INSURANCE\\\


Take care with online freight exchanges, warns TT Club


There is an increasing trend, especially in Eastern Europe, for organised criminals to use internet cargo clearing sites – freight exchanges - to steal high value cargo by impersonating legitimate operators. TT Club has found that the


increased use and availability of such sites is creating an unprecedented opportunity to pinpoint, locate and steal cargoes. Crime organisations have purchased legitimate but failing transport operators and continuing to trade in their name, predominantly online and in a state of


virtual insolvency.


In this way the criminals can identify, accept and collect cargoes, which are subsequently stolen during transit. Such internet-based portals allow these organisations to search for targeted cargo over prolonged periods until the desired opportunity arises. A recent TT Club case study


illustrates the issue. A forwarder received a last minute order for a cargo of automotive air-conditioning units with collection due three days later. Due to the short notice period and unavailability of the regular haulier, the forwarder searched the internet and found the contact details of a prospective carrier. After phoning the prospective carrier, the forwarder received


reassurance in the form of state registration documents purporting to show the prospective carrier as a bona fide legal entity, as well as a certificate of registration with the tax authorities. The forwarder granted ‘Actual Carrier’ status and provided the collection details. The cargo was picked up as arranged but vanished into thin air along with the carrier. The theft resulted in a claim of €105,000. There are a number of


lessons to be learnt from this incident. The company name of the prospective carrier was not on any blacklist or warning site; however no request was made for copies of insurance details or company profile, and the state registration and other documents that were received were not checked with the relevant authorities. As many operators expand


their logistics services into new geographical areas and acquire new contracts, they naturally need to subcontract and use unknown carriers more often. Where movements become time sensitive, clearing sites can be an attractive means of achieving on time arrival targets. However, the risk of loss of cargo and the consequent reputational damage should not be underestimated.


Such damage will almost certainly


outweigh the failure to achieve an on time delivery. TT Club’s advice is that the


risks of internet cargo sites can be reduced in a number of ways. For instance, it is essential to have a robust approved


selection policy. The effective implementation


being


policy, even (and particularly) at times when time-sensitive moves are


arranged,


is fundamental in reducing the risks associated with the use of clearing sites. TT Club’s Stop Loss Information Sheet on ‘Theft Attractive Cargoes’ includes a list of questions a forwarder should be asking a prospective sub-contractor. This can be downloaded from the Publications section of the website www.ttclub.com. Clearing sites often include a


disclaimer, denying liability in the event of fraudulent activity on the site. However, operators of such sites do have a duty of care to users. They will often make recommendations for safe usage, list best practice and give loss prevention advice in order to minimise user’s exposure to risk. TT Club recommends that such instructions are fully understood and applied wherever possible. Subcontractors using free mail accounts such as Hotmail,


Gmail and Yahoo should


arouse suspicion. Similarly correspondence via Skype or other free videoconferencing should be avoided. When requesting insurance


subcontractor of such a


documents always ensure the original certificates are posted. Beware if documents are offered only in electronic format.


While this can be a


time saver, more sophisticated graphics packages are making it easier for fraudsters to create false documents. Always seek to verify the of


legitimacy the insurance


policy with the insurer. If the insurer is not contactable and/ or doesn’t have a website with contact details, this could be an indicator of legitimacy issues with the contractor. As mentioned there is also a


threat of criminal organisations taking over legitimate companies


with whom a


forwarder may have traded previously. Take extra care should a past point of contact suddenly change. Ultimately thieves will


seek the weakest link in any given supply chain and web- based sites can offer one such opportunity. - so it is important to adopt a stringent approval procedure, before you entrust a new subcontractor with your customer’s cargo and your own reputation.


A cautionary tale from the Continent


Dover-based forwarder John Shirley reports that its Slovenian partners, a reputable well- established forwarder, put a load of office chairs from Italy to France on a continental European-based exchange in mid-May. A Ukrainian haulier took the job but then disappeared with the load. The forwarder’s loss adjuster - based in Belgium – said that it would be impossible to claim against the exchange, as its terms and conditions effectively absolve them of any liability. The loss-adjuster added that he knew of at least 15 other cases involving UK companies where criminals have penetrated exchanges and the recent incident was by no


means the largest. This implies that there may be dozens – possibly many hundreds of cases - across the Continent. Similar incidents have been


reported when using UK-based freight exchanges, although the chance of the forwarder receiving some sort of redress is higher. Transport insurer the TT Club


also said that it too had received reports from logistics operators of similar problems - organisations in Eastern Europe are setting up what on the surface appear genuine companies to collect loads but then disappear. The Club’s senior cargo


underwriter Graham Hooper, said: “These exchanges are just acting like a telephone directory


and I guess that their website terms of use will absolve them of any liability. We recommend that shippers and forwarders only use exchanges that check their members out properly and you should know your subcontractor.” A recent issue of the Club’s


