1 00:00:07,600 --> 00:00:11,440 Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast. 2 00:00:11,480 --> 00:00:15,480 Speaker 1: I'm your host, Lee Klascal, senior freight transportation logistics analysts 3 00:00:15,480 --> 00:00:19,280 Speaker 1: at Bloomberg Intelligence, Bloomberg's in house research arm of almost 4 00:00:19,280 --> 00:00:23,040 Speaker 1: five hundred analysts and strategists before diving in little public 5 00:00:23,079 --> 00:00:26,600 Speaker 1: service announcement. Your support is instrumental to keep bringing great 6 00:00:26,720 --> 00:00:28,960 Speaker 1: guests onto the podcast, like the one we have today. 7 00:00:29,280 --> 00:00:32,320 Speaker 1: If you haven't already, please do take a moment to 8 00:00:32,479 --> 00:00:36,479 Speaker 1: follow rate and share the Talking Transports Podcast with your friends. 9 00:00:36,960 --> 00:00:40,839 Speaker 1: We appreciate your support. I'm very excited to have Shannon Schmidt, 10 00:00:41,200 --> 00:00:45,880 Speaker 1: Nicora International's North American president. Nicora is a division of Kunanagal. 11 00:00:46,240 --> 00:00:49,920 Speaker 1: Kunanagle is one of the largest freight forwarders in the world. 12 00:00:50,120 --> 00:00:54,040 Speaker 1: In trades under the ticker knin space SW on the 13 00:00:54,080 --> 00:00:57,400 Speaker 1: Bloomberg terminal. The company has a market cap around thirty 14 00:00:57,400 --> 00:01:01,960 Speaker 1: five billion. Welcome to the Talking tan Sport Podcast. Shannon Hiley, 15 00:01:02,400 --> 00:01:04,160 Speaker 1: It's good to see you. It's been a while. I 16 00:01:04,200 --> 00:01:06,440 Speaker 1: think last time we saw each other was in Philadelphia 17 00:01:06,440 --> 00:01:09,440 Speaker 1: at the Health and Personal Care Logistics Conference. 18 00:01:09,880 --> 00:01:12,560 Speaker 2: Absolutely, yes, it's been a minute, but good to see 19 00:01:12,600 --> 00:01:13,080 Speaker 2: you again. 20 00:01:13,360 --> 00:01:16,480 Speaker 1: It's good to see you as well. So why don't 21 00:01:16,520 --> 00:01:19,960 Speaker 1: you tell folks a little bit about you and Noicora? 22 00:01:20,720 --> 00:01:25,120 Speaker 2: Sure? So, I have been with Nicora for the last 23 00:01:25,200 --> 00:01:28,720 Speaker 2: four years. I started in July of twenty twenty. Prior 24 00:01:28,760 --> 00:01:32,920 Speaker 2: to that, I was with our parent company of kunan 25 00:01:32,920 --> 00:01:36,240 Speaker 2: Ogle and I've been with the organization as a whole 26 00:01:37,080 --> 00:01:40,840 Speaker 2: for going on thirteen years. My background is a little 27 00:01:40,840 --> 00:01:45,279 Speaker 2: bit unusual for the insurance space. I actually started out 28 00:01:45,720 --> 00:01:50,360 Speaker 2: in logistics and transportation right out of college and was 29 00:01:50,400 --> 00:01:52,920 Speaker 2: in that space up until the time that I joined Nicora. 30 00:01:53,040 --> 00:01:56,640 Speaker 2: So Nicora was my first foray into the insurance world 31 00:01:56,720 --> 00:02:00,760 Speaker 2: and it has been a really exciting and enjoyable ride, 32 00:02:00,800 --> 00:02:04,360 Speaker 2: i have to say, and just really excited to be 33 00:02:04,400 --> 00:02:05,720 Speaker 2: on the side of the business. 34 00:02:06,040 --> 00:02:08,160 Speaker 1: And can you talk a little bit about nkor, like, 35 00:02:08,360 --> 00:02:12,280 Speaker 1: you know, where are you positioned. Why does kuninagal have 36 00:02:12,600 --> 00:02:14,959 Speaker 1: an insurance division? 37 00:02:15,520 --> 00:02:20,639 Speaker 2: Sure? So, physically I'm positioned in the US. I'm responsible 38 00:02:20,680 --> 00:02:25,640 Speaker 2: for North America. As you mentioned earlier, We're headquartered in Shindealigi, Switzerland, 39 00:02:26,680 --> 00:02:31,720 Speaker 2: actually in the same building as kunanagal Ag. We were 40 00:02:31,760 --> 00:02:35,720 Speaker 2: founded in nineteen seventy two by Kunanagle, so we are 41 00:02:35,880 --> 00:02:40,839 Speaker 2: completely homegrown. We started in Canada in that year and 42 00:02:41,200 --> 00:02:44,240 Speaker 2: today we have offices in over thirty countries, with like 43 00:02:44,280 --> 00:02:46,880 Speaker 2: I mentioned, our head office being in Shindoligi, which is 44 00:02:46,960 --> 00:02:52,840 Speaker 2: near Zurich. Given our heritage and the transportation industry, we 45 00:02:52,960 --> 00:02:56,000 Speaker 2: have a strong specialty in the design and management of 46 00:02:56,040 --> 00:03:00,400 Speaker 2: cargo insurance solutions, but we also offer a widespec of 47 00:03:00,400 --> 00:03:06,359 Speaker 2: insurance solutions that include things like cyber insurance, commercial general liability, 48 00:03:06,520 --> 00:03:08,880 Speaker 2: property insurance, and so on and so forth. 49 00:03:09,280 --> 00:03:14,520 Speaker 1: And you guys, are your customers go beyond just Kudinogle customers. Correct. 50 00:03:14,800 --> 00:03:18,840 Speaker 2: Absolutely. While we do business with Kunanagle and with the 51 00:03:18,919 --> 00:03:22,720 Speaker 2: other companies that fall under the Kunanogle group, we have 52 00:03:23,200 --> 00:03:26,800 Speaker 2: our own group of customers as well, and we primarily 53 00:03:27,800 --> 00:03:30,880 Speaker 2: are B to B so our core competency is to 54 00:03:30,960 --> 00:03:34,400 Speaker 2: support companies of all sizes in the design and building 55 00:03:34,480 --> 00:03:40,000 Speaker 2: of cost effective commercial insurance programs, which includes risk consulting 56 00:03:40,600 --> 00:03:42,640 Speaker 2: commercial insurance solutions. 57 00:03:43,560 --> 00:03:45,520 Speaker 1: One of the reasons why I want to have you 58 00:03:45,640 --> 00:03:48,760 Speaker 1: on is that we're on a panel together. And don't 59 00:03:48,760 --> 00:03:53,240 Speaker 1: take this personally, but I was like, wow, insurance is 60 00:03:53,240 --> 00:03:55,280 Speaker 1: a lot more interesting than I thought it was going 61 00:03:55,320 --> 00:03:58,280 Speaker 1: to be. You had a lot of great points because 62 00:03:58,280 --> 00:04:00,920 Speaker 1: there's so much craziness going going on in the world 63 00:04:00,960 --> 00:04:04,720 Speaker 1: where you know, risks are increasing, and you know, proper 64 00:04:04,720 --> 00:04:08,440 Speaker 1: insurance is obviously becoming more and more important for companies. 65 00:04:08,880 --> 00:04:12,000 Speaker 1: It's obviously some a risk that, you know, something that 66 00:04:12,040 --> 00:04:15,119 Speaker 1: people were trying to diminish the risks of all the time, 67 00:04:15,160 --> 00:04:17,039 Speaker 1: but it seems like more and more importance with the 68 00:04:17,080 --> 00:04:19,359 Speaker 1: crisis and the Red Sea. Can you talk about the 69 00:04:19,400 --> 00:04:24,240 Speaker 1: insurance markets where are we today? How has that changed since, 70 00:04:24,400 --> 00:04:27,200 Speaker 1: you know, since the chaos going on the Red Sea? 71 00:04:27,320 --> 00:04:28,480 Speaker 2: Maybe even like. 72 00:04:28,600 --> 00:04:31,880 Speaker 1: What did the pandemic do? Did change insurance? Just talk 73 00:04:31,880 --> 00:04:35,320 Speaker 1: about the insurance market for the marine shipping industry. 74 00:04:36,080 --> 00:04:38,320 Speaker 2: Sure, So I'm actually going to go back even a 75 00:04:38,360 --> 00:04:42,320 Speaker 2: little further beyond the pandemic and just point out that 76 00:04:43,120 --> 00:04:47,520 Speaker 2: marine cargo insurance is actually the oldest form of insurance 77 00:04:47,520 --> 00:04:50,800 Speaker 2: in the world. It was started in the thirteen hundreds. 