TT Club urges freight firms to review risk management

Freight forwarders are being urged to quickly adopt stronger credit risk management strategies to survive the increasingly volatile global trading landscape.

Global transport and logistics insurer TT Club recently highlighted a surge in freight crime and cargo abandonment, a direct result of ongoing and increasing market instability. This same economic turbulence is now putting freight forwarders under unprecedented credit risk exposure.

Mike Yarwood, TT Club’s managing director of loss prevention, said: “Freight forwarders work right at the intersection of global trade and local business, their role in coordinating shipments, managing customs and delivering goods promptly makes them indispensable to SMEs. However, this proximity also makes them vulnerable when clients default.

“As SMEs falter under financial pressure, due to things like the marked increase in tariff activity across multiple jurisdictions, forwarders face delayed payments, abandoned cargo and the potential for client insolvency. The result is a heightened exposure to credit risk – an area traditionally under-appreciated in logistics operations.”

In its latest newsletter, TT Club has set out guidance for freight forwarders to consider urgently to prevent major logistics credit losses. The advice includes strengthening contracts, being diligent with credit assessments, and keeping a close eye on macroeconomic trends as well as sector-specific risks. Critically, freight forwarders must invest in solid legal liability insurance to give themselves a decent safety net.

“The global economic landscape is unlikely to stabilise any time soon, so freight forwarders must be prepared for their customers to default,” Yarwood added. “There are clear steps to take that can help them weather the storm, but they must be taken urgently.”

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