February 25, 2009
What is Ocean Cargo?
• Simply put – Covers goods being shipped, while
in transit overseas and domestically.
– Any One Vessel
– Any One Vessel On Deck
(Subject to an on-deck BOL)
– Any One Aircraft
– Any One Domestic Transit
– Any One Barge
– By Parcel Post
Ocean Cargo: The Parties
• Party who ships the • Party who receives or
• Control over packing & purchases the goods
arranging goods for • Limited control over
• Usually the product seller • May need documents to
release cargo at delivery
Common Terms of Sale
• Ocean Cargo uses Agreed
– ACV seldom used because
most cargo is brand new, ACV
doesn’t reflect costs to
destination, and value is
always higher at destination
• FOB: Free on Board
– Title changes when cargo
passes over ship’s rail
• FAS: Free Along Side
– Title changes when ship
Buyer assumes the interest and risk of loss at the
FOB or FAS point.
Common Terms of Sale, cont.
C&F - Cost & Freight CIF - Cost, Insurance &
– Seller arranges for the Freight
freight cost, but does – Seller arranges for
not provide insurance freight and purchases
on Buyer’s behalf. insurance for both the
Seller and Buyer.
Standard Valuation Formula – Certificate/Special
Policy of Insurance
+ [pre-paid freight]
issued and endorsed
+ an “advance” over to the Buyer.
Total – Certificate allows
Buyer to present a
• Used in CIF Terms of Sale
• Advance ranges from 0% - 25%
claim at destination.
Commodities & Packing
• What is being shipped?
• Description of Packing
(i.e. cardboard boxes,
• Are the goods
door containers? Sealed
Policy covers both Imports and Exports
– Need to know annual values shipped
– % Import or Export
– Countries the goods are shipped to/from
– Type of shipment (vessel, air, barge, etc.)
– Maximum/average value of shipment
– Shipping terms
• Warehouse to warehouse
• Warehouse to port
• Port to warehouse
Warehouse to Warehouse
Coverage continues in the ordinary
course of transit until:
1) Cargo is delivered at the final What is “Ordinary Course of
OR 2)15 days after completion of • Transit with all of the usual
unloading of the overseas minor delays
vessel if the final destination is • Covers incidental warehouse
in the port city
storage during normal transit
Provisions exist for extension of
coverage due to delays beyond • DOES NOT refer to
the insured’s control circumstances where the insured
• Notification & payment of intentionally halts the shipment
additional premium are for their convenience
Coverage Endorsement Options
•Exhibition & Processing
•Strikes, Riots, & Civil
Potential Customers Key Questions to Ask
– Wholesalers – Do you import or
– Retailers export any goods or
– Manufacturers raw materials? If so,
who is responsible for
– Contractors goods in transit?
– Are any of your
overseas? If so, who
is responsible for
goods in transit?
– Do you sell any of your
• Ocean Cargo coverage can round out accounts
for your customer.
• Offering this coverage makes you more valuable
to the customer by meeting all of their needs.
• Keeps other agents out of the picture who are
not familiar with the coverage and when it is