Welcome to
Comply with procedures in respect of lost,
discrepant and damaged cargo
US 252419
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distributed to any other person without the express written
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Purpose of this Module
• This Module is intended for people who are, or you wish to be involved in the
processes and procedures required in respect of cargo claims. Individuals who are
credited with this Module will be able to, on discovery of loss, discrepancy or
damage to cargo, organise, initiating action and initiate and finalise claims.
The qualifying learner is capable of:
• Initiating action in the event of loss or damage to cargo within carrier's time bar
limitations.
• Endorsing documentation for the purpose of preserving rights of claim.
• Communicating with affected parties.
• Initiating and finalising claim action.
• Maintaining appropriate records
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distributed to any other person without the express written
permission of GMLS Management.
Principles of Marine Insurance
• Unit Standards׃
• 252419 ׃Apply lost, discrepant and
damaged cargo procedures
• 252243 ׃Arrange and administer insurance
of goods in transit
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distributed to any other person without the express written
permission of GMLS Management.
Pillars of Insurance
• Utmost good faith (uberrimae fidei in
contrast to caveat emptor)
• Insurable interest
• Mitigation
• Subrogation
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distributed to any other person without the express written
permission of GMLS Management.
Introduction
• The risk of damage to or loss of goods in international trade is
much bigger than in circumstances when goods are moved locally.
• Customs brokers should inform their clients that most people in
the global supply chain who are responsible for facilitating the
movement of goods operate under conditions that limit their
liability in cases of loss or damage.
• Customs brokers should therefore assist their clients in making the
right decisions when insuring their cargo against loss or damage
while in transit, maintaining appropriate records
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distributed to any other person without the express written
permission of GMLS Management.
SPECIFIC OUTCOME 1
Initiate action in the event of loss or
damage to cargo within carrier’s
time bar limitations.
ASSESSMENT CRITERIA 1
Carrier’s conditions of carriage are identified and
carrier’s time bar limitations specified
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distributed to any other person without the express written
permission of GMLS Management.
Conditions of Carriage
• Goods being transported internationally are under
the constant threat of being stolen, damaged,
pilfered, sent to an unplanned destination, loaded
into the wrong container, placed on an incorrect
vessel, or merely left behind.
• Damage may occur because of poor or inadequate
packaging, careless or irresponsible handling, or
accidents involving the carrying vehicle.
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distributed to any other person without the express written
permission of GMLS Management.
Risk – Transfer of Risk
• Risk in international trade –
– Commercial
– Transit
• Transfer of risk under Incoterms ® 2010
Rules
– Point of Delivery
– Named place
• “C” Incoterms ® 2010 Rules
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distributed to any other person without the express written
permission of GMLS Management.
SPECIFIC OUTCOME 1
Initiate action in the event of loss or
damage to cargo within carrier’s
time bar limitations.
ASSESSMENT CRITERIA 2
Notice of loss or damage to cargo is sent to all
parties in accordance with organisational
procedures
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distributed to any other person without the express written
permission of GMLS Management.
Notice of loss or damage
• A claim is a formal notice to all parties who may have been the cause of loss or
damage to goods that such loss/ damage/ discrepancy has been found and that the
parties concerned will have a formal, priced claim lodged against them in due course.
• It is all very well circulating this notification in the form of a proforma claim, but
what, you may ask, happens now?
• Key to the claims function is record keeping. In order for a claim to be successful, the
following conditions need to have been met:
• There must be objective proof that the loss/ damage discrepancy resulted from
something that happened during the course of transit of the cargo
• There must be documented proof that all possible steps were taken to prevent
further loss or damage once the initial loss or damage had been discovered
• Claims must have been lodged and processed on time, and in accordance with the
requirements of those responsible for insuring the cargo.
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distributed to any other person without the express written
permission of GMLS Management.
Types of Cover 11
• Who is Lloyds?
