1. Managing Global Shipping Risks Presented by Greg J. Kritz, CIC Vice President SCTIC May 27, 2008 www.roanoketrade.com USA England Ireland China Singapore UAE Germany

2. How Does One Manage Risk?

3. Follow a 4 Step Risk Management Process 1. Identify the Potential Problems

4. 2. Analyze the Size of the Potential Problem * Probability * Maximum Financial Exposure * Frequency

5. 3. Control the Risk *Avoid It *Prevent It *Reduce It U.S. Cargo Losses Exceed $18 Billion Annual Impact on U.S Economy

6. 4. Finance the Risk [how you’ll pay for bad stuff when it happens to you] * Transfer the risk to an Insurance Company * Retain the risk [self-insure]

7. Examples of Today’s Shipping Risks Cyclones Delay Product Recall Non-payment Earthquakes Inclement Weather Tariff Retaliation Currency Valuation Cargo Theft Regulatory Seizure Environmental Hurricane/Monsoon Political (Nationalization) Extremes in Temperature

8. 5 Commonly Overlooked Supply Chain Risks

9. Knowing The Total Aggregate Financial Exposure at Any One Place At Any One Time

10. 3 rd Party Limited Liability Not Knowing Whose Responsible for What and Where.

11. Ocean Carrier/NVOCC Subject to terms of Carriage Of Goods by Sea Act (COGSA) $500 per Customary Shipping Unit as described on OBL Unit can be the container, a pallet, a crate, carton

12. International Air & Indirect Air Carriers Subject to terms of the “Warsaw Convention” $9.07 pound/$20 Kilo or 17 SDR Kilo if Montreal Protocol ($25 kilo)

13. Distribution Centers & 3PL Facilities Warehouseman’s Terms & Conditions Rule Unless Changed by Contract Liability Typically a multiple of base rate 3PL’s and Forwarding Operations Often Limit Liability on Warehouse Receipts Reasonable Care Standard Applies

14. Loss of Profit & Business Income Freight is insured for only landed cost

15. LOSS of BUSINESS INCOME : IMPORTERS NIGHTMARE A Property Insurance Policy Doesn’t Cover Loss of Business Income for Cargo Claims What if these were Yours’ at Peak Season? $30M

16. Haphazard Entry Into Logistic and Carrier Contracts

17. Clearly Defined Control & Security Procedures at Each & Every Link in The Supply Chain

18. CARGO CRIME SOARING Theft & Unexplained Shortages (shrinkage/Leakage) 4 Easy Ways to Access An Ocean Container Without Leaving a Trace

19. 30% of Cargo Losses NOT Preventable

20. 273 Hurricanes Hit USA 1851-2005 92 Were Major Category 3,4 & 5

21. Thank You For Letting Me Be With You Today !