78 00:04:50,800 --> 00:04:54,640 Speaker 2: That's the first policy that was recorded, and actually there's 79 00:04:55,040 --> 00:05:01,359 Speaker 2: evidence that it could even be before BC at this point, 80 00:05:01,440 --> 00:05:05,719 Speaker 2: so not really sure. Of course, the Phoenicians had some 81 00:05:07,960 --> 00:05:13,080 Speaker 2: data from back in the day about some early early recordings, 82 00:05:13,120 --> 00:05:19,359 Speaker 2: but it's really a fascinating industry. So kind of fast 83 00:05:19,360 --> 00:05:23,200 Speaker 2: forwarding back to your question of the market today. In 84 00:05:24,040 --> 00:05:27,440 Speaker 2: twenty twenty three, the market was about twenty point eight 85 00:05:27,600 --> 00:05:33,720 Speaker 2: billion US dollars of premium for the insurance market, and 86 00:05:34,040 --> 00:05:37,040 Speaker 2: we're expecting that to grow to about thirty four billion 87 00:05:37,120 --> 00:05:41,080 Speaker 2: dollars by twenty thirty two. There have been ebbs and 88 00:05:41,120 --> 00:05:45,800 Speaker 2: flows obviously with that, because with the pandemic, we did 89 00:05:45,839 --> 00:05:50,880 Speaker 2: see quite a bit of a diminished market in that 90 00:05:51,000 --> 00:05:53,600 Speaker 2: year based on the fact that trade had just sort 91 00:05:53,640 --> 00:05:58,800 Speaker 2: of completely stalled at one point. In the years after 92 00:05:59,120 --> 00:06:03,080 Speaker 2: twenty twenty, we saw a huge boom as people who 93 00:06:03,120 --> 00:06:06,960 Speaker 2: were kind of trapped in their house for the quarantining 94 00:06:07,040 --> 00:06:09,600 Speaker 2: and so on and so forth, we're buying things. There 95 00:06:09,680 --> 00:06:13,920 Speaker 2: was a lot of purchases being made by the end 96 00:06:13,960 --> 00:06:16,800 Speaker 2: consumer that we're leading to a lot of increases in 97 00:06:16,839 --> 00:06:20,159 Speaker 2: the transportation industry. So we saw our market, at least 98 00:06:20,160 --> 00:06:23,680 Speaker 2: in the marine cargo space begin to increase, and interesting 99 00:06:23,760 --> 00:06:27,040 Speaker 2: also in the property space for commercial businesses in their 100 00:06:27,080 --> 00:06:30,000 Speaker 2: warehouses also we saw boom in the market there as well. 101 00:06:30,760 --> 00:06:35,920 Speaker 2: So the reason that we are now seeing going forward 102 00:06:36,000 --> 00:06:39,880 Speaker 2: from twenty twenty three an increase in the market is 103 00:06:39,920 --> 00:06:44,120 Speaker 2: because of two main factors. Number One, global trade is 104 00:06:44,160 --> 00:06:49,440 Speaker 2: continuing to increase, and that's the biggest factor. And then secondly, 105 00:06:50,080 --> 00:06:52,920 Speaker 2: because of a lot of the environmental and when I 106 00:06:52,960 --> 00:06:56,719 Speaker 2: say environmental, I will go into that here shortly, the 107 00:06:56,839 --> 00:07:01,280 Speaker 2: larger environmental scale of things, companies have paid a lot 108 00:07:01,320 --> 00:07:04,520 Speaker 2: more attention to the benefits of insurance overall and their 109 00:07:04,600 --> 00:07:10,200 Speaker 2: risk supply chain risk management strategy, largely in part to 110 00:07:10,560 --> 00:07:15,840 Speaker 2: the fact that just you know, last year, over three 111 00:07:15,920 --> 00:07:19,320 Speaker 2: hundred and eighty billion dollars worth of goods were lost 112 00:07:19,400 --> 00:07:23,720 Speaker 2: globally just due to natural disasters and other environmental calamities. 113 00:07:24,320 --> 00:07:29,120 Speaker 2: So as you can see, with the increase of certain 114 00:07:29,240 --> 00:07:33,120 Speaker 2: risks that are out there, companies are really standing up 115 00:07:33,160 --> 00:07:36,560 Speaker 2: and paying more attention to how to expand their supply 116 00:07:36,640 --> 00:07:43,280 Speaker 2: chain risk strategy to better encompass insurance as a solution. Wow. 117 00:07:43,320 --> 00:07:45,200 Speaker 1: And is that three hundred and eighty billion dollars Is 118 00:07:45,240 --> 00:07:47,960 Speaker 1: that just on the water or that's just globally like 119 00:07:48,040 --> 00:07:50,520 Speaker 1: it could be going to were ahouse the tornado rips up. 120 00:07:51,240 --> 00:07:55,600 Speaker 2: That's globally for any form of transportation, so land air ce. 121 00:07:56,480 --> 00:07:59,680 Speaker 1: Wow, that's that's incredible. And then also you know earlier 122 00:07:59,760 --> 00:08:01,960 Speaker 1: you may that you see the market growing to thirty 123 00:08:01,960 --> 00:08:04,400 Speaker 1: four billion by twenty thirty two. So is that the 124 00:08:04,440 --> 00:08:09,560 Speaker 1: marine cargo insurance market you were talking about specifically, So we. 125 00:08:09,600 --> 00:08:12,760 Speaker 2: Speak about marine cargo insurance, it's actually a little misleading. 126 00:08:12,880 --> 00:08:16,800 Speaker 2: Marine cargo insurance actually is all forms of transportation. So 127 00:08:16,960 --> 00:08:18,240 Speaker 2: even though we refer. 128 00:08:18,080 --> 00:08:21,240 Speaker 1: To the word marine, you're blowing my mind right now. 129 00:08:21,360 --> 00:08:25,320 Speaker 2: Yeah, and it incorporates all air road and see, yes. 130 00:08:25,320 --> 00:08:29,720 Speaker 1: That's good to know. And you know, I guess the 131 00:08:29,760 --> 00:08:34,400 Speaker 1: market you say is increasing. So is that because people 132 00:08:34,400 --> 00:08:37,679 Speaker 1: are buying more and more coverage or because rates are 133 00:08:37,679 --> 00:08:42,200 Speaker 1: going up? What's driving that large increase from twenty point 134 00:08:42,240 --> 00:08:45,400 Speaker 1: eight billion to thirty four billion by twenty thirty two. 135 00:08:45,640 --> 00:08:48,480 Speaker 2: There's a few factors that are going into that. Number One, 136 00:08:48,559 --> 00:08:54,160 Speaker 2: if the cost of transportation itself increases, the premium organically 137 00:08:54,200 --> 00:08:57,559 Speaker 2: also increases. And the reason for that is because when 138 00:08:57,559 --> 00:09:02,880 Speaker 2: a company purchases marine cargo insurance, they are covered for 139 00:09:03,280 --> 00:09:06,960 Speaker 2: the cost of the goods themselves, the freight that they're purchasing, 140 00:09:07,480 --> 00:09:09,800 Speaker 2: if they had to pay any duties or taxes to 141 00:09:09,960 --> 00:09:13,480 Speaker 2: end of the country that they're coming into, plus ten percent. 142 00:09:13,760 --> 00:09:17,920 Speaker 2: So as the cost of freight increases, the premium automatically 143 00:09:17,920 --> 00:09:20,560 Speaker 2: increases as well. Because the purpose of insurance is to 144 00:09:20,600 --> 00:09:25,120 Speaker 2: make a company whole. So in part it is due 145 00:09:25,160 --> 00:09:33,280 Speaker 2: to freight increasing itself. It's also due to the freight 146 00:09:33,480 --> 00:09:37,560 Speaker 2: is increasing because of factors that are outside of the 147 00:09:37,559 --> 00:09:41,560 Speaker 2: insurance market, obviously supply and demand when it comes to 148 00:09:42,000 --> 00:09:47,079 Speaker 2: the equipment itself. But the market is increasing because of 149 00:09:47,160 --> 00:09:51,800 Speaker 2: the freight costs are increasing. In addition to that, with 150 00:09:52,040 --> 00:09:55,520 Speaker 2: global trade increasing, the market's also increasing with that. So 151 00:09:56,480 --> 00:09:59,679 Speaker 2: the more customers are importing, exporting moving goods within their 152 00:09:59,679 --> 00:10:03,480 Speaker 2: own entries and so on and so forth, that isn't making 153 00:10:03,559 --> 00:10:08,920 Speaker 2: the market increase. And then the greater attention to insurance 154 00:10:08,960 --> 00:10:13,640 Speaker 2: itself as a solution for supply chain risk mitigation strategy. 