The erosion of traditional buffer mechanisms to ensure the continual supply of goods demands a new assessment of potential risks, according to industry specialists.

The ongoing effects of the pandemic, with its associated lockdowns and the war in