AGCS warns marine transport risk managers to focus on cargo storage and transit risks

Captain Rahul Khanna, global head of marine risk consulting, AGCS

Cargo shippers and transportation companies face a heightened risk environment because of serious disruption to the global supply chain caused by the Covid-19 pandemic, according to Allianz Global Corporate & Specialty (AGCS).

The insurer said there is a higher threat to goods in storage and transit, especially those that are high value, perishable or temperature-sensitive.

It added that the growing number of locked-down and unmanned facilities worldwide raises the risk of theft and fire to cargo, and also potential damages caused by extended storage periods, long delays or even abandonment of cargo.

AGCS pointed out that damaged goods already account for more than one in five marine insurance industry claims.

As a result of the pandemic, risk managers in the sector need to focus on loss prevention measures including contingency plans to counter last-minute shutdowns; the use of internet of things (IoT) technology to obtain real-time location information in case of delay or deviation; and carrying out review requirements for perishable cargos.

“Transportation of cargo is still regarded as an essential activity by governments around the world, despite current lockdown restrictions. However, many companies are having to shut down operations and are unable to handle cargo because of the coronavirus outbreak. News of such closures may not always reach transportation providers for goods in transit until after arrival at the intended destination, which brings increasing risks for owners and handlers of high-value, perishable and temperature-sensitive goods,” warned AGCS.

“The current pandemic situation has impacted the global supply chain in an unprecedented manner and risks to cargo in storage and transit, especially to high-value and temperature-sensitive goods, have significantly increased,” said Captain Rahul Khanna, global head of marine risk consulting at AGCS.

“Locked-down and unmanned facilities mean not only an increased risk of theft and fire to the cargo, but also risk of damage to goods due to extended storage periods. Transit disruptions to cargo due to closed borders, delayed customs clearances or simply due to lack of personnel, can mean long delays to delivery times or even cargo being abandoned. Companies should do all that they possibly can to implement robust planning of cargo shipments and ensure they have backup plans in place because of the last-minute shutdowns we are seeing around the world,” he added.

AGCS has issued a new publication – Coronavirus: Loss Prevention Measures for Cargo Storage And Transportation – in which it provides risk managers in the sector with advice, particularly in the areas of cargo storage risks and risks for goods in transit.

On cargo storage risks, the insurer states:The accumulation of unattended cargo in warehouses increases the threat of theft and organised crime. Where possible, companies should consider to strengthen warehouse security and check alarm functionality. Companies should also consider checking whether prolonged staging of loaded trailers outside of warehouse locations can be avoided, as this increases the risk of cargo theft and damage. With the coronavirus outbreak having the potential to cause prolonged disruption to supply chains, inventory turn times will increase and capacity in warehousing spaces will be limited, therefore companies should also consider identifying alternative warehouse capacity in the event occupied spaces can no longer safely receive cargo.”

On cargo transit risks, AGCS advises: “Companies should endeavour to obtain confirmation that the final destination is still able to receive cargo prior to beginning the shipment and make preparations for its possible non-receipt, as an increasing number of organisations are ceasing operations at short notice. Utilising trailers that have integrated GPS technology whenever possible and also integrating IoT monitoring devices into cargo packaging can enhance shipment visibility. These devices can provide real-time location information in the event of shipment deviation or delay.

“Where possible, companies should also consider reviewing requirements for perishable cargoes. Food and pharmaceutical products associated with the response to the coronavirus outbreak have been given priority for temperature-controlled capacity. Therefore, non-critical perishables will be subject to increased transit time as temperature-controlled capacity is stretched. Consider a review of packaging design to ensure applied schemes are able to maintain the required product temperature for an extended period of time. Additional packaging or storage configurations should be considered for ‘just in time’ perishable products not deemed critical under the latest guidance.”