion every year

9. 9 © 2000 Expeditors Piracy

10. 10 © 2000 Expeditors Freight Carrier Legal liability International Carriers are governed by Conventions and Acts such as The Carriage of Goods by Sea Act (COGSA) and the Warsaw Convention (Air). These conventions allow carriers to limit their liability International Ocean $500.00 per customary freight unit International Air Freight $28.00 per kg or 17 SDRs/kg Trucking and Warehousing varies from Country to Country. –This limited liability creates a financial exposure for the actual owners of the goods – the result – Cargo Insurance

11. 11 © 2000 Expeditors Is The Freight Carrier Liable ?

12. 12 © 2000 Expeditors When are Ocean Carriers NOT Liable? Neither the carrier or ship owner will be responsible for loss or damage arising or resulting from: 1. Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship. 2. Fire, unless caused by the actual fault or privity of the carrier. 3. Perils, danger, and accidents of the sea or of other navigable waters. 4. Act of God. 5. Act of war. 6. Act of public enemies. 7. Arrest or restraint of princes, rulers or people, or seizure under legal process. 8. Quarantine restrictions. 9. Act or omission of the shipper or owner of the goods, his agent or representative. 10. Strikers or lockouts or stoppage or restraint of labor from whatever cause, whether partial or general; Provided that nothing herein contained shall be construed to relieve a carrier from responsibility for the carrier's own acts 11. Riots and civil commotion's. 12. Saving or attempting to save life or property at sea. 13. Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods. 14. Insufficiency or packing. 15. Insufficiency or inadequacy of marks. 16. Latent defects not discoverable by due diligence. 17. Any other cause arising without the actual fault and privity of the carrier without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

13. 13 © 2000 Expeditors Is The Freight Carrier Liable ?

14. 14 © 2000 Expeditors Know your Freight Carriers Cargo Theft is a major problem FBI estimates: U.S. - $12 to $20 billion in annual losses - Los Angeles = $2 million per day! Worldwide - $30 to $50 billion in annual losses

15. 15 © 2000 Expeditors Know your Freight Carriers Same old problems: – Pilferage / “smash and grab” / “onesie twosie” – Crimes of Opportunity – Inside Jobs – Organized crime – still around – growing in some areas Newer problems: – Gang activity – “Bogus drivers” / “Bogus traffic stops” – Armed hijackings / shootings / gas attacks

16. 16 © 2000 Expeditors Know your Freight Carriers What is your Freight provider doing to guard against these risks? Minimum security standards? CCTV limited access to warehouse Background checks for employees? Background checks for 3 rd party contractors? Process to limit exposure points? Where is your cargo sitting over the weekend? Alternating driving routes / pick up times? You get what you pay for !

17. 17 © 2000 Expeditors Regulations/Compliance ISF (Importer Security Filing) Cargo Screening C-TPAT

18. 18 © 2000 Expeditors Cargo Insurance “All Risk” Open Marine Policies are available - Coverage for Air, Ocean, Truck, Rail International Domestic Stock Stock in process (stock through-put) When was the last time you REALLY reviewed your cargo Insurance program ? Has your policy kept pace with your supply chain ?

19. 19 © 2000 Expeditors MSC Napoli

20. 20 © 2000 Expeditors

21. 21 © 2000 Expeditors Conclusion - What can you do to protect your organization against supply chain losses Not a conclusive list but a place to start –Terms of Sale – INCOTERMS – when are you at risk? –Shipping patterns - Concentration of value –High Risk Countries – Where do you ship to / from? –Know your Freight Carriers standards of care –Evaluation of your Cargo insurance program

22. 22 © 2000 Expeditors Expeditors Cargo Insurance Brokers (ECIB) Diane Grand Regional Insurance Manager – North East Based in Inwood New York 516-371-3330 Caitlyn Bellezza Regional Insurance Manager – North East Based in Inwood New York 516-371-3330