Although many of the impacts of the pandemic seem to be behind us, the global supply chain continues to face major disruptions, from piracy and labor shortages to inflation and geopolitical challenges. And with hurricane season on the horizon, 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 fact, some experts are saying it could be a record-breaking hurricane season. The Tropical Weather and Climate Research Team at Colorado State University (CSU) is predicting 23 tropical storms this year, 11 of which may develop into hurricanes, and 5 of which could become Category 3, 4, or 5 storms. In comparison, the average hurricane prediction for 1991 to 2020 was just 14.4 tropical storms, making this year’s estimate 60 percent higher than years past.
Forecasts predicting hurricanes mean a higher risk for a severe storm that can cause billions in losses. And for shippers and carriers, that spells out damage to physical assets and disruption to operations. Coming into the hurricane season this year, companies have already faced ongoing difficulties managing their vulnerable global supply chains, so it’s pertinent that they have plans in place to address potential disruptions associated with tropical storms.
To help mitigate the risks and prepare for some of the impending challenges, companies should take a proactive risk-based approach to managing their supply chain, such as prioritizing resources and closely examining supply chains and inventory management programs. Also, they ought to collaborate with service provider partners to develop appropriate contingency plans.
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. The appropriate coverage 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 and risk management strategies that protect against the fallout from natural disasters, contact us. Our policies can be customized to your business.
