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Evaluating Logistic Company Risks. 5 th Insurance & Re-insurance rendezvous St. Petersburg Friday 17 th November. Discussion points. What is logistics? Industry drivers The industry response The risks. Introduction.

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Evaluating logistic company risks

Evaluating Logistic Company Risks

5th Insurance & Re-insurance rendezvous

St. Petersburg

Friday 17th November


Discussion points
Discussion points

  • What is logistics?

  • Industry drivers

  • The industry response

  • The risks


Introduction
Introduction

“The streamlined processes and services introduced by logistic service providers have still to be matched by the insurance industry.”


What is logistics
What is Logistics?

“The planning , implementing, managing and monitoring the movement of product from point of origin to point of use.”

Or

“The management and control of inventory in motion and at rest”


Industry drivers
Industry drivers

  • Global integration

  • Outsourcing

  • Mergers & Acquisitions

  • Environmental sensitivities


Industry drivers global integration
Industry drivers - Global integration

“Global integration, deregulation and privatisation have led to the expansion of worldwide trade leading to container traffic exceeding all other waterborne trade.”


Industry drivers outsourcing
Industry drivers - Outsourcing

“As cargo producing companies increasingly focus on core activities the percentage of outsourced logistics activity continues to grow.”


Outsourcing activity
Outsourcing – Activity

  • Outward Transportation 89%

  • Inbound Transportation 82%

  • Customs brokerage/clearance 82%

  • Warehousing 70%

  • Cross docking/consolidation 49%

  • Freight Forwarding 40%

  • Source: 9th Annual 3PL study – Capgemini/Georgia Inst of Technology/ FedEx


Outsourcing activity1
Outsourcing - Activity

  • Logistics procurement 33%

  • Reverse Logistics 32%

  • Product returns & repair 30%

  • Labeling & marking 29%

  • Inventory Management 27%

  • Carrier Selection 25%

  • Source: 9th Annual 3PL study – Capgemini/Georgia Inst of Technology/ FedEx


Industry drivers m a the motivators
Industry drivers - M&A the motivators

  • Entry to new markets

  • Geographical positioning

  • Expanding skills & capabilities

  • Reinforcement of presence

  • Accelerate growth


Industry drivers environment
Industry drivers – Environment

“Increasing regulation will increasingly govern the way in which we dispose of unwanted goods, a responsibility that logistic service companies will use to their advantage.”


The industry response
The industry response

“Gone are the days when container shipping lines refused to compete with freight forwarders, now that the controller of cargo movement is usually the service provider.

What of the other transport service providers?”


The risks
The Risks

“The risks associated with the transportation & warehousing of cargo have not changed but the obligations on the service provider have.”


Risks the human factor the human factor
Risks – The human factor– The human factor

Problem areas Reasons Possible results

Wrong transmission human factor out of parts in factory Standstill

Wrong packaging human factor Standstill

Damages in transport human factor missing parts force majeure

Late delivery traffic, human or Standstill technical problems

Missing parts wrong picking or Standstill packing

Wrong inventory human factor additional supply

Quality problems manufacturing or new delivery human problems

Wrong assembly human factor new assembly additional supply

Some examples for

problems, discussions or claims


The risks the human factor he human factor
The risks – The human factor– he human factor

REASONS

human factor

human factor

human factor

force majeure

traffic, human ortechnical problems

wrong picking orpacking – human orIT-factor

human factor

manufacturing orhuman problems

human factor

The human factor is the determining reason for mistakes

People are working in processes

They are motivated or not

They are well educated or not

They are using the right equipment or not

They understand what they are doing or not

To fulfil these requirements the management has to define

the qualifications, the equipment and the education for their work force

Only best practice (in staff and technique) enables theLogistic service provider to meet the customers demandsand to keep claims in a moderate range


The risks logistics contracts
The risks - Logistics contracts

  • Extended liability or full value cover

  • Non-standard contract cover

  • Access to high limits or non-standard risks


Conclusion
Conclusion

“There is now a blurring of where all risk cargo and cargo liability begins or ends”.


Conclusion1
Conclusion

“The increasing range of services offered by and demanded of companies requires a more collaborative approach between all parties.”


Logistics

Logistics

Any Questions?


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