b'20American Journal ofTransportation ajot.com(PICTUREcontinued from page 13)dark green. (See AJOT August 21 edition 756, pageSPONSORED CONTENT2, Is there a track to net zero for US railroads.)At COP 28, US Secretary of Energy Jennifer M.Granholm,USSecretaryofTransportationInsuring cargo in conflict zones: Key insights PeteButtigieg,andCanadasMinisterofTrans-port Pablo Rodriguez issued an interesting state- to secure a successful outcomement on decarbonizing rail in North America. The statement,inpartsaid,Recognizingtheimpor- By: Joe Chillino, Senior Vice President, Roanoke Insurance Group Inc.tantroletransportationplaysinreducinggreen-house gas emissions, the United States and CanadaYou may already be familiar with the significantvery quickly.have created a Rail Decarbonization Task Forceglobal conflicts that are currently happening. How-to develop a common vision to reduce emissionsever, what many people may not realize is that therel ossT riggErs , r EsTricTions andE xclusionsfrom the rail sector. The statement went on to out- are 25 other ongoing conflicts or unstable securityThe cause of loss determines whether coverage line the groups objectives stating: situations worldwide, as defined by the Council ofapplies under the War Risk or S.R.&C.C. Endorse- establish a joint research agenda to test the safeForeign Relations Global Conflict Tracker. ment.TheS.R.C.C.Endorsementcoversdamage integrationofemergingtechnologies,includingFirstandforemost,waranditshumanitariandirectly caused by strikes, labor disturbances, riots hydrogen-powered and battery-electric locomotives. toll is a tragedy regardless of your political stanceand rioters, certain acts of terrorism, civil commo- coordinate strategies to accelerate the rail sectorsconcerninganyconflict.Waralsopresentschal- tions or political uprisings. However, this endorse-safe transition from diesel-powered locomotives tolenges for supply chains that the logistics industryment is also subject to exclusions, including civil zero-emission technologies to ensure a net-zero railmustnavigate.Andwhensendingcargointoanwar,revolution,rebellion,insurrection,andcivil sector by no later than 2050; and adverse environment, risk management and insur- strife (considered more warlike). collaborate on the development of a U.S.-Canadaance should be of utmost concern. Where the S.R.&C.C. Endorsement leaves the rail sector net-zero climate model by 2025. policyholder without coverage for the perils of civil A noble agenda, but the Task Force has its worku ndErsTandingc oVEragEd isTincTions war, revolution, and other civil uprisings, the War cut out for them. North American rail is the leastAs with any insurance policy, its essential toRisk endorsement responds. The War Risk Endorse-electrified large network in the world. At present,understand what your cargo insurance policy coversmentcoversphysicallossordamagetocargo approximately 1% of rail is electrified, and thatsand what is not covered. Knowledge of policy cov- through war and other warlike operations, including limitedtopassengertrainsliketheAMTRAKerages and exclusions and their potential impact onfactions engaged in civil war, revolution, rebellion, system. All freight trains remain powered by dieselyour clients is vital to an effective risk managementor civil strife. While this may place most policyhold-locomotives.AndasMillerwrote,thechallengeplan. For example, coverage for War perils is ini- ers at ease, its essential to understand that the War to electrify the rail network is immense, To put ittially excluded in the body of a Cargo Policy andendorsementprovidescoverageonlywhilecargo another way, the US boasts a rail network of aboutthen added back under Named Peril conditions viais on board an ocean-going vessel or on an inter-140,000 miles. Electrifying that network would costthe War Risk Endorsement and the Strikes, Riots,national flight, leaving the shipment without such an estimated $7 million per track mile or a stunningand Civil Commotions (S.R.&C.C) Endorsement. Itcoverage during the inland portion of transit.