TT Talk - Cargo thefts – Know Your Subcontractor


Following a recent theft claim, the TT Club’s investigation, carried out by the Thomas Miller investigative arm, Signum Services, highlighted the repeated involvement of a particular subcontracted haulier in Hungary. It transpired that this haulier had played an active role in other thefts in which the Club was involved. Subsequent analysis of the TT Club’s theft claims concludes that as many as 68% of claims reveal the direct involvement of a subcontractor, at or immediately prior to the point of incident.

The strategic growth of most logistics operations presents new and varied challenges, both geographically and in terms of volume of movements. And e-tendering adds to the risks and the ability to control a subcontract relationship. It is therefore critical for operators to develop and maintain a robust strategy and selection process in relation to the appointment of subcontractors. It is apparent that some entities are set up by organised crime, so do not take things at face value.

The effective employment of an approved subcontractor policy will prove an invaluable tool in minimising risk exposure in such circumstances. Pre-engagement checks should be made in respect of the respective contractor’s company registration number, the number of years established, in which country the entity is registered, direct contact details, and any affiliations with industry trade bodies. It is also important to scrutinise the subcontractors’ Standard Terms and Conditions, which will provide clarification of any limitations of liability and details of the applicable law and jurisdiction clause. Ensure that you review the subcontractor’s insurance policy and be satisfied that it is adequate and from a recognised insurer.

Successfully completed, such checks will empower operators to assess their risk exposure, prior to the engagement of a subcontractor, allowing commercially informed decisions to be made regarding such appointments.

As business is increasingly generated and agreed through less formal, electronic means, the effective incorporation of standard terms and conditions into contracts of carriage is frequently challenged. This is clearly a material risk to be managed for both customers and subcontractors, with the added complexity that different jurisdictions may give rise to unanticipated interpretation of contractual provisions. There are numerous methods through which this risk can be mitigated, including standard references at the foot of all email communications, formal quotations and all general letters, additionally references and links can be embedded to web sites. So the advice is to ensure that:

(a) your own terms are transparently incorporated into all transactions with your customers; and

(b) you fully appreciate the specific terms that are being offered or imposed by any subcontractor.

Where there is opportunity, it is recommended that you seek to incorporate more stringent measures in respect of your expectations of subcontractors. Including clear, concise restrictions and direction in relation to matters such as the further subcontracting, security provisions, communication channels and incident notification can assist in reducing the overall risk exposure associated with the necessary subcontracting of work. However, consider carefully the requirement for enhanced limits or special terms that may simply highlight the potentially attractive nature of the cargo; it might be more prudent to accept standard limits from subcontractors.

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Through Transport Mutual Insurance Association Limited and TT Club Mutual Insurance Limited, trading as the TT Club. TT Club Mutual Insurance Limited, registered in the UK (Company number: 02657093) is authorised by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and Prudential Regulation Authority. In Hong Kong, TT Club Mutual Insurance Limited is authorised and regulated by the Hong Kong Insurance Authority, in Singapore by the Monetary Authority of Singapore and in Australia by the Australian Prudential Regulation Authority. In the United States, TT Club Mutual Insurance Limited is approved as a surplus lines insurer in all states and is accessible through properly licensed surplus lines brokers. The registered offices are: 90 Fenchurch Street, London, EC3M 4ST.

Through Transport Mutual Insurance Association Limited, registered in Bermuda (Company number: 1750) is authorised and regulated in Bermuda by the Bermuda Monetary Authority and is authorised in the UK by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and Prudential Regulation Authority.

The UK VAT Identification number for Through Transport Mutual Insurance Association Limited is: GB 564 5244 35 and for TT Club Mutual Insurance Limited is: GB 564 3375 30. The Italian VAT Identification number for TT Club Mutual Ltd is: 03627210101.