Every single freight forwarder has to get ready to deal with possible logistics risks. These are oftentimes unexpected and come out of the blue, like terrorism, instability, economic downturns, conflicts, and a worldwide health pandemic. Transportation and logistics risks are oftentimes linked with the increasing globalization so strategies have to be developed and implemented in order to safeguard transports.

What risks does freight forwarding include? The very common ones are presented below.

The most common main logistics risks for freight forwarders are:

Safety problems

Acquisitions

Mergers

Lack of security procedures

Hijacking

Theft

Carrier Delays

Non-Performance

The logistics provider can also be faced with bankruptcy, liability for losses or delays, new security legislations and new safety legislations that have to be respected. When referring to operational risks, we talk about risks related to probability or threat of injury, liability, avoidable damage, and losses. It is important for the freight forwarder to focus on increased responsibility, profits, market share, human resources, automation, optimization, skills, knowledge, and interface efficiency.

Legal and contractual risks are all about failure to be able to meet some contractual obligations and the disputes that appear over contractual obligations, terms, and conditions. Usually, terms and conditions include various provisions related to claims procedures, confidentiality, party relationships, indemnification, severability, notices, and more. Clauses might be interpreted differently so this can lead to disputes and civil lawsuits.

Some of the common financial risks that have to be mentioned are unexpected cost overruns, budget overruns, and shortage of financing. Logistics providers can also be faced with supplier bankruptcy and exchange rate fluctuations as possible risks.

These are mainly connected with negative impacts of different transportation methods on air, soil, and water quality. We can mention some of the main pollution sources as being road transport exhausts, international shipping exhausts, aviation exhausts and rail transport exhausts. International shipping is oftentimes criticized because of gas emissions.

Last but certainly not least, socio-political risks can appear for freight forwarders when they combine intermodal transportation services over borders. This is especially the case when dealing with unstable countries and regions that show inequitable social conditions.