• Marine Insurance ׃Hull and Cargo
• Introducing Institute Cargo Clauses
– Who is the “Institute”?
• Marine
• Institute Cargo Clauses A, B and C
• Institute Cargo Clauses War
• Institute Cargo Clauses Strikes
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distributed to any other person without the express written
permission of GMLS Management.
Claims Procedure
• Carriers/ forwarders limitations of liability
• Discovery of loss, damage discrepancy
• Pro forma claims
• Priced claims
• Repudiations
• Finalisation of claims
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distributed to any other person without the express written
permission of GMLS Management.
SPECIFIC OUTCOME 1
Initiate action in the event of loss or
damage to cargo within carrier’s
time bar limitations.
ASSESSMENT CRITERIA 3
In the event of damaged cargo, an inspection is
done and noted, photographs taken and filed in
accordance with standard operation procedures
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distributed to any other person without the express written
permission of GMLS Management.
Action in the event of Loss/Damage
• Where proforma claims are circulated by email it is important that such
emails have “Request Delivery Receipt” and/or “Request Read Receipt”
attachments in order to create an electronic record of the fact that the
proforma claim has been received and/ or read by the recipient. Such
receipts need to be filed electronically under the appropriate claim file
reference number.
• These electronic receipts are however insufficient in themselves and
formal acknowledgement is required from all parties concerned. Follow
up procedures therefore need to be in place to ensure that each claim is
followed up regularly.
• These records are critical to proving the validity of a claim.
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distributed to any other person without the express written
permission of GMLS Management.
Provisions of FAIS Act
• What is the FAIS Act? (Financial Advisory
and Intermediary Services Act)
• What is advice on Marine Insurance?
• Who may advise?
• What is the role of the freight forwarder
under FAIS?
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distributed to any other person without the express written
permission of GMLS Management.
The basic picture……
ORIGIN MAIN TRANSPORT DESTINATION
PARTIES
PROCESSES
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distributed to any other person without the express written
permission of GMLS Management.
The International Trade cycle
EXPORTER’S IMPORTER’S
BANK BANK
IMPORTERC C
CLEARING AGENTOHHO
N N
PORT AUTHORITY
CUSTOMS/ STATUTORY BODIESSAAS
O O
CARRIERSLU
I U L
CUSTOMS/ STATUTORY BODIESDLLI
PORT AUTHORITY D
A FORWARDERIE IE A
T T
EXPORTERER
R E
R R
COUNTRY OF ORIGIN COUNTRY OF DESTINATION
RISK MANAGERS- INSURERS, CREDIT AGENCIES ETC.
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distributed to any other person without the express written
permission of GMLS Management.
Customs Impacts for Lost and Abandoned Shipments
q Duty Refund Claims
q Short Shipments
q Supplier Credit Notes
q Damaged Cargo
q Abandonment Procedures
q Landed Costs?
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distributed to any other person without the express written
permission of GMLS Management.
SPECIFIC OUTCOME 1
Initiate action in the event of loss or
damage to cargo within carrier’s
time bar limitations.
ASSESSMENT CRITERIA 4
The client’s priced claim is submitted to all
affected parties
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distributed to any other person without the express written
permission of GMLS Management.
Priced claim submitted to parties
• No payment is made by an underwriter on the strength of a
proforma claim.
• Proforma claims do not make reference to any monetary amount
and insurance companies do not place much emphasis on them.
• The monetary amount expected by the importer or exporter is set
out in a detailed “priced claim”.
• A properly prepared priced claim gives all the necessary financial
details to support the claim. These financial details will include
costs and selling prices.
• Attached to a priced claim will be supporting documents such as
commercial invoices and transport documents.
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distributed to any other person without the express written
permission of GMLS Management.
Documents relevant to priced claim
• A priced claim without supporting documents would be rejected by an insurance
company and by any other party receiving one.
• The actual documents required depends on the nature of claim and the party to
which the claim is being sent.
