Insurance. Liability Insurance. Liability insurance has two components always included together: Bodily Injury coverage and Property Damage coverage. Liability insurance is the basic insurance coverage that covers injuries or damage to other people or property if you’re at fault for an accident. If you cause an accident that injures or even kills another person, the Bodily Injury (BI) portion of your Liability insurance will pay for the related expenses. Bodily Injury (BI) will cover hospital and medical bills, rehabilitation, long-term nursing care, funeral expenses, lost earnings, pain and suffering, and other expenses, up to the limits you select. If you cause an accident that damages another person’s property, the Property Damage (PD) portion of your Liability insurance will pay for the related expenses. Property Damage (PD) will cover the expense to repair or replace damaged items, including other vehicles, lamp posts, houses or even a pet, up to the limits you select. Liability insurance also will pay for your legal defense costs if you are sued as a result of your involvement with the accident. Carrier Requirements: BMC-91 or Public liability Insurance (Bodily Injury/ Motor Common Carrier) Freight:-$750,000 -$5,000,000, depending on commodities transported; $300,000 for nonhazardous freight moved only in vehicles weighing under 10,001 lbs. Passengers:-$5,000,000; $1,500,000 for registrants operating only vehicles with seating capacity of 15 or fewer passengers. BMC-34 Cargo insurance-$5,000 per vehicle; Motor Common Carrier. Contingent Cargo Insurance. You as a freight broker should carry contingent cargo insurance to pay shipper loss or damage claims if the carrier and its insurance company refuse to pay. Contingent cargo coverage provides shippers and yourself a second level of protection, as long as a claim is valid. Contingent cargo insurance is available only to freight brokers. It is not cargo insurance; it is insurance Contingent upon the motor carrier’s insurance not paying a claim that has been made. A freight broker is typically never liable for cargo damage. The higher your shipper or client’s insurance requirements are, the more difficult it will be to find a carrier to transport their freight. Therefore, you will need to have contingent cargo to make up the difference in coverage. The exception of when a freight broker is liable; is by being negligent in their duties. A freight broker never takes possession of the cargo and can never be legally liable for cargo damage. Contingent cargo coverage provides indemnity and defense to a freight broker for third-party cargo claims. An example of where coverage applies is a case where the broker relies upon a certificate of insurance for a trucker to be valid and it turns out to be bogus. A claim ensues and the freight broker is brought into the fracas. The contingent policy provides for indemnity and defense. Example: Your carrier allowed his policy to lapse due to non-payment, and his insurance company assumes no responsibility for this loss. YOUR contingent cargo liability insurance will certainly come in handy in this predicament. How Do I Know if a Carrier Has Allowed their Policy to Lapse? FreightBrokersCourse.com offers a monitoring service enabling you to monitor and qualify carries for insurance policy changes, safety ratings, and more. Registry Monitoring Insurance Service Inc. (RMIS) offers brokers the following: Carrier Insurance Tracking, Contingent Cargo Insurance, Claims Assistance, DOT Reporting, and Insurance Verification. Therefore, RMIS offers both insurance and monitoring, under one roof, confident that your carrier is in compliance prior to dispatching them under a load. Errors and Omissions Insurance. Errors and Omissions covers a financial loss incurred by your customer resulting from your failure to perform, wholly or in part, your contractual obligations. Could it have happened to you? Freight Brokers are more vulnerable than ever to actions brought against them by their clients due to errors made, or errors which the client perceives were made. Mistakes can be extremely costly to a shipper, and very frequently, it is the freight broker who is asked to pay for the mistake. Even if there was no mistake, the cost to defend your company can create a substantial expense. It is highly recommended that this insurance be carried by your company. Claims. What Constitutes a Claim? The first point to know is that a claim against a carrier is a legal demand for the payment of money arising from the breach of the contract of carriage (usually the bill of lading). Therefore, the rules governing the filing of claims are founded in law and must be followed strictly. Claims are also governed by government regulations, whether intrastate or interstate commerce is involved. If an international movement is involved, the claim may also be governed by international treaties. Claims rules will be found either in carriers’ tariffs, in their bills of lading, or both. Court decisions interpret these regulations, laws and tariffs, and determine the rights and obligations of the parties. If a claim shipment was governed by a contract, the terms of that agreement will govern the carrier’s liability. Often contracts will adopt common carrier tariff rules, as described herein. No specific claim form is prescribed by law, but four elements are essential: the shipment must be identified to enable the carrier to conduct an investigation; the type of loss or damage must be stated; the amount of the claim must be stated or estimated and a demand for payment by the carrier must be made. The shipment identification information must include the carrier’s pro number, shipper’s number, vehicle number, origin date, delivery date, and commodity description. The claimant’s name must be either; the entity having title to the goods in transit; the entity assuming the risk of loss in transit; an assignee of either (1) or 2. The carrier against whom the claim may be filed is either the originating carrier or the delivering carrier. It is not recommended that claims be filed against intermediate connecting carriers, although it is permissible to do so if it is definitely known which carrier caused the loss or damage. The claim must be delivered to the carrier within the time period specified in the carrier’s contract and/or tariff, or that time prescribed by law, (usually 9 months from delivery). Since the date of receipt by the carrier determines whether or not the claim is timely filed, claims should be filed via delivery methods which give some type of confirmation of receipt and guarantee as to length of time for delivery, such as; facsimile transmission (FAX); registered or certified mail, Return Receipt Requested (RRR); Express Mail; Express Courier Services; Electronic Data Interchange (EDI). Claims. Also referred to in the logistics industry as O S and D (Overage, Shortage, or Damage). There are generally 3 types of