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Marine
Ocean Cargo Insurance – Does Your Policy Include Expediting Expenses?
The Suez Canal blockage caused significant supply chain disruption. It is not the first time that ocean cargo has been disrupted, and it probably won’t be the last. These incidents impact many different types of companies that rely on ocean cargo, including manufacturers, construction companies, transportation companies and freight companies. If your business was impacted, you probably already filed an insurance claim. But what happens if you need to send replacement materials faster because of cargo loss event?
Potential Cargo Threats
On March 23, 2021, a massive container ship became lodged in the Suez Canal, blocking all traffic in the popular shipping route.
According to the BBC, the Ever Given is more than 1,300 feet long and has a maximum capacity of 20,000 containers. When it blocked the Suez Canal, it disrupted the ship traffic that passes through the canal each day. Because that’s about 12% of all global trade, this disruption was significant.
This recent incident is not the first time the Suez Canal has been closed. According to Business Insider, the Suez Canal has been closed five times since it was first opened in 1869. The first two closures were related to international conflict, but the next three were caused by ships that became stuck, much like the Ever Given. These blockages occurred in 2004, 2006 and 2017.
A blockage at a major canal is not the only possible threat to ocean cargo, either. For example, Bloomberg reports that the ports of Los Angeles and Long Beach have experienced significant backlogs recently.
Problems can also occur in the middle of the vast ocean. NPR reports that the towering stacks of containers on massive containerships sometimes topple over, especially in high winds. In one incident, a Japanese-flagged vessel lost more than 1,800 containers, or $200 million in cargo.
Expediting Expense/ Extra Expense Additional Coverage
If your company relies on international cargo, you are probably familiar with the claim process. But what happens if your client was depending on that cargo, and looks to you to get the replacement shipment to them faster than the first?
At Propel, we will commonly add an expediting expense or extra expense clause to the cargo policies for our clients. This clause adds additional claims expense dollars to the cost that it may take to get the replacement cargo to your client faster than it would by sending cargo the same way a second time.
Many times, customs delays can also hold up the replacement cargo; the clause is usually written to specifically include the costs to expedite the customs process and get the client their product as quickly as possible.
If you’re not sure whether your policy has the correct coverage included, we are happy to review it with you. We can explain how your specific policy works and make recommendations to optimize your coverage.
