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The risk of using a self-managed or third-party transport provider in the required area must be assessed prior to the appropriate insurance being taken out. In moving goods – especially to and within high risk contexts - there will be potential risks of theft or loss of the goods.

Third-party Transporter Insurance

Transporter provided insurance can be useful in that it provides coverage for short term gaps, for specific activities that self-insurance isn’t designed for, or last mile activities that have enhanced risks. Cargo may be covered by the overall shipping terms of a contract with the third-party transporter, but it is strongly advised that all organizations relying on third-party transporter provided insurance to confirm the insurance status and requirements with the sender/owner of the goods to be moved. Shippers should understand the level of insurance that the provider will offer to cover the goods it carries on behalf of its clients; often if any insurance cover is offered, it will be fairly nominal and only cover a portion of the real cost of the items.

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  • Scope: does the insurance cover all potential contexts of operation? What if a transport requires operating in more than one country?
  • Does the insurance accommodate changing risk conditions?

Self-managed Insurance

Some humanitarian agencies have opted to develop a global self-managed insurance schemes in the form of self-insurance or some form of “blanket insurance.”

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A method of obtaining global blanket cargo insurance might come from soliciting large international insurance brokerages, who may be able to provide a flat or relatively fixed rate for cargo insurance based on their estimation of risk of any individual agencies’ activities. Global cargo insurance might end up being slightly more expensive per kg, but saves substantial amount of time identifying insurance solutions for every transport. The specifics of a global insurance plan would be negotiated based on the need of the requestor. As an example, if an aid agency maintains a large fleet of self-managed cargo vehicles in many high-risk countries, there may be a need to develop a high annual global premium to cover all risks associated with cargo movement. On the other hand, if an aid agency is largely only doing international transport using regular carriers, then insurance may be issued on a case by case basis.

Mode of Transport

A mode of transport is the means by which goods and material are transferred from one point to another. The basic modes of transport are:

  1. Air
  2. Sea / Riverway
  3. Road
  4. Rail

See below a mode comparison matrix for different modes.


Road

Rail

Sea/Riverway

Air

Relative Speed

Moderate

Moderate

Slow

Very High

Reliability

Good

Good

Limited

Very good

Cost per kg

Medium

Low/Medium

Low/Very Low

High

Flexibility

High

Low

Low

Medium

Other Considerations

Extensive Network

Limited and fixed infrastructure

Restricted Network

Limited Network

Short and medium distances from neighbouring country to operation site; internal transport for short and medium distances

Large consignments from port of discharge to inland operation site; ecological

Large quantities; less urgent; pre positioning phase; long distances with no time constraint

Emergency phase; expensive goods; fragile or perishable goods; cold chain; no alternative option; small shipments; e.g. diplomatic pouches; long distance with time constraint.

Advantages

Relatively fast; no transshipment; direct delivery; flexible; cost

Economical; large loading capacity; range and speed (context depending)

Economical; large loading capacity; no restriction on loading capacity; cheap

Fast; reliable; limited losses; direct; easy tracking and tracing

Disadvantages

Roads may be dangerous or blocked; sometimes driver nationality or vehicle registration not acceptable

Difficulty finding freight cars; frequent delays; transshipping required; inflexible; limited tracking

Slow; transshipping at ports; use as a second means of transport at high volumes; higher theft risk in ports; not flexible

Expensive; restricted to journey’s between airports; restricted loading capacity; special considerations (dangerous goods, size limits, packing, etc.)

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It is important to fully recognise the operational characteristics of the mode or modes that have been selected. It is also necessary to consider the type of vehicle or equipment that will be used within that mode. Prior to making a decision on the mode of transport, it would be useful to create a matrix ranking of influential factors for choosing transport modes. Some factors to consider in the rating:

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Transport Selection Criteria

Four key criteria:

  • The speed which the mode exhibits
  • The reliability that the mode demonstrates in its ability to fulfill service requirements
  • The flexibility that the mode exhibits
  • The comparative unit costs, which the modes incur

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  • Required delivery date
  • Cost of transport service
  • Reliability and service quality
  • Shipment size
  • Transit time
  • Number of transshipment points
  • Item type
  • Possibility of damage
  • Range of services

Matching Operational Factors to the Selection Criteria

It is important to use a structured approach to mode selection, all while considering the following points:

  • opportunities Opportunities and constraints in the choice of mode will be identified from careful analysis of all relevant operational factors;
  • modes Modes that realistically cannot be considered should be ruled out of the decision process immediately;
  • geographical Geographical factors should be considered, as they may remove the opportunity to use a particular mode; and
  • lack Lack of appropriate infrastructure may also remove the opportunity to use a particular mode.

References

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