Archive for category Risk Management

Federal Government Lifts Cargo Insurance Coverage Requirement

Caveat Emptor!  The carrier you may be hiring to move your shipments (or your supplier delivering your shipments) is no longer required by the US government to maintain a minimum level of cargo insurance.

The Federal Motor Carrier Safety Administration issued a ruling that became effective on March 21st that allowed commercial shippers to no longer maintain a set level of cargo insurance.  Citing that most of the commercial carriers are maintaining a higher level of insurance coverage than the minimum, and this stipulation falls outside the regulatory responsibility.

While this change will probably not affect your shipments, it is important to watch out for changes in the agreement you have with your carriers.  It would be easy at this time to reduce coverage by raising deductible, reducing normal coverage amounts or in extreme cases no longer provide coverage for product moving on their vehicles.

Full information on the change and an article weighing the pro’s and cons can be found here.

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Water Dilema Food or Steel?

Today is Blog Action Day 2010 and Managing Supply Chain Risk is participating with thousands of bloggers from more than 130 countries focused on bringing attention to the world about . . . . . Water.

I ran across an interesting article in Business Week this week talking about the stalemate Global steel giants ArcelorMittal and Posco  are having in developing the steel industry in India because the current land owners, farmers, do not want to be relocated from their farms.  India’s Bitter Choise:  Water for Steel or Food?  Abhishek Shanker looks at the challenges that these organizations, India’s government and the local farmers. 

What is more important, Steel or Food? 

The food supply chain would be damaged by the move and additional funds and resources would be needed to irrigate the new land to produce food.  It’s unknown at this point was additional transportation costs would be incurred in getting the food to market, nor the impact in the harvested amount because of the new location or conditions.  With the expanding population of the world, what impact would there be on a reduction in the crop yields and what hazards do we open ourselves up to?

The steel industry would benefit from gathering iron ore from the largest concentrated deposits in India.  Additional jobs would be created and this would have the opportunity to push India into the #2 spot as a steelmaker.  It would infuse $80 billion into India’s economy and perhaps reduce the steel import need of India because of home made product.

However it’s not just about relocating the farmers.  According to the story , “The 160 million tons of planned steel capacity would consume 640 billion gallons of water a year, based on the average consumption by U.S. steel mills. That’s enough to provide adequate water for drinking and cooking for 133 million people in India over the same period, according to government figures.”   This could have an impact on the availability of water to the countries population. 

If it was your company, what would you do?   How would this affect your reputation and revenue.  These are points to ponder in this fluid situation.

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DOT Bans Texting While Driving

On January 26th U.S. Transportation Secretary Ray LaHood announced that effective immediately commercial truckers and bus drivers are prohibited from sending texts while operating a vehicle.   This stand comes after a number of studies have identified texting and cell phone usage while operating a vehicle has contributed to many accidents and deaths. 

The decision is based on an existing Federal Regulation that focuses on driver distraction.  A $2750 fine. 

There has been an increased focus on distracted driving from both the commercial as well as civilian population.  Oprah has highlighted it on her talk show, a number of states have banned the use of cell phones and texting while driving and a significant PR push has been put into place to curb this issue.

If your organization owns a fleet, be sure your drivers are complying with the regulations.  Being caught has greater ramifications than just the fine.  It could affect your insurance premiums, on time delivery, operating authority, and reputation.

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