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Cargo Insurance and International Trade.

Cargo Insurance and International Trade with Kingsly on Panafrica Traders Podcast.

[00:00:00] Malobi: 

Welcome guys to another episode of the Pan-African trader’s podcast, where I interview players that are in the international trade space. Today I’ve got Kingsly. Kingsly is another gentleman I met at the clubhouse and we’ve just spoken offline a couple of times about his business and his history and the sort of international trade.

[00:00:20] And insurance, if I’m not mistaken you will correct me if I’m wrong. So, yeah, we’re just going to be talking today about his history, how he got into the space that he’s in his current projects and any other information that he thinks will be quite interesting for any of the listeners today. So welcome Kingsly to the podcast, how you did today.

[00:00:41] Kingsly:

I’m very well, thank you very much. I’m pleased to be here. Thank you for having me.

[00:00:46] Malobi:

Awesome. Welcome. You, mentioned when we were talking offline, actually there you, are you a Cameroonian based in Germany? So, how did that work? How did you get there?

[00:00:55] Kingsly:

My journey to Germany is a long one. So many years ago when I left my country, I went to England to study. So I spent my uni days in England and I started working for a shipping line in London. And my role as well, I was working in the legal department, so we were responsible for fending off claims coming from cargo and insurance companies around the world.

I moved to Argentina a couple of years later while in Argentina, I switched sites and I started working for an insurance company, but also with international traders crossed the Latin American continent. So we were handling claims for them against shipping lines, airlines and freight forwarders.

[00:01:34] Kingsly:

Four years later, I moved to South Africa and in South Africa, I started learning the business from an African perspective. So my mission really wants to understand the challenges from an African perspective, what were the African traders going through what were the challenges the insurance companies on the continent are facing.

And during that time I met my wife who had flown in from the United States so we got married in South Africa and [00:02:00] yeah. Then we moved to Germany and that is how I got to be here.

[00:02:05] Malobi:

That’s fantastic. That’s a really interesting story. So you’ve been about the place you’ve been. Three continents working professionally in three different continents, which is really interesting.

Not a lot of people can say that. So I guess I just wanted, to break it down for the layman, right? You speaking about insurance and working on both sides of the coin, can you just explain to people. What is cargo insurance? Maybe if it’s different from other types of insurance and who are the parties involved and how is it connected?

So from the freight-forwarder side to the insurance side, to any other parties involved, just trying to explain and really simplify for the audience how the insurance part of international trade works.

[00:02:50] Kingsly:

Okay, thank you very much for the question. So I’m going to answer your question by giving you a scenario, imagine that you are exporting or you’re growing ginger, somewhere in Nigeria and you’re exporting to the Netherlands.

Now. Most people in Africa would, load up their ginger in the container and ship it off without insurance that where you, you choose to use insurance. The insurance company would not write the risk involved in transporting your cargo from the first carrier. So even, let’s see, I’m not sure.

I don’t know, Northern part of Nigeria and you’re moving your cargo down to leave us to deport. Then the insurance will start covering your ginger from the first career or the way from home. Down to the port and eventually sort of carrier to the buyer. So cargo insurance really is insurance for the transportation of cargo and the risks involved in moving that cargo from one place to the other.

[00:03:45] Kingsly:

I think being over-simplistic, but there are various forms or types of cargo insurance or extent of coverage. So you have, for example, goods in transit, which would cover your risk inland you have what you [00:04:00] typically call marine insurance or cargo insurance, which would cover inland including sea and air, but based on the policy that you’re taking or base on the coverage that you’ve taken.

The insurance company will specifically specify if it’s a port to port coverage or if it’s a place to place coverage. And also the type of international seal that is involved is well, determined on the type of insurance product. So, but I don’t want to go too technical. Cargo insurance is really just insurance with the risk involved in moving cargo from one place to the other.

And the lip of your question, I think, was who were the parties involved or who are the parties in for? We have the cargo interest and the cargo interests are either involved in growing the cargo. So you have a grower, a local guy in Nigeria will glow the cargo, but if they don’t have the international connections, then they’ll sell it on to like an aggregate, who is an exporter.

[00:04:55] Kingsly:

So this guy this exporter would likely be the one to take out. Depending on the market, I think in Nigeria, there’s a, there’s a strong list of brokers or do they’re also direct line business, but where there’s a broker, this exporter would get in touch with a broker. This is an insurance broker who would then arrange for insurance called to offer that Cabo with an insurance company.

