December 2 - International freight and logistics insurer TT Club has warned forwarders and logistics operators offering services within Russia to consider their liabilities beyond just cargo protection.
In a recent presentation by its representative in Russia, Panditrans, TT Club reminded transport operators with interests in the Russian market of a five-fold liability risk profile associated with doing business in the region.
Panditrans deputy director Alexander Petrenko highlighted that in addition to claims for loss or damage to cargo, operators could be liable for financial losses through errors and omissions, as well as third-party liabilities, and fines and duties imposed by state authorities.
Furthermore, added TT Club, there is a range of costs arising from the consequences of any incident involving a container or CTU (cargo transport unit).
Aside from this, liability to a contractual party - usually limited by applicable international and local laws and conventions - may be significantly increased depending on the circumstances of the incident, such as whether gross negligence or reckless conduct on the part of an employee or hired subcontractor.
"The level of risk for some types of incident, such as cargo theft and armed hijacking, may be higher in the region, but a lack of knowledge and experience of regulations, the law and judicial procedures are also likely to expose operators to considerable unexpected costs," said Paul Knighton, senior underwriter at TT Club.
"Operators should never consider cargo cover alone as sufficient. All carriers, truckers and forwarders need to carry out a thorough assessment of common liabilities, both local and international, when providing transport services to Russia and the former Soviet Union."
The TT Club's warning comes as some signs of a recovery in container trade volumes to the region are being reported, following a number of economic and political difficulties in the country.
"Our 25 plus years of experience in the former Soviet Union has lead us to conclude that in practical terms the transport operator is liable for almost everything in the event of an incident," warned Petrenko.
In order to assist operators in understanding the complexity of the situation, TT Club has identified four main factors which commonly impact on risk exposure.
The four factors include the human factor (genuine mistakes, errors and omissions by own employees); the professional factor (poor internal procedures and lack of risk management policies); the juridical factor (imperfection of applicable international and local legislation and disputable court practices); and the insurance factor (a low level of insurance culture and shortage of insurance products specifically designed for the needs of transport operators).