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Managing Risk in Your Global Supply Chain

Supply chain risk management is a broad term defining the methods and processes used to measure, control and manage risks. Expeditors Risk Management focuses on enhancing the visibility of potential exposures for our clients. The goal is to reduce overall risk by accurately measuring and controlling hazards. Expeditors helps our customers turn risk into an opportunity, not a cost.

Expeditors Cargo Insurance Brokers (ECIB) is a wholly-owned subsidiary of Expeditors that specializes in providing risk management services to our customers, including global cargo insurance and third-party claims management programs.

The benefits to the customer include a reduction in frequency of loss, improved financial recoveries, and reliable data to make supply chain and operational improvements.

When an ECIB customer was informed that a truckload of medical devices rolled over during a winter storm, they knew exactly what to do. They forwarded the shipment information to their dedicated claims team at ECIB, who immediately contacted the carrier and initiated the claim process. Within 30 days of filing the claim with the carrier, ECIB resolved the claim and transferred a payment to the customer as compensation for the loss.

The customer in this example is a leading medical technology company. With offices in more than 50 countries worldwide, and sales in the billions, the customer has thousands of shipments moving worldwide at any moment. Inevitably, some of these shipments are subject to loss or damage during transit.

Until 2009, the customer did not have a standard global process for managing losses, damages and exceptions in transit; the process was decentralized, fragmented, and inconsistent. The customer saw an opportunity to increase claims recoveries, reduce losses and better manage service providers by centralizing the claims management function. In June of 2009, the customer established a global cargo claims program by partnering with ECIB for third-party claims management. ECIB provided a dedicated account team to receive and manage all of the customer’s claims. The account team ensures that each claim is accurately recorded and promptly resolved. Since the program began, more than 4000 claims have been submitted to ECIB and nearly $2 million has been recovered.

In addition to seeing increased claims recoveries, the customer is actively using the loss data to assess carrier performance. For example, one of the measurements the data provides is the “complaints ratio”—comparing number of complaints to the total number of shipments. The customer evaluates its carriers by comparing each carrier’s claims data against its competitors. The carriers with high claims percentages are alerted and required to institute a corrective action plan. After experiencing a high complaint ratio, one top carrier made process improvements which led to a significant reduction of loss and damage. The carrier was awarded more business because of the improvement.

With the consolidated claims data, the customer is also able to analyze trends and make process improvements to avoid loss and damage. For example, when ECIB noted a trend of consistent damage in specific lanes, the customer identified a packaging issue and contacted the shippers to suggest packaging improvements. As a result, the frequency of damage was reduced in these lanes.

ECIB leveraged our logistics and risk management experience to create a customized solution to meet this customer’s needs. The benefits to the customer include a reduction in frequency of loss, improved financial recoveries, and reliable data to make supply chain and operational improvements. ECIBs Claims Management professionals can improve any customers’ claim process. With our global network and logistics expertise, Expeditors is well positioned to recognize risk control opportunities through the ECIB claims management product.

For more information, visit the Risk Management page or Contact Us.