Companies are simply not doing the due diligence required to manage their logistics operations properly.
Most of the people making transportation decisions today may not be educated in the legal consequences of their operations. Management might be misinformed that transportation is now totally deregulated, so they don't need highly skilled transportation specialists anymore to deal with carriers and service providers. Anybody could do the job. There is a greater need than ever to have people on staff educated in the legal aspects of transportation and logistics. All the problems we see cropping up are a result of this failure to educate.
Very few companies are in a position to have their own transportation lawyer on staff, but there are more practical options. It is recommended that every manufacturer, retailer and other company shipping goods have a compliance/legal officer who not only understands transportation and the law but who also has the authority to delve into operations to make sure that contracts are mitigating all risks and ensure that regulatory requirements are being met.
One common problem is cargo insurance coverage. An uninformed operations manager will ask the carrier how much insurance it carries. If that policy amount is at least equal to the value of any shipment the company is likely to tender to the carrier, R1m for example, that manager will assume all is in order. What the person should have confirmed by looking at the carrier's tariff is the limit of liability that the carrier's insurance will cover for any single incident. If there is a R2m loss, but the tariff limits liability to R100 000 000 the insurance company will only pay up to that limit. The fact that the company had a R1m insurance policy is irrelevant.
"Carriers routinely limit their liability and it's up to the shipper to check this out. It is recommended that shippers look at the carrier's insurance policy and all endorsements that will list any exclusions. Don't just look at certificates of insurance. Each contract must be tailored to specific needs of the shipper in terms of service levels, liability protection, and so on. Don't sign something just because it is called a contract. Have a real transportation lawyer prepare what is right for you. - Beulah Ramjith, director of legal affairs, Sun Legal Consulting.
