The growth in South Africa’s regional exports and the stricter control of cross-border movements within the Customs Union area as part of the Customs modernization programme means that more companies than ever are now registered as exporters and entrusting their road cargo to third party carriers.
One of the risk areas that appear to be largely overlooked is that of insurance for road transport cargo. Carriers provide no automatic insurance for such cargoes and the liability limits imposed by them can be extremely low. Under Incoterms®2010 rules both seller and buyer are responsible for their own risks up to the defined point of delivery. Neither party has any obligation to purchase/provide insurance cover unless the CIP term is used.
Exporters who move cargo to final destination by road are particularly at risk because their right to claim the zero VAT rate is directly linked to their ability to prove that the goods left South Africa, were received by the consignee and were paid for in full.
All roadfreight cargoes should be insured whilst in transit for an amount that represents the expected replacement cost in case of loss, including the exporter’s VAT liability to SARS. The start and end points for the insurance also need to be specifically stated.
Where importers move cargo in transit across South African territory care should be taken to ensure that any pre-existing insurance cover is extended to include delivery to final destination.
Contributed by BPLive, Bidvest Panalpina’s logistics bulletin
