Executive Briefings

Analysis Pinpoints Risk Hot Spots for Freight Forwarders and Logistics Operators

Despite key factors that cause disruption throughout the global supply chain, there are opportunities for operators to save costs by tightening procedures to minimise accidents, breakdowns, delays and other risks, according to Laurence Jones, TT Club's director of global risk assessment.

Speaking in Hong Kong at the recent freight industry forum, TOC Container Supply Chain Asia, Jones revealed that nearly 80 percent of incidents resulting in a claim were avoidable and the vast majority involved some form of human error.  In urging operators to pay heed to the lessons of TT's analysis, Jones said, "We found that the adoption of proven operational procedures and available safety technology could prevent many of the incidents.  Relatively small investments in training and maintenance could bring significant commercial benefits through less disruption to operations, lower insurance premiums and more satisfied customers."

In terms of causal effect the analysis showed that 63 percent of the total cost of claims was due to operational factors, with maintenance (or lack of it) accounting for a further third; leaving those lacking human intervention, mainly weather-related incidents contributing only 4 percent of the cost.

When it comes to the movement of freight around the world, TT Club's experience concludes that the prevention of many claims lies in efficient and well constructed processes and the analysis presented by Jones reinforced this belief.  Forty-three percent of the cost of claims resulting from operational factors came as a consequence of errors or faults in an operator's systems or processes.

"While straightforward theft accounted for 29 percent of operational claims, poor processes and systems were the biggest culprit," Jones said. "A whole range of substandard practices were in evidence, such as bad stowage and handling; customs fines due to incorrect or late paperwork; poor instruction on management of refrigeration equipment; and wrong release of cargo.  All such claims could have been avoided with tighter procedures."

The other major contributor to damage and cost was found to be fire destroying property, equipment and cargo.  Most building damage came from electrical faults; for lifting equipment, a lack of sufficient, regular maintenance checks was the main cause; and fire in container cargo was mainly due to poor stowage or mis-declaration of the goods.  Each factor, argued Jones, could be mitigated by adequate attention by either operators or shippers.

"In analysing the causes of disruption, we seek solutions through the development of good practice for our industry."

The TT Club provides insurance and risk management services to the international transport and logistics industry.

Source: TT Club


Keywords: Supply Chain Security & Risk Mgmt, Business Strategy Alignment, Legal, Govt. & Regulatory Issues, Supply Chain Analysis & Consulting, Global Supply Chain Management, Transportation Insurance, Risk Management Services

Speaking in Hong Kong at the recent freight industry forum, TOC Container Supply Chain Asia, Jones revealed that nearly 80 percent of incidents resulting in a claim were avoidable and the vast majority involved some form of human error.  In urging operators to pay heed to the lessons of TT's analysis, Jones said, "We found that the adoption of proven operational procedures and available safety technology could prevent many of the incidents.  Relatively small investments in training and maintenance could bring significant commercial benefits through less disruption to operations, lower insurance premiums and more satisfied customers."

In terms of causal effect the analysis showed that 63 percent of the total cost of claims was due to operational factors, with maintenance (or lack of it) accounting for a further third; leaving those lacking human intervention, mainly weather-related incidents contributing only 4 percent of the cost.

When it comes to the movement of freight around the world, TT Club's experience concludes that the prevention of many claims lies in efficient and well constructed processes and the analysis presented by Jones reinforced this belief.  Forty-three percent of the cost of claims resulting from operational factors came as a consequence of errors or faults in an operator's systems or processes.

"While straightforward theft accounted for 29 percent of operational claims, poor processes and systems were the biggest culprit," Jones said. "A whole range of substandard practices were in evidence, such as bad stowage and handling; customs fines due to incorrect or late paperwork; poor instruction on management of refrigeration equipment; and wrong release of cargo.  All such claims could have been avoided with tighter procedures."

The other major contributor to damage and cost was found to be fire destroying property, equipment and cargo.  Most building damage came from electrical faults; for lifting equipment, a lack of sufficient, regular maintenance checks was the main cause; and fire in container cargo was mainly due to poor stowage or mis-declaration of the goods.  Each factor, argued Jones, could be mitigated by adequate attention by either operators or shippers.

"In analysing the causes of disruption, we seek solutions through the development of good practice for our industry."

The TT Club provides insurance and risk management services to the international transport and logistics industry.

Source: TT Club


Keywords: Supply Chain Security & Risk Mgmt, Business Strategy Alignment, Legal, Govt. & Regulatory Issues, Supply Chain Analysis & Consulting, Global Supply Chain Management, Transportation Insurance, Risk Management Services