Risks Associated with Handling and Shipping of Oversized Cargo
The handling and shipping of oversized cargo carry certain risks, including political, social, economic, and technical risks. Assessing potential risks helps logistics services providers to develop appropriate strategies such as disaster planning, protection against political risk, assessment of providers’ financial stability, and others.
Types of Risks
When offering international freight services and shipping of goods by air, sea, and land, logistics services providers face economic risk. Economic risk is mainly related to bank policies and financing available to shippers in different areas. Factors that logistics companies assess include labor costs, interest rates, and terms and repayment schedules. Forwarders also face technical risk which is related to cargo storage requirements and capacity, route length, choice of loading equipment, vehicle selection, and mode of transportation.
Assessment strategies help logistics services providers to choose equipment, mode of transportation, and warehousing capabilities that minimize the risk of accidents and ensure safe shipping. Shipping heavyweight loads also carries political risk which is mainly related to political attitudes and regulations on the transportation of oversized goods. In some countries, public policy may pose undue restrictions to shipping while in others, it encourages and stimulates the transportation of heavy loads.
Fiscal policy is another factor that impacts shipping, including tariffs which increase the cost of services and goods imported from other countries. Other factors include routing coordination policies, permission granting regulations, and the cost of using transportation infrastructure in different countries. Finally, logistics services providers also face social risk which is associated with public tolerance for transit and transportation of oversized loads across their territory. The shipping of heavy cargo may be perceived as having a significant negative impact on local communities and sustainable living.
Risk Management Strategies
Logistics services providers and members of IFA in this number develop and implement multiple strategies to identify, assess, control, and reduce risk. When assessing the risk of accidents, forwarders take different factors into account, including the impact on traffic participants and local communities, risk of delays, risk of delivering damaged cargo, and failure to deliver loads.
Other risks include potential damages to road infrastructure and the death or injury of traffic participants and drivers. To assess the risk of accidents, forwarders take different factors into account, including seasonality, infrastructure quality, distance, load volume, and frequency of shipping to different locations. They also look into factors and data such as traffic flow and freight data, severity and frequency of accidents, the operational characteristics of roads and highways, and others.
Logistics services providers also assess consequences such as lost, undelivered, and damaged loads and associated costs. In order to reduce the financial costs associated with different types of risk forwarders purchase insurance coverage for cargo subject to export, import, and re-export. Insurance covers goods against any damage or loss while in transit.
Policies include coverage for shipping from warehouse to warehouse, trans-boarding, deterioration of cargo while shipped by refrigerator vehicles, and risks associated with civil commotions, riots, strikes, political unrest, and war.