The traditional handling of risk in the mobility sector is noteworthy for numerous shortcomings, which can be categorized under three headings; duplication, conflict and complexity.

Duplication:

Premium duplication: The cargo owner purchases insurance, and simultaneously each freight operator within the supply chain purchases liability insurance against physical loss or damage; in effect covering the same risk twice. This duplication is repeated in the various stages of a single cargo movement.
Administration duplication: The cargo owner is responsible for all the procedures relating to managing his policy, whilst the freight operator is separately managing the administration relating to his liability; time-consuming administration relating to the same risk.

Conflict:

The freight forwarder is required to automatically refute the cargo owners' claim. Conflict is thereby intrinsic to the current system, with all that this implies for inefficiencies, let alone the creation and nurturing of a mindset that sets at odds the interests of the freight operator and the cargo owner.

Complexity:

Up to six claims are instigated following a single loss. The situation is further complicated by the number of interests that become simultaneously involved, with the freight operators negotiating with their brokers, and insurance companies, whilst the cargo owner interacts with his broker and insurer. Further inefficiency is prescribed with each insurance company appointing their own loss adjuster to protect their interests.

A system that has duplication, conflict and complexity designed into it, is profoundly flawed, not only adding costs, but also frustrating efforts to improve quality by misalignment of interests. To be effective a total review of risk in the supply chain must be addressed resulting in a fundamental change to the system.

"Quantum improvements in terms of Cost and Quality for Freight Operators and Cargo Owners are required," says Hugh Reimers Director of Eikos Risk Applications (Pty) Ltd who specialize in mobility risk solutions.

Reimers suggests using a single facility whereby administration is slashed, and the principle of a single premium for a single risk is ensured. Further benefits then ensue from economies of scale, and the speed and simplicity of the process. Vitally important is the change of mindset and the positive impact on quality that comes from the alignment of freight operator's and cargo owners interests in respect of loss or damage. Reimers is adamant that it is possible to create convenient facilities whose revenue generating/cost saving functions benefit the freight operator and the cargo owner alike, and whose use assists considerably in the pursuit of total quality.