FREIGHT FORWARDERS AND FREIGHT AGENCIES
Category: Trucking and Transit

SIC CODE: 4731 Arrangement of Transportation of Freight and Cargo

NAICS CODE: 488510 Freight Transportation Arrangement

Suggested ISO General Liability Code: 94617, 94638

Suggested Workers Compensation Code: 7360A, 7360B, 7360C, 7360D, 7350A, 7350B, 7350C, 7350D

Description of operations: Freight forwarders and freight agencies organize the shipment of freight from its initial pickup at the shipper's location through final delivery at the receiver's location. In addition to arranging transport, services can include document preparation, negotiation of freight charges, packing, purchase of insurance, storage, tracking, and acting as intermediaries in the event of a dispute between shippers and service providers., Transportation of the cargo from point to point can include various modes of transportation such as trucks, railroads, aircraft, and watercraft, with warehousing at one point or more along the route. Freight forwarders are not responsible for shipping delays as these may be due to unforeseen circumstances such as inclement weather, political unrest, or route changes. Freight forwarders may combine shipments from several customers into one. Services may be limited to domestic shipments or include international transport.

Property exposures may be limited to electrical, heating and cooling systems for an office location. All electrical wiring must be up to code. If the forwarder stores customers’ goods at an owned warehouse, the types of goods handled and stored may increase the exposure to both fire and theft. Theft protection should be appropriate for the types of goods stored and the location. Physical barriers such as steel doors and reinforced walls, surveillance cameras, and an alarm system that reports directly to a central station or the police department may be required. Additional property exposures can result if the forwarder repairs, refuels, and maintains its own vehicles on premises. Exposures include flammable liquids, including gasoline and diesel fuel, and heat-producing activities such as welding. Flammable liquids and heat-producing activities must be separated from combustibles to prevent fire and explosion. All spray-painting should be conducted in a spray booth with explosion-proof fixtures. The condition and controls of fuel tanks, whether above or below ground, are important for both property and environmental liability.

Inland marine exposures include accounts receivables for billings to customers, bailees for property of others in the forwarder's care, computers to track shipments and inventory, goods in transit, and valuable papers and records for contracts involving customers and service providers. Customers' property may be damaged while being transported due to overturn, collision, or theft. Cargo containers should have locks and appropriate alarm systems. Coverage for customers’ goods may be purchased using a motor truck cargo carrier coverage with modifications, or from a specialty carrier. Any items in storage must be marked to prevent incorrect release. All data must be duplicated and kept off site for easy replication in the event of a loss.

Crime exposure is from employee dishonesty and money and securities. Background checks, including criminal history, should be performed on all employees handling money. Freight forwarding operations involve a number of transactions and accounts that can be manipulated. There must be a separation of duties between persons handling deposits, billing, ordering, disbursements, and reconciling bank statements. Regular internal and external audits should be conducted.

Premises liability exposure is limited due to lack of public access. Cargo containers stored outside may present an attractive nuisance to minors. The premises should be enclosed by fencing and lighting with “No Trespassing” signs posted. Contracts with transportation and storage providers may expose the operation to additional liability. The contract should spell out the responsibilities of each.

Environmental impairment exposure can be high due to the potential for air, land, or water pollution from the transport and disposal of fluids used for servicing and repairing trucks. Contracts should be in place to dispose of all environmentally dangerous chemicals. There should be spill procedures in place to prevent the accidental discharge of sludge from water reclamation systems used in washing trucks. IF there are underground storage tanks, a UST policy will be required. All underground fuel tanks must meet state or federal regulations and be routinely tested for leakage.

Automobile exposure may be high if the freight forwarder is involved in transporting customers' goods. Loading and unloading of freight is included on the auto policy. The client can be injured should the movers drop or overturn cargo. Children may be present during loading or unloading operations, requiring additional caution. All drivers must have training in lifting, and handling, and transporting the items being carried. They must be well trained and have valid appropriate licenses. A commercial driver's license (CDL) may be required. MVRs must be acceptable and run on a regular basis. Random drug and alcohol testing should be required. Vehicles must be well maintained with records kept at a central location. Accidents can result in the spillage of diesel fuel or other operating fluids from within the truck, requiring cleanup.

Workers compensation exposure may be light if operations are limited to that of an office. If workers are involved in handling and/or storage of cargo, there is an increased exposure to injuries due to strains, sprains and back injuries. Proper lifting techniques must be taught, and safety equipment provided. Garage employees can be injured by vehicles falling from hoists, strains, sprains and other lifting injuries. Good housekeeping is critical to reduce injury from slips, trips, and falls. Burns, eye injuries, and respiratory problems can occur with welding and painting. Dermatitis can result from employees coming into contact with harsh cleaning detergents. Repair areas should be properly ventilated. Proper safety equipment is required. Drivers must operate in adverse traffic conditions such as inclement weather or road construction. Monitoring is required to ensure that an appropriate amount of their time is allocated for sleep.

Minimum recommended coverage:

Business Personal Property, Business Income and Extra Expense, Accounts Receivables, Bailees, Computers, Goods in Transit, Valuable Papers and Records, Employee Dishonesty, Money and Securities, General Liability, Employee Benefits, Umbrella, Business Automobile Liability and Physical Damage, Hired and Nonownership Auto, Workers Compensation

Other coverages to consider:

Building, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Cyberliability, Employment-related Practices, Environmental Impairment, Underground Storage Tank, Stop Gap Liability