155 00:10:14,160 --> 00:10:17,480 Speaker 1: Right, And so I guess the large increase that we've 156 00:10:17,480 --> 00:10:21,800 Speaker 1: seen in liner rates this year have had a positive 157 00:10:21,800 --> 00:10:26,880 Speaker 1: impact on insurance rates going. When I say positive impact, 158 00:10:26,920 --> 00:10:29,679 Speaker 1: I mean from your standpoint, not maybe from the buyers standpoint. 159 00:10:29,960 --> 00:10:33,200 Speaker 1: So insurance is going to be more expensive because of that, sure, 160 00:10:33,559 --> 00:10:34,200 Speaker 1: And I. 161 00:10:34,200 --> 00:10:37,600 Speaker 2: Like to tell our customers because of the increases in 162 00:10:37,640 --> 00:10:40,760 Speaker 2: the freight costs, even more important is it to have 163 00:10:40,840 --> 00:10:44,640 Speaker 2: insurance because it's protecting that investment of the freight itself 164 00:10:44,960 --> 00:10:48,280 Speaker 2: and not just the value of the cargo. So with 165 00:10:48,360 --> 00:10:51,840 Speaker 2: the greater investment that they're making in the transportation of 166 00:10:51,880 --> 00:10:56,640 Speaker 2: the goods, becomes more of a reason to have the 167 00:10:56,640 --> 00:10:58,200 Speaker 2: insurance on the cargo as well. 168 00:11:00,800 --> 00:11:05,680 Speaker 1: You know, because conan Ogle does all surface difference. You know, 169 00:11:05,679 --> 00:11:08,120 Speaker 1: they do surface, they do air, they do ocean forwarding, 170 00:11:08,160 --> 00:11:10,720 Speaker 1: they kind of they kind of do it all. When 171 00:11:11,400 --> 00:11:13,880 Speaker 1: you know, in the insurance market, is is there much 172 00:11:13,920 --> 00:11:18,880 Speaker 1: difference for air cargo versus ocean cargo in terms of 173 00:11:18,920 --> 00:11:22,800 Speaker 1: either the market or the nuances of the insurance. I mean, 174 00:11:23,000 --> 00:11:25,360 Speaker 1: you know, get as wonky as you need to. 175 00:11:25,440 --> 00:11:28,200 Speaker 2: Here, sure, So, I mean the vast majority of the 176 00:11:28,240 --> 00:11:32,240 Speaker 2: cargo that's insured is moving on the water. It also 177 00:11:32,440 --> 00:11:36,560 Speaker 2: is a riskier form of transportation because there are more 178 00:11:37,559 --> 00:11:41,360 Speaker 2: handling points. There's also a longer transit. With a longer 179 00:11:41,400 --> 00:11:46,839 Speaker 2: transit comes more risk. So air freight rates typically are 180 00:11:47,080 --> 00:11:53,040 Speaker 2: significantly less than the other modes of transportation. Road typically 181 00:11:53,160 --> 00:11:57,880 Speaker 2: has the highest rates in the marketplace, mainly because there 182 00:11:57,960 --> 00:12:00,600 Speaker 2: is the most risk associated with that mode of insportation. 183 00:12:01,160 --> 00:12:04,720 Speaker 1: And is that risk people stealing stuff or just accidents 184 00:12:04,760 --> 00:12:06,080 Speaker 1: on the highways. 185 00:12:05,880 --> 00:12:09,080 Speaker 2: It's really all of the above. It's it's theft. It's 186 00:12:09,880 --> 00:12:12,719 Speaker 2: the fact that you know, there's there's accidents on the 187 00:12:12,800 --> 00:12:18,400 Speaker 2: roads every day. There are natural disasters like tornadoes and 188 00:12:18,520 --> 00:12:22,880 Speaker 2: wind and rain and lightning and other things that can 189 00:12:22,920 --> 00:12:27,240 Speaker 2: befall a truck driver. Sometimes we've run into situations where 190 00:12:27,280 --> 00:12:32,240 Speaker 2: there's organized crime related to the truck drivers themselves. So 191 00:12:32,320 --> 00:12:35,200 Speaker 2: there's all kinds of different factors that go into road 192 00:12:35,240 --> 00:12:41,240 Speaker 2: that aren't necessarily applicable to the air and the EC space. 193 00:12:41,800 --> 00:12:44,440 Speaker 1: Yeah, I find that the conferences that I go to 194 00:12:44,600 --> 00:12:47,120 Speaker 1: in the industry, people that I speak to, how more 195 00:12:47,160 --> 00:12:50,400 Speaker 1: and more theft is kind of bubbling up to kind 196 00:12:50,440 --> 00:12:54,160 Speaker 1: of some of the biggest issues facing the industry, especially 197 00:12:54,240 --> 00:12:59,200 Speaker 1: as it relates to trucking. So that's that's pretty interesting. 198 00:12:59,240 --> 00:13:01,360 Speaker 1: And we've seen truck rates here in the US go 199 00:13:01,520 --> 00:13:05,160 Speaker 1: up very very much so in the last couple of years. 200 00:13:05,760 --> 00:13:08,520 Speaker 2: Absolutely, and I feel like I'm doing a disservice to 201 00:13:08,640 --> 00:13:13,719 Speaker 2: the transportation solution of rail by not mentioning it. But 202 00:13:13,800 --> 00:13:17,439 Speaker 2: also rail is another area where we've seen a huge 203 00:13:17,480 --> 00:13:21,280 Speaker 2: spike in theft, particularly on the West Coast in the 204 00:13:21,360 --> 00:13:25,200 Speaker 2: last couple of years. We've seen a lot of pillaging 205 00:13:25,240 --> 00:13:27,320 Speaker 2: of those containers that are moving on the rail there 206 00:13:27,360 --> 00:13:31,240 Speaker 2: as well. So that's another area that's quite risky when 207 00:13:31,280 --> 00:13:33,280 Speaker 2: it comes to especially theft. 208 00:13:33,800 --> 00:13:37,120 Speaker 1: And so you know, you're mentioning that trucking insurance tends 209 00:13:37,120 --> 00:13:39,640 Speaker 1: to be more expensive than ocean, which tends to be 210 00:13:39,640 --> 00:13:43,200 Speaker 1: more expensive than air. Is rail in between trucking and 211 00:13:43,240 --> 00:13:46,480 Speaker 1: ocean in terms of the cost of insurance. 212 00:13:46,640 --> 00:13:51,480 Speaker 2: Rail will typically fall somewhere in the realm of the 213 00:13:51,520 --> 00:13:53,480 Speaker 2: truck rates when it comes to insurance. 214 00:13:54,200 --> 00:13:59,440 Speaker 1: Oh okay, great. So when we were on that paddle 215 00:13:59,440 --> 00:14:03,800 Speaker 1: in philadel you kind of like really educated me on 216 00:14:03,840 --> 00:14:07,480 Speaker 1: a couple of things. One of those things was general average, 217 00:14:08,440 --> 00:14:10,320 Speaker 1: you know, and that came up because of what happened 218 00:14:10,559 --> 00:14:16,600 Speaker 1: with the Baltimore bridge collapse. Can you talk or educate 219 00:14:17,000 --> 00:14:21,440 Speaker 1: the listeners here what general average is and kind of 220 00:14:21,440 --> 00:14:24,640 Speaker 1: its impact on the situation down in Baltimore? 