freight claims. Freight Lost in Transit, Freight Damaged In Transit and Concealed Damage. A freight claim is essentially when there is a payment that has not been fulfilled and must be addressed immediately. This holds true even if you are in doubt if the claim is reputable. Depending on the freight and carrier, freight claims are handled in a variety of ways. The act of response could depend on specific state, federal, or international laws. Claims should be addressed to the carrier’s claims manager at the carrier’s home office. Personal delivery to a carrier’s representative may be effective if the claim is actually delivered in time, but an acknowledgment should be obtained in writing, and a copy sent to the carrier’s claims manager. Receipt by the carrier is deemed to be notice to all connecting carriers as well! The names and addresses of the consignor (shipper) and consignee (receiver) must be stated, including all stop-off locations for completion of loading and/or unloading. Information on who is liable for the freight charges should be included in the claim. (Collect, Prepaid, C.O.D., etc.) information on any liability limitations must be noted on the BOL. Details of a Claim. A detailed description of the loss, damage, or delay must be stated, setting forth the specific commodities, number of units of each type, extent of loss suffered, the value of each unit, the amount of salvage realized, the net loss, and a description of the events which caused the loss. Supporting Documentation. The original bill of lading. The paid freight bill. Proof of the value of the commodities. Inspection reports, if made. Copies of request for inspection. Notification of loss. Waiver of inspection by carrier. Photographs. Temperature reports. Impact records. Dumping certificates. Laboratory analysis. Quality control reports. Package certifications. Loading diagrams. Weight certificates. Affidavits. Carrier’s passing reports. Loading and unloading tallies. A Bond of Indemnity may be filed with the claim indemnifying the carrier for any loss it may suffer as a result of improperly paying the claim on the basis of the claimant’s furnishing a copy of the original document. Every claim should be numbered by the claimant and recorded in a claim log or computer system. The carrier should also assign its claim number and acknowledge receipt of the claim within 30 days of receipt, pursuant to D.O.T. regulations. Both claim numbers should be shown on all correspondence and checks. Claims. You may encounter three different types of freight claims: 1. Freight Damaged In Transit: 1. This claim is filed when there is damage done to the freight at the time the carrier had claim over it. This includes dents or cuts to the container holding the freight or the actual load itself. The damage must be visual and apparent. If there is damage to the container holding the load, there may be additional damage that will not be discovered until it is opened. This is known as hidden loss. 2. Damage could also include freight alteration because of non-compliance to temperature regulations during the trip. This may result in the spoiling of food, also considered damaged freight. This damage is noted on the Bill of Landing by the customer when they receive the load. 2. Freight Lost in Transit: 1. This claim is filed when a shipment cannot be located due to a misdirected shipment. The load is then not delivered within a suitable time frame. Lost freight due to hijacking or criminal activity can also be described as being lost in transit. An extended delay can also lead to a freight loss in transit claim. 3. Concealed Damage: 1. If Freight is defined as damaged after the time of delivery it is called concealed damage. A separate file should be kept on each claim. Important deadlines and dates should be recorded in the claim log and systematically reviewed. For instance; If a claim is not acknowledged within 30 days, or; If a claim is not paid, compromised or disallowed within 120 days, or; If the carrier does not provide status reports every 60 days thereafter, it should be notified of its violations of the government’s regulations. Repeated violations of D.O.T claim regulations should be reported to the Surface Transportation Board, 1201 Constitution Ave. NW, Washington, DC, 20423-0001. Suit Deadlines. If a carrier denies liability for a loss for which the claimant has reason to believe the carrier is lawfully liable, the claimant has the right to institute a lawsuit. However, such suits must be instituted within strict time limits. The most commonly applicable suit time limit is two years and one day from the date the carrier disallowed the claim. See the Carmack Amendment governing regulated truck (49 U.S.C. 14706) and rail traffic ( 11706). The date of mailing the carrier’s disallowance letter usually governs, not the date of its receipt by the claimant. However, some traffic is not subject to the Carmack Amendment, and therefore, the time limits vary. For instance; on some piggyback traffic, the suit must be instituted within one year from the date of delivery on ocean traffic, the suit must be instituted within one year of delivery, but the carrier may extend that date upon request received before the expiration of one year. Airline claim limits vary for each carrier. A system must be implemented to periodically review the status of pending claims to prevent the expiration of the suit-filing deadlines. Note: Only a written statement declining payment of a claim in whole or in part starts the running of the time period for filing suits. Note: An offer to settle or compromise a claim is deemed a declination, but it must also state that the remainder of the claim is disallowed. (See 49 U.S.C. 14706(e)(2)(A)) Note: Don’t wait until the last day to request your attorneys to institute a suit. Set your review schedule to allow at least 30 days’ lead time. Who Files the Freight Claim? Freight claims are filed by either 1. The shipper- Sends the freight. 2. The consignee- Receives the freight. 3. This depends on the F.O.B. (free on board) designation. The F.O.B designation helps by placing the responsibility on to one party for the freight at the time of transportation. The Bill of Landing will determine and tell you who has ownership of the freight so you can contact the correct person. Two terms that should be focused on are destination and origin which define who had control of the freight. F.O.B., free on board, means that the price for commodity being transported includes delivery only to a certain point. These terms are then associated with one another as F.O.B. Destination or F.O.B. Origin. To distinguish the two it depends on who is bearing the risk of transportation. F.O.B destination designates the seller or shipper as bearing the risk of transportation. They are in control and held responsible for filing claims until delivery. However, F.O.B origin shows that the consignee or receiver is taking that risk of transportation. They are given the title once the freight is loaded and are the ones who file the claim. Prepaid and Add, Prepaid and Allow, or Collect are the most common payment terms that will be associated and used when dealing with freight claims. 