Most freight forwarders lack liability insurance

Dubai: Up to 90 per cent of Dubai's 2,000 freight forwarding companies have no liability insurance, a fact which could seriously damage the emirate's future as a trading hub, according to leading freight experts.

Lawyers, customs officials and the former president of a global organisation representing forwarding companies said many freight companies in Dubai have minimal understanding of customs documents and provide no cover for damaged or lost shipments.

They claimed it is vital that Dubai brings itself into line with major European and Asian countries and introduces mandatory liability insurance and a set of professional guidelines.

The consequences of failing to bring accountability into the industry could result in Dubai losing out to Bahrain or Qatar as the region's trading hub, they claimed.

Thomas Gutruf at Spedlogswiss, the Swiss association of forwarders, said he was shocked at the state of Dubai's freight forwarding industry, which he claimed lags far behind standards in Europe and Asia.

"Dubai is a very civilised market, but out of 2,000 freight forwarders, 90 per cent operate without any liability insurance. This is shocking to me," he said.

"Freight forwarders have not kept up with the fast pace of growth in Dubai when it comes to liability and best practice. It's now time to change."

He said big money claims on lost, damaged or misdirected freight could bankrupt Dubai's small and medium sized freight forwarders and will deter companies from using local freight services.

"For Dubai to remain in its position as a cargo hub, it has to think seriously about introducing best practice, liability insurance and education," he added.

Issa Baluch, past president of the International Federation of Freight Forwarders Associations (FIATA), said Dubai's commitment to numerous multi-billion dirham projects has made change a necessity.

He said the majority of local freight companies merely cross their fingers and hope they will not be hit by major transportation disasters, rather than spending money on securing adequate cover.

"It shows the state of the industry that we are discussing such basics (as liability insurance) this is just the ABC of the industry," he added.

The Dubai-based National Association of Freight and Logistics (NAFL) has been given the task of gathering regulators and local freight companies and drawing up a set of industry guidelines, as well as a format for introducing liability insurance.

They will recruit experts from Singapore to conduct training sessions in an effort to improve standards and could even introduce a certificate of ability following an examination.

Baluch, also chairman of NAFL's executive committee, said: "The idea is to lift the awareness and knowledge base to a level where we have competent professionals. We have a mighty big responsibility."

He said Government bodies including the Department of Economic Development have been behind calls for new industry legislation.

Marco Sorgetti of CLECAT, the European association for forwarding, transport, logistics and customer services, said freight companies must introduce reform through the NAFL rather than attempting to act independently.

"To tackle the problem together will give them a permanent solution rather than a solution for a day," he said.

Impact: Emirate could lose its lead in trade

Top global industry professionals say many freight companies in Dubai have minimal understanding of customs documents and provide no cover for damaged or lost shipments.

They say it is vital that Dubai brings itself into line with major European and Asian countries and introduces mandatory liability insurance and a set of professional guidelines.

According to them, the consequences of failing to bring accountability into the industry could result in Dubai losing out to Bahrain or Qatar as the region's trading hub.