TT Talk newsletter added that with business increasingly generated and agreed through less formal, electronic means, incorporating standard terms and conditions into contracts of carriage was becoming more


challenging,


jurisdictions contract


with


the added complexity that different interpret


may provisions


in unexpected ways. But there were ways of mitigating these


risks, including standard references at the foot of all email communications, formal quotations and all general letters, and references and links can be embedded to web sites. The Club advises companies


to incorporate their own terms transparently into all transactions with customers and to make sure that they fully appreciate the specific terms that are being offered or imposed by any subcontractor. Subcontractors should also be


given clear, concise restrictions and direction on, for example, further subcontracting, security provisions,


communication


channels and incident notification.


Issue 5 2012


21 NEWS ROUNDUP FORWARDING & LOGISTICS


Yusen Logistics will open a new Turkish subsidiary on 1 October. Yusen Logistics (Europe) already has a representative office, but Yusen Logistics Turkey Lojistik Hizmetleri Limited Şirketi (YLTR) will offer general logistics solutions that combine air/ocean forwarding as well as inland logistics and warehousing to serve the automotive and retail industries. YLTR will also act as a hub for the Black Sea, Mediterranean, Central Asia, and the Middle East.


The VAT rules have changed for some port community systems charges, reports BIFA in its latest newsletter. Some services that were previously zero-rated are now liable to standard-rate VAT, it says. BIFA advises that freight forwarders can continue to charge the net amount as an invoice disbursement, when handling an international freight movement. This brings the PCS charges in line with a number of disbursements a freight forwarder may incur when organising an international movement. For example, if a forwarder contracts a UK-based transport company to collect goods from a UK port or airport to deliver within the UK, then VAT is applied by the UK contractor at the standard rate. So long as this service is part of an international freight movement the forwarder can invoice its customer with VAT zero-rated. The forwarder can then recover any VAT applied by a UK contractor for a domestic service through its VAT return.


US-based forwarder BDP International has decided to remain a 100% family-owned business and not to seek private equity investment, following a seven-month review. Owners the Bolte family are not seeking a minority investor, and the company is not for sale and will continue to be managed by the current leadership team.


Registration has opened for the Intermodal Europe 2012 show at Amsterdam RAI on 27-29 November, earlier than scheduled say the organisers. The free to attend three-day event covers all areas of container transport and logistics across road, rail and sea. There will be over 50 free conference sessions with presentations from leading industry figures. The full programme will be announced in September. For further information, to register or to exhibit, visit http://www.intermodal-events.com.


TPC Freight Management has appointed David Pollock as head of business development for its UK Southern Region. He will oversee the continuing growth of the Paisley-based freight management business outside Scotland, specifically the wines and spirits sector. TPC Freight Management provides complete global logistics solutions for the food and beverage, engineering, chemical and pharmaceutical sectors and has a network of offices in Scotland, Russia, Estonia, Sweden and the UAE.


Panalpina has invested £750,000 in its Aberdeen operation and plans to add 15 people to its existing 160-strong workforce at its base in Bucksburn, Aberdeen. Increased oil and gas business also prompted the purchase of six new trucks, taking its total Aberdeen fleet to 40.


Davies Turner has bought a 7,000 sq m cross dock warehouse close to its existing distribution centre at Coleshill, Birmingham. The UK independent freight forwarder said it needed more capacity to handle its European and oceanfreight consolidation services. The terminal is purpose-built to handle fast-moving consignments for our daily services to continental markets, along with ocean freight consolidations.


DHL Express opened its US$175 million North Asia Hub at Shanghai Pudong International Airport on 12 July, its biggest in Asia. It also announced plans to further invest US$132 million in an additional eight dedicated aircraſt to service high demand routes between Shanghai and North Asia, Europe and the US, by 2014. The flights will be operated by partner and equity-held airlines Polar Air, Aerologic, and DHL Air UK and other providers.


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