Water damage greatest climate-related risk for cargo

Whilst many storm events are considered geographically seasonal, the global supply chain as a whole must take adequate steps to prepare for isolated severe weather events all year around. Typically wind strength is most ferocious in coastal areas. However, it is often the surge and flood risk that can cause greater problems, both on the coastline and further inland, according to data from TT Group.

The incident data compiled illustrates that the traditionally wetter summer months in the northern hemisphere are when cargo is at greater risk; extreme flooding across broad swathes of continental Europe during July and August 2021 corroborate this as an emerging (or emerged) risk. Further, 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 says: “The associated losses of such incidents can be far reaching; water is unforgiving and has the ability to penetrate and cause significant damage. Flood water is inevitably dirty, increasing damage and in many instances creating health challenging situations. 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.”

TT notes that understanding of meteorological trends, particularly in light of global warming, is doubtless advancing. The capability to monitor, record and predict weather patterns will continue to develop. This understanding 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.

The insurer’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. That data for 2020 suggests 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.

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