Marsh India

Insurance Brokers Pvt Ltd

LOGISTICS RISK MANAGEMENT (LRM)

The study of logistics risk management (LRM) helps analyze cargo losses during
transportation. In addition, LRM shows organizations the measures they can take
to prevent such losses.
The circumstances that lead to cargo losses The most severe cargo losses are due to
differ for each organization, for example the the following.
method of transportation, and the cargo etc.
•• Accident, overturning, and hijack.
A few key areas, such as cargo, route, storage, •• Natural catastrophic losses.
driver, and vehicle, when studied, can help
analyze the causes of cargo losses. Once the •• Fire and piracy.
causes are known, all or most cargo losses can
•• Temperature variation, moisture,
be prevented.
condensation, and contamination.

KEY LOSSES LOSS EXAMPLES

Cargo transportation losses can be classified in Cargo losses in transit can occur in many
terms of frequency and severity. ways. The following are a few examples of
how organizations have suffered:
The most frequent cause of cargo losses are
given below. •• A company producing fast moving
consumer goods was transporting cargo
•• Cargo breakage. through the road. The vehicle carrying
the goods was parked at a hotel on the
•• Water damage.
highway for the night. Unfortunately, the
•• Handling and storage loss. tarpaulin that covered the vehicle was
cut and the cargo stolen.
•• Theft and pilferage.
•• Cement bags placed in a railway yard for
•• Chipping, denting, scratching, rusting, further transportation were destroyed by
oxidation, and discoloration. unexpected heavy rain.
 •• Cargo in pallets was loaded in a container by a JOURNEY RISK MANAGEMENT (JRM)
company. During transit, the container
together with the carrying vehicle overturned. The route of a journey also influences whether an
An investigation revealed that the cargo that organization incurs cargo loss. To assess the route
was inside the container was not lashed, which and offer actionable solutions, the MRC team offers
resulted in cargo shifting to one side of the the following services:
container. Unable to maintain its balance, the
•• Study of proposed and alternate routes to prevent
vehicle overturned.
hazards.
•• Cartons stored one above the other without
•• Assess emergency preparedness, and suggest
separator sheets, led to bulging and the stacks
measures to improve.
collapsed during storage.
•• Identify facility for parking, repairs etc.
LRM OFFERINGS •• Provides details of bridges with capacity, tunnels
The Marsh Risk Consulting (MRC) team assesses with clearance, etc.
exposures, and measures the likely losses. •• Help with GPS implementation.
For unacceptable exposures, the team
recommends cost-effective engineering solutions.
CARGO STORAGE MANAGEMENT
The following are the service offerings provided Storage plays a vital role in cargo losses. Business
by the MRC team for logistics risk management. organizations store finished goods and raw materials at
manufacturing plants, warehouses, and intermediate
storage areas, such as ports, railway yards, premises of
CARGO LOSS MINIMIZATION STUDIES
the transporter etc.
Cargo loss plays a major role in marine cargo
insurance policies. Each cargo has unique The MRC team helps organizations safely store cargo by:
characteristics and care requirement during
transit. Consequently, marine cargo premium is •• Reviewing the general condition of the storage area.
based on the nature of cargo and the loss history.
•• Reviewing the handling and stacking methods.
Our risk professionals evaluate and recommend •• Training storage operators.
measures to eliminate cargo loss through:
•• Studying traffic management in the site.
•• Claims analysis.
•• Reviewing capacity utilization.
•• Review of loading/unloading practices.
•• Reviewing the safety of storage, so that people
•• Review of packing. working in the vicinity are safe.

•• Review of lashing/dunnage stacking/stowage,

including weight distribution in transit.

•• Review of protection against wet, moisture,

and other atmospheric damage.

•• Study to minimize hijack and theft in transit.

•• Review of bulk cargo, oversized cargo,

and project cargo to eliminate loss.

2 • Logistics Risk Management (LRM)

DRIVER VEHICLE
The severity of cargo losses in transit is due to small Vehicle selection is a key step to minimize cargo loss.
driving errors. The MRC team helps the organization with the
following services:
The MRC team conducts training programs to
educate drivers about the route, importance of the •• Select vehicles based on the cargo to be transported.
cargo, likely loss scenarios, and emergency
•• Fleet audits for external condition.
response. Following are a few examples of how the
team supports organizations. •• Assist in preparing checklist/standard operating
procedures (SOP) for vehicle selection.
•• Driver training.
•• Help with central motor vehicles rules compliance
•• Enroute surprise audits. audits.
•• Train the trainer program.

•• Pre-trip inspection training.

•• Customize monsoon safety campaigns, alcohol -

drug awareness campaigns.

SUCCESS STORIES
The MRC team has helped many organizations minimize logistics loss. The following are examples of how
the team has helped different organizations.

•• The MRC team helped a large pharmaceutical company select a road route with speed limits. The team
also helped the client improve dunnage and lashing to avoid internal movement of the cargo in the
container and the vehicle to reduce chances of the vehicle overturning and causing losses. Consequently,
the company was able to improve the risk quality and reduce the number of incidents.

•• The MRC team helped a chemical company develop an effective risk plan, by studying the movement of
its products along key routes, the hazards on the way, and emergency procedures.

•• A major manufacturing company, which produces steel wires, was suffering losses due to water entry
during transit. The MRC team advised the company about the factors that caused water entry and
recommended best practices, which helped eliminate these losses.

•• A two wheeler manufacturer suffered frequent losses in their new vehicle utility box. The MRC team
identified the reason for the loss and recommended use of a particular packing material to avoid
scratches in the utility box.

•• The lack of space is common in Indian warehouses, which causes over stacking. The MRC team provided
practical suggestions to avoid overstacking and betterment of stacking quality to a company.

Marsh • 3
THE MARSH DIFFERENCE
Marsh India’s risk professionals are knowledgeable about the regulatory, technical, and business challenges of all
major industries. The solutions that they offer cover all aspects, such as cargo, route, storage, driver, and vehicle.
The MRC professionals design strategies tailored to meet an organization’s needs, keeping all factors in mind.

For more information about Marsh Risk Consulting and other solutions from Marsh, visit
http://marsh.co.in/service/riskconsulting/ or contact riskconsulting.india@marsh.com
or contact your local MRC representative.

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one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer and Oliver Wyman. This document is not intended to be taken as
advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe
reliable, but we make no representation or warranty as to its accuracy.

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