Risk in freight forwarding
A typical freight forwarding contract accompanying a commercial contract is in the nature of a contract for the service of organizing and executing transport in support of a commercial transaction between two partners, as well as providing any additional services related to insurance, transaction settlement, and cargo operations.
As such, it contains precise provisions regarding the rights and obligations of the freight forwarder, and where such provisions are missing, the parties refer to established customs and forwarding practice. The risk associated with this type of contract is therefore quite precisely defined; the moment of assumption of liability, and whether the freight forwarder bears the risk or acts on the client’s account and risk, are also usually precisely defined. Nevertheless, in forwarding activities, there is also non-contractual risk – resulting from the way the freight forwarder operates on the market and remaining within their exclusive competence. Many freight forwarders do not take this additional, non-contractual risk into account in their operations, and are often not even aware of its manifestations. This risk, if it materializes, is one of the main factors that can undermine the profitability of the forwarding business. The inability to predict the future with one hundred percent probability, acting under conditions of uncertainty, necessitates risk analysis in the enterprise. This also applies to the forwarding industry. Activities consisting of organizing different transport processes each time by their nature generate many types of risk, specific and unique. The division of risk and the scope of the freight forwarder’s liability related to the transport process itself, carried out by the forwarding company (or a carrier hired by it), are determined by delivery rules.
The article comes from the magazine “Logistyka” 2009/3.