So an insurance company would be [00:05:20] in Nigeria. There’s Yancy, my. I think there’s fidelity. I’m not sure that I’m missing the name of the names at the moment, but this broker would get in touch with the insurance company and say, Hey, I’ve got these goods moving from Nigeria. These are the terms.

This is the type of coverage I will like to take. On the side of the insurance company. You have the underwriter, the underwriter is the person who is going to then engage with the broker to agree in terms of this coverage. And once there is insurance coverage for this cargo, we then move on from the exporter to either a freight forwarder or directly to the ship.

[00:05:58] Kingsly: 

So a freight forwarder will be a representative they can either be independent with their company or a representative of the carrier. But basically, their role is to arrange the shipment from, the exporter and pass it to the carrier. In certain cases, freight forwarders will own their own truck.

In others, they’ll just subcontract to other trucking companies. So from Northern Nigeria, you, so you’ve got the exporter then broker the underwriter, then the first carrier who is the trucking company then you got the freight forwarder, eventually the shipping line. And I’m skipping here.

some parts which are a little bit more complicated. So you’ve got the shipping line. Then once it gets to the other side, you get the reverse process. until it gets to the shelves or the final consumer

[00:06:45] Malobi:

That’s brilliant. You’ve, really like explain that in a very simple way. And, I’m sure people will kind of get an understanding before we dive deeper into this.

So what I look at freight forwarding when I’m looking at the example that you gave me with the ginger, grower, exporter in my mind, I’m always thinking of anything to do with logistics. My freight forwarder can handle it. Right. So I guess my next question. Do people often reach out to an insurance company separately from the freight forwarder, or do they normally go through that freight forwarder and say, Hey, can you help us sort out the [00:07:20] insurance thing?

 I want to be completely hands-off just to sort it out for us.

[00:07:23] Kingsly:

In some markets, they do some markets, people assign this role or this task to frequent. But in other markets recently not in a distant past in a, in a market like South Africa three forwarders where we’re stopped from doing that because offering insurance services in any form is financial service advice, and you need to be qualified to be able to do that.

So in some markets freight forward can no longer do that. But I think if other freight forwarders can assist and the assistance here really just really ohI know a broker. I know an insurance company. But in some markets, you have the freight forwarder who offer [00:08:00] insurance cover as part of the waybill or house bill of lading where, you know, if you’re entrusting their cargo to them, then this is usually checkbox, which says, yes, if I want insurance and no, I don’t want insurance.

Now you can check one insurance, then we will use their resources for getting new insurance coverage for the cover. But short answer, it does happen, but in some markets, it doesn’t.

[00:08:24] Malobi:

So well, I guess that kind of also leads on to the idea that this insurance, is it necessary? Is it compulsory in certain countries or is it an entirely optional thing for people to get?

[00:08:38] Kingsly:

Again, it depends on where we are. So in, in, in many African countries, today in, into the country is obligated before insurance be particular within that country. So this applies in Kenya, in east Africa, and most recently in Ghana where imported herself nice to take it away. Within the country wants the cargo, which is the point of the country.

Unfortunately exporters in many African countries export on FOB, FOB being “Free On Board” so they sell their goods without insurance. And so whoever is buying the goods from abroad, you take our insurance, the foreign country, which I think is really a, it’s an unfortunate arrangement.

And the reason I say it’s unfortunate is. That’s an opportunity that is been transferred away from the continent. And, when you sell your product without insurance, then you’re giving an opportunity for the foreign insurer to leverage, the labour of, Africans who have grown this product or developed a product or have doc up this product, and the risk is now transferred.

I think insurance of the constant shouldn’t be able to try and understand these risks, but also be bold enough to pick up some of this risk. In my opinion, I think governments or financial bodies across the continent should be ensuring that these cargoes are only exported with insurance.

[00:10:03] Malobi:

Wow. That is super interesting. I never thought about that. And when I tend to export products, I always talk about X works for people that are not familiar with these terms. I’d suggest looking into incoterms on Google.

But X work just basically implies that as an exporter. The person that’s buying the goods for me is going to basically handle the cargo as soon as it leaves my warehouse. So they’re going to take it to the port in my domestic country. They’re going to handle the insurance, everything into the guests, to that front door.

And so what, what you’re essentially saying is that if as Africans is exported, as we shift the responsibility and take a bit more of that responsibility on is going to create more business for the insurance companies in Africa, create more jobs and thus more wealth, etc. So that’s a really interesting one. I never actually thought about that. So I’m going to be considering using different Incoterms now. Okay. That’s that’s great. And so you mentioned that you went to different parts of the world. You’ve worked in, Europe and the states and South Africa. I’m quite keen to learn more about what you learned from Africa.

