TT Club: Risk Factors Facing Ports and Terminals

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Port and cargo handler insurer TT Club has spoken of the risk factors most commonly facing port authorities and terminal operators.

Offering advice on how these entities can most easily minimise risk of damage to both cargo and equipment, bodily injuries and reputational impairment, Dorota Jilli, a Senior Underwriter at TT Club, has outlined the risks presented in the port environment.

Speaking at October’s Mediterranean Ports Conference in Barcelona, Jilli said: “The risk profile of ports and terminals can be measured against a basic matrix.

“For example, cargo handling operations will fall into a higher end of risk assessment if they have poor equipment maintenance or lack staff training regimes.

“A culture of favouring productivity over safety, or scant attention to security are key characteristics of higher risk operations.”

Read a TT Club technical paper about how to avoid major incidents when loading cargo in 'Safety Initiatives: A Prime Tool' by Storrs-Fox from TT Club

Apart from assessing the differing business models and activities, TT Club also carries out detailed analysis into historical claims of all types including property, liability and bodily injury, in order to provide effective advice on loss prevention and risk management.

For landlord port authorities, which don’t provide operational services but grant concessions to operators, heightened risk factors include poorly constructed contracts with concessionaires or other port community stakeholders.

A lack of emergency response protocols or clarity of interface with other port service providers also lead to greater risk.

Those operations that are found at the lower end of the risk spectrum feature well-trained and motivated workforce and a management culture with a commitment to safety, properly maintained equipment and secure premises. 

The riskiest part of a shipping container’s journey is before it begins, according to Peregrine Storrs-Fox, Risk Management Director, TT Club:

View transport and logistics insurance solutions from TT Club

In the case of landlord authorities those at lower risk display a strong element of control over the relationship with their tenants, having robust contracts in place with port stakeholders and plan carefully for the correct response to emergencies.

Jilli stated that the risks faced by both ports and operators are both symbiotic and able to be grouped for risk assessment purposes.

While direct involvement in cargo operations, for example, has certain risk factors, setting appropriate frameworks and contracts may be equally important for those acting more in the ‘landlord’ capacity.

Jilli added: “In this environment, it would be fallacy to think that non-operational risks are entirely benign.

“Furthermore, the interactions between the port community stakeholders, for activities such as navigation, berthing or emergency response, are critical not just for liability but also on-going successful outcomes.”

Jilli warned that port entities, both operational and landowning —  which are often governmental —  should consider the effect of uninsured costs that can happen from accidents.

She stated: “Well-established research evidences that uninsured or economic loss arising from incidents may be as much as $36 for every $1 that is recovered under an insurance policy.

“In the unfortunate event of a serious incident, unexpected expenses will be incurred such as diversion of management time, delays in re-establishing normal revenue streams, temporary additional labour and emergency supplies, and on-going reputational damage among others.” 

Read more: TT Club has shared advice on 'Not Petya' from an executive within another Thomas Miller division after identifying cyber security threats in the container shipping industry

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