1. Prepaid and Add - The shipper pays shipping costs beforehand, and then later adds additional charges to the invoice. The consignee is able to be reimbursed of these charges later on. 2. Prepaid and Allow - The shipper prepays shipping costs (already included in price). 3. Collect – The consignee gives the shipping charges to the carrier. What defines a freight claim and how are they filed? Specific aspects must be made known to the carrier in order for the claim to be made on a legal aspect. An investigation is overseen by the carrier and they must be able to identify the carrier’s Pro number, the shipper’s number, the vehicle number, the date the shipment was originated, and the final delivery date. Along with these, there needs to be a full description of the discrepancy including: 1. The specific kind of loss or damage (visible damage, lost in transit, concealed damage) must be clearly stated. 2. An actual or good faith estimate of the amount of loss must be clearly stated. 3. A formal demand for payment by the carrier must be made. The claim must be filed with the carrier within the specific time frame set out in the carrier’s tariff or any authorized contract for cartage. Once the claim is filed it should include a descriptive summary of the damage of the freight including an approximate estimate. Documentation is also needed to support the claim. These include: An original or certified copy of the bill of lading. Proof that the freight bill was paid. Loading/unloading count sheets or inspection reports. Evidence, such as photos of damage. Driver’s Temperature Reports. for climate-controlled shipments. Freight Claim Tracking and Investigation. You must also include an internal tracking number and record the claimants tracking number. You have thirty days to show you have received this receipt. This is vital and could have serious consequences such as fines if neglected. After documentation is done, the claim will be investigated to decide its credibility. These investigations will be in compliance with the NMFC Principles and Practices dealing with the Investigation of Freight Claims. Consignee Options For Addressing Damaged Freight. The consignee has the power in deciding to reject the whole delivery, or accept the delivery simply recording damage on the delivery paperwork. This is dependent on the severity of the claim and the amount of damage visible. Drivers need to be prepared on how to react to a dam-age claim collecting enough information, if possible pictures of damage, so that the claim can be processed. In the event of the consignee rejecting the whole shipment, the driver must notify his office. The office staff then will contact those who authorized the shipment to receive more information on what to do. If the load is sent to a different location, this may include in more freight payments to cover repacking and re-routing. Although insurance claims for lost or damaged freight do not happen that often, they are a scenario that you must be prepared for. The most common type of claim will be Freight Damaged in Transit and this will more than likely be caused by the carrier. The legal owner of the freight at the time files the claim, either the shipper or the consignee. This is why it’s important to obtain a copy of the motor carrier’s insurance certificate prior to dispatching them and make sure they have the proper coverage to haul the freight. However, it is also important that you as a broker obtain Contingent Cargo Insurance. This will cover any claims or loss that the carriers insurance cannot or does not cover. Suit Deadlines. If a carrier denies liability for a loss for which the claimant has reason to believe the carrier is lawfully liable, the claimant has the right to institute a lawsuit. However, such suits must be instituted within strict time limits. The most commonly applicable suit time limit is two years and one day from the date the carrier disallowed the claim. See the Cormack Amendment governing regulated truck (49 U.S.C. 14706) and rail traffic ( 11706). The date of mailing the carrier’s disallowance letter usually governs, not the date of its receipt by the claimant. However, some traffic is not subject to the Carmack Amendment, and therefore, the time limits vary. For instance; on some piggyback traffic, the suit must be instituted within one year from the date of delivery on ocean traffic, the suit must be instituted within one year of delivery, but the carrier may extend that date upon request received before the expiration of one year. Airline claim limits vary for each carrier. A system must be implemented to periodically review the status of pending claims to prevent the expiration of the suit-filing deadlines. Note: Only a written statement declining payment of a claim in whole or in part starts the running of the time period for filing suits. Note: An offer to settle or compromise a claim is deemed a declination, but it must also state that the remainder of the claim is disallowed. (See 49 U.S.C. 14706(e)(2)(A)) Note: Don’t wait until the last day to request your attorneys to institute a suit. Set your review schedule to allow at least 30 days’ lead time. Claims – Frequently Asked Questions. How do I find the time limits for filing claims against our carriers? a) The carriers’ tariff or bills of lading will specify the various time limits, but they could be different via each mode, or different for carriers within the same mode, particularly on traffic which is exempt from government regulations. The best procedure is to draw-up a time limit chart listing these key periods for each carrier in your routing guide. This will also help you to select the carriers with the most favorable liability terms and conditions. Must we notify our own insurance company of a claim against a carrier? a) Yes, under most shippers’ cargo insurance policies, the insurer stipulates that it must be given notice of claims promptly, or within a reasonable time. If you are not able to recover from a carrier, you may be time-barred from claiming against the insurer if you have not given it prompt notice of your claim against the carrier. Must I use a specific claim form? a) No, any written notice containing the basic elements of a claim will suffice. May I include interest, administrative costs, freight charges, loss of profits, attorney’s fees, etc. in my claim? a) Yes and No. The measure of damage is governed by common law. Freight Claims in Plain English reviews the case law on this issue as well as all other legal issues affecting claims. Can I recover a claim from a carrier after it files for bankruptcy? a) Yes. Call the D.O.T. for the name and address of the carrier’s cargo