221 00:14:25,000 --> 00:14:31,080 Speaker 2: Sure? So, General average is an old, ancient maritime law 222 00:14:31,880 --> 00:14:35,240 Speaker 2: that began hundreds of years ago because there was a 223 00:14:35,400 --> 00:14:41,240 Speaker 2: need to create some protection for the steamship lines in 224 00:14:42,080 --> 00:14:49,160 Speaker 2: the liability that they may have there are Back back then, 225 00:14:49,520 --> 00:14:53,120 Speaker 2: there were so many situations where it was unsafe waters 226 00:14:53,320 --> 00:14:57,120 Speaker 2: or wind or something along those lines, and they may 227 00:14:57,240 --> 00:15:00,640 Speaker 2: have to they being the crew may have to jettison 228 00:15:01,320 --> 00:15:03,640 Speaker 2: some cargo over the rail of the ship in order 229 00:15:03,680 --> 00:15:08,040 Speaker 2: to keep the crew safe to make the journey, and 230 00:15:08,120 --> 00:15:11,200 Speaker 2: there are a lot of factors that would go into that. 231 00:15:11,680 --> 00:15:13,960 Speaker 2: The crew would have to do what they had to 232 00:15:13,960 --> 00:15:16,280 Speaker 2: do to keep them some safe, to keep the ship safe, 233 00:15:16,600 --> 00:15:20,080 Speaker 2: and to get the vast majority of the goods to 234 00:15:20,120 --> 00:15:24,440 Speaker 2: where they're going. Over time, that's evolved. Obviously there's a 235 00:15:24,520 --> 00:15:28,240 Speaker 2: lot more factors that go into the movement of goods today, 236 00:15:28,800 --> 00:15:33,000 Speaker 2: but the sentiment of the idea of general average remains 237 00:15:33,040 --> 00:15:38,480 Speaker 2: the same. How it works is it just basically says, hey, 238 00:15:38,680 --> 00:15:41,440 Speaker 2: the steamship line shouldn't have to take on the burden 239 00:15:41,520 --> 00:15:44,680 Speaker 2: of this cost on their own. If something happens between 240 00:15:44,720 --> 00:15:47,640 Speaker 2: point A and point B on the journey of this vessel, 241 00:15:47,760 --> 00:15:51,880 Speaker 2: if we have to jettison cargo, or if the say, 242 00:15:51,920 --> 00:15:55,720 Speaker 2: for example, ship runs aground or gets stuck in the 243 00:15:55,760 --> 00:15:59,360 Speaker 2: Suez Canal, or I'm just thinking of some other things 244 00:15:59,360 --> 00:16:03,240 Speaker 2: that have happened to over the years recently, then everyone 245 00:16:03,320 --> 00:16:05,720 Speaker 2: on the ship who has stake in this cargo is 246 00:16:05,760 --> 00:16:08,840 Speaker 2: going to pitch in and they are going to help 247 00:16:08,920 --> 00:16:16,040 Speaker 2: cover the cost of whatever has happened. There is a liability. 248 00:16:16,240 --> 00:16:18,160 Speaker 2: I shouldn't use the word liability in this case. There 249 00:16:18,200 --> 00:16:23,280 Speaker 2: is a responsibility of the steamship line to actually declare 250 00:16:23,400 --> 00:16:28,800 Speaker 2: general average, and what that would require is that there 251 00:16:28,840 --> 00:16:32,400 Speaker 2: isn't a gross negligence on the part of the steamship 252 00:16:32,440 --> 00:16:37,720 Speaker 2: line in declaring this before they do that. So perfect 253 00:16:37,800 --> 00:16:41,640 Speaker 2: example of where that may not work and we're waiting 254 00:16:41,720 --> 00:16:46,240 Speaker 2: to see is the Baltimore Bridge situation. So, Lee, I'm 255 00:16:46,240 --> 00:16:49,400 Speaker 2: sure you've gotten your listeners up to speed with what happened, 256 00:16:49,400 --> 00:16:51,800 Speaker 2: but just in case somebody's tuning in for the first time, 257 00:16:51,840 --> 00:16:55,920 Speaker 2: I'll kind of explain it. So in late March, the 258 00:16:57,680 --> 00:17:03,160 Speaker 2: vessel named the Dolly struck Francis Scott Key Bridge in Baltimore, 259 00:17:03,720 --> 00:17:08,159 Speaker 2: and because of that, there was a destruction of the 260 00:17:08,160 --> 00:17:12,119 Speaker 2: bridge itself. There were six road workers who were killed 261 00:17:12,960 --> 00:17:17,639 Speaker 2: when the vessel struck the bridge. There was damage to 262 00:17:17,720 --> 00:17:22,320 Speaker 2: the ship itself, there was cargo that was damage based 263 00:17:22,359 --> 00:17:24,679 Speaker 2: on the bridge falling on the ship, and as you 264 00:17:24,720 --> 00:17:29,919 Speaker 2: can imagine, this was just a huge disaster when it 265 00:17:29,960 --> 00:17:35,120 Speaker 2: comes to lots of different things, death, destruction of the bridge, 266 00:17:35,440 --> 00:17:41,280 Speaker 2: the ship, and the cargo. So there have been investigations 267 00:17:41,359 --> 00:17:43,960 Speaker 2: from the time that this happened. As to why did 268 00:17:44,000 --> 00:17:50,760 Speaker 2: this happen, the ship owner has declared general average, but 269 00:17:50,880 --> 00:17:56,200 Speaker 2: there is an investigation that is going on today by 270 00:17:56,240 --> 00:17:59,440 Speaker 2: the National Transportation Safety Board, and that's been an ongoing 271 00:17:59,480 --> 00:18:03,479 Speaker 2: investigation since the time that happened. They just released a 272 00:18:03,520 --> 00:18:08,640 Speaker 2: report on Monday that the reason that the ship did 273 00:18:08,720 --> 00:18:13,840 Speaker 2: crash into the bridge is because there was a blackout 274 00:18:14,400 --> 00:18:17,960 Speaker 2: because there were two breakers that were tripped unexpectedly right 275 00:18:18,080 --> 00:18:21,440 Speaker 2: before the vessel crashed into the bridge. It was there, 276 00:18:21,560 --> 00:18:26,520 Speaker 2: estimating about three ship links distance between where the vessel 277 00:18:26,640 --> 00:18:29,320 Speaker 2: was at that point and where the bridge was was 278 00:18:29,359 --> 00:18:34,760 Speaker 2: when that happened. Interestingly, there also were two blackouts the 279 00:18:34,880 --> 00:18:38,400 Speaker 2: day before, and what they found out was that one 280 00:18:38,440 --> 00:18:42,160 Speaker 2: occurred because a crew member mistakenly blocked the generator's exhaust 281 00:18:42,320 --> 00:18:46,240 Speaker 2: gas stack, and the second occurred because of insufficient fuel 282 00:18:46,280 --> 00:18:49,639 Speaker 2: pressure on the ship. So it's been a really interesting 283 00:18:49,760 --> 00:18:52,080 Speaker 2: journey to kind of find out what really is going 284 00:18:52,119 --> 00:18:56,800 Speaker 2: on here, and of course the vessel owner does not 285 00:18:57,040 --> 00:19:01,760 Speaker 2: want to have the liability for that. Just the construction 286 00:19:01,920 --> 00:19:05,120 Speaker 2: of the bridge itself, the cost of that is estimated 287 00:19:05,160 --> 00:19:08,960 Speaker 2: to be right around one point nine billion dollars just 288 00:19:09,119 --> 00:19:12,160 Speaker 2: to rebuild that ship. Or I'm sorry that bridge. Then 289 00:19:12,200 --> 00:19:15,040 Speaker 2: of course there's the damage to the ship, like I mentioned, 290 00:19:15,160 --> 00:19:18,320 Speaker 2: the cargo itself, and then the families of these six 291 00:19:19,680 --> 00:19:24,160 Speaker 2: road workers are going to be looking for some legal 292 00:19:24,240 --> 00:19:28,760 Speaker 2: restitution as well. So it's going to be I think 293 00:19:28,800 --> 00:19:32,080 Speaker 2: a long journey to find out whether or not General 294 00:19:32,119 --> 00:19:36,600 Speaker 2: Average will will actually stick on this one, because there's 295 00:19:36,640 --> 00:19:43,320 Speaker 2: some finger pointing going on. Interestingly, this was chartered by 296 00:19:44,160 --> 00:19:46,919 Speaker 2: Marisk steamship Line as well, so was not their vessel. 297 00:19:47,240 --> 00:19:50,720 Speaker 2: They chartered the vessel from the ship owner who owned 298 00:19:50,720 --> 00:19:53,440 Speaker 2: the Dolly, so there's a few fingers pointing there as well. 299 00:19:54,240 --> 00:19:58,280 Speaker 2: So it's a really dynamic story that's continuing to evolve, 300 00:19:59,000 --> 00:20:02,399 Speaker 2: and I definitely encourage everyone to continue to stay on 301 00:20:02,480 --> 00:20:08,280 Speaker 2: top of how that's looking because if General Average does 302 00:20:08,680 --> 00:20:12,800 Speaker 2: remain in play, this could be very expensive for those 303 00:20:12,840 --> 00:20:13,880 Speaker 2: who had cargo. 