• It simplifies the processing of claims if a copy of the proforma claim is attached to
the priced claim, which is normally received quite some time after the proforma
claim.
• In some instances it may be necessary to submit a certificate of non-receipt. This
is simply a letter submitted by the claimant, on the claimant company’s letterhead,
stating that the goods in question have not been received.
• Submissions to shipping lines or their agents should always include a “negotiable”
bill of lading. The reason for this is that the shipping line wants to be sure that the
claimant has title to the goods.
• Wherever possible and appropriate to the claim, a detailed packing specification
(list) should also be included.
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distributed to any other person without the express written
permission of GMLS Management.
SPECIFIC OUTCOME 1
Initiate action in the event of loss or
damage to cargo within carrier’s
time bar limitations.
ASSESSMENT CRITERIA 5
Responses received from affected parties are
noted and filed in accordance with SOPs
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distributed to any other person without the express written
permission of GMLS Management.
Record-keeping
• Why is record keeping so important with regard
to the processing of claims in respect of lost,
damaged and discrepant cargo?
• Record-keeping is an important aspect of all
freight forwarding operations but in this case
we need to take particular care.
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distributed to any other person without the express written
permission of GMLS Management.
Why keep records?
• Loss is very significant to any party pursuing that claim - if it were not significant,
the party concerned would not be taking all the trouble to initiate and pursue the
claim.
• The amounts earned by the parties who may have been responsible for the loss,
damage or discrepancy giving rise to claims are very small relative to the amounts
claimed. This means that any party facing such a claim will in all likelihood be facing
a loss far in excess of any revenue he or she may have made, never mind any profit.
It is understandable that any party facing such a claim will do all in their power to
reject the claim. Experience has shown that any insufficient or lost records can
well provide sufficient grounds for claims to be rejected.
• It is not at all for larger claims to be taken to Court with the claimant suing all and
any parties who may have been responsible for causing the loss damage or
discrepancy. Record-keeping must therefore be of the highest standards because
such records represent the evidence which can prove or disprove a claim as well as
identifying the responsible party or parties.
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distributed to any other person without the express written
permission of GMLS Management.
SPECIFIC OUTCOME 1
Initiate action in the event of loss or
damage to cargo within carrier’s
time bar limitations.
ASSESSMENT CRITERIA 6
Initiate and finalise claim action
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distributed to any other person without the express written
permission of GMLS Management.
Final Notice sent requesting finalisation of
claim
• It is very important that such final notices are
submitted in terms of the time bar
requirements of all parties which may have
been responsible.
• Companies must therefore reflect this in their
standing operating procedures which in turn
must be adhered to by those responsible for
carrying out the claims function.
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distributed to any other person without the express written
permission of GMLS Management.
Responsible persons for finalising claims must ensure
• a proforma claim has been issued on all relevant parties to avoid any rejections due
to time bar considerations
• all relevant documents are collected so that they can be attached to the priced claim
submitted to the insurers
• tracers on lost goods are initiated and followed up until satisfactory answers have
been received
• a claim file is opened and maintained in which copies of all correspondence are kept
and details of all communications are recorded
• in the case of clearing & forwarding agents, proper and regular contact is
maintained with the insured to ensure that a priced claim is produced and
submitted without delay.
• any queries originating from the insurance company or insurance broker are dealt
with promptly and efficiently
• regular communication with the insurance broker and insurance company is
maintained until payment of the claim has been received or one of the two other
alternatives listed under 2 and 3 above has taken place.
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distributed to any other person without the express written
permission of GMLS Management.
Questions & Answers
For further information on this and
other Training Courses offered by
GMLS, please contact us on:-
Website: www.gmls.co.za
Email: info@gmls.co.za
Office Mobile: +27 82 852 3626
Tel: +27 44 813 0052
or +27 11 425 1840
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distributed to any other person without the express written
permission of GMLS Management.