Shippers cautioned about growing supply chain risk

Shippers cautioned about growing supply chain risk    Shippers and shipping companies face growing risk related from the economic recession, a report released this week warned.
   'The probability of company failures among transport and logistics vendors is heightened, as is the threat of cargo theft, while moving products from offshore locations to final markets continues to create specific business risks,' said Drewry Supply Chain Advisors, announcing a new report called 'Risk Management in International Transport and Logistics' on Monday.
   'International sourcing has introduced in global business more and higher risks related to transport and logistics, and that these risks are often more complex and more significant than in the past, but are still misunderstood,' said Philip Damas, director of Drewry Supply Chain Advisors.

Damas

   He said one strategy he has seen being used by shippers to reduce risk is to attempt to eliminate what they perceive as weak carriers from the roster of shipping lines they use. He suggests using the reports of credit rating agencies    to help assess the health of carriers, as well as looking at high a percentage of their current fleet a steamship line has on order.
   He said some shippers are seeking to extend contracts to two years with carriers they perceive as stable. The problem is, he said, that few carriers want to lock in contracts at current low rates.

Traill

   'There is a plethora of strategic and operational risks related to transport and logistics and in the current economic recession those risks are even more pronounced,' said Andrew Traill, policy director of the European Shippers' Council, who co-authored the Drewry report. “A lot of things that go wrong are preventable.”
   Traill said the report 'advocates a systematic methodology to identifying and assessing the many, varied and growing number of risks that could affect the supply chain and potentially bring a business to its knees.'
   “One thing you cannot do is rely on headlines to set your risk management agenda,” said Traill Instead, shippers have to carefully examine their own supply chain and the risks they may be exposed to.
   As an example, he talked about piracy, noting that it might affect shippers very differently. Shippers who move cargo on ships that, for example, face little risk from pirates might want to question why they are being subjected to a blanket piracy surcharge.