Some nuances, some differences. Some things that are unique to Africa in your space. Can you tell us a bit more about that?

[00:11:15] Kingsly:

Yeah, I think that there are many the first one is really just, what we’re talking about, the incoterms unfortunately other than South Africa, Southern Africa and some of Northern Africa.

Most countries in Africa, they will trade on, on FOB or export, basically, most brands, very opportunities to improve. What are the countries? That is the first thing. The second thing, which I found on the continent, which again was quite disheartening.

So Africa as a whole does not own a line, a single line. The last one is that we own was south marine by south Africans. And this was sold off to Maersk so there’s not a single shipping line on the continent. There are various international conventions that apply to the carriage of goods by sea. You’ve got Hague rules, Hague Visby Rules, and Hamburg roles.

[00:12:00] Kingsly: 

Probably just because we haven’t reached there, the core of the number of people to understand., but the reason I say that is Hague and Hague Visby rules were developed largely by vessel only countries and is heavily biased. So that means the terms, the clause is the rules are such that he protects the interests of the carrier.

When you look into Africa, some African countries actually get used to that rule. And I’m asking him, I said, why? Because many countries in Africa cargo exporters rarely export largely cargoes, so why the hell are we subscribing to Hague and Hague Visby rules instead of Hamburg rules. So I’ll just give you a very brief difference between these two to emphasize my point, Under the Hague and Hague Visby rules, you have a one-year time bar within which or prescription period within which you must file a claim.

Typically it would require that you bring a claim in the jurisdiction of the head offices or the carrier that would typically be in London you may say in France, for someone that’s for jurisdiction, where Africans have very limited access. Now with Hamburg rules on the other hand gives you a clear time bar.

[00:13:34] Kingsly:

And then it seems that you are at Liberty to bring a claim either at the port of loading so that is either in Nigeria or if you choose in the country of discharge or country or the head office or the company or the shipping line in question. So you could either take it to London or you can leave us in Lagos. Now you as an exporter, if you had a claim against of the shipping line where we’ll do other suits.

[00:14:01] Malobi:

Yeah. And in your, in your own jurisdiction,

[00:14:04] Kingsly:

there you go. So yeah, those are some of the unfortunate things that I realized on the continent. We advocated for that to change. I hope we can gather enough voices around this. I think that we should do that.

So yeah, that’s the other one. I think the other unfortunate thing that I realized was so across the continent we’ve got, we’ve got people that are very capable of being, what we do. So whether you are surveyors or, or lawyers or transporters, and they’re like, and many countries around the world are quite interested in doing business with Africa.

But many people are not aware of Africa. Many people are not aware that you exist. Many people are not aware that I exist. There are not aware that there are people in the continent who are capable of doing certain things. So, what they tend to do then is they go to foreign countries. I don’t want to name names because I don’t want to, I don’t have any bias against these countries, but they go to these countries and they are Africa experts in these countries who acquire the business.

[00:15:02] Kingsly:

Then they outsource it to an Africa to deliver the project. So they could acquire their business in a foreign country. X amount. And then by the time, it gets to the fourth act to the expert on the ground. You’re getting about one-fifth of the amount, which has been paid to the foreign company.

But you are the one delivering on the service. Then they’ll take the work that you’ve done, place it on the letterhead and then deliver it to the client. And I’m asking myself with technology why don’t you eliminate everyone and deal directly with whosoever has the business. So I mean here are some of the things I thought it rather, unfortunately, in the continent. There are quite a lot of them that I think we haven’t got.

[00:15:49] Kingsly: 

That’s, that’s really interesting. And then this is why we’re having these discussions because I want to put it out there I want people to listen to this and because with any challenges, opportunities. So I hope that people can pick up these individual things. You know, we might not get some.

Purchasing starting their own liner of overnight, but you know, you might have people that sought out the lower hanging fruits and then go from there, but some really, interesting insights there. Especially when you, when you mentioned that the two different rules that, that are placed.

So are you saying that this, some countries go by the Hamburg, some countries go by others? So how, how does it. How does a country choose theirs? Like Nigeria, for example, can we say, oh, we want to go by Hamburg rules now, how does that work?

Yeah, you can. So it’s just like any international convention. The country needs to ratify it. Well, the need to sign it, ratify it and then it becomes local law. There are certain countries that are going through that process. The keys of Nigeria, and it’s a little bit nuanced because they have signed the Hamburg rules but they have not ratified it

[00:16:49] Kingsly: 

Even though they haven’t ratified it, aspects of Hamburg rules apply in Nigeria in certain cases and the distinction I think is for goods in the case law, this topic describes it as incoming bills of lading and for this incoming bills of lading, that is shipment, the Hague Visby rules do not apply.

