Dealing with the impact of major marine crises

By By Parisa Kheradmand, Marine Surveyor and Major and Complex Loss Adjuster, Sedgwick, IUMI Professional Partner

In the past two months, global supply chains have experienced significant disruptions due to major shipping companies rerouting their voyages away from the Red Sea. This shift has been prompted by attacks on cargo ships and tankers by Houthi rebels, forcing vessels to bypass one of the world's most critical maritime corridors, the Suez Canal - a critical artery for global trade, which facilitates 12% of the world's commerce and handles 40% of Asia-to-Europe exports. Consequently, ships are now taking a detour around the Cape of Good Hope in South Africa to reach Europe, extending their journey by approximately 10 days. This alteration not only impacts delivery schedules but also highlights the strategic vulnerabilities in international trade routes.

Planning is key to shippers and receivers of products coming from the Asia-Pacific region to ensure they arrive in the right order and on time. The recent crisis has underscored the critical need for resilience within supply chains. Companies can adopt several strategies to cushion against the effects of such disruptions. These include diversifying their supplier base, keeping sufficient inventory levels, and investigating alternative transportation pathways. By implementing these measures, businesses can enhance their adaptability and minimise the impact of unforeseen events on their operations.

The crisis has prompted the insurance industry globally to reassess risk factors and seek innovative solutions to safeguard supply chains. When incidents occur, logistics service providers are faced with an array of issues; multiple parties are involved, claims can be substantial and there are often legal issues. Dealing with these claims requires not just an understanding of the standard contractual arrangements but needs people with experience dealing with enhanced agreements between parties and the arising liabilities. Ultimately, global integration and technological developments have made communications and the transfer of goods and services across the world easier.