2. Overview of Transportation Industry :
• With the changing economic scenario, factors such as
globalization of markets, international economic integration,
removal of barriers to business and trade and increased
competition have enhanced the need of transportation.
• The Road Transport Industry (RTI) has always been backbone
for the economic growth of a nation.
• Transport volumes in India remain much less than those in the
developed countries. India has still to go a long way in
strengthening its transportation network.
3. Transport on roads can be grouped into
two categories:
Transportation of People Transportation of Goods
4. In today's business big or small ,
domestic or global, the value of time is
clearly immense. Business today is
focusing on how it can deliver goods
and services to global markets in a
timely and reliable manner. Besides
efficiency in pick up , timely delivery ,
timely information and availability of
other infra structural facilities for
efficient handling of cargo
transportation have become the need of
the day.
5. The Road Transport Industry is judged primarily on the
following key parameters:
Speed of Distribution.
World wide Service.
Security and Reliability.
Value added service.
Customer care.
6. Problems facing by road transportation
industry:
Most of the Indian roads are unsurfaced (42.65%) and are not
suitable for use of vehicular traffic.
One major problem on the Indian roads is the mixing of traffic.
There are multiple check-posts, toll tax and octoroon duties
collection points on the roads.
There is very little attention on road safety and traffic laws are
wilfully violated.
There has been no stability in policy relating to highway
development in the country.
7. Risk:
“Risk refers to the uncertainty that surrounds future events
and outcomes.”
Risk Management:
“Risk management is a process of thinking systematically
about all possible risks or problems before they happen and setting
up procedures that will avoid the risk or minimise its impact or
cope up with its impact.”
9. Risks in Transportation Business:
Operational Risks
Road Accidents:-
According to the Ministry
Of Road Transport
and Highway in year 2012 in
there are 497686 road
accidents in India.
10. Percent share in total road accidents by type
of vehicle involved (2011-2012)
Other
Vehicles/objects
Two Wheelers
9.4 7.6
Auto Rikshaws
22.4 23.7
Car, Jeep, Taxisr
Buses
8.7 6.9
Truck, tempos,
21.3
Mavs
Other motoe
vehicles
11. Causes of Road Accidents: 2012
2%
1%
2% 1% 2% Fault of Driver
15% All Other Causes
Defect in Road condition
77%
weather condition
Defect in Condition of motor
vehicle
Fault of Pedestrian
Fault of Cyclist
20. Multiplicity of Laws:
Laws Governing Access Control to National Highways:
National Highways Act, 1956.
The National Highways Authority of India, 1988.
National Highways (Land and Traffic) Act,2002.
Laws Governing Inter-state movement of goods:
Central Sales Tax Act :1956 .
Various State Sales Act/State VAT.
Various Local/Municipal Acts governing Octroi and Entry Tax.
21. Laws Governing Inter-state movement of Vehicles (i)
The Motor Vehicle Act (MVA), 1988
The Central Motor Vehicle Rules (CMVR), 1989 (Amended in
1994, 2000 and in 2002) .
The various sections/provisions of MVA relate to regulation of
safety/quality, axle, load, emissions etc.
26. Risk Management in Transportation
Business:
•Driver’s Management:
Elements related to the drivers which include the drivers
recruitment,trainning, evaluation, behaviour change
performance monitoring, etc.
Drivers Recruitment
Road Transporters shall have a policy and procedure in
place to address the requirements in recruiting new drivers
and to recruit the best driver available.
27. Drivers Training:
A system in place to ensure that the training needs of Drivers are
identified and satisfied in an appropriate and adequate manner so that
operations are carried out competently and safely.
Driver Monitoring:
The company shall have a formal system and procedures to monitor
and promote safe driving behaviour and performance. Unsafe
behaviour and traffic violations shall be counselled and
disciplinary actions taken on repeated offenders.
Drug and alcohol policy:
28. Provide medical facilities to the drivers :
e.g.-
The German project DocStop was initiated to improve medical
facilities for long-distance professional drivers while at work.
