December 2003 | Commentary | Risks and Rewards

Are Your Goods in Transit Safeguarded?

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Q: The supply chain in the United States can be long and involve a number of carriers, railheads, truck depots and container yards. How can I reduce the risk of disruption to my goods during transit? Which criteria do you suggest I use in checking my suppliers' facilities along the supply chain?

A: Transit delays or losses are often caused by operators who fail to follow established procedures when handling or transporting goods. It follows that the more hands through which a shipment passes, the greater the likelihood that something might go wrong. The causes for these incidents vary widely, from failing to issue the appropriate documents at an interchange point to failing to comply with governmental regulations.

In a recent case, a depot operator permitted a truck driver, who had arrived at his facility after hours, to leave a trailerload of goods at the yard over the weekend. The trucker was not given an interchange receipt or other document evidencing the trailer's delivery. The following Monday, it was discovered that the trailer and its contents had been stolen over the weekend. In this case, standard interchange procedures had not been followed.

In another case, customs authorities refused entry of a consignment of powdered milk destined for the United Kingdom because EU law prohibits milk imports from certain origin countries. The shipment in question had originated in a prohibited country and was detained for failure to comply with EU law. Proper compliance checks might have alerted the forwarder to this requirement.

Shippers often feel helpless when it comes to having any knowledge of the procedures their transporters employ to protect their goods. Although there can never be any assurance that a shipment will be transported completely free from incident, shippers can take the following steps to protect against this risk.

  1. Know your operator. Does your operator specialize in handling your type of goods? Does it have a good reputation? Does the staff receive specialized training?
  2. Ask for the specific routes and procedures employed. The use of a regular network of suppliers ensures that shipments are handled under a system of established procedures.
  3. Provide your own specifications. If your cargo requires special handling, such as temperature control, air ride trucks, or specific delivery times, you should provide clear written instructions to your carrier in advance and insist on written acknowledgement. As a safeguard, your carrier should also ensure that all the documents of carriage contain those instructions.
  4. Consider using long-term contracts. One-off transactions with multiple carriers tend to pose a greater risk of loss.
  5. Obtain an insurance certificate from your carrier. A claim for loss or delay is never a welcome event, but a liability policy tailored to address the operator's services helps to ensure proper compensation.
  6. Ensure that your operator requires liability insurance from its subcontractors. This is as important as receiving a certificate from your own operator.
  7. Purchase your own insurance to protect against loss and damage to your goods. This puts the claims process directly in the hands of the insurance companies and relieves you of the administrative details.
  8. Ensure that your carrier participates in organized anti-terrorism initiatives such as the Customs-Trade Partnership Against Terrorism (C-TPAT). By voluntarily participating in the many cargo security initiatives now being instituted, your operator can achieve known operator status, thereby reducing the risk that your cargo will be subjected to delay.

Finally, once you have established a rapport with a carrier, try to maintain it even if you feel that other carriers may charge you less for the same job. Good working relationships and trust are often worth more than a small saving in the cost of the shipment.

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