$980 billion. is vitally important to grasp this seemingly minorWhile coverage under a standard Cargo Policy Nonetheless rail is a critical piece of infrastruc- coverage distinction of Named Peril coverage. only affords War Risk Coverage while the cargo is ture that has to get on track to meet the decarboniza-tion goals outlined by the Task Force at COP 28 and the Paris Agreement.T EsTF lighT : T hEa irT ransporTd EcarbonizaTionAs difficult as it will be to decarbonize rail, the realchallengetodecarbonizingthesupplychain will be in air transport. There are few easily appli-cable solutions. Back in October of 2022, a World BankblogentitledDecarbonizingairtransport: Sustainable aviation fuels are vital for growth out-lined the challenges. As the title for the blog implies, at the heart of the challenge is the need to find new aviation fuelsjet fuel is mostly a blend of around 30%keroseneand70%gasolineneitherenvi-ronmentallyfriendly. Accordingtoa2022 World Bank study entitled The Role of Sustainable Avia-tion Fuels in Decarbonizing Air Transport, Direct emissionsfromjetfuelcombustionindomestic and international aviation already account for 12% of CO2 emissions from the transport sector and as muchas2.5%ofglobalCO2emissions.So,the obvious answer is finding a new environmentally (PICTUREcontinued on page 22)(BUOYEDcontinued frompage 18)value reporting thresholds, trade statistics generally do a poor job at capturing cross-border e-commerceUnderNamedPerilCoverage,onlynamedon board an ocean-going vessel or on an interna-traffic, which may account for up to a fifth of globalcauses of loss are covered. If a cause of loss is nottional flight, coverage for war during inland ground air cargo volumes, it said. specifically named in the coverage wording, it istransit (War On Land Coverage) may be available Valuereportingthresholdsimplythatanynotcovered.Incontrast,underthestandardAllthroughlimitedspecialtymarkets.Dependingon increase in e-commerce traffic is unlikely to be cap- Risk coverage, damages are covered unless spe- the risk, this coverage is often cost-prohibitive and tured in the data. Reporting threshold for the EUcificallyexcludedbythepolicy.Intheinsuranceincludes restrictive coverage provisions or warran-is 1,000, or 1,000 kg; for the US, it is $2,500 forindustry, the Named Peril Coverage approach is aties that dictate specific requirements. For instance, exports and $2,000 for imports, TDS added. commonly used method to protect against specificunderwriters may require armed escorts, only allow Turning to the general outlook for the air cargorisks. Its important to note that the list of coveredstorage or pauses in transit at secure facilities, or market, Owen noted: In terms of headwinds, obvi- perilsmayvarydependingonthepolicy,soitsdesignateparticulartransportroutes.However,if ously theres the concern around international tradeessentialtoconfirmwhetherthepolicyprotectsshipping to a perilous locale is unavoidable, serious that we talk about a lot in regard to the economicagainst the risks you want to insure against. consideration of this coverage and the subsequent situation of the globe and its impact on air cargo. Standard All Risk Coverage is designed torequirements by underwriters is recommended.But I think that among the tailwinds pushing usallow coverage for unforeseen or unimaginable cir-along, as previously mentioned, is international globalcumstances. The reason the coverage needs to be sob Ea lErT: u ndErWriTErsc anc ancElc oVEragEe-commerce which currently shows no signs of slow- broad for cargo insurance is that some claims situ- Cargounderwritershavetherighttocancel ing down in terms of growth, but also two other verti- ations are completely unpredictable. The causes ofWar and S.R.&C.C. coverage by issuing a notice calsperishable cargo into the Chinese mainland, andlossordamagetocargoarelimitless,butunderbeforethecancellation.Thenoticeperiodmay pharmaceuticals which weve been investing heavily innormal circumstances the routes and destinationsvary by insurer but is typically 48 hours in the US. over the last few years at Cathay Cargo. are considered safe and loss is not expected. On theUnderwriters can cancel the coverage due to sudden He added: So like all these things, the cargoother hand, the War Risk or S.R.&C.C. Endorse- andseveresituationsthatmaymakeadestina-market is up and down. Its very cyclical and werementiswrittenasNamedPerilCoverage,afartionunsuitableforreceivingcargoorexceedthe ready to make an agile response to anything thatsmore restrictive coverage, specifically because warinsurers capacity to cover. However, underwriters thrown our way as the year comes to an end and alsooranyconflictingeneralcanbeunpredictable,cannot cancel coverage for covered shipments that next year. unimaginable,andcandevastateentireregions(INSIGHTScontinued on page 22)'