Choppy waters ahead: Navigating uncertainty when shipping cargo internationally
Right now, businesses shipping goods internationally are facing extreme disruption. In light of Covid-19 and resulting supply chain issues, global conflicts and rising goods prices, shippers are turning to insurers to ensure that their widening exposures are properly covered, and their operations protected.
While some improvements have been made to ease the movement of cargo since Covid-19, bottlenecks remain, and goods shortages continue to impact manufacturers and retailers. Lockdowns and other restrictions have led to staff shortages, as well as tightened warehouse capacity as goods are typically stored for longer.
“Even as pandemic restrictions ease, the supply chain issues they created have not all disappeared, and new concerns have cropped up during the downturn of global economies.” said Howard Kingston, Global Head Marine, Commercial Insurance, Zurich Insurance Company. “It is important for companies to remain vigilant in addressing the risks that arise from global instability and supply chain disruptions.”
Recent geopolitical tensions are also creating new risks for goods shippers.
As populations are forced to displace due to conflict, this will cause manpower shortages, leading to shipment delays and security issues. Plus, with land routes in affected areas clogged with traffic, movement of goods will often get delayed.
Moreover, goods can become targets for crime as people resort to desperate measures. With police presence often lacking in dangerous areas, this theft is likely to go unchecked.
“These disruptions in global trade are unlikely to end soon,” said Kingston. “Insurers need to work closely with customers and their brokers to manage these risks.”
To keep goods protected and shipments moving in these uncertain times, risk managers will need to take a broad scope of action:
- Increasing security to protect critical goods in storage and in transit from theft
- Keeping up standards in staff training
- Building up stock to keep supplies stable and ensuring sure new locations are listed as insured
- Reviewing business continuity plans
- Considering new shipping routes to avoid trouble spots and working with insurers and other partners to create a risk overview of these new routes
- Putting a team of experts in place to represent all stakeholders in the supply chain
Read more about how risk managers can prepare for unexpected events in the full paper.
