Theft-Hit Supply Chains Highlight Need for Marine Cargo Insurance

17 /Sep

The disturbance to international supply chains caused by Covid-19 is exacerbating what was an already disturbing pattern in relation to marine cargo thefts, according to international experts who warn of the exposures all shippers, exporters and importers face.

The Transported Asset Protection Association (TAPA) says cargo thieves see such supply disruptions as “windows of opportunity”. This is leading to increases in sailing cancellations, ships not calling at port, short-term shifts in mode of transport and exposure of vessels to risks which are not fully known or assessed. TAPA predicts further increases in cargo theft across every mode of transportation [1].

This follows statements from the International Union of Marine Insurance (IUMI) in September 2019, which reacted to a sizeable surge in cargo theft. The IUMI claimed it was having a “negative impact on supply chains and economies around the world” and the Transported Asset Protection Association pointed to a 5.1% increase in thefts from supply chains in the Europe, Middle East and Africa (EMEA) region alone [2]. Such thefts have continued with Covid-19 PPE supplies being just some of the cargo targeted.

Whilst many British importers and exporters may not have been exposed to this issue, with 54% of British imports and 49% of its exports in 2018 coming from, or going to, the EU, the requirement to find new international markets after Brexit, could well change the picture. In 2018, China and the USA ranked second and third as UK import markets [3], whilst their positions were swapped when it came to UK export markets. Other countries that could leap up either table post-Brexit were Hong Kong, South Korea, Japan, India and Canada. Sea-freight would play a major role in any such change in Britain’s import and export strategies.

The theft of marine cargo is highly organised and driven by growth in e-commerce, according to the IUMI. The organisations behind such crime are highly organised and professional, stealing cargo to order and using online platforms to plan their thefts. Infiltrating online freight-exchange platforms, by using the logos, names and employees’ names of legitimate users, enables them to efficiently plan the theft of cargo orders.

Whilst the authorities call for task forces and due diligence on the part of shippers, any business relying on goods shipped to or from the UK is well-advised to put their own robust protection in place through Marine Cargo insurance. This will cover any losses, not just through theft, but also through losses of ships or part cargoes dumped to save a ship and to which all owners of goods on board the vessel has to contribute.

Other advantages of Marine Cargo insurance lie in the fact that it is depot-to-depot cover, protecting the cargo not just whilst at sea but also in HGVs and road-freight containers and in the warehouses that are also increasingly becoming the prey of cargo thieves. Many other risks are covered by a policy and the cover is transferable from buyer to seller, covering the entire goods transfer process, from departure, right through to final delivery and whoever is the ‘owner’ of the cargo at any given moment in time, according to the sales agreement.

Marine cargo theft is not just about the loss of goods. It is also about the protection of relationships and reputation. As British businesses start to look worldwide for import and export markets and as the disruption within supply chains continues, it makes sense to consider the purchase of Marine Cargo insurance.

 

FPS1319

Sources:

[1] https://www.aviationbusinessnews.com/cargo/tapa-warns-of-spike-in-cargo-theft-as-coronavirus-lockdown-lifts/

[2] https://theloadstar.com/shippers-and-insurers-renew-calls-for-transnational-coordination-to-tackle-cargo-theft/

[3] https://www.mckinsey.com/featured-insights/europe/brexit-the-bigger-picture-rethinking-supply-chains-in-a-time-of-uncertainty

 

Disclaimer:

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage.

The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates.

COVID-19 is a rapidly evolving situation and changes are occurring frequently The information given in this publication is believed to be accurate at the date of publication shown at the top of this document. This information may have subsequently changed or have been superseded, and should not be relied upon to be accurate or suitable after this date.

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