Opinion: Easing the disruption pain points

By: Roz Shaw


Adopting new strategies helps enable those at risk to roll with the punches

Opinion: Easing the disruption pain points
Roz Shaw

 

Delays and slow-downs in shipping deliveries are putting transport and logistics operators under pressure in getting their goods to customers and raising new risks to be managed.

It’s a case of rolling with the punches by responding to these pain points with appropriate strategies for risk management.

The difficulties for Australian businesses are mainly due to the ongoing effects of the Covid-19 pandemic, such as:

  • increased consumer demand
  • the availability of containers
  • limited shipping space
  • increased costs as a result of demand
  • unreliable shipping information.

These difficulties have multiple roll-on effects on transporters’ risk exposure.

The increase in demand can lead to errors in deliveries or mistakes that cause damage to goods.

This can have an effect on your goods in transit insurance.

Having to store more of your customers’ goods for longer may also have an effect on your property policy.

Effects of logistical issues

With the Northern Hemisphere maintaining a monopoly over the supply of empty shipping containers, Australian transport and logistics operators are finding their choices limited to return containers and are also having to use their own properties to store containers that would normally go straight to the customer or the ship.

It’s important to check any contracts with your customers and to clarify who is responsible for demurrage if containers are held up or multiple arrive on the one ship without additional free storage days from the shipping companies.

Limited shipping space on-board vessels and delays and hold-ups also mean that loaded containers may not ship in the intended consignment, and this has insurance implications if consignment cover applies to multiple containers instead of a single one.

Early communication with customers ensures they know the possible costs for these delays and can decide how to handle their deliveries. Just assuming they will pay the demurrage is not a good strategy.

Spread your risks

A strategy of spreading your risks is always the best option.

Where possible, spread your customer base not only by revenue, but also by industry type. There are certain industries experiencing great change in the current environment and some may not survive.

Importantly, document everything.

Keep detailed records of the arrangements you have made for every consignment, in case you have to make an insurance claim.

At the same time transport and logistics operators should review their insurance policies to ensure they’re appropriate for new exposures.

Working with your broker can help determine what cover is needed and whether your terms are adequate for the current risks.

After a 30-year career in running her family’s transport business Gallagher National Head of Transport Roz Shaw moved into an equally high-level role in insurance, drawing on her industry experience and knowledge of operating a large transport business.

(To the extent that any material in this document may be considered advice, it does not take into account your objectives, needs or financial situation. You should consider whether the advice is appropriate for you and review any relevant Product Disclosure Statement and policy wording before taking out an insurance policy.)

 

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