The spread of Coronavirus, also known as COVID-19, is having a major impact on the global economy. Aside from its devastating effects on human health, the virus is disrupting world trade, reducing activity by land, rail, air, and sea.
Although some ports in China are already reopening, the future of others around the world continues to be uncertain. The closure of ports often leads to shipping companies rerouting, which can add days or weeks to a voyage. Meanwhile, some transport companies have completely canceled activity. This, along with travel bans and increased security measures, is causing backup and major delays worldwide. As a result, the cargo industry is taking a direct hit.
Impact on Shipping
Shipments are late, postponed, and even canceled, which is especially detrimental to those transporting perishable items. When shipped items are no longer viable, it can cause major financial implications. For example, the market value of the items may significantly drop; they may even have to be destroyed, which requires additional costs.
With all this disruption, what role does your cargo insurance play?
Know Your Policy
Though cargo insurance policies vary, most are designed to cover the financial hit associated with the physical loss or damage of insured goods. However, many policies do not cover delays, the fear of loss, or the additional cost of shipping fees associated with delays or diversions. What’s more, most cargo insurance will not cover the potential market value loss of delayed shipments either.
To protect your cargo, it’s important to conduct supply chain risk assessments and determine contingency plans to help protect your goods and mitigate hazards. Particularly during this outbreak, you’ll want to consider roadblocks such as refusals of delivery, rerouted shipments, government-imposed quarantines, and closed facilities, such as seaport terminals, rail yards, and warehouses.
When choosing cargo insurance options, settle on one that addresses your areas of concern. Because some cargo insurance policies may differ, contact your provider and consult your contract of carriage to determine the specific details of your coverage.
Have a question about your cargo policy?