Global logistics directors, responding to the wave of supply chain-rattling natural disasters last year, increasingly are looking for ways to hedge against repeat performances if the trend continues this year. “They are re-exploring and refining their business continuity and disaster recovery plans,” said Casey Chroust, executive vice president of retail operations at the Retail Industry Leaders Association. “Some retailers are looking at sourcing goods from two locations.”
John Barnwell, global marine product leader for Allianz Global Corporate & Specialty, said risk managers are finding their supply chains have gotten so long and complicated that they don’t know where some components are sourced when natural catastrophes strike. Typical general cargo insurance policies don’t provide coverage for delays or loss of business caused by natural disasters.
“That’s a concern that clients are coming to us with, because if they can’t make something because they can’t ship something, that’s not covered,” Barnwell said.
As a result, cargo risk managers are turning to their property and indemnity policies to provide coverage for the interruption in their supply chains caused by natural disasters, including business interruption.
One of those risks, piracy, isn’t a major concern of U.S. importers for two reasons. Most of the U.S. retail supply chains are rooted on the Far East and shipped over the trans-Pacific to U.S. ports. If U.S. importers bring in goods from the Indian subcontinent through waters infested by Somali pirates, it’s on big, fast container ships that are much less vulnerable to hijacking than smaller, slower bulk ships.
“The severity of piracy is up,” Barnwell said, “but there are not a lot of goods going to or from the U.S. that are transiting those high target areas.”