24 Juni 2014

[240614.EN.BIZ] TT Club Warns Forwarders of Perils Lurking in Routine Service Contracts


FORWARDERS are taking on too much risk in the contracts they routinely sign, warns TT Club's Europe-Mideast-Africa manager Andrew Kemp.

Writing in London's Containerisation International, the maritime insurance executive said forwarders are clearly accepting an ever growing exposure to risks of which they may not be aware.

"These non-negotiable contracts are frequently generic, tend to be non-specific and sometimes considerable imagination is needed to relate them to logistics and supply chain risks," he said.

What he recommends is to transform the contract's theoretical provisions into practical implications.

"Underwriters can then make a judgment as to the risk's insurability, which will depend on a full risk assessment, covering what is known about the companies involved, including sub contractors," said Mr Kemp.

"One challenge is that contracts being promoted by cargo owners are usually fait accompli, offering little if any leeway to the unsuspected forwarder," he said.

What forwarders are asked to sign may be based on no-fault liability and lack typical carriage liability limitations or defences.

"This may be inconsistent with or may derogate from, international conventions or locally applied law," said Mr Kemp.

Source : HKSG.

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