Every month or so it seems we hear about another incident involving a cargo ship, resulting in a substantial financial loss. The recent Baltimore tragedy is bringing into question by some yet again the safety of commercial shipping, and it wasn’t that long ago when over 1800 containers were lost at sea in a Pacific storm, causing almost $100 million in cargo losses alone. Forecasters predict an even more active storm season this year. So how do businesses best protect themselves from supply chain risk?
The shipping industry is the backbone of global trade, and risk of loss is becoming an increasing concern for companies that ship goods. This is true for companies that ship internationally or domestically. Therefore, recognizing and understanding this risk is vital to managing a company’s supply chain. Many larger companies have an entire team dedicated to mitigating risk, and it wouldn’t be surprising to hear that supply chain risk is one of the most important challenges they face. But what if you are a small or medium sized business?
Some would argue that mitigating risk is even more important for small and medium sized companies, since the impact of a large loss would have a larger proportionate effect on the bottom line. Thankfully, knock on wood, many such companies have yet to suffer a large loss. But unfortunately, this can lead to a false sense of security whereby serious consideration may not be given to protecting what could be one of a company’s largest assets. Still others believe that transportation carriers are ultimately responsible for loss or damage and will pay any claim they might have. As many of us in the transportation and insurance industries already know, large losses happen and transportation carrier liability is limited, even if the carrier is found to be at fault. It is not uncommon to hear stories about companies purchasing additional carrier liability from the transportation carrier and still getting their claim denied! This can lead to friction with the transportation carriers and yet another reason why companies might think it’s just not worth insuring their shipments.
But there’s a better way. Whether you ship goods domestically or internationally or both, a cargo insurance policy may be one of the most important policies your business considers. Cargo insurance provides coverage for all types of shipments within the supply chain, protecting against physical damage or loss while in transit. And when contemplating the effect of a sizeable loss to your business, you may be surprised at how reasonable the cost of a cargo insurance policy can be! Don’t assume that your shipments are already covered by carrier liability, or that your business owner’s or general lines policy will cover in the event of a shipping loss. Make sure you have a cargo policy in place BEFORE that large loss happens, as opposed to waiting until it is too late. We’d be glad to help find the best coverage and rates for your business needs, and of course we can help with other business insurance needs as well. Feel free to give us a call at 626-256-0393 to discuss further or just fill out our online form to get started!