Tuesday, 12 June 2012
TT Club's Brian Sullivan talks to Mike Weir about the changing face of freight forwarding and the accompanying changing profile of risk
One of the key themes is that a lot of operators are moving from just being freight movers to providing a lot of other services. Nobody says “I’m a freight forwarder” any more. They say they provide logistics solutions.
Some of that is just marketing but some of it is reality. What we would say is that businesses need to be aware of how that changes the profile of risk that they’re taking on – if they haven’t got the right insurance, they’re on the hook and nobody will pick it up.
Can you give any examples?
I’ve seen companies get involved in things like delivering drugs to hospital bedsides. That’s a bit different to delivering it to a DC. Imagine you delivered the drug at 50% strength rather than 10%, because you got it wrong when you did the picking. You would expect the medical professional to pick that up, but we all know that sometimes these things don’t happen if people are in a hurry.
Where does the liability end in a situation like that?
The automotive sub-assembly sector is another example. Companies have told us that they just supply wheels to the local car plant, but when we get to the site we find they’re actually putting the tyres on. If they don’t do that properly, you can imagine the problems: there are recall issues; people might have accidents.
You need to know what you’re doing, and you need to share that with your insurance broker and have the right sort of programme by talking with someone like TT Club.
Do your staff have operational logistics experience?
We have people from industry who work for us. They’ve been there and know the stresses and the strains, and we also have legal professionals so that we can provide advice on contract issues.
We get to see a lot of things across the industry, so we can say, for example, “look, most of our other clients don’t take work on that basis, so you should alter your contract”. That’s part of the process.
A lot of cargo isn’t insured. How significant a problem is that?
I suppose shippers assume their cargo is insured because someone takes it from them, but most freight forwarders have some form of limitation on their per kilo liability. Unless the transport business or the freight forwarder or road haulier is grossly negligent then that per kilo compensation is all you get. You may think when your shipping something you don’t need to insure it but you do.
The other problem is that when you’ve not insured the cargo there is, potentially, stress on the commercial relationship because there is a mis-match of expectations and understanding.
When it comes to insurance, what is the freight industry’s biggest concern?
Why is insurance so complicated? Part of it is because of what I’m talking to you about, but we’re also asking our clients to help us understand what they’re doing to make it easier for us to do our jobs. We try and maintain an active dialogue with the industry.