Economic times are tough, and there is no industry where it is more apparent than in the freight forwarding industry. Profit margins are low and escalating fuel prices, toll fees and crime are further adding to cost pressures faced by the industry.
“Freight forwarding is a tough industry where the price is king and forwarders are price takers rather than price setters, forcing many operators to discount heavily in order to close deals. These discounting measures without weighing up the related risks can adversely affect the quality of service delivered and the outcomes for both forwarders and clients,” says Kennedy Ntenjwa, Marine Broking Centre Manager at Aon South Africa.
Seemingly, the biggest threat is the magnitude and complexity of risks that transport companies are willing to take on in order to secure business, without thoroughly interrogating the financial and liability implications if something does go wrong.
“We see forwarders taking the bare minimum of cover on a general commercial policy in order to save on costs, instead of working with a broker to ensure that the cover is purpose-built for the real risks facing the business and industry. Even more worrying is the growing number of operators who have no insurance cover at all, taking on risks and assuming liabilities that are well beyond their capabilities and that equally leave their clients in a massive predicament if things go awry,” says Kennedy.
In an embattled economy, solid risk management strategies need to be front and centre, backed by appropriately scoped insurance covers to protect the bottom line of the business and the client’s goods entrusted to it.
Aon offers the following important tips to freight forwarders when taking on new business and ensuring that the appropriate risk management measures are in place:
Much more stringent and detailed roadworthiness regulations are also on the horizon. “Operators will need to familiarise themselves with these new developments, as insurance cover is dependent on the vehicle being roadworthy, ultimately necessitating the implementation of a comprehensive vehicle maintenance programme,” says Kennedy.
“This is exactly where the insights and expertise of a professional broker that specialises in maritime insurance can prove to be invaluable. Testing different scenarios and making sure that you have all your bases covered is a task best undertaken with an expert broker in marine insurance by your side,” concludes Kennedy.
The post Domestic freight forwarding challenges grow as economy struggles appeared first on Truck and Freight Information Online.