insurer at; (202) 927-7600. Get the cargo policy number in effect on the date of the loss. Then write to the insurer and demand payment under the BMC 32 Endorsement. Standard Carrier Alpha Code SCAC. The Standard Carrier Alpha Code SCAC. is a unique two to‐four letter code used to identify transportation companies. NMFTA developed the SCAC identification codes in the mid 1960’s to facilitate computerization in the transportation industry. The Standard Carrier Alpha Code is the recognized transportation company identification code used in the American National Standards Institute ANSI. Accredited Standards Committee ASC. and United Nations EDIFACT approved electronic data interchange EDI. transaction sets such as the 856 Advance Ship Notice, the 850 Purchase Order and all motor, rail and water carrier transactions where carrier identification is required. The SCAC is required on tariffs filed with the Surface Transportation Board STB The United States Bureau of Customs and Border Protection has mandated the use of the SCAC for their Automated Manifest AMS. and Pre‐Arrival Processing PAPS. Systems. SCAC's are required when doing business with all U.S. Government agencies and with many commercial shippers including, but not limited to, those in the automobile, petroleum, forest products, and chemical industries as well as suppliers to retail businesses and carriers engaged in railroad piggyback trailer and ocean container drayage. Carriers who use the Uniform Intermodal Interchange Agreement UIIA. are required to maintain a valid SCAC. The petroleum industry uses SCAC’s in their integrated software programs that expedite the movement of bills of lading, pipeline tickets, product transfer orders, and inventory data. Many commercial shippers and receivers utilize SCAC’s in their freight bill audit and payment systems. Certain groups of SCAC's are reserved for specific purposes. Codes ending with the letter U are reserved for the identification of freight containers. Codes ending with the letter X are reserved for the identification of privately owned railroad cars. Codes ending with the letter Z are re-served for the identification of truck chassis and trailers used in intermodal service. To apply for your SCAC code with the NMFTA https://secure.nmfta.org/scacapp.htm Transportation to U.S. Ports. TWIC Cards. What is TWIC? A Transportation Worker Identification Credential, TWIC, is a biometric credential that ensures only vetted workers are eligible to enter a secure area of a Maritime Transportation Security Act-regulated port or vessel unescorted. Port Security procedures, rules and laws affecting the delivery of cargo, can and do change over time and have a direct impact on the cost of transporting cargo. In major US ports, unescorted access to secure areas is no longer possible. At major US ports, what areas are deemed secure or sensitive are subject to change without notice. New rules and regulations require that transportation workers making delivery of cargo to secure areas, have a TWIC card ‐Transportation Worker Identification Credential. This is issued by the US Federal Government, TSA Transportation Security Agency. The TWIC card is a biomet-ric ID card that costs money to obtain, involves going through a security check, has a biometric chip and photo identification, and lasts up to 5 years. In certain US ports, since the last part of 2008, this is required of all drivers delivering cargo directly to the sea‐port. Most FCL full container load container haulers are up to speed with this ID requirement. How-ever, many vehicle and heavy equipment truckers coming from the US interior ‐far from the ports where these rules have gone into effect ‐do not have this new required TWIC card. Likewise, many private people looking to make direct delivery of their vehicles to effected ports do not have this card. History. Congress mandated the Transportation Worker Identification Credential in the Maritime Trans-portation Security Act of 2002 MTSA. a s amended by the Security and Accountability for Every Port Act of 2006 SAFE Port Act.. MTSA directed the secretary of the Department of Homeland Security to prescribe regulations that would prohibit an individual from gaining unescorted access to a secure area as designated in an approved security plan of a regulated facility unless that individual holds a duly-issued transportation security card and is otherwise authorized by the owner or operator to be in such a secure area. TWIC Escorts. In some US ports, TWIC escorts are available to provide secure access to ports of call. These es-corts are paid at the time of service by the carrier. I have listed some of these escorts with contact information below. You will need to contact the local TSA office at the specific port your truck is delivering to for TWIC escorts that are available. What is the enrollment process? The enrollment process consists of the following components: optional pre-enrollment, in-person enrollment, security threat assessment and notification of the results, and issuance of the TWIC to the applicant. Applicants may pre-enroll online to enter all of the biographic infor-mation required for the threat assessment and make an appointment at the enrollment center to complete the process although appointments are not required.. Then applicants must visit the enrollment center where they will pay the enrollment fee, complete a TWIC Application Disclosure Form, provide biographic information and a complete set of fingerprints, and sit for a digital photograph. The applicant must bring identity verification documents to enrollment and in the case of aliens, immigration documents that verify their immigration status, so that the documents can be scanned into the electronic enrollment record. What documents do I need to enroll? All applicants are required to bring appropriate documentation to the enrollment center in or-der to verify their identity click here for a list of approved documents.. Applicants can provide any one document from list A or two documents from List B, one of which must be a govern-ment-issued photo ID. A good example of appropriate documentation from List B is a state-issued driver’s license and a social security card. What documentation is an applicant required to bring to the enrollment center if he/she is a U.S. citizen, but was not born in the United States? Applicants should bring one of the following documents: 1. Department of State - Certificate of Report of Birth Form DS-1350.; 2. Department of State - Consular Report of Birth Abroad Form FS-240.; or 3. U.S. Passport. Note: If the Certificate of Birth Abroad, Consular Report of Birth Abroad, or an expired U.S. Pass-port are presented, additional documents will be required to verify identity; see list of accept-able identity documents. If a current unexpired. U.S. Passport is presented, it is the only identity verification document required. How much does a TWIC cost? The fee for a TWIC