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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

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Evaluating Logistic Company Risks

5th Insurance & Re-insurance rendezvous

St. Petersburg

Friday 17th November

Discussion points

  • What is logistics?

  • Industry drivers

  • The industry response

  • The risks


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

What is Logistics?

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


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

Industry drivers

  • Global integration

  • Outsourcing

  • Mergers & Acquisitions

  • Environmental sensitivities

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

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

Outsourcing – Activity

  • Outward Transportation89%

  • Inbound Transportation82%

  • Customs brokerage/clearance82%

  • Warehousing70%

  • Cross docking/consolidation49%

  • Freight Forwarding40%

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

Outsourcing - Activity

  • Logistics procurement33%

  • Reverse Logistics32%

  • Product returns & repair30%

  • Labeling & marking29%

  • Inventory Management27%

  • Carrier Selection25%

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

Industry drivers - M&A the motivators

  • Entry to new markets

  • Geographical positioning

  • Expanding skills & capabilities

  • Reinforcement of presence

  • Accelerate growth

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

“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 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

Problem areasReasons Possible results

Wrong transmissionhuman factor out of parts in factory Standstill

Wrong packaginghuman factor Standstill

Damages in transporthuman factor missing partsforce majeure

Late deliverytraffic, human or Standstilltechnical problems

Missing partswrong picking or Standstillpacking

Wrong inventoryhuman factor additional supply

Quality problemsmanufacturing or new deliveryhuman problems

Wrong assemblyhuman factor new assembly additional supply

Some examples for

problems, discussions or claims

The risks – The human factor– he human factor


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

  • Extended liability or full value cover

  • Non-standard contract cover

  • Access to high limits or non-standard risks


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


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


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