INSURANCE/NEWS\\\


Companies that provide what are increasingly called supply chain management services - which now include freight forwarders, logistics operators, 3PLs, distribution, warehousing and haulage firms - are constantly widening their service portfolios. Either their customers demand it or, with ever more competition, they are striving to expand their services to sustain or increase profits. In seeking to provide the most


relevant insurance cover for this type of transport operator, we at TT Club are constantly monitoring the services our customers are contracting


to undertake. We


need to ensure that the Club’s products still meet the needs of its customers and the market and also assess the changing risks and liabilities that operators are open to when providing new services. We


are intensely interested,


therefore in innovation and the exciting trends that exist in our industry. I recently helped judge a wide


variety of entries from transport companies hoping to win a BIFA Award. The experience fuelled this interest in industry trends and the ways in which operators are seeking to serve their customers better. These award entrants are competing in the marketplace by differentiating their


service


offerings through a range of innovations, both technology- and process-driven. I believe there is a significant


lesson to be learnt. In recent years, the freight transport industry has bemoaned the commoditisation of its services. Many commentators have concluded that pressure on rates from customers has shorn the operator of his ability to deliver the added value that distinguishes services from the plain vanilla, A to B transportation of freight. But I would contend that this is not entirely true. Advances in technology,


particularly the Internet, have allowed small and medium-sized freight forwarders, especially, to compete with the big boys. Regional or national operators with one or just a few offices can network easily with partners throughout the world. Associate companies at the other end of the supply chain (and/or at key points along it) can be employed via almost instantaneous electronic communication.


Complex


documentation can be shared without laborious and potentially


By Brian Sullivan, TT Club


error-strewn re-keying. Perhaps most importantly, state-of-the-art track and trace systems can be offered on a transactional basis. Being able to monitor the


progress of, and more importantly be alerted to any delay in shipments moving through the supply chain has raised the smaller operator’s competitiveness. Through internet application, sophisticated tracking can be offered to shippers without cumbersome and expensive in- house IT systems. Thanks to modern technology,


smaller operators can maintain close, hands-on personal relationships with their customers at a local level, while still providing them with the same standard of service as that offered by larger organisations with their own global network of offices. So we are finding that even


when larger multi-national shippers go out to tender for their global supply chain management requirements, medium-sized, regional forwarders and logistics operators are not precluded from bidding. Modern technology allows them to provide a worldwide service. In these cases we advise operators to examine carefully the contracts such multi- nationals demand they sign, if successful with their bid. There is a real danger of smaller operators over-stretching their resources in terms of increased liability. Innovation is, of course not


limited to technology, which – as a function of its universal availability –can hasten commoditisation. Transport operators across the whole size range are seeking to differentiate themselves through long-term relationship building with customers. These might include growing new markets for their customers by designing radical new supply chain arrangements that make previously unprofitable products successful; developing more efficient processes within the supply chain by applying management techniques such as Lean and Six Sigma; or taking a lead logistics (sometimes called 4PL)


role that controls other operators on behalf of the customer. These are all devices with


which a transport operator can increase his revenue, expand his customer base and make his value to the customer more difficult to do without. Of course, through innovative service and involvement in a customer’s business comes increased responsibility and liability. This can oſten be arduous for smaller companies with limited resource, or any size company that agrees to responsibilities while unaware of the consequences. Inventory costs are a typical


example of this sometimes hidden responsibility. Warehousing, packaging and redistribution are common functions taken on by some operators that have traditionally been solely involved in the international forwarding of goods. The liability, should these goods be lost or damaged while in store, will rest with the forwarder, who in the past was responsible only while the goods were in transit, when such liability was oſten limited by the terms of an international convention. This is a simple example of unwitting responsibility leading potentially to uninsured loss. While TT Club would urge


some caution in taking such expansionary steps, it has valuable experience


and can highlight


issues to consider, alongside tailoring appropriate insurance terms. Thorough consideration of the risks involved needs to underpin any successful venture. TT Club was born of innovation;


the mutual was set-up to deal with the changing face of freight transport risk at the dawn of containerisation. Since that time the nature of global supply chains and the function of those companies whose


services manage them


has been constantly changing. As innovation brings cost-savings and efficiencies, we at TT Club continue to monitor the changes, applaud the inventiveness of those that drive them, and offer our experience and keen awareness of the evolving risk environment.


Issue 1 2013


Innovation is the key to successful services


NEWS ROUNDUP CUSTOMS & INTERNATIONAL TRADE


 Importers and exports using simplified customs procedures, such as customs warehousing or temporary storage, will have to fulfill Authorised Economic Operator (AEO) criteria, or possibly provide other financial guarantees to cover suspended VAT and duty, reports the British International Freight Association. This could lead to heſty cost increases, BIFA adds. The Association quoted an alert by international tax service company Grant Thornton on a clarification recently issued by HM Revenue and Customs. Grant Thornton also noted that UK businesses have lagged others in the EU in pursuing AEO status and urged firms to start the process as soon as possible, given the lengthy accreditation process.


 The British International Freight Association is warning shippers sending goods to South Korea to pay special attention to manifest descriptions or risk penalty charges and customs delays. The description of the goods must be completed in specific and precise manner as outlined by the Korean Customs Service (KCS) and BIFA is strongly advising shippers to avoid generic and meaningless terms such as “part, sample, accessory, giſt, assembly, product or goods” as well as meaningless numbers and punctuation marks. The precise technical terms as stipulated in The Korea Advance Manifest System (AMS) issued by the Korea Customs Service should be used. Korean customs has given the industry a month in which to improve, aſter which penalties will be issued.


 Turkey has restricted a number on imports in an attempt to reduce its current account deficit. The measures affect a range of commodities including flat steel, red meat, cars and alcohol and some apply immediately. Turkey has also imposed a special consumption tax on larger cars mobile phones, alcohol, cigarettes and fuel.


 Intertek has signed a new contract to support The Standards Organisation of Nigeria (SON) Conformity Assessment Programme. SON, which has been in place since 2005, aims to improve the quality and safety of goods being exported to Nigeria and protect against substandard and dangerous goods. Exporters need to obtain a certificate of conformity for all customs clearances, samples are also taken at the country of origin and the container then sealed to prevent tampering.


19


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We find smarter ways to move our customers’ containers anywhere in Europe - using the best combination of sea, rail and roadd


Unifeeder Shortsea provide our customers with fully multimodal and flexible solutions, combining seabourne transportation with road and/or rail solutions to suit individual needs as required.


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