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Inland Cargo Transport (GIT) Risks in Africa

Africa as a continent presents significant opportunity for those who dare (Allianz Africa)! Foreign entities who ship cargo to Africa often concern themselves with cargo safety when the cargo is discharged on the shores of Africa. While some of the local transport companies are outright incompetent or negligent there are some reoccurring risks which are common across the continent making GIT claims difficult to recover:

Some of these risks include:

  • Hijacks
  • Road accidents
  • Thefts

Hijacks

Many of the cases we have dealt with from the SADEC region involve hijacks and thefts. The situation has become so extreme that it does not suffice to employ the use of security escorts any longer. In a recent case, two armed security vehicles were accompanying a truck of valuable cargo. A few kilometres from the airport, heavily armed gunmen attacked the convoy and made away with the entire consignment. Unfortunately, this is not a one-off occurrence in Africa. The difficulty in dealing with these cases, from an underwriters perspective, stems of the protection of the sanctity of contracts guaranteed by the courts. Many of the freight forwarders use the STC’s provided for by the South Africa Freight Forwarders Association which holds them harmless for all losses how so ever causes. Often, this is taken to mean they are not responsible even for gross negligence – not to suggest that this was one of such cases of gross negligence. The cargo owners hardly ever take time to read the STCs to understand how exposed they are. They are usually of the opinion that once insurance is taken out for the cargo, the insurance companies should deal with the inconvenience.

 

Road accidents

While road accidents are common across the continent, we have received an increased number of claims stemming from reckless driving  from Thika to the Mombassa port in Kenya. The most important factor contributing to this risk is the driver as opined by Wayne Phillips, CEO of Arrow Underwriting Managers. The haulage companies do have a significant role to play here. If they have the right guidelines in place to ensure their drivers get enough rest, risk of accidents owing to driver fatigue or recklessness could be considerably reduced.

Thefts

30% of our inland cases relates to theft. This includes theft at port and warehouses. A typical scenario is theft by truck drivers especially during cross-border transits. The use of tracking devices have unfortunately not deterred determined rogue drivers from making away with the entire truck which they generally dump in country of destination a while after all goods have been transhipped.

 

One common denominator in all these risks is poorly drafted contracts. From an underwriters perspective, the most effective way of dealing with these risks is to ensure cargo owners have the right contracts in place. For anyone who offers Goods In Transit (GIT) cover in South Africa, this is a familiar terrain. From standard trading terms and conditions which the market have been slow in testing in the courts to waybills which spell out Carried At Owners Risk. We are however seeing some changes in the market with the new Bailee policies which are currently being trialled in the market. We shall analyse how these policies may impact the market in a future post.

While you cannot compel the various African governments to provide adequate roads and security in the respective countries, you can advise your clients to engage in proper contracting practices. For example, they can include clauses in their contracts emphasising that the main contractor or freight forwarder must vet their subcontractors and are liable for the acts of such subcontractors.

With our experience in dealing with such cases across Africa, we can help shed light on best practices from different corners of the continent. For more on our services, visit www.stilfresh.co.uk/services.

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