Pressures in the transport and logistics industry continue to mount due to the impact of rising fuel costs and ongoing supply chain delays.
Supply chain issues that have come about due to the Covid-19 pandemic are ongoing, despite a return to normal from a health perspective in many parts of the world. Issues such as increased consumer demand, delays on the production of goods due to factory shutdowns and labour shortages and delays on the shipping of goods due to port shutdowns and container shortages are all taking a toll.
At the same time, fuel prices have surged due to the Russian invasion of the Ukraine and the subsequent boycott of Russian fuel. The former Australian government announced a six-month cut to the fuel excise tax in March this year, but despite that reprieve, prices at the pump have continued to climb.
These external factors are impacting heavily on the operation costs of transport and logistics companies. Having appropriate risk management strategies to counter them should be a key consideration for all transport and logistics companies.
Heightened risk exposures
A shift away from just-in-time logistics to ensuring supply can meet demand means one of the additional risk exposures facing transport and logistics companies in this new trading environment is the potential for property insurance to be impacted if goods are being stored in factories or warehouses for longer.
Goods in transit insurance cover is another area that may be impacted if the potential for goods to be lost or damaged has risen due to, for example, consolidating loads on shipping containers or trucks in order to lower costs and meet delivery deadlines.
It also pays to ensure that all of your other business insurances are in order and your risk management practices are sound at a time like this. With cost pressures magnified, many businesses would not be able to afford an unexpected risk exposure.
If your business has changed, you must respond
In an environment such as this, transport and logistics operators should be reviewing all contract terms to understand their liabilities, and factor delays and rising costs into any new contracts they negotiate.
Speaking with your insurance broker to review your trading situation and identify whether any changes to your business have had a material impact on the insurance cover you have is also key. They will be able to advise you if you need higher limits or if there are new covers you should consider.
Here to help
Gow-Gates is one of Australia’s leading independent insurance brokers. Our deep industry knowledge, coupled with our insurer relationships, enables us to deliver tailored insurance and risk management solutions for transport and logistics businesses.
You can contact us by emailing firstname.lastname@example.org or calling us on 02 8267 9999.
The information in this article is of a general nature only and may contain advice that is not based on your personal objectives, financial situation or needs. Accordingly, you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, and before acting on the advice.
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