304 00:20:13,640 --> 00:20:16,800 Speaker 1: On that vessel, right, And so obviously it sounds like 305 00:20:17,000 --> 00:20:20,000 Speaker 1: this is going to be held up in the courts 306 00:20:20,080 --> 00:20:25,720 Speaker 1: for a long time before a final decision or is 307 00:20:25,800 --> 00:20:29,159 Speaker 1: going to be made. But if General Average were to 308 00:20:29,200 --> 00:20:32,840 Speaker 1: come true, if I understand the explanation of it, that 309 00:20:32,960 --> 00:20:35,320 Speaker 1: means if you were a company and you had a 310 00:20:35,320 --> 00:20:40,000 Speaker 1: container on that ship, you'd be on the hook for 311 00:20:40,720 --> 00:20:44,600 Speaker 1: all the liability associated with the accident for a certain 312 00:20:44,600 --> 00:20:45,640 Speaker 1: percentage I would gather. 313 00:20:46,359 --> 00:20:48,840 Speaker 2: What will happen is there'll be a dollar amount that's 314 00:20:48,920 --> 00:20:53,680 Speaker 2: released as the total amount that has been added up 315 00:20:53,800 --> 00:20:57,040 Speaker 2: based on all the different factors, and then they take 316 00:20:57,080 --> 00:21:00,320 Speaker 2: a look at who has what stakes. So in other words, 317 00:21:00,320 --> 00:21:03,760 Speaker 2: if the value of your goods equate to one percent 318 00:21:03,920 --> 00:21:07,800 Speaker 2: of whatever that dollar or whatever the total values are 319 00:21:08,880 --> 00:21:13,160 Speaker 2: prior to the accident, then you would be responsible for 320 00:21:13,359 --> 00:21:16,639 Speaker 2: one percent of whatever that dollar amount is that is 321 00:21:16,880 --> 00:21:20,480 Speaker 2: due to the accident. So the higher the value the goods, 322 00:21:20,520 --> 00:21:23,480 Speaker 2: the more containers a company typically has on a ship 323 00:21:23,560 --> 00:21:27,880 Speaker 2: at any given time, that will increase the amount that 324 00:21:27,920 --> 00:21:30,320 Speaker 2: they would end up paying in those situations. 325 00:21:30,840 --> 00:21:34,080 Speaker 1: And this is the risk that people are mitigating with insurance, right, 326 00:21:34,160 --> 00:21:36,920 Speaker 1: So it's not necessarily the shipper is on the hook. 327 00:21:37,000 --> 00:21:39,800 Speaker 1: Their insurance company would be on the hook. 328 00:21:39,960 --> 00:21:42,960 Speaker 2: Yes, And therein lies a lot of the reason why 329 00:21:43,000 --> 00:21:46,359 Speaker 2: more and more companies are taking a look at insurance 330 00:21:46,440 --> 00:21:50,480 Speaker 2: as a solution for supply chain risk. Even just a 331 00:21:50,480 --> 00:21:52,840 Speaker 2: few years ago, you talked to a company and they 332 00:21:52,840 --> 00:21:56,040 Speaker 2: may say, oh, we're self insured, and traditionally what that 333 00:21:56,080 --> 00:21:59,160 Speaker 2: means is a company has a rainy day fund for 334 00:21:59,520 --> 00:22:03,520 Speaker 2: whatever may happen when it comes to their supply chain, 335 00:22:03,560 --> 00:22:05,959 Speaker 2: if they've got a loss or if they have a 336 00:22:05,960 --> 00:22:10,280 Speaker 2: general average event or something like that. But as as 337 00:22:10,640 --> 00:22:14,360 Speaker 2: inflation continues to happen, as goods become worth more, as 338 00:22:14,600 --> 00:22:19,080 Speaker 2: accidents are occurring more frequently, and general average is being 339 00:22:19,080 --> 00:22:24,200 Speaker 2: declared more frequently, this isn't necessarily a great strategy for 340 00:22:24,520 --> 00:22:27,959 Speaker 2: companies to employ. And in the case of general average, 341 00:22:27,960 --> 00:22:30,760 Speaker 2: if they don't have an insurance policy on their cargo, 342 00:22:31,359 --> 00:22:33,439 Speaker 2: then they are actually on the hook to pay the 343 00:22:33,480 --> 00:22:39,080 Speaker 2: bond to the entity that is managing that so that 344 00:22:39,119 --> 00:22:41,040 Speaker 2: they can get their cargo released and be off the 345 00:22:41,080 --> 00:22:44,199 Speaker 2: hook for those charges. And then they wait and then 346 00:22:44,240 --> 00:22:46,480 Speaker 2: they wait to find out if there's any further adjustments. 347 00:22:47,119 --> 00:22:51,520 Speaker 2: So it's very very interesting and a huge risk for 348 00:22:51,560 --> 00:22:53,160 Speaker 2: those that are moving cargo on the water. 349 00:22:53,680 --> 00:22:55,240 Speaker 1: I don't know if you have any stats, so I 350 00:22:55,320 --> 00:22:58,920 Speaker 1: might just be asking a silly question, roughly, what percentage 351 00:22:59,000 --> 00:23:01,480 Speaker 1: you think of the market is self insured and not 352 00:23:01,840 --> 00:23:03,440 Speaker 1: going through traditional insurance. 353 00:23:04,080 --> 00:23:06,760 Speaker 2: You know, I've seen some statistics on it. I'm going 354 00:23:06,840 --> 00:23:09,520 Speaker 2: to hesitate to throw a number out today. Just because 355 00:23:09,920 --> 00:23:13,439 Speaker 2: they're kind of all over the place. But what I 356 00:23:13,480 --> 00:23:16,520 Speaker 2: will say is that the estimation is that there are 357 00:23:16,600 --> 00:23:19,639 Speaker 2: still more companies that are self insuring than companies that 358 00:23:19,680 --> 00:23:22,960 Speaker 2: are going with an insurance policy to cover their cargo. 359 00:23:23,320 --> 00:23:25,280 Speaker 1: Wow, that's food for thought. 360 00:23:26,160 --> 00:23:26,399 Speaker 2: You know. 361 00:23:26,560 --> 00:23:30,320 Speaker 1: In the trucking insurance market, you know, we've seen a 362 00:23:30,320 --> 00:23:33,800 Speaker 1: lot of underwriters leave the market because it's just the 363 00:23:33,880 --> 00:23:36,840 Speaker 1: risks are too high and it's just not a good 364 00:23:36,880 --> 00:23:40,800 Speaker 1: business for them anymore. So the underwriters, the number of 365 00:23:40,920 --> 00:23:43,920 Speaker 1: underwriters are becoming smaller and smaller. Is that true in 366 00:23:44,960 --> 00:23:48,359 Speaker 1: the global marine shipping or the global air freight markets? 367 00:23:49,520 --> 00:23:52,040 Speaker 2: We haven't seen that as much with the companies that 368 00:23:52,080 --> 00:23:55,440 Speaker 2: we do business with. We're very careful with the companies 369 00:23:55,480 --> 00:23:58,399 Speaker 2: that we work with. We make sure that they have 370 00:23:58,480 --> 00:24:02,080 Speaker 2: a good risk management strategy in and of themselves. We 371 00:24:02,119 --> 00:24:06,280 Speaker 2: want to work with companies that look very diligently at 372 00:24:06,280 --> 00:24:09,880 Speaker 2: the risks that they're taking on so that they are 373 00:24:10,359 --> 00:24:17,560 Speaker 2: well positioned to give very very comprehensive solutions to the 374 00:24:17,560 --> 00:24:21,040 Speaker 2: brokers that are out there. So I can't speak to 375 00:24:21,920 --> 00:24:24,560 Speaker 2: seeing that with the companies that we do business with, 376 00:24:24,600 --> 00:24:28,200 Speaker 2: but it has happened in the industry yes, okay, And. 377 00:24:28,119 --> 00:24:32,480 Speaker 1: So have you been involved or any at all of 378 00:24:32,560 --> 00:24:34,920 Speaker 1: any of the ships being damaged in the Red Sea. 379 00:24:35,560 --> 00:24:37,159 Speaker 1: When I say you being involved, I know you're not 380 00:24:37,200 --> 00:24:39,080 Speaker 1: doing the damage. But like any of the companies that 381 00:24:39,119 --> 00:24:43,520 Speaker 1: you ensure, have they had any impact from the crisis 382 00:24:43,560 --> 00:24:44,720 Speaker 1: that's going on in the Red Sea? 383 00:24:45,160 --> 00:24:48,560 Speaker 2: Luckily no, And at this point, given that the steamship 384 00:24:48,600 --> 00:24:53,560 Speaker 2: lines are all re routing around the Cape of Good Hope, 385 00:24:54,040 --> 00:24:57,720 Speaker 2: we're not really expecting to see that at this point. 