INSURANCE\\\ Forwarders: Are you


unnecessarily exposed?


TT Club development director Brian Sullivan looks at the liabilities that forwarders face besides the loss or damage to their customer’s cargo.


It is an increasingly litigious world. With profits harder to come by than ever, freight forwarders can be at risk as companies search all available avenues to cost recovery. This means that forwarders need to consider not only their responsibility for the well-being of their customers’ cargoes but all potential liabilities that they may be susceptible to under the terms of their bill of lading or standard trading conditions. The sources of such additional


liability can vary widely and are best illustrated by some real-life examples. A forwarder’s refrigerated being hauled by a


trailer was


subcontractor for delivery to a consignee. A fire broke out in the unit - due to a fault in the reefer equipment it was later discovered - and the whole rig was destroyed. The forwarder was liable, not only for the lost cargo of cheese but also for the tractor unit (estimated at £50,000), the trailer (£20,000) and repairs to the fire-damaged road surface (£20,000). Another equipment-related


fault led to multiple claims against a forwarder. This time it was damage to a rubber flexi-tank that was to blame. Some 17,500 kilos of Parol Oil (used mainly in the manufacture of scented candles) was travelling on the road haulage sector of an international move in a 20-ſt container. Quite soon into the journey the driver spotted a leak. Unfortunately by then some 5,000 litres of the oil had been lost. Weather conditions conspired to worsen the scenario as the wet road surface was dangerously affected by the spilt oil which caused six traffic accidents. It was discovered that the rubber bladder housing the oil had been incorrectly slung within the container. It was not secured properly and positioned at an inadequate height so it rubbed against


the bulkhead of the


container, causing it to rupture. The forwarder was liable for cargo loss, clean-up costs, container repair, demurrage, fines and the motor accident claims. Damage to a carrier’s equipment as a result of poor packing, chocking or securing of a load can be quite costly too. A case of


steel pipes was delivered by the shipper to a forwarder for a flight from the Far East to Europe. On approach, the pipes broke free and badly damaged the aircraſt, though happily it was able to land safely. When it comes to assessing


liability, cases such as this are not entirely straightforward. In this instance the airline held the forwarder, who issued its own airwaybill, liable. The forwarder in turn claimed from the shipper but this was contested. A costly lawsuit resulted. A forwarder


can also find


himself in difficulties even if he is more remote from the incident; for example when sub-contracting haulage to an independent carrier. Failings by truck drivers oſten cause accidents. TT Club has seen instances of third party damage to property and, sadly, bodily injuries, simply because the truck’s handbrake was leſt off when coupling or de-coupling a trailer. The rig runs away and untold damage caused. Similarly, considerable third party liability can result from a driver not planning his route carefully or being unaware of the true height of his load. A bridge collision, particularly if it is carrying a railway, can have extensive claims consequences. Nor can these types of liabilities


always be laid at the door of the trucker. With increased cost pressures, the Club is seeing the use of untested subcontractors as a problem for forwarders and if the carrier is not properly insured, the forwarder can be held liable. Forwarders should check


whether their own insurance covers third party liability but, in addition TT Clubs strongly urges careful vetting of subcontractors, especially trucking companies in unfamiliar regions. These days, selection is made easier by databases that can verify a trucking company’s licences to trade and proof of adequate insurance, including stipulated excess limits. Awareness of the exposure


in carrying out its business is an important aspect of a forwarder’s long-term financial security. Comprehensive liability cover is available and advice readily to hand from good brokers and specialist insurers.


Issue 3 2014 - Freight Business Journal


Cutting claims? It’s up to you says TT Club expert


Most insurance claims analysed by TT Club have showed that costly damages and loss, as well as serious bodily injury can be prevented or minimised by concerted risk management efforts, the Club’s regional director Phillip Emmanuel told the TOC Container Supply Chain Asia Conference in Singapore in early


April. He said: “While these causes are varied; ranging from theſt and poor maintenance of equipment to bad cargo handling and packing and clerical error; they share in common the fact that through good training, the employment of best practices and detailed monitoring and checking procedures, the vast majority are avoidable.”


17 The Club analysed over 2,600


claims over the past seven years from transport and logistics operators. Two thirds of incidents were due to failures in some facet of the operation, with only 5% caused by the weather and a quarter being due to poor maintenance of property or equipment.


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