Freight Forwarders Face Increasing Liabilities as Global Supply Chain Expands, Says TT Club
Thursday, 08 December 2011 | 00:00
Speaking at the Cargo and Freight Insurance Annual Conference in Moscow on Thursday, Andrew Kemp, TT Club’s European Regional Director, will draw close attention to the complex risks that manufacturers, retailers and other users of transport and logistics services are expecting their suppliers to undertake as they continue to outsource more of their sub-assembly, inventory handling and distribution processes.
“Those traditional freight forwarders, who have, in the recent past seen the opportunity to expand the service role by offering extended warehousing, packaging, delivery fulfilment and even purchasing functions for many shippers are not always fully aware of the liabilities for cargo loss and third-party damages that these additional tasks are opening them up to,” explains Kemp.
In particular, as supply chains continue to develop in order to supply emerging markets, where the cargo owners are not always willing to invest in distribution infrastructure, the out-sourcing of such tasks will proliferate. Of course, this can bring significant new business opportunities to companies, which had previously limited their service offerings to freight forwarding and the organisation of international transport. These additional procedures can be complex. Kemp cites an example,
“A typical new type of activity would be the packaging, for the local retail market of an item with a sales promotion attached (price discount or two for one offer). This task is straightforward in itself but brings with it risks of errors and possible damage to the items. This would be something not experienced by transport operators in the past.
Cargo owners are also increasingly requiring forwarders to cover the full value of their goods throughout the sometimes lengthy and involved supply chain. This can be an onerous and unfamiliar risk for the forwarder, who is seeing his contractual obligations extended beyond what used to be accepted as standard terms and conditions.
Kemp outlines what he feels is a specialist insurer’s responsibility in these circumstances. “TT Club frequently gives advice to its Members with regards to the liabilities customer contracts could give rise to and sees the importance of providing tailor-made cover. We always wish to provide adequate protection for the varied operating scenarios presented by freight forwarders from around the world, who in turn are delivering a myriad of logistics services to their customers,” he concludes.
Source: TT Club
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