386 00:24:58,800 --> 00:25:02,320 Speaker 1: And you mentioned that, you know, insurance rates for ocean 387 00:25:02,400 --> 00:25:05,600 Speaker 1: or more expensive than the air because the longer voyage times, 388 00:25:05,640 --> 00:25:09,800 Speaker 1: and you know, because people are avoiding this as canal, 389 00:25:09,880 --> 00:25:13,000 Speaker 1: that's adding you know, call it anywhere between ten and 390 00:25:13,040 --> 00:25:16,760 Speaker 1: fifteen days. So I guess not only is insurance becoming 391 00:25:16,800 --> 00:25:19,840 Speaker 1: more expensive because the rates are increasing, but also because 392 00:25:19,880 --> 00:25:23,360 Speaker 1: the voyage times are increasing as well. Is that true? 393 00:25:23,960 --> 00:25:26,560 Speaker 2: Yes, there is more risk the longer the transit. So 394 00:25:27,760 --> 00:25:30,960 Speaker 2: you know, typically what insurance companies will do, especially for 395 00:25:31,080 --> 00:25:34,960 Speaker 2: companies with policies, is they look at that once a 396 00:25:35,000 --> 00:25:38,040 Speaker 2: year unless there's a reason to do otherwise. For example, 397 00:25:38,680 --> 00:25:42,240 Speaker 2: war risk is a reason to do otherwise. So if 398 00:25:42,280 --> 00:25:46,800 Speaker 2: a company is at in jeopardy of having an issue 399 00:25:46,840 --> 00:25:51,360 Speaker 2: when it comes to geopolitical tensions or war, the insurance 400 00:25:51,400 --> 00:25:55,679 Speaker 2: companies will do an adjustment there, but otherwise not seeing 401 00:25:55,800 --> 00:26:01,200 Speaker 2: necessarily a spike in insurance on the the regular rates 402 00:26:01,840 --> 00:26:04,280 Speaker 2: as of yet. Now, do we expect to see some 403 00:26:04,520 --> 00:26:09,919 Speaker 2: jump next year, yes, probably, but not double digit increases, 404 00:26:10,320 --> 00:26:13,280 Speaker 2: probably still in the single digits. And when I had 405 00:26:13,280 --> 00:26:19,159 Speaker 2: a conversation with the trade team at Kunanagul about what 406 00:26:19,200 --> 00:26:22,560 Speaker 2: they're expecting on the ce logistics side, I said, how 407 00:26:22,680 --> 00:26:26,040 Speaker 2: much of the increases that you're seeing on the freight 408 00:26:26,080 --> 00:26:30,159 Speaker 2: itself are attributed to this re routing to go around 409 00:26:30,160 --> 00:26:31,880 Speaker 2: the Cape of Good Hope, And they said, actually, it's 410 00:26:31,920 --> 00:26:35,719 Speaker 2: only about ten percent. The reason for that is because 411 00:26:37,000 --> 00:26:41,679 Speaker 2: now we're squarely in peak season from trans Pacific to 412 00:26:41,760 --> 00:26:45,600 Speaker 2: the US in particular, is what I'm speaking about. They 413 00:26:45,640 --> 00:26:48,920 Speaker 2: don't expect that to end until October. Beginning of October, 414 00:26:49,320 --> 00:26:51,760 Speaker 2: but there's going to be a tariff increase in August. 415 00:26:51,760 --> 00:26:54,359 Speaker 2: That's what's anticipated, and so a lot of companies are 416 00:26:54,400 --> 00:27:01,840 Speaker 2: actually trying to move their cargo and sorry August first, 417 00:27:02,480 --> 00:27:06,320 Speaker 2: and so we're seeing some supply issue as well. And 418 00:27:07,560 --> 00:27:11,080 Speaker 2: with that, the spot market has become a little interesting. 419 00:27:11,200 --> 00:27:14,240 Speaker 2: So there's all kinds of factors that go into it. 420 00:27:14,320 --> 00:27:18,520 Speaker 2: But from an insurance perspective, when the rates, we're seeing 421 00:27:18,560 --> 00:27:22,119 Speaker 2: the rates increase, it's really just the premium at this point, 422 00:27:22,160 --> 00:27:23,840 Speaker 2: and that's because the freight's going up. 423 00:27:24,160 --> 00:27:28,400 Speaker 1: And so when you're talking to your clients, obviously geopolitical risks, 424 00:27:28,600 --> 00:27:34,000 Speaker 1: environmental risks, you're trying to ensure against what other large 425 00:27:34,119 --> 00:27:37,199 Speaker 1: risks are out there that shippers need to be aware 426 00:27:37,240 --> 00:27:40,040 Speaker 1: of when putting freight on the ocean or in the air. 427 00:27:40,320 --> 00:27:45,240 Speaker 2: Sure, there's four main supply chain risks that I like 428 00:27:45,320 --> 00:27:48,640 Speaker 2: to put things into buckets. It is the geopolitical risk, 429 00:27:48,720 --> 00:27:53,119 Speaker 2: it's the environmental risk, there's economic risk itself. And the 430 00:27:53,240 --> 00:27:56,200 Speaker 2: emerging risk that's come out over the last couple of 431 00:27:56,280 --> 00:28:00,600 Speaker 2: years is the cyber risk. The reason for that is 432 00:28:00,960 --> 00:28:05,320 Speaker 2: I think fairly obvious, but as the world becomes more digital, 433 00:28:05,760 --> 00:28:10,400 Speaker 2: so does the maritime industry. And because of that, many 434 00:28:10,640 --> 00:28:20,160 Speaker 2: of the communication devices are Internet enabled, and because of this, 435 00:28:20,200 --> 00:28:25,760 Speaker 2: we're seeing more and more cyber threats, particularly at ports, 436 00:28:26,320 --> 00:28:30,200 Speaker 2: some airports as well. So it's some steamshiplines. Actually, we've 437 00:28:30,200 --> 00:28:32,200 Speaker 2: seen it with the steam steamshipline we've seen it with 438 00:28:32,240 --> 00:28:35,160 Speaker 2: the freight forward or so it is becoming a much 439 00:28:35,160 --> 00:28:38,520 Speaker 2: bigger risk for companies and so we've got our eye 440 00:28:38,560 --> 00:28:42,000 Speaker 2: on that and the market is adjusting for that as well. 441 00:28:43,000 --> 00:28:46,880 Speaker 1: And so when you're ensuring for cyber risk a so 442 00:28:46,960 --> 00:28:49,400 Speaker 1: you're insured, are you talking about the freight itself is 443 00:28:49,440 --> 00:28:51,840 Speaker 1: being insured for cyberrisks? So if it's being held up 444 00:28:51,840 --> 00:28:56,920 Speaker 1: at a port because the cyber attack screws up a 445 00:28:57,000 --> 00:29:00,440 Speaker 1: portability to take containers off of a ship, then you're 446 00:29:00,520 --> 00:29:04,000 Speaker 1: being you're being insured for that or am I missing something? 447 00:29:04,120 --> 00:29:06,640 Speaker 2: Yeah, Typically that's going to be that's going to be 448 00:29:06,920 --> 00:29:10,479 Speaker 2: a little bit different. So if there's delay because of 449 00:29:10,880 --> 00:29:15,040 Speaker 2: some peril that's happened in the in the movement of 450 00:29:15,080 --> 00:29:19,719 Speaker 2: the goods, if a company's cargo insurance policy has a 451 00:29:19,760 --> 00:29:24,200 Speaker 2: delay clause in it that allows for them to to 452 00:29:24,280 --> 00:29:27,680 Speaker 2: file acclaim against it, then that would cover that. If 453 00:29:27,760 --> 00:29:34,080 Speaker 2: the company themselves is not affected their their cyber capability 454 00:29:34,120 --> 00:29:36,960 Speaker 2: is not affected by that breach, it wouldn't there wouldn't 455 00:29:36,960 --> 00:29:40,440 Speaker 2: be any anything that would touch on that. But typically 456 00:29:40,480 --> 00:29:43,520 Speaker 2: cargo insurance it's not going to cover for any sort 457 00:29:43,520 --> 00:29:45,680 Speaker 2: of cyber threat that would be a separate policy. 