Transporting project cargoes is a multifaceted process, often desired by logistics managers and forwarders due to its high-reward nature. As any high-reward job, transportation of project cargoes holds an inherent high-risk element and many hidden hazards.
In this article we will cover in short a few of those, hopefully supporting project managers, heavy-lift logistics managers and freight forwarders and help minimise the possibility of claims. In order to be able to understand the process of handling a project cargo, we must first seek to understand what is commonly understood when using the term. Although in practice “project cargo” sometimes refers to a single-purpose equipment that is being transported for a certain site, originally, most commonly and for the purposes of this article the term “project cargo” refers to large – in dimensions and/or in weight – equipment that is shipped either together or in stages from production site or a hub to its final destination. Such are large machinery sections, transformers, pipes, wind turbine rotor blades and towers and so on.
Budgeting and Hidden Costs
One of the most burdensome – and sometimes tedious – parts of dealing with project cargoes is the budgeting. When arranging a project cargo transportation from its point of origin to its final destination, a freight forwarder or a logistics manager has to plan for a vast range of services, sub-contractors and expenses. The tricky part is that the budgeting is being done before the cargo is shipped, sometimes even before it is manufactured.
That being said, it is clear that the process leaves a lot of chances for things to go wrong: subcontractors increase their fees or do not do the job as needed, unexpected delays occur hence storage needs to be arranged, regulatory bodies change their requirements and so on.
A recent example in our practice is a rather simple job of shipping oversized transformer parts and other miscellaneous equipment from three countries to a Bulgarian port, from where they were to be shipped in 2×40’ HCs and 1×40’ FR OWOH containers to China. The Bulgarian forwarder obtained quotations from customs brokers, lashing surveyors, container line and the terminal itself for handling charges, offering a sum fee to their principal. The latter ended up falling significantly short, after a portion of the cargo arrived much earlier than planned, which required extra storage fees. The lashing surveyor did not do a sufficiently good job on the securing of the cargo, which made it necessary for another company to be appointed. At the end, a simple job ended up being a time-consuming effort that resulted in literal financial loss for the forwarder.
In our practice, we would recommend that when dealing with project cargoes, initial estimates need to have a 15% safety net for unexpected charges, which in most cases ends up being used.
Road Transport and National Regulations
Another difficult aspect of taking up a project cargo transport, especially if it is a dedicated road carry, is that the cargo is going to be passing through several countries, which usually mean dealing with non-standardised regulations for dimensions, especially bridge heights. Unfortunately (for forwarders and hauliers at least), bridge heights in different parts of the world are not uniformly standardised to have the same clearance.
If a forwarder is planning a transport of out-of-gauge (OOG) project cargoes or a haulier has taken up the same, both need to be wary of the different national regulations of the countries through where the route will pass. For example, countries in the EU should ensure that vertical clearance on major roads and highways is at least 5 meters, the UK states it should be 5.03 m, whereas in the US the regulations state that should be at least 4.90 m. A haulier or a project manager should be well aware of the different regulations for OOG in order to plan the route appropriately, engage an experienced subcontractor to carry out a road survey, obtain permits and if unavoidable, plan for expenses and personnel for disassembly where at all possible.
In order to ensure that the project goes through smoothly, engaging a reputable road surveyor is recommended. If the initial planning has taken place well in advance of the actual transport, a second road survey is also preferable – we have come across cases where changes in road structure have led to significant increase in costs simply because the initial road survey was carried out months in advance of the actual transport.
Insurance Risks and Unreliable Subcontractors
On the topic of insurance, it is also important to note that proper unification of insurance coverage between forwarders and actual performing subcontractors (carriers / hauliers) is crucial for avoiding potential large payments in case of damages. It is not uncommon for the forwarders – which are well aware of the whole project, specifications of the units, routes, etc. – to take insurance against specific risks. Same needs to be well coordinated with the actual carriers – we have had cases of negligence and even outright fraud on the part of hauliers, who confirm to the project manager that certain risks are covered in their haulier insurance, only to end up finding out that is not the case and significantly increase costs, as well as burden all parties with legal battles claiming funds.
Proper description of the units, their value and IMDG codes are also vital in order to ensure smooth handling and staying on budget. A good project manager knows that appropriate description of the cargo and its value are essential for correct insurance coverage. On the other hand, properly obtaining information about IMDG status / class and passing it to all parties as early as the pre-planning stage will warrant appropriate planning. For example, certain IMDG classes can only be stored in specifically certified storage areas (subject to local jurisdictions). Dangerous cargoes are also usually subject to increased handling, transportation and storage charges. In certain cases where omission of reporting IMDG status is ‘caught’ at customs, it is even possible that import is rejected altogether.
Insurance Cases
An example from practice – a freight forwarder is tasked with transporting steel pipes on barges from Hungary to Bulgaria. The forwarder takes up insurance for the river transport, providing a BL to the insurance broker. The cover is picked up by an UK insurer with no issues. When transporting the pipes, due to limited space on board the barge, the pipes are telescoped. Upon receipt and storage at the disport, the insurer claims double premium needs to be paid, as cover was for only half the number of pipes.
In Conclusion
As outlined above, handling, transporting or insuring project cargoes is a complex process that presents a number of challenges and dangers for all parties involved. In order to guarantee smooth execution, it is important to obtain as much information about the cargo as possible, ensure that all subcontractors are well aware of the specifications and dimensions, appropriate local permissions are obtained and constant communication is maintained.
And above else, do not forget that something will always go wrong – so better be prepared for it!