card will be $132.50 and the credential is valid for five years. Those who hold a valid MMD issued after February 3, 2003, MML issued after January 13, 2006, HME issued after May 31, 2005, or a FAST card, may pay a reduced fee of $105.25. Those applicants choosing to pay the reduced fee must present an MML, MMD, HME, or FAST card at the time of enrollment. If the reduced fee is paid, the TWIC expiration date will be 5 years from the date of the supporting MML, MMD, HME, or FAST card. What are the methods of payment? Payment must be made with money order, certified/cashier’s check, corporate check, or credit card Visa or MasterCard only.. Checks should be made payable to Lockheed Martin. Two ad-ditional payment options are available for companies to pay for their employees: company pur-chased pre-paid debit cards or bulk payments. For companies choosing to use the pre-paid option, additional information can be found at http://www.twiccard.com. For additional information on bulk payments please click here for Lockheed Martin’s policy document. In all cases, payment will be made at the enrollment center at the beginning of the enrollment process. What is the pre-paid debit card for the TWIC Program? This method of payment is a prepaid Visa® card and is intended for employers who wish to pur-chase TWICs for their employees. They may be purchased in bulk and are redeemable at any TWIC enrollment center. The website for additional information or purchasing them is at http:// www.twiccard.com. What is the fee for a replacement card? The card replacement fee for lost, stolen, or damaged TWICs. is $60. What is the deployment schedule? Click here to view the latest TWIC deployment schedule, which provides monthly or quarterly time frames. As the start of the enrollment period for each grouping of ports nears, specific en-rollment start dates and addresses will be posted, so stay tuned. Where can I enroll? The current listing of enrollment locations is available on this website, under the Schedule tab. Where can I get more information on mobile enrollment? Click here to view a document that provides background information, requirements, and contact information for requesting and hosting a mobile enrollment facility. What is pre-enrollment? The pre-enrollment process allows applicants to provide much of the biographic information re-quired for enrollment; to select an enrollment center where they wish to complete enrollment; and to make an appointment to complete enrollment at the enrollment center of their choosing. Applicants are encouraged, but not required, to pre-enroll. Pre-enrollment is available by clicking here. Are appointments required for enrollment? No. Appointments are encouraged to save applicants’ time but are not required and walk-ins are welcome. How can I make an appointment for enrollment? To make an appointment for TWIC enrollment, an applicant must first pre-enroll. If pre-enrolling on the website, an applicant may use his/her address to search for nearby enrollment centers and set an appointment time for the location of his/her choice. If pre-enrolling via the Help Desk 1-866-DHS-TWIC., an operator will help the applicant set an appointment time at the enrollment center of his/her choice. How long does enrollment take? The enrollment process for a pre-enrolled applicant is expected to take approximately 10 min-utes. The enrollment process for an individual who chose not to pre-enroll is expected to take approximately 15 minutes. How will the cards be issued? The applicant will be notified by email or phone, as specified during enrollment, when his/her credential is available at the enrollment center. The applicant must return to the same enrollment center to pick up his/her TWIC. How long does it take to receive a TWIC? Currently, there is typically three to four week turnaround from enrollment until card activation. Eligibility issues or insufficient paperwork may increase the turnaround time. Where can I get additional information on TWIC? The TSA website for the TWIC program provides additional information on the program, sup-porting policies and regulation information on waivers and appeals., etc. Additionally, the Coast Guard’s website contains information on U.S. Coast Guard policies and contains specific docu-ments, such as the Coast Guard Navigation and Vessel Inspection Circular NVIC. and small entity guides for TWIC applicants and owners operators. Carrier Qualification. Setup with New Carrier’s. FMCSA’s Compliance, Safety, Accountability CSA. program — formerly known as Comprehen-sive Safety Analysis CSA 2010. initiative will change the way carrier and driver performance are measured. CSA replaces SafeStat with a new Safety Measurement System SMS. that measures the previous two years of roadside violations and crash data. With SMS, every inspection counts, not just out-of-service violations, and both driver and carrier safety performance are monitored using seven new Behavior Analysis Safety Improvement Categories knows as BASICs. CSA will mean more contact between FMCSA and you the carrier. As a household goods broker, you may do business only with a motor carrier that has a valid USDOT number and valid household goods motor carrier authority. You may not arrange transportation with motor carriers having only property motor carrier authority or household goods authority that is under suspension or has been revoked. You are encouraged to regularly verify the authority status of motor carriers that you do business with. You can check the status of a motor carrier’s operating authority by going to the FMCSA Licensing and Insurance Web site at http://li-public.fmcsa.dot.gov. This process of checking if a Motor Carrier has valid operating authority is being replaced with new CSA methodology and as a Freight Dispatcher you will need to understand how to do your due diligence in selecting motor carriers with CSA scores in the 7 BASICS categories that are in the thresholds re-quired to be considered a safe motor carrier. Unsatisfactory, Conditional, and Satisfactory, will be replaced by CSA 2010 SFDs. General Overview of CSA 1. What is CSA 2010? Comprehensive Safety Analysis 2010, CSA 2010, is a new, high-impact Federal Motor Carrier Safe-ty Administration FMCSA. safety program to improve large truck and bus safety and ultimately reduce crashes. It introduces a new enforcement and compliance model that allows FMCSA and its state partners to contact a larger number of carriers earlier in order to address safety problems before crashes occur. When the program is fully rolled out by the end of 2010, we will have a new nationwide system that will make the roads safer for motor carriers and the public alike! 