As countries worldwide continue to struggle with the economic downturn caused by the coronavirus pandemic, the transportation industry is on high alert for potential natural disasters that could add even more stress on supply chains.
Unfortunately, the industry’s concerns are looking to be well-founded. In 2020, The National Oceanic and Atmospheric Association (NOAA) predicted: “a 60 percent chance that activity is above average.” This prediction led to a record-breaking Atlantic hurricane season with “the most storms on record.” NOAA is predicting an above-average hurricane season for 2022 and is forecasting a range of storms with a 70% confidence.
Forecasts predicting more hurricanes means higher risk for a severe storm that can cause billions in losses for shippers and carriers—namely, damage to physical assets and disruption to operations. Coming into the hurricane season this year, companies have already been facing the increasing and difficult challenge of managing their vulnerable global supply chains as a result of COVID-19 impacts on the cargo industry. Restricted product flows and logistical bottlenecks have led to significant cargo backlogs and delays at major seaports and a significant reduction in air freight, trucking and warehouse capacity due to the overall slowdown of cargo movement and product distribution around the world.
Companies should take a proactive risk-based approach to managing their supply chain by prioritizing resources, closely examining supply chains and inventory management programs and collaborating with service provider partners to develop appropriate contingency plans to effectively mitigate risk and avoid supply chain disruption. An effective and critical element of any company’s supply chain risk management and mitigation strategy, especially in unusual and challenging times such as these, is to ensure they have the proper cargo insurance coverage that is aligned with their business operations and will provide the necessary financial protection against the potential of physical loss or damage to their goods and products as they move through the supply chain.
To learn about cargo insurance options that protect against the fallout from natural disasters, contact us. Our policies can be customized to your business.