Protecting Your Freight on the Move

Shutdowns and supply chain disruptions, such as we saw during the pandemic, highlight the crucial role the transport and logistics sector plays in keeping Australia moving.

But operating a business that uses transport and logistics creates unique risks and issues to manage. This article explains how transit insurance can help protect your business operations.

Importance of transit insurance for business owners

Whether you’re undertaking marine, land or air transit, there are several risk factors that can affect your operations:

• Economic – including pricing for fuel, charter and freight rates, which could see the capacity of shipping services wax and wane on particular trade routes
• Political and regulatory – such as international sanctions, piracy, changes in a ship’s flag-state regulations, tariffs and labour disputes
• Environmental – weather, and pollution by shipping companies
• Operational – traffic issues, accidents and vessel maintenance
• Technological – cyber security risks
• Financial – interest rate and currency movements
• Geopolitical – tensions and conflicts (the Middle East, China-US trade and Russia-Ukraine) that can disrupt normal shipping routes and shipowners’ access to insurance.

You can minimise those issues using these tips:

• Do your due diligence to understand the external factors listed above as well as any cultural issues
• Have customers pay upfront
• Choose a reputable shipping service
• Verify with your supplier to reduce the risk of counterfeit goods entering your supply chain
• Securely package your items
• Track your shipment electronically in real time
• Select the appropriate shipping method for your item
• Tap into technology to help you manage your shipping risks and logistics.

Marine cargo risk

Marine cargo risk covers businesses that send and receive items by sea and transit through ports and terminals. Nine out of ten items traded across the globe travel by ocean. Despite that, routes may not necessarily be direct between ports. So, the ship carrying your goods may make stops along the way before it reaches you or the recipient.

A marine cargo policy protects your export or import items in transit should the vessel experience a fire, explosion, sink or become stranded during its journey. This could result in your goods being lost, stolen or damaged. Under this cover, you’ll be repaid the full value of your shipment.

Land transport risk

Road or rail transport is often the most popular and convenient way to move or receive your business items. It’s also quite flexible and safe whether your freight is going short or long distances.

However, there are downsides. Using land transport increases risks to your items including theft, traffic delays, overturning/derailment, water or condensation damage, spoilage when refrigeration fails and damage during loading, transit or unloading. So, ensure your contract with the transit provider specifies clear responsibilities for the cargo for each part of the journey.

Air transport risk

Meanwhile, air transport can also be a fast, safe and effective way to send or receive your goods. Risks include:

• Turbulence or extreme weather damaging your goods and their packaging
• Pilot error, communication problems
• Plane issues such as cargo fires
• Hazardous materials travelling near your items
• Delays or accidents due to incorrect documentation, loading and unloading errors
• Theft of cargo, substituting with counterfeit items

Freight/transit insurance

There are pros and cons to transporting your items whether you use land, sea, or air.

Increasingly, Australian SMEs are extending their supply chains and servicing customers across the globe. Proper risk management involves risk identification, analysis/evaluation, choosing appropriate techniques, implementing your strategy, and controlling the risks (where possible).

Reduce your risks using the tips above and by choosing the best-fit freight insurance policy for your job, such as:

• Single transit, for a one-off shipment you nominate
• Annual transit, which covers you for multiple shipments. Handy if you’re regularly importing/exporting goods
• Freight forwarder and logistics liability. This policy covers their day-to-day risks but not importers that use their services
• Carriers load insurance, for businesses that offer transport services, but it also won’t protect importers that use those services.

Ask us to help bolster your risk management through tailored insurance options.

Article supplied by OneAffiniti

Photo by  by Samafoto on Unsplash