Motorway rest areas serve as DocStop centres, which have a
network of doctors that are convenient for drivers to consult while
on the road, without seriously disrupting their schedules.
29. •Journey Risk Management:
Elements related to the routes used for the delivery and it
associated risks and mitigation actions.
A Journey risk management plan is in place taking into account
National and Local authority on routing of hazardous substances.
To identify risks and restrictions on the road that might be imposed
by tunnels, bridge regulations. Within the constraints imposed
above, select the routes that offer the minimum traffic hazards.
30. •Vehicle Specifications:
Elements related to the vehicles specifications the various
stages of inspections “fit for purposes’’ and maintenances
program.
A system shall be in place to ensure all equipment are
appropriate for the products to be stored, handles and
transported. The equipment must be maintained in good
conditions and “fit for purpose”.
31. The company must have tire policy, which include tire
inspection procedure, change and management.
Tire Inspections and replacement frequency.
Tire types and use on specific axle.
Twining of tires (checks regarding equal wear on each
tire)
Regulations of tire pressures
32. Fuel Efficiency Management:
Ordering Fuel:
Manager is responsible to ensure fuel stock are regularly
checked in order to maintain and adequate supply at all times.
Supplies should be obtain form a recognised approved
suppliers.
Fuel tanks Inspection:
Fuel tanks must be checked weekly .
Fuel leaks must be reported immediately and repairs
implemented.
33. Equipment calibration:
Fuel tank monitoring equipment should be calibrated or
original installation.
Fuel pumps should be maintain and calibrated on a regular
basis.
34. Safety Management:
Guidance on the minimum protective clothing and safety
equipment required to be carried on all heavy goods vehicle
transporting company products, and the provision of such
equipment.
It is the responsibility of Transportation companies to ensure that
all the necessary protective clothing and safety equipment is
provided to drivers
35. Minimum Safety Equipment List
Certain items of equipment are required irrespective of load:
Two self-standing warning signs (e.g. reflective cones or
triangles or flashing amber lights that are independent from the
electrical equipment of the vehicle).
A suitable warning vest or warning clothing for the driver.
One Intrinsically safe or explosive proof hand lamp.
Two fire extinguishers (5kgs).
First Aid Box.
Safety helmet.
General purpose industrial gloves.
36. Risk or Damages covered and not covered by insurance
policy:
Covered Risk:
The different types of loss or damage usually covered under the
insurance contract can be classified according to the nature of the
damage.
Road Accidents:
There are various insurance policies available for covering the
accidental loss .
Risk of theft:
37. Risk of Drivers:
There are many life and health insurance policies available for
drivers of transport company.
Risk of customers’ goods :
38. Uncovered Risk:
There are various risks or damages which are not covered under
any insurance policy.
Political risks and governmental risk:
Weather Condition:
Fuel price hike:
Competitors risk:
Seasonal risk:
39. Insurance for Transportation Business:
There are various Insurance policies are available to the
transportation business.
Driver Insurance Policy:
Driver insurance policy insures the drivers life during any
accident or any health issue happened during the transportation
activity.
The following policies covers the issues relating to the driver:
o Life insurance policy.
o Health Insurance.
o Accidental policy.
40. Vehicle Insurance:
Vehicle insurance is purch for cars, trucks, motorcycles, and
other road vehicles.
Its primary use is to provide financial protection against
physical damage and/or bodily injury resulting from traffic
collisions and against liability that could also arise there from.
The specific terms of vehicle insurance vary with legal
regulations in each region.
To a lesser degree vehicle insurance may additionally offer
financial protection against theft of the vehicle and possibly
damage to the vehicle, sustained from things other than traffic
collisions.
41. Errors & Omissions (E&O) policy (including late delivery
of freight):
This policy protects the transportation company for the
professional liabilities incur in providing services to their
customers. It typically protects company's interests anywhere
in its trading area, wherever that may be.
This policy insure the any error and omissions takes place
during the delivery of goods.
42. Commercial General Liability (CGL) policy:
This policy covers Transportation company's office
exposures, while company also take a separate property
policy to cover loss of building or warehouse.
