The CMR Convention enacted by the United Nations in 1956 and to which Malta became a signatory in 2006 recognizes that whilst transport and logistics operators have their responsibilities when carrying goods on behalf of their clients, the risks involved that may result is the loss or damage of cargo are not bestowed entirely upon the transporter. This is why business owners should choose their transport operators carefully and make sure they are well equipped to mitigate the risks involved.
We all grow up with the notion that if you are in possession of something, you are fully responsible for it. Likewise, in carriage and logistics, customers would expect that whoever is carrying or is in the possession of the cargo, carries the full responsibility for it. But according to the CMR Convention, this is not so.
“Had it been the case, no carrier in his right frame of mind would be in a position to guarantee and carry such a huge risk for the price charged for the carriage, or else the prices of carriage would skyrocket, as would insurance costs for the carriers. And this is where the CMR Convention comes in,” explains Franco Azzopardi, Chairman and CEO of Express Trailers.
Whilst logistics is a sector that attracts risk, some risks can be mitigated and others can be transferred, whereas certain residual risks will remain with the owner and the transport operator.
“So in the case of the loss or damage to cargo, for example if there is a consignment of 100 items costing €500 each but weighing 200grms each, the cost to the carrier would be €10 per kg that is €200 while the cost to the owner of the cargo would be €49,800 (€50,000 less the €200.) Needless to say, if the carrier is condemned by a court of law to have exercised (as the law puts it), ‘wilful misconduct’, which verges on criminality, then the carrier may be condemned to pay the full value of the cargo. The point here is that the owner of the cargo runs the risk of losing €49,800 in our example, not to mention the loss of profits and sales disruption. Does not this therefore justify some assessment of the carrier company before entrusting it with the job?”
“Risks in our business start off with the booking, correct understanding of the customers’ needs, accurate planning, clear communication to all parties involved, the choice of equipment and the people who will execute the job, the chosen route and the selection of the partners we choose wherever we need support services. All this is welded into the external risks on the road and on the ocean, not to mention strikes, illegal immigrants attempting to enter countries as stowaways in trailers, adverse weather, breakdown of equipment, and so many other risks. Expertise in logistics, acquired experience and the obsession to do things right with the correct equipment, people and control towers are the right qualities that reduce as much as possible the costs of damage and loss beyond the CMR limitation of €10 per kg, that will be borne by the customer.”
“The discipline of risk management in logistics might not be as sophisticated as in other financial sectors such as insurance and banking for example. However, at Express Trailers, we are constantly looking at the perceived risk and we take this aspect of our business extremely seriously. From a governance perspective in fact, as a Group, we have one tone addressing risks through a board committee. We have invested a lot to borrow from and emulate other sectors such as banking, finance and investment operators in this regard, especially because those sectors are regulated and have taken risk management to higher echelons of perfection. I believe that our company, with this tone, its culture and its choice of people and equipment, reduces drastically the risk of incidence of an event that results in business disruption and cost of replacing the cargo.”
“On this sub-committee, we are constantly challenged by the question “what if”. Because in transport and logistics, so many things may go wrong. 60 years of experience have already taught us a lot and we know the answer to most ‘what-if’ questions. This is why Express Trailers was one of the first service companies in Malta to be ISO-certified. We are constantly training our people and investing in the best talent. We adhere to strict quality control procedures, we employ a complement of people who handle the repair and maintenance of our fleet, we keep investing in new technology and equipment and we keep training our drivers to be the best on the road. These are ultimately our ambassadors and carriers of our pride and reputation.”
“Safety at work has always been a defining trait of this company reflected in the corporate culture and tone that resonate the respect we have always shown towards our people and our clients. We ensure constant safety by giving continuous training to our employees.”
“After the launch of our Express Trailers Training Academy last year, to offer staff continued training to become professionals this year we inaugurated our brand new learning hub ‘The Logic’ which is a state-of-the-art multi-media discussion centre. We turn our employees, both management, administrative and operational staff, into experts and professionals in their work and this too is part of our way of mitigating risks.”
“We are doing our part. Therefore, the logical question should be ‘are business owners assessing their side of the risk? What is the risk of losing business and incurring the cost between our limitation and the replacement cost of their cargo, not to mention the risk of not having inventories to sell for a period of time? Are they doing their part to mitigate their side of the risk by making sure to trust their cargo with the operator who is best equipped to mitigate the risks?” concludes Franco Azzopardi.