Freight forwarding is a complex business and requires timely and accurate logistics management. Here are 5 key business considerations which will help protect forwarders and help retain clients.
1. Managing Risk
It’s important to recognise that risks can never be completely eliminated. That being said, freight forwarding companies need to be proactive in minimising risks through ongoing training, keeping up to date with industry knowledge, having efficient and accurate record keeping and using trusted carriers where possible. Having trading conditions in place is very important and will usually contractually limit the forwarder’s liability. This is expanded on in the next point.
2. Trading Conditions
Trading conditions set out the scope and parameters of the service the forwarder will provide and will usually limit the forwarders liability in the event of a claim made against them. The sale contract between the buyer and seller will have a bearing on the contract and trading conditions which are drawn up between the forwarder and the buyer or seller. Failure to have clear trading conditions in place could leave the forwarder with unlimited liability.
3. Liability Insurance
Freight forwarders are responsible for their client’s goods whilst in transit from seller to buyer. It’s therefore essential that liability cover is in place for customer’s goods whilst in the forwarder’s custody or control, whether the cargo is being moved or stored. Liability insurance will usually extend to cover cabotage, misdelivery, consequential loss, incorrectly received goods and other many other scenarios. Protection for employees is mandatory in the UK so Employers Liability insurance must be in place for any business which has staff. Separately to the liabilities, cover for office premises and busines contents will protect a business further should a loss occur.
4. Vehicle Insurance
Many freight forwarders operate their own fleet of vehicles to transport client goods both domestically and internationally. As well as satisfying RTA legal requirements, fleet insurance affords protection for the physical damage to the vehicles operated by the forwarder. In order to minimise vehicle downtime, most forwarders will include breakdown cover and a vehicle maintenance contract.
5. Value Added Services
Freight forwarding is a competitive industry and ‘going the extra mile’ has become a way for companies to stand out from the crowd. Equally as important is for companies to be a one-stop shop to encourage customer loyalty. For example, offering international payment solutions to client’s to enable them to make and receive international payments and convert them to GBP at a fraction of the cost that high street banks charge. Often something as simple as saving a client some money in another part of their business can go a long way to ensuring repeat custom.
This isn’t an exhaustive list of considerations by any means but should highlight some points for thought.
If you’d like advice and information on protecting your freight forwarding business, contact SJL Insurance Services. We provide specialist insurance solutions for the transport and logistics industries, we are a mentor with the Commonwealth Enterprise and Investment Council and we offer consultancy on existing insurance arrangements to check for gaps in cover and to advise if any cost savings can be made.
+44 (0)1905 27775