43. Carrier’s liability insurance:
Carrier’s liability insurance provides protection against liabilities
that arise from transport contracts. The liability of forwarders of
goods is also distinguished from that of the actual carrier.
Sub type of Carrier’s liability insurance
Forwarder’s liability insurance:
Insurance regarding the liability of the party which is
organizationally responsible for the collection, shipment and
delivery of goods, as opposed to the actual transporter (carrier)
44. Road carrier’s liability insurance:
Insurance covering the liability of the road carrier (road
hauler) which physically transports the goods.
Motor Truck cargo Policy:
As a trucker, you may have a "motor truck cargo" policy
to cover losses to goods on your vehicles during transit.
This cover is not part of the standard auto liability policy
and must be purchased separately.
45. Combine policy:
Fortunately, some insurers that specialize in the transportation
field now combine several related covers into a single manuscript
policy.
For example, some insurers will combine errors & omissions
insurance with cargo liability, motor truck cargo, and all-risk
cargo insurance into a single form.
46. Insurance policy related to the third party damage or
injury:
Some insurance policies also covers the third party damage
or injury to third party during the transportation.
Policy relating to the failure in contractual liability:
Policy for covering the loss of business interruption:
47. Conclusion:
At present transport companies’ managers are facing with a
bewildering array of uncertainties, as the environment within
which they operate changes at an increasing rate.
Risk management is dealing with uncertainty in order to
reduce threats and maximize opportunities. It can be seen as a
way that enables to create sustainable competitive advantage
but no risk management process can create a risk-free
environment
48. Managers who lead transport companies should be able to
demonstrate their ability to deal with frequent and often
changes caused by market development, political
events, technological inventions and environmental hazards.
Poor risk management may lead to bankruptcy whereas
good risk management practices can excel company
performance outcome.
49. Suggestions:
Develop a comprehensive employee training program:
Properly train employees in transportation safety techniques
and requirements. Transportation operators are able to practice
safety procedures and timely respond to external risk factors
when they have adequate training and experience.
50. Ensure that transportation equipment is in optimal condition
when in operation:
Hire talented equipment maintenance personnel to perform routine
vehicle checks and servicing. Regularly replace outdated
transportation equipment.
Develop a written company safety policy and procedure to
manage operational risk:
A transportation organization's policies and procedures should be
based on both applicable transportation laws and customary
industry procedures.
51. Obtain insurance:
Risk exposure is a constant in the transportation industry.
No amount of training will completely eliminate the risk
potential inherent in transportation operations. Securing
adequate business insurance is a form of managing risk. It is
designed to mitigate a company's cost exposure when
claims of damages or injuries arise. There are certain
insurance requirements on transport operators required by
law. There are also optional insurance policies available for
greater risk coverage.
52. To attract and retain the best drivers:
An organization must develop good relationships with its
drivers. This involves addressing many of the underlying causes
of driver dissatisfaction, such as lack of convenient
training, lack of consistent information from
managers, inconsistent schedules, and manual record keeping.
Create a system for customer feedback:
Customers are able to see potential risk from their perspective
that may be undetectable by transportation operators, managers
and executives.
53. Insurance management in Grapes Transportation
company:
Laxmi Transportation company
carrying the activity of grapes
transportation in Niphad, Company
provides the transport facility to
farmers for send their grapes in
various cities like
Kolkata, Raipur, Banaras, Guwahat
i etc. Grapes are perishable in
nature and its will be spoiled in 10
to 12 days.
54. In that case grapes must be deliver at time. If grapes not delivered
in time then it will be spoiled and there are no customer ready to
purchase that grapes and loss will face by the farmers. Transporter
gives the assurity to the farmers to deliver the grapes in specific
time. If transporter is unable to deliver grapes in specific time then
transporter will liable to compensate all losses . That cause the
transporter takes a errors and omission insurance policy for the
grapes which in transits. Many time transporter gives the reward to
their drivers who delivers the grapes before time.