2. Why is CSA 2010 being implemented? FMCSA’s mission is to improve safety by reducing crashes. Over the past few years, the rate of crash reduction has slowed, prompting FMCSA to take a fresh look at how the agency evaluates the safety of motor carriers and drivers and to explore ways to improve its safety monitoring, evaluation and intervention processes. CSA 2010 is the result of this comprehensive examination. CSA 2010 will enable FMCSA and its state partners to assess the safety performance of a greater segment of the industry and to intervene with more carriers to change unsafe behavior early. 3. What is the CSA 2010 Operational Model? The CSA 2010 Operational Model is the new way FMCSA and its state partners will carry out the compliance and enforcement programs. The CSA 2010 Operational Model is characterized by 1. a more comprehensive measurement system, 2. a proposed safety fitness determination methodology that is based on performance data, and 3. a comprehensive intervention process designed to more efficiently and effectively correct safety problems. 4. What are the BASICs and how are they used in CSA 2010? The Behavioral Analysis and Safety Improvement Categories, or BASICs, are seven categories of safety behaviors measured in the Safety Measurement System SMS.. The BASICs represent be-haviors that can lead to crashes: unsafe driving, fatigue hours-of-service., driver fitness, con-trolled substances and alcohol, vehicle maintenance, and cargo related; and crash history. The Carrier SMS uses a motor carrier’s data from roadside inspections, including all safety-based vio-lations; State reported crashes, and the Federal motor carrier census to score and rank carriers in each BASIC. 5. Where can I find more specific information about measurements for specific BASICs? For a detailed look at the safety measurement system methodology including in-depth informa-tion on how data would be categorized and scored for the BASICs, Please read the Safety Mea-surement System SMS. Methodology. How will CSA 2010 affect freight dispatchers and 3PL’s? 1. Carrier qualification criteria. Most brokers and 3Pls will need to adapt their carrier quali-fication processes to CSA 2010, Because the program includes significant changes in the measurement of carrier performance: The new Safety Measurement System SMS. emphasizes on-road performance, compared to SafeStat’s reliance on out -of-service and moving violation s. Instead of the four Safety Evaluation Area SEA. categories in the SafeStat system, the CSA will divide carrier and driver safety performance data into seven categories called BASICs: Behav-ioral Analysis Safety Improvement Categories. 1. Unsafe driving 2. Fatigued driving, based on Hours of Service HOS. compliance. 3. Driver fitness. 3. Controlled substance or alcohol. 4. Vehicle maintenance. 5. Improper loading of cargo. 6. Crash indicators. Note: The Crash indicator will not be available to the public. The NEW Safety Measurement System SMS 2014 Website. for the most current information please visit: https://csa.fmcsa.dot.gov/whats_new.aspx The NEW Safety Measurement System SMS 2014 Website https://ai.fmcsa.dot.gov/SMS/Carrier/DOT_Number_Here/Overview.aspx Safety Ratings Explained. Safety Ratings. A compliance review results in a safety rating for the motor carrier. This rating can be satisfactory, conditional, or unsatisfactory. Satisfactory Rating. A motor carrier that receives a satisfactory rating is found to be in compliance with the applicable FMCSR agencies, state regulations, and hazardous materials regulations, if applicable. Carriers with a satisfactory rating also are found to have adequate safety management controls. The FMSCA will administer a satisfactory rating no later than 60 days following the completion of the compliance review. Unsatisfactory Rating. If a carrier is found to be unsatisfactory, the FMCSA will issue the notification no later than 45 days following the compliance review. Motor carriers receiving an unsatisfactory rating have their operating authority suspended 15 days after the date of the unsatisfactory notice. An out-of-service order is imposed, which prohibits the carrier from operating any motor vehicles in the United States, unless the carrier can prove errors in the compliance review within 10 days of the date of the notice. Within 30 days of receiving the suspension order, the motor carrier must make the necessary cor-rections specified in the order to prevent the provisional operating authority from being revoked. A follow-up review may take place to ensure that all necessary corrective actions were taken. Conditional Rating. A conditional rating is issued by the FMCSA no later than 45 days following a compliance review. When a conditional rating is issued, the motor carrier’s operating authority is revoked and an out-of-service order is imposed unless the carrier takes the necessary corrective action within 30 days of receiving the order. A follow-up review takes place to ensure that corrective actions have been made by the motor carrier. http://safer.fmcsa.dot.gov/CompanySnapshot.aspx Things to Remember about CSA 2010. Unlike the current safety ratings, that can remain unchanged for years at a time, the new SMS will be updated monthly. Enforcement includes progressive measures. CSA2010 measurement system will trigger progres-sive interventions for any carrier whose performance falls below the required threshold on one or more of the seven BASICs. When dealing with a carrier that has one or more BASICs that require intervention, brokers may wish to get a copy of the carrier’s corrective act ion plan. Expected shortage of capacity. Since the new measurements will include all violations not just OOS violations. there is likely to be an s harp increase in the number of carriers receiving inter-ventions. In addition, drivers with bad BASIC scores will find it hard to gain employment. This may contribute to a shortage of drivers and truck capacity. Compliance review process will change immediately. When the CSA 2010 system is fully rolled out, the current safety ratings of Unsatisfactory, Conditional, and Satisfactory, will be replaced by CSA 2010 SFDs. Carrier safety ratings will provide information on the safety performance of carriers to shippers, insurance com-panies, and the public and allow for more informed marketplace decisions. The FMCSA maintains the SAFERSYS website where complete information may be obtained instantly on any licensed motor carrier. How to Check Carrier Safety Ratings and Insurance Coverage. http://www.safersys.org. Before you move any load with a carrier, or you set them as a potential carrier to move your loads. A safety check should always be performed through the FMCSA database. To check these ratings, simply type in the MC number the carrier has provided you and wait for the results. The website will provide you with the carrier safety record, insurance coverage, etc. Always check that the information provided to you by the carrier is listed on the ICC Authority. Check Valid Authority Information Here -http://www.safersys.org/CompanySnapshot.aspx Check Valid Insurance Here -http://li-public.fmcsa.dot.gov/LIVIEW/pkg_carrquery.prc_carrlist