458 00:29:46,040 --> 00:29:51,280 Speaker 1: Gotcha understood? So you know your your your business is 459 00:29:51,280 --> 00:29:54,080 Speaker 1: dealing with risks. You know what keeps you up at 460 00:29:54,160 --> 00:29:57,360 Speaker 1: night in terms of you know your your your job, 461 00:29:57,560 --> 00:30:00,360 Speaker 1: in terms in terms of you know the thing that 462 00:30:00,880 --> 00:30:03,280 Speaker 1: concern you most about the industry. 463 00:30:03,920 --> 00:30:06,720 Speaker 2: Yeah, I think it's just making sure that companies know 464 00:30:06,800 --> 00:30:11,000 Speaker 2: what they're up against and what those risks are. Because 465 00:30:11,080 --> 00:30:15,280 Speaker 2: the estimation on the number of companies globally that have 466 00:30:15,400 --> 00:30:18,680 Speaker 2: cargo insurance is so low. I want to get out 467 00:30:18,720 --> 00:30:21,200 Speaker 2: in front of as many customers as I possibly can 468 00:30:21,240 --> 00:30:23,560 Speaker 2: to kind of let them know what the full story is. 469 00:30:24,280 --> 00:30:29,840 Speaker 2: We have a lot of conversations with companies about why 470 00:30:29,880 --> 00:30:33,840 Speaker 2: not to bundle their cargo insurance into their typical business 471 00:30:33,840 --> 00:30:37,280 Speaker 2: and commercial policies, and why it's best to have a 472 00:30:37,280 --> 00:30:41,640 Speaker 2: standalone cargo insurance policy. So that could be a whole 473 00:30:41,720 --> 00:30:46,440 Speaker 2: nother podcast lead. So I won't time on that, but 474 00:30:47,560 --> 00:30:49,160 Speaker 2: that's the kind of thing that does keep me up, 475 00:30:49,160 --> 00:30:50,840 Speaker 2: and not in a bad way. Actually it is in 476 00:30:50,840 --> 00:30:53,440 Speaker 2: a good way. It excites me to have the opportunity 477 00:30:53,520 --> 00:30:56,440 Speaker 2: to talk to companies about how we can help them 478 00:30:56,520 --> 00:31:01,160 Speaker 2: create solutions and their supply chain risk management strategy that 479 00:31:01,240 --> 00:31:04,520 Speaker 2: include insurance and other facets that is going to keep 480 00:31:04,560 --> 00:31:08,480 Speaker 2: them from putting themselves in a position where they're financially 481 00:31:08,680 --> 00:31:11,120 Speaker 2: at risk because of decisions that are happening. 482 00:31:11,680 --> 00:31:14,920 Speaker 1: And in your career on the insurance side, is there 483 00:31:15,120 --> 00:31:20,840 Speaker 1: one claim that were event that you saw that was 484 00:31:21,880 --> 00:31:24,680 Speaker 1: really like, was shocking to you for a good reason 485 00:31:24,760 --> 00:31:26,520 Speaker 1: or a bad reason, And you don't have to give 486 00:31:26,680 --> 00:31:30,000 Speaker 1: name names, just you know, kind of like an incident 487 00:31:30,040 --> 00:31:32,560 Speaker 1: that was, you know, out of the ordinary. 488 00:31:33,120 --> 00:31:35,120 Speaker 2: One comes to mind. I don't know if i'd use 489 00:31:35,160 --> 00:31:38,640 Speaker 2: the word shocked, but I do think it's really interesting 490 00:31:38,720 --> 00:31:44,120 Speaker 2: and it's somewhat intricate as well. We had a company 491 00:31:44,440 --> 00:31:51,680 Speaker 2: that was importing some goods from Asia and the goods 492 00:31:51,880 --> 00:31:58,040 Speaker 2: were held at port because of a customs inspection. Because 493 00:31:58,280 --> 00:32:01,880 Speaker 2: they were held so long, then of course they incurred 494 00:32:02,520 --> 00:32:06,480 Speaker 2: detention and demurriage. Well really just more demerge because I 495 00:32:06,480 --> 00:32:10,000 Speaker 2: don't believe they were on uh with a truck driver 496 00:32:10,120 --> 00:32:13,960 Speaker 2: at that point, but demurriaged charges were adding up every 497 00:32:14,000 --> 00:32:18,520 Speaker 2: single day. The goods were sitting uh waiting, waiting, waiting, waiting, 498 00:32:18,640 --> 00:32:22,000 Speaker 2: and actually while they were waiting, come to find out, 499 00:32:22,000 --> 00:32:25,240 Speaker 2: a couple of containers actually had some holes in them, 500 00:32:25,720 --> 00:32:29,720 Speaker 2: and so the goods were actually getting damp, not soaked, 501 00:32:29,880 --> 00:32:35,520 Speaker 2: just damp when there was precipitation. And this customer lives 502 00:32:35,560 --> 00:32:39,880 Speaker 2: and kind of a is located in a subtropical part 503 00:32:39,920 --> 00:32:44,840 Speaker 2: of the US, and because of that heat and that moisture, 504 00:32:44,960 --> 00:32:49,080 Speaker 2: and of course just general humidity as a whole, it 505 00:32:49,160 --> 00:32:52,760 Speaker 2: created the perfect storm where this company is waiting for 506 00:32:52,800 --> 00:32:56,800 Speaker 2: their goods to be released. They're paying the demerriage because 507 00:32:56,880 --> 00:33:02,479 Speaker 2: the cargo is sitting in the containers. This is for months, 508 00:33:02,560 --> 00:33:05,640 Speaker 2: just as an aside, and then when they finally do 509 00:33:05,720 --> 00:33:08,560 Speaker 2: get the goods unloaded, they realize they're covered in mold. 510 00:33:09,320 --> 00:33:16,040 Speaker 2: The interesting part about this is that they had changed 511 00:33:16,080 --> 00:33:19,720 Speaker 2: their business model, and because they changed their business model, 512 00:33:19,840 --> 00:33:24,160 Speaker 2: they were moving more cargo on a vessel at a 513 00:33:24,240 --> 00:33:27,760 Speaker 2: time than they used to when they started their policy. 514 00:33:29,240 --> 00:33:34,440 Speaker 2: And because of that their policy, it was in between 515 00:33:34,840 --> 00:33:38,400 Speaker 2: their renewal periods when they decided to do this, and 516 00:33:38,440 --> 00:33:40,800 Speaker 2: they increase the amount of containers that were moving at 517 00:33:40,800 --> 00:33:44,640 Speaker 2: a given time. A typical policy will have a per 518 00:33:44,680 --> 00:33:48,640 Speaker 2: conveyance limit on it, so a certain dollar amount limit 519 00:33:48,920 --> 00:33:55,880 Speaker 2: per conveyance, whether that's an airline shipment or sorry, an 520 00:33:55,880 --> 00:34:02,680 Speaker 2: airline flight or a sea voyage, if they have X 521 00:34:02,720 --> 00:34:06,360 Speaker 2: amount of dollars on that voyage, then it caps out 522 00:34:06,360 --> 00:34:10,040 Speaker 2: at a certain dollar amount. Well, because this company had 523 00:34:10,080 --> 00:34:14,279 Speaker 2: made changes in their supply chain strategy between when they 524 00:34:15,000 --> 00:34:17,440 Speaker 2: renewed their policy and when they were up for renewal again, 525 00:34:18,360 --> 00:34:20,719 Speaker 2: the amount of containers that were on that vessel, the 526 00:34:20,800 --> 00:34:26,120 Speaker 2: value exceeded what their per occurrence limit was. So because 527 00:34:26,160 --> 00:34:29,320 Speaker 2: of all this, it's sort of the perfect storm. Because 528 00:34:29,360 --> 00:34:32,640 Speaker 