‘Don’t scrimp on short-term insurance cover’

Remaining competitive is
one of the biggest challenges
faced by the logistics sector,
which may lead some to
reduce costs in vital areas
such as short-term insurance
cover. But in the long term
this could prove to be
crippling, says Eikos Risk
Applications.
The company has
identified three major risks
for 2014 for which it urges
logistics service providers
to create sustainable risk
management solutions.
Weak currency
A weaker rand may be
welcomed by the export
sector as the weaker
exchange rate reduces
the cost of South African
products in dollars but it’s
a nightmare for importers,
says Eikos. A weak rand
contributes to higher
inflation rates, steep fuel
costs and higher goods
prices, factors which
undermine both importers
and exporters.
Civil unrest
It is not just the mining
sector that has been
directly affected by strikes.
According to the state-owned
specialist risks insurer
Sasria, it has seen an increase
in claims costs arising from
strikes and labour unrest
from about R200 million
in 2011/12 to almost R600
million in the 2012/13
financial year, and these
came from many different
business sectors.
Road and border risk
The supply chain continues
to face risks related to
delays at border posts and
damage to vehicles caused
by unroadworthy roads. A
report recently published by
the World Economic Forum
entitled ‘Outlook on the
Logistics & Supply Chain
Industry 2013’, stated: “If
countries were to be more
ambitious and improve
their border management
and transport-related
infrastructure services to
attain 50% of the global best
practice level (as observed
in Singapore), global GDP
would jump up by 4.7% – six
times more than what would
result from removing all
import tariffs.”