The Golden Rule. Use only carriers with a satisfactory rating or above. Liability insurance of minimum $1,000,000 Cargo insurance of minimum $100,000 Check if Carrier has any recent inspections and number of trucks on fleet. Want to make sure they have some inspections and that they have the correct amount of available trucks on fleet. Occasionally, you will find a motor carrier that will contact you regarding a shipment that has been listed as a conditional or none rotated carrier on the SAFERSYS website. These can be used to move your loads but discretion is advised. Freight Factoring. What Is Freight Factoring? Factoring is definitely all about cash flow. The process of factoring is selling your accounts re-ceivable so that you can get paid immediately for the work you have performed. Factoring is often used synonymously with accounts receivable financing. Factoring is a form of commercial finance whereby a business sells its accounts receivable in the form of invoices. at a discount. Effectively, the business is no longer dependent on the conversion of accounts receivable to cash from the actual payment from their customers, which takes place on typical 30 to 90 day terms. Businesses benefit from the acceleration of cash flow. Factoring is considered off balance sheet financing in that it is not a form of debt or a form of equity. This fact makes factoring more attain-able than traditional bank and equity financing. There are usually three parties involved when an invoice is factored: Seller of the product or service who originates the invoice. Debtor is the recipient of the invoice for services rendered who promises to pay the balance within the agreed payment terms the customer. Factor companies come in all sizes and many different models. A trucking company using a factor does it for a reason or a variety of reasons. First and foremost, Freight Factoring is the ability to obtain a line of credit from a bank. Factoring is an easy method of financing. Truckers have invoices and under the Uniform Commercial Code UCC., invoices are freely assignable. Think of it as a truck purchase. You go the dealer and buy a truck, but you need financing. The contract you make with the truck dealer is assigned to the bank. IF you have a long standing mortgage, you have your mortgaged assigned a number of times as companies merge or your mortgage is sold from company to another. The UCC provides that this commercial paper is freely assignable, meaning it can be done without the consent of the party making the payment. Almost always, along with the purchase of the invoice, the Factor requires a party to execute a UCC form, which constitutes a lien upon the invoice and may state that is a lien upon all receiv-ables of the trucking company UNTIL RELEASED. The UCC form is then registered in the home state of the trucking company or the state in which they are incorporated. Without going into a very detailed further explanation, the first registered UCC is in the first position just like the first mortgage on a house. Until your first is paid off, should the first foreclose any second mortgage must buy out the first to protect their interest. Failure to file a UCC form does not affect the ability to assign the invoice or the obligations of the party assigned. Failure to file a UCC form does, however, cause a Factoring Company to run the risk of UCC form filing by another Factoring Company, causing the first Factor to fall behind the right of the filer even though the non-filer first Factor. obligation was incurred first in time. Think of its a similar to patent rights. First to file for the patent is the holder of the right to receive royalties. All factoring companies that know what they are doing file UCC forms, which are usually furnished to the company responsible for paying the invoice. Types of Factors. 1. Purchase with Non-Recourse. In a purchase of an invoice by a non-recourse factor, the purchaser of the invoice receives the right to payment of the invoice. That right to payment becomes binding on the company owning the payment upon receipt of notice that the right to payment has been assigned. The trucker no longer has any right to receive payment and the Factoring Company assumes the risk of col-lecting. Stated plainly, when the notice has been given and receive under the UCC, payment to the trucker by the broker becomes what is known as a Payment over Notice. When a Payment over Notice occurs, the right to receive payment by the factoring company is not discharged if payment is made to the trucker rather than the factor, and may make the broker liable for paying twice for the transportation cost. 2. Purchase with Recourse A recourse factor is a company that maintains a right to return unpaid invoices to the trucker for payment. Usually a percentage of each load is maintained in a client’s account until a certain total amount is reached to insure that payment for unpaid invoices can be deducted from the client’s account. These agreements vary in terms and content, but are essentially the same in how they work. State plainly, the recourse factor can collect from the client account or the client when not paid on an invoice. A non-recourse factor takes the risk of non-payment Factoring Basics. 1. Are Factors Licensed? There are no permits or licenses required for factors or other purchasers or lenders. when the business is standard commercial credit through Article 9 of the Uniform Commercial Code UCC.. 2. Am I Bound by a Notice of Assignment? If you have received a Notice of Assignment, you are bound by it even if you do not acknowledge the Notice. 3. How Can I be Sure the Assignment is Real? If you are suspect to the notice that you have received, you can request additional proof of the assignment UCC 9-406©. which reads, Subject to inspection h., if requested by the account debtor, an assignee shall reasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the account debtor may discharge its obligation by paying the assignor, even if the account debtor has received a notification under subsection a. Reasonable proof would be signed Notice of Assignment Letter, a redacted Security Agree-ment, Proof of the creditor’s purchase of the account in question, or a UCC financing statement. 1. Should I Sign a Notice of Assignment? Since you are bound by a Notice of Assignment once received, whether you sign it or not, it is probably better not to sign such notices so that you do not inadvertently agree to new terms or conditions. By simply filing the Notice of Assignment and following its payment instructions, you have not agreed to any new conditions. 