2: of all this, as you can imagine, they had well 529 00:34:32,719 --> 00:34:38,520 Speaker 2: over the amount of value on that specific conveyance that 530 00:34:38,719 --> 00:34:44,239 Speaker 2: would have been ordinarily covered based on their policy. So 531 00:34:44,920 --> 00:34:47,200 Speaker 2: there are a lot of interesting facets on that one. 532 00:34:47,239 --> 00:34:50,960 Speaker 2: And so I do encourage companies to if you're planning 533 00:34:51,040 --> 00:34:55,880 Speaker 2: on making any changes in your supply chain strategy, or 534 00:34:55,960 --> 00:35:00,480 Speaker 2: if you are not reviewing your insurance policy right regularly 535 00:35:00,560 --> 00:35:03,200 Speaker 2: to see what those limits are to make your insurance 536 00:35:03,280 --> 00:35:07,799 Speaker 2: provider aware. I would encourage any listener to do that, 537 00:35:07,960 --> 00:35:11,600 Speaker 2: because it's really important to have a good understanding of 538 00:35:11,640 --> 00:35:16,320 Speaker 2: what that policy will cover when you're strategizing on how 539 00:35:16,360 --> 00:35:20,400 Speaker 2: to move the goods. And I think the most interesting 540 00:35:20,480 --> 00:35:23,879 Speaker 2: part about that is what we find nine times out 541 00:35:23,920 --> 00:35:26,960 Speaker 2: of ten, maybe even more times than that is that 542 00:35:27,520 --> 00:35:32,520 Speaker 2: the supply chain and logistics team, they aren't negotiating necessarily 543 00:35:32,560 --> 00:35:37,120 Speaker 2: their cargo insurance policy. So if it's a CFO, if 544 00:35:37,120 --> 00:35:40,680 Speaker 2: it's somebody illegal or compliance, it depends on the company's 545 00:35:40,760 --> 00:35:44,040 Speaker 2: strategy with that. They may not know when they're making 546 00:35:44,080 --> 00:35:47,160 Speaker 2: a change in the supply chain strategy and it may 547 00:35:47,160 --> 00:35:50,799 Speaker 2: not match any longer with what the policy looks like. 548 00:35:50,920 --> 00:35:54,600 Speaker 2: So that's the most interesting thing that I've run across, 549 00:35:54,600 --> 00:35:57,560 Speaker 2: and I've seen it time and time again. Not necessarily 550 00:35:57,600 --> 00:36:00,000 Speaker 2: with our customers because we try to do quarterly review 551 00:36:00,120 --> 00:36:04,600 Speaker 2: use with our customers to make sure that we aren't 552 00:36:05,000 --> 00:36:08,960 Speaker 2: overlooking something alongside them. But that is something I highly 553 00:36:09,000 --> 00:36:11,839 Speaker 2: encourage companies to do, is just look, just understand it, 554 00:36:11,920 --> 00:36:12,800 Speaker 2: just know what it says. 555 00:36:13,920 --> 00:36:16,640 Speaker 1: So I was scarious with that example. So if there's 556 00:36:16,680 --> 00:36:19,400 Speaker 1: holes in the container, is the owner of the container 557 00:36:19,440 --> 00:36:21,960 Speaker 1: responsibility for the damage? 558 00:36:22,239 --> 00:36:27,600 Speaker 2: So what typically a policy will state is that when 559 00:36:27,640 --> 00:36:31,279 Speaker 2: the cargo is being loaded, if the container is not 560 00:36:31,440 --> 00:36:34,799 Speaker 2: sufficient for the journey, they should reject the container and 561 00:36:34,840 --> 00:36:35,719 Speaker 2: request a new one. 562 00:36:36,560 --> 00:36:40,240 Speaker 1: Gotcha, Okay, very good. So when you're not slinging insurance, 563 00:36:40,280 --> 00:36:41,080 Speaker 1: what do you do for fun? 564 00:36:41,400 --> 00:36:44,359 Speaker 2: Oh Man? All kinds of things. We actually we love 565 00:36:44,440 --> 00:36:47,719 Speaker 2: to travel our family. We love to just go. So 566 00:36:47,800 --> 00:36:51,520 Speaker 2: we just got off a cruise ship on Saturday with 567 00:36:51,560 --> 00:36:54,320 Speaker 2: a Disney cruise. Not sure if I can say the brand, 568 00:36:54,320 --> 00:36:58,080 Speaker 2: but I'm going to say it anyway. We were all 569 00:36:58,080 --> 00:37:00,560 Speaker 2: over the Western Caribbean, and prior to that, we were 570 00:37:02,680 --> 00:37:05,360 Speaker 2: in kind of the Mothership in Orlando as well, spending 571 00:37:05,400 --> 00:37:07,759 Speaker 2: some time there. So that's one of our favorite things 572 00:37:07,760 --> 00:37:12,640 Speaker 2: to do is to travel. We've got big plans to 573 00:37:12,760 --> 00:37:15,919 Speaker 2: hit all the Seven Wonders of the world. We want 574 00:37:15,960 --> 00:37:18,840 Speaker 2: to see all the Disney parks together as a family, 575 00:37:18,920 --> 00:37:20,839 Speaker 2: So that's that's a big thing we like to do. 576 00:37:21,320 --> 00:37:24,759 Speaker 2: And then, of course I've got two teenagers and one 577 00:37:24,840 --> 00:37:27,400 Speaker 2: of which just got our driver's license, which is a 578 00:37:27,480 --> 00:37:30,719 Speaker 2: huge relief for me because up until this week I 579 00:37:30,800 --> 00:37:33,439 Speaker 2: was shuttling them to all their places. That was one 580 00:37:33,440 --> 00:37:34,200 Speaker 2: of my hobbies. 581 00:37:36,160 --> 00:37:40,000 Speaker 1: I know the feeling all too well about that. Well, 582 00:37:40,040 --> 00:37:42,480 Speaker 1: hopefully you get to all seven Wonders. Have you gotten 583 00:37:42,480 --> 00:37:43,200 Speaker 1: to any of them yet? 584 00:37:43,440 --> 00:37:47,040 Speaker 2: Yes? I have. I've gotten to one. At this point, 585 00:37:47,160 --> 00:37:49,960 Speaker 2: I was very close to the second one. I've been 586 00:37:49,960 --> 00:37:53,600 Speaker 2: to the Great Wall, and I had the opportunity to 587 00:37:53,640 --> 00:37:58,120 Speaker 2: go to to Loom, but I'm sorry to teach Younitza 588 00:37:58,160 --> 00:38:00,840 Speaker 2: but instead I went to Tuloom. So we're going to 589 00:38:00,880 --> 00:38:04,279 Speaker 2: have to get the family to teaching needsa together and 590 00:38:04,320 --> 00:38:05,719 Speaker 2: then hit the rest of them as well. 591 00:38:06,520 --> 00:38:09,240 Speaker 1: Well. It's great to have a bucket list and Channa 592 00:38:09,239 --> 00:38:10,720 Speaker 1: and I really want to thank you for your time. 593 00:38:11,920 --> 00:38:16,560 Speaker 1: I find these conversations fascinating. I like insurance. Insurance is 594 00:38:16,640 --> 00:38:20,680 Speaker 1: very interesting. My first job in inequity research was I 595 00:38:20,719 --> 00:38:25,680 Speaker 1: worked for a property and casualty teams as a junior, 596 00:38:25,719 --> 00:38:28,880 Speaker 1: so that was fun. Got my toes wet and insurance there. 597 00:38:29,160 --> 00:38:32,880 Speaker 2: So thanks for coming absolutely and thanks for having me. 598 00:38:32,960 --> 00:38:35,520 Speaker 1: It's been a pleasure, and I want to thank you 599 00:38:35,560 --> 00:38:38,120 Speaker 1: for tuning in. If you like the episode, please subscribe 600 00:38:38,120 --> 00:38:40,440 Speaker 1: and leave a review. We've lined up a number of 601 00:38:40,480 --> 00:38:44,120 Speaker 1: great guests for the podcast. Check back to hear conversations 602 00:38:44,160 --> 00:38:47,919 Speaker 1: with C speed executives, shippers, regulators, and decision makers within 603 00:38:47,920 --> 00:38:50,400 Speaker 1: the freight market. Also, if you have any ideas for 604 00:38:50,440 --> 00:38:53,040 Speaker 1: a future episode, please hit me up on the Bloomberg 605 00:38:53,120 --> 00:38:56,319 Speaker 1: terminal or at Twitter at logistics Late. Thanks everybody, and 606 00:38:56,400 --> 00:38:56,799 Speaker 1: take care