Blog
All-Risk Coverage Is Critical
In our recent article with Freight Waves, we discuss why All-Risk coverage is critical and how a Canadian freight brokerage overcame challenges of shipping in and out of Mexico.
The excerpts of the article below were originally posted on FreightWavs.com.
Cross-border shipping is a tricky business, there’s no getting around it. But with a reliable and knowledgeable partner at your side — and proper insurance protecting your products — your cross-border anxieties will greatly diminish.
Mark Vickers, Reliance Partners’ executive vice president of international logistics, recently connected with Ryan Jones, president at NUAGE Logistics Inc., to dive into cross-border logistics.
Jones shares his thoughts on what it’s like shipping into Mexico from the perspective of a Canadian-based freight brokerage. NUAGE Logistics, based in Quebec, Canada, primarily serves the food and beverage industry, hauling dry and refrigerated freight between the United States and Canada. However, the freight brokerage hauls a considerable amount of heavy machinery from Mexico to the Canada work sites, specifically rural mining sites.
Comparing the U.S.’ northern and southern borders, Jones gives the nod to the Canadian border for being simpler to work between. For starters, the northern border has a lot less criminal activity, he said, and it helps that both countries share English as a common language.
In addition, Jones points out that the vast majority of freight carriers hauling across the U.S.-Canadian border are Canadian in origin. He said these carriers are very familiar with the border and have the tools in place to navigate through its processes.
This pales in comparison to the Mexican border, where Jones said visibility is often not assured. Even real-time freight tracking south of the border will only get you so far.
“It seems like there’s 17 different parties involved with any shipment crossing into Mexico and there are different ways of working, different company cultures that clash,” Jones said. “You’ve got agents, shippers, carriers, brokers and freight forwarders — it can really be a circus of finger-pointing if something goes wrong.”
Vickers said that one of the most frequently asked questions shippers have for brokers is what type of visibility they can expect when their shipments are in Mexico. Jones said that NUAGE surrounds itself with carrier and insurance experts to better handle their clients’ Mexico shipments.
“Our carriers in Mexico have proven themselves through their dependability and accountability,” Jones said. “When we have a new lane that we’re bidding on, we turn to that same network; we rarely if ever source a Mexican spot market carrier.”
Vickers has outlined the various disparities in freight liability between the U.S., Canada and Mexico in previous articles with FreightWaves. He draws attention to Mexico’s nearly nonexistent carrier liability that leaves shippers on the hook for the majority of damages. In fact, Mexico only requires carriers to be liable for 2.5 cents for every pound transported. Contrast that with the United States, where U.S.-based motor carriers can be liable for up to $1 million in cargo loss. What’s more, Canada-based carriers have a maximum liability of $2 per pound of freight.
“Through the All-Risk coverage we have with Borderless Coverage, it sits in front of both [the primary and secondary policies] as sort of a primary all-risk coverage, which has been a blessing for us,” Jones said, describing the difficulties in processing claims, even domestically, as insurance companies and carriers pin the blame on each other for damages or cargo losses. He added that Borderless Coverage takes the guesswork out of the process.
“Borderless Coverage has been fantastic for us, and that’s why we use it for any shipment in Mexico inbound or outbound,” Jones said, explaining that even in a worst-case scenario, NUAGE knows that their customers’ freight will be painlessly covered.
Before partnering with Borderless Coverage, Jones said it was difficult to find a risk-mitigation solution for Mexican freight, explaining that for the past few years, many carriers have danced around the topic.
Jones suspects that recent turmoil at the Mexican border may be why carriers have withdrawn their Mexican in-line coverage.
“I wouldn’t be surprised if there’s a lot of brokerages or carriers out there that think that they’re covered under their policy that in fact aren’t,” Jones said. “That is scary because you never want to find that out after something’s happened.”
Jones said that his customers are very receptive to all-risk coverage after hearing it’ll cost them next to nothing to implement. He added that the amount of dollars NUAGE spends on coverage pales in comparison to the risk that the freight would be subject to moving without coverage, let alone standard coverage.
“It has really allowed us to provide an option to our clients that gives them confidence,” Jones said of Borderless Coverage’s All-Risk insurance. “They’re appreciative of that insight.”
Click to obtain a Borderless Coverage by Reliance Partners annual policy quote.