For those that are going out of Nigeria, the Hague Visby rule applies so it’s a little bit different. But for Cameroo n for example, is a signatory to the Hamburg Rules. But you also have regional markets. That law is basically as far as the transportation of goods is concerned, that law is a replicate of the Hamburg rules there are certain aspects, which are lifted up within the OHADA convention.

So many countries that are signatories to the OHADA conversions will apply the local law and on the other hand, you have countries like South Africa, South Africa is not a sign of the Hamburg Rules. And you could say maybe because of the shipping line, but it’s no longer the case. You have many Southern African countries that would apply Hague and Hague Visby rules as opposed to Hamburg rules. Some Northern Africa countries like Egypt, Morocco. I think they apply the Hamburg rules. But again, once on the way, they have taken into their local laws, they have some exceptions Kenya aside or east Africa.

You have a mixture because Tanzania applies Hamburg rules while Kenya applied Hague and Hague Visby Rules.

[00:18:25] Malobi:

That’s brilliant. So, I mean, I mean the long and short of it is that, you know, there’s a, there’s a bit of a mix and match, but the awareness needs to be there so that the right stakeholders can actually start moving towards the Hamburg or, or, or the one that actually suits African countries better. So that’s, that’s pretty interesting.

And, and now that you’ve kind of set the stage on like, you know, cargo insurance and the industry, I would love to learn more about Optimiz. What, is Optimiz? What do you guys do? What, what problem are you solving?

[00:18:55] Kingsly:

Okay. Thank you very much for the question. So Optimiz really we are digitizing the cargo claims process. To expand a little bit on that.

You remember this guy who was exporting ginger from Nigeria to Europe, sometimes the buyer in Europe will say the container they have is not, it was not the agreement that I expected the seller surname, Nigeria on their side. They know that they have done their best to export that container.

And they are not really sure the buyer is really saying the truth that the cargo arrived with damages. But what are the options today? For the guy in Nigeria, he would have to pay a qualified surveyor in Europe to go out and inspect the container once it arrives in the Netherlands. Now that will be about a thousand euros that he has to cover from his pocket. What is his margin from that container? So often there’ll be like, ah, because he hasn’t got the wiggle room to appoint the survey and civil, okay.

Deduct 10%. We got 20% to ensure that losses because he wants to keep that a commercial. So we thought if we could empower this guy to be able to collect this information, remotely but also objectively, then we could significantly first bottom line, we would streamline these processes and overall.

[00:20:15] Kingsly:

If it’s creditworthy or a trust for the buyer, then both sides should be on good terms because they can now both have the same sort of food. They’re seeing the same information about the cargo, pre-shipment and post-shipment and all of this information’s collected.

About this tool, it is a web-based mobile application where we have defined certain steps for the shippers which label what is required of them, you just need to follow the instructions as designed in the application, both the shipper and the buyer to collect information and all of this information is automatically transformed into a dashboard where the interested parties can see that this is the quantity of ginger, this is the number of bags or ginger that was loaded in Nigeria and the guy in Nigeria, this is a container when it arrived, the Netherlands, this is the amount of shrinkage that occurred. This is how I can and see it, you know? So what is really interesting about that service is we work on a subscription basis, right?

And if you were to come in at the lowest year, you will have access to Optimizinspection, For 250 euros a month. What that means is the cost of an inspection is really about 5 euros. So compare that to a thousand euros in five years and you see that the value proposition for the cargo inspection is actually really low.

[00:21:44] Kingsly:

Now there’s a second aspect to the solution that we provide. If after collecting this evidence, it turns out that there is actually damage to the cargo in transit, then we want to be able to empower the guy in Nigeria or whoever has been interested in this cargo to be able to manage a claim against the responsible party.

And it will be a shipping line, an airline or a freight forwarder. Now your option would have been to contact a lawyer who will bill you high or you contact a recovery agent like my first company which I started, which depending on where you are, depending on the quality of the service, it could range anywhere between 15 to 30.

But on our system, it ranges between five and 10%. So, and the way that we can achieve that is by leveraging predictive algorithms to guide you on how to manage these claims and case law and things like that so that you can handle these claims by yourself without the need of a third party.

