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Evaluating Logistic Company Risks

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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  1. Evaluating Logistic Company Risks 5th Insurance & Re-insurance rendezvous St. Petersburg Friday 17th November

  2. Discussion points • What is logistics? • Industry drivers • The industry response • The risks

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

  4. 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”

  5. Industry drivers • Global integration • Outsourcing • Mergers & Acquisitions • Environmental sensitivities

  6. 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.”

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

  8. 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

  9. 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

  10. Industry drivers - M&A the motivators • Entry to new markets • Geographical positioning • Expanding skills & capabilities • Reinforcement of presence • Accelerate growth

  11. 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.”

  12. 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?”

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

  14. 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

  15. 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

  16. The risks - Logistics contracts • Extended liability or full value cover • Non-standard contract cover • Access to high limits or non-standard risks

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

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

  19. Logistics Any Questions?

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