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Expert Advice.

Combat margin erosion in five steps - Part Two: Governance & Risk Prevention

12/4/2018

1 Comment

 
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Now that you have defined a sales strategy/positioning for sustainable margins, you need to ensure you have no leaks in your bucket. Learn how to prevent one-offs, such as fines and penalties, and protect yourself (and your profit margins). 

Limitation of Liability
In order to limit the amount of exposure your company would face in the event a lawsuit is filed or a claim is made, you want to ensure that the majority of your business is executed against limited liability contracts and that your limited liability is covered through relevant insurance policies.

Usually in the transport sector the limitation of liability is lower or equal to liability limits set forth in international conventions, e.g. Hague-Visby or Hamburg, COGSA, Montreal or Warsaw Convention, CMR and CIM Rules.

Claims Management
Throughout my career I met several people who were seriously afraid of losing their customer as a result of damaged or lost cargo. I believe, if a claim is handled professionally and with utmost priority, the customer relationship actually intensifies.

When it comes to claims settlements, you want to ensure that you limit commercial settlements as much as possible. Instead, settle according to your limited liability terms.

Regulatory Requirements
You should avoid fines from late tax/VAT reporting and comply with audit requirements as well as local labour laws. Ensure you fully understand and are compliant with the requirements of establishing or liquidating legal entities in other geographies. Also, ensure that you comply with local commercial company laws as well as the provisions set forth in the Articles of Association of your company.

Compliance
Ensure you are not only compliant with local competition and anti-bribery legislation, but especially when dealing with multinational clients, compliance with FCPA and UK Bribery Act is an absolute must. Non-compliance in this area cannot only lead to your organization’s termination, but you might open yourself personally up to civil and criminal proceedings including possible extradition.
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Trade Compliance
Since logistics providers facilitate global trade, it is equally important to be compliant with sanctions and denied party lists, as well as FMC regulations, should you operate as a NVOCC. Fines for violations of sanctions/denied party lists as well as penalties imposed by the FMC can be significant.

Need more compliance guidance? We’ll be happy to help. Get in touch.
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1 Comment
Saibi
12/6/2018 01:41:07 am

What about vendor management’s role in Governance? And it belong to which field of Governance?
Because poor vendor management does affect on Margins.

Reply



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