[00:22:44] Malobi:

That’s brilliant, I can definitely see the problem of the customer that has the problem and how you’re solving that problem. So on a very practical basis, right? I’m the ginger supplier. So when I’m ready to export the goods, do I take pictures of the goods and put them on the app and stuff that take data and say, okay, this was at this level. So it’s like, do I need a smartphone to be able to.

[00:23:10] Kingsly:

Yeah, you need a smartphone, but I mean, you don’t need an iPhone or something like that, right? The internet connection. So, we are designed for applications such that you don’t have to download the application on your phone. So it’s a web-based application and once you have harvested your ginger, you want to start collecting.

So the type of data that we collect is a combination of photographs, short videos. , structured text and in the background, we are measuring location time. And very soon we’ll be looking at temperature as well. So all of the data is collected at various stages and it tells a very solid picture of the handling and quality of your goods before it goes into the containers and eventually into the ship.

[00:23:54] Malobi:

Okay. One thing that kind of popped in my head and then correct me if I’m wrong, but with, with the kind of technology that you’re using, you’re actually, tracking things along the way, like in the UK or whatever, or wherever you have tracked parcels online. So are you looking to go into that space of tracking the shipments or you’re just kind of using your data specifically for the insurance side of things?

[00:24:17] Kingsly:

So going into tracking. So we, we are partnering with the guys who are providing these, this fucking devices. One of our partners, which we are working with at the moment is Delta track. And they provide temperatures like a digital level that you place in the container.

And you can track, you know the various, like a temperature, humidity, light, and all of that. From one point together. So we integrate to their service such that whenever there’s a spike in temperature or there’s an anomaly in transit, then we become aware and we can automate the rest of the process so don’t want to go in that space, but we want to be close to them.

[00:24:56] Malobi:

Yeah, that makes sense. That makes sense. There’s no need to reinvent the wheel and you can just plug and play, with the right partner. That makes a lot of sense. So, I mean, in terms of your, your business right now, what, what stage you are in, have you launched it? Have you got customers?

Are you still in the building phase? Let’s, more about what, what stage.

[00:25:13] Kingsly:

So we are early stage. We do have some traction. We have some customers from the continent but also Europe. So you’ve got a customer in Switzerland in Spain. We are starting the pilot with one of the largest freight forwarders with offices in Columbia.

We just picked up a very big client in South Africa. Then we’ve got another in Ghana, so we are picking up customers here. But we didn’t ever have that editing stage. I think there’s still a long way to go.

[00:25:38] Malobi:

That’s brilliant. That’s brilliant. Yeah, I’ve learned a lot from this conversation and I feel like, I feel like we need to do part two.

But I like to keep the podcasts short and sharp so people can actually digest the information. They don’t lose focus and they can take it away and have something that they can learn from. I mean thank you very much for, you know, explaining your industry for explaining your business. Your solution is being very, very interesting, I guess, you know, next week, I’d love to hear how people can reach out to you, how they can learn about it. Is it optimist.com? How can they learn more about Optimiz?

[00:26:14] Kingsly:

It is optimiz.claims that is the website. If you wanted to get in touch with me, personally, my email is king@optimiz.claims and you can reach me on Instagram, Facebook, Twitter, LinkedIn, wherever you are. I am so, let’s link-up.

[00:26:33] Malobi:

Amazing amazing. Well, Kingsly. There’s not much else to say. I mean, I’ve really, really enjoyed this episode. I’ve really learned a lot. There’s been some, there are so many gems in such a short amount of time that I’m even, I’m going to be looking deeper into. So thank you very much for your contributions.

[00:26:50] Do you have any final words, anything to say to the people before we wrap up?

[00:26:54] Kingsly:

Not just if your listeners. I think with the passage of the African Fruit Trade Contender Area, we expect to see business increasing on the continent and we should be smart about it. Otherwise, just like before, we are going to sit by and watch the opportunity go to other areas. So I think the watchword again is collaboration. We need to collaborate and partner to make sure that, as you raise you lift others up only then can be progressed.

[00:27:21] Malobi:

Amen to that. Because, a lot of other communities, they, they collaborate, they work together, they put their egos to the side. So it’s something that we definitely need to do more, but I’ve been seeing more and more of it recently. So I’m definitely encouraged by what I’ve seen on different platforms. I think it’s a new day. It’s a new age. And we’re going to be doing some really interesting things. I can see both of us working together on some stuff as well.

So I’m really looking forward to that. So thanks again for joining me on this podcast episode. Enjoy the rest of your afternoon and thank you very much to the listeners for listening. It’s Malobi the Panafrican Traders Podcast and we’ll see you guys on the next one.

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