The freight transport and logistics insurance expert TT Club has conducted an analysis of weather-related risk highlighting water damage to cargoes, as climatic changes and extreme events are a global concern for those managing international supply chains, as well as for the operators of the transport infrastructure that service them.
In particular, the analysis over the last three years indicated:
- Inland operations suffered damage caused by extreme weather in 32% of cases.
- Locations near a coast are more susceptible to weather-related incidents (68% of cases) with 16% of claims involving heavy rainfall causing flooding.
- Property damage through strong winds and microbursts featured in 74% of weather-related claims through the period.
- The maritime mode accounted for 65% of reported claims.
- Road transit next most prominent mode at 14%.
- Wet damage while in storage accounted for 13% of reported claims; 31% of these as a result of flooding.
Hence, TT Club noted that the global supply chain as a whole must take adequate steps to prepare for isolated severe weather events, whilst many storm events are considered geographically seasonal.
The incident data compiled by TT Club illustrate that the traditionally wetter summer months in the northern hemisphere are when cargo is at greater risk. Recent months have seen extraordinary volumes of rainfall over short periods in various parts of the globe, resulting in flash flooding and causing significant damage.
TT Club’s Risk Management Director, Peregrine Storrs-Fox pointed out that extreme weather events can be challenging to predict but operators of warehouses, terminals and port areas need to keep ‘fresh’ their assessment of the changing risk profile in relation to climate experience.
The London-based company officials also emphasised that understanding meteorological trends, particularly in light of global warming, is “doubtless advancing”, while it will not physically protect property, equipment and operations but, when utilised as an integral component of thorough risk assessment, it should inform operational decision-making.
TT Club’s analysis has also found that 65% of cargo damage incidents are attributable in part to the way that goods are packed within a container or cargo transport unit (CTU).
Data for 2020 suggest 25% of wet cargo damage was caused by water ingress to the CTU through pre-existing damage that probably should have been identified as part of the cargo packing process. Therefore, many claims can be avoided with a pre-loading condition checking procedure and correct packing processes.
TT Club stressed that the CTU Code and the more recent ‘CTU Code – a quick guide’ and its complementary Container Packing Checklist published by the Cargo Integrity Group, provide invaluable guidance for players in the supply chain to mitigate such risks.
“Climatic change is a fact of life,” stated Storrs-Fox, “as such risk assessment exercises by supply chain stakeholders must necessarily take account of extreme weather events, as unpredictable as they may be.”
“However, sensible operational measures and the employment of best practice procedures pertinent to individual organisations’ functions will go a long way towards avoiding disastrous consequences when the next rainstorm hits,” concluded Storrs-Fox.
