As with any industry, shipping and transportation will come under the challenge to design contracts with partners and clients in a way that legally avoids administrative fines and penalties. In addition to these risks there are country-specific fines affecting the business of international freight forwarding, creating a need for consistently updated knowledge regarding ocean and air freight in particular. Domestic freight companies should, under usual circumstances, only be concerned with state laws and fiscal penalty, however these are no less important in seeking to implement best practices for risk management.
Effective risk management takes all potentially occurring risks into consideration using all the tools available. Energy Resource Programs (ERPs) are an example of a modern and prevalent tools within an industry containing information that can be used to mitigate losses via data. In addition to this, proper training of employees and crisis management plans should all be in place. Software, while valuable, does not eliminate all possibility for mishap. Compliance and regulatory issues will also be imperative parts of a risk management strategy as the requirements of corporate responsibility in the both fiscal and environmental fields are increasing. A proactive implementation of advanced compliance management systems, for example, can eliminate possible risk before it becomes financial burden.
Although basic strategies can create the best possible corporate governance strategy, there is no crystal ball detailing the future of government regulation. It’s important to stay as educated as possible. For example, explanation of risk and fraud by government definition should be properly explained to staff, however consulting on the varying changes that can happen within the space of one year can be extremely valuable to a company’s risk mitigation intel. Regulatory changes that happen within the industry could impact companies significantly, an example of this being MAP-21. This regulation, although put in place to increase freight safety and combat and increased fraud, put bonding requirement prices for brokers up to $75, 000. This was an increase of $65, 000, inciting confusion and financial uncertainty for freight companies and brokers alike.
However what does the future of international fraud protection look like? It’s difficult to say, but protection against data theft and other forms of fraud has proven to be a continuous challenge within transportation and logistics companies even domestically. Ever-increasing forms of competition in the domestic and international freight market, has encouraged but not organized specific forms of collaboration between both types of carriers. This dynamic is not only present within the transportation and logistics industry. Certain countries provide little delineation between customary business practices and what would be legally defined as fraudulent within the United States. It will be important to plan for changes in the ever globalized world of freight and logistics.