2. Do Factors Have to Abide by the Terms of the Broker – Carrier Contract? Factors buy receivables from carriers for a discounted rate. This results in a subrogation of the carrier’s receivables. By doing so, they also inherit the terms and conditions related to those receivables ie. If the Carrier agreed to 60-day terms, than the factor must respect those terms.. Factors should be aware of the terms the carriers have with their clients before factoring. If the factor does not agree with the pre-established terms, they should turn back to the carrier to re-solve the issue. The Factor should not negatively affect the payer’s credit rating in attempting to collect with agreed terms. 3. Where can I Get Additional Information? The International Factoring Association www.factoring.org. has a great deal of information on its website. TIA Recommended Best Practices for Factors. 1. The carrier is to provide the broker with documentation indicating that the load has been factored, and to whom payment is to be made. 2. The factoring information should not be changed during the payment terms agreed to for the shipment. 3. A factor should not subrogate receivables that are already assigned. The carrier should not re-assign its receivables to a new factor without having received a release from the initial factor. 4. The broker should establish procedures for being contacted by the factor and should make said procedures known during carrier set-up; factors should abide by the broker’s procedures. 1. Factors should confirm, within the parameters of the broker’s established procedures, that the broker has been advised of the assignment of the receivables and is aware to whom the payables should be made. 2. Payment terms and conditions should be agreed to between the broker and the carrier by written contract. 3. Factoring loads does not free the receivables from any legal lien due to the non-perfor-mance of the carrier as defined in the broker-carrier contract. If funds are being held due to the non-performance of the carrier, the factor should not negatively affect the brokers credit in an attempt to collect, but should address the issue back to the carrier for resolution. 4. All information gathered by the factor should be considered confidential and not be transmitted to any party other than as required to ensure their receivables. 5. There should be a clear and arm’s length separation between the factor and any related businesses to avoid the appearance of impropriety or conflict of interest. 6. Factors should disclose information about any brokerages, freight forwarders, carriers, or other transportation related businesses they own or operate, or with whom they are associated. Carrier Qualification - Setup with New Carrier’s. New changes are being made as how to verify and qulify new carriers as a broker. To stay up to date wiht the latest information please visit: https://csa.fmcsa.dot.gov/whats_new.aspx On December 4th 2015 The FAST Act prohibits the display of a property carrier’s relative percen-tile, so on December 4, 2015, FMCSA removed the information prohibited from display, and also removed the absolute measures to allow time to modify the SMS Website to be compliant. As of 2016 brokers CAN NOT use the CSA 2010 methodology to verify carriers. as there are not CSA scores available to the public. As a household goods broker, you may do business only with a motor carrier that has a valid USDOT number and valid household goods motor carrier authority. You may not arrange transportation with motor carriers having only property motor carrier authority or household goods authority that is under suspension or has been revoked. You are encouraged to regularly verify the authority status of motor carriers that you do business with. You can check the status of a motor carrier’s operating authority by going to the FMCSA Licensing and Insurance Web site at http://li-public.fmcsa.dot.gov. The NEW Safety Measurement System SMS 2014 Website. https://ai.fmcsa.dot.gov/SMS/Carrier/DOT_Number_Here/Overview.aspx Safety Ratings Explained. Safety Ratings. A compliance review results in a safety rating for the motor carrier. This rating can be satisfactory, conditional, or unsatisfactory. Satisfactory Rating. A motor carrier that receives a satisfactory rating is found to be in compliance with the applicable FMCSR agencies, state regulations, and hazardous materials regulations, if applicable. Carriers with a satisfactory rating also are found to have adequate safety management controls. The FMSCA will administer a satisfactory rating no later than 60 days following the completion of the compliance review. Unsatisfactory Rating. If a carrier is found to be unsatisfactory, the FMCSA will issue the notification no later than 45 days following the compliance review. Motor carriers receiving an unsatisfactory rating have their operating authority suspended 15 days after the date of the unsatisfactory notice. An out-of-service order is imposed, which prohibits the carrier from operating any motor vehicles in the United States, unless the carrier can prove errors in the compliance review within 10 days of the date of the notice. Within 30 days of receiving the suspension order, the motor carrier must make the necessary cor-rections specified in the order to prevent the provisional operating authority from being revoked. A follow-up review may take place to ensure that all necessary corrective actions were taken. Conditional Rating. A conditional rating is issued by the FMCSA no later than 45 days following a compliance review. When a conditional rating is issued, the motor carrier’s operating authority is revoked and an out-of-service order is imposed unless the carrier takes the necessary corrective action within 30 days of receiving the order. A follow-up review takes place to ensure that corrective actions have been made by the motor carrier. http://safer.fmcsa.dot.gov/CompanySnapshot.aspx How to Check Carrier Safety Ratings and Insurance Coverage. http://www.safersys.org Before you move any load with a carrier, or you set them as a potential carrier to move your loads. A safety check should always be performed through the FMCSA database. To check these ratings, simply type in the MC number the carrier has provided you and wait for the results. The website will provide you with the carrier safety record, insurance coverage, etc. Always check that the information provided to you by the carrier is listed on the ICC Authority. Check Valid Authority Information Here http://www.safersys.org/CompanySnapshot.aspx Check Valid Insurance Here -http://li-public.fmcsa.dot.gov/LIVIEW/pkg_carrquery.prc_carrlist The Golden Rule. Use only carriers with a satisfactory rating or above. Liability insurance of minimum $1,000,000. Cargo insurance of minimum $100,000. Check if Carrier has any recent inspections and number of trucks on fleet. Want to make sure they have some inspections and that they have the correct amount of available trucks on fleet. Occasionally, you will find a motor carrier that will contact you regarding a shipment that has been listed as a conditional or none rotated carrier on the SAFERSYS website. These can be used to move your loads but discretion is advised. HOW TO VERIFY INSURANCE. see graphic in manual.