News / Insurance moves to the fore as US ports start to deal with delayed cargo

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Despite ending today, the lingering costs of the International Longshoremen’s Association (ILA) strike could leave uninsured US east and Gulf coast shippers with a hefty bill – and even those with cover could be caught out by unforeseen risks.  

Patrizia Kern, chief insurance officer at embedded insurance platform Breeze, told The Loadstar the effect on insurance claims would “largely depend on the length and scale of the strike”. 

Yesterday, the USMX and ILA announced they had extended the master contract and the dockworkers would resume port operations immediately.  

However, three days of strike action has left ports with severe vessel bunching, that will likely see delays in loading, unloading and transporting cargo for the next few weeks – increasing the risk of spoilage of perishable goods and damage to sensitive cargo. 

According to Scan Global Logistics, at least 50 containerships are thought to be anchored off the ports, but will begin to berth today in the order they arrived.    

Ms Kern warned that “delays are frequently a major exclusion in most insurance policies”, and explained: “Unless a policy explicitly covers spoilage of perishable goods due to delays, cargo owners could find themselves without coverage.” 

This becomes a “particularly pressing issue” for cargo owners with seasonal products that need to enter the market promptly, such as those intended for the upcoming holiday season.  

Ms Kern emphasised that while cargo insurance policies would generally cover physical loss of, or damage to, goods, they typically did not cover financial losses incurred due to delay-induced “missed market opportunities”. 

And she told The Loadstar: “As a result of the strike and subsequent port congestion, insurers could face an uptick in theft-related claims.” 

Further, the delays caused by port strikes could lead to higher demurrage and detention fees for cargo owners as containers are unable to be returned to or collected from US east and Gulf coast ports on time.  

“Generally, cargo policies cover demurrage fees incurred only when an insurer requests the detention of a container for inspection at the port. Other charges related to demurrage and detention arising outside of an insurer’s inspection are typically not covered,” Ms Kern advised. 

However, she noted that, in the era of advanced data analytics, marine insurers should be better equipped to assess risks accurately. 

“Insurers can more effectively identify potential hazards and set appropriate premiums by analysing elements such as historical data, weather patterns and shipping routes,” explained Ms Kern. 

“[By doing so] marine insurance evolves from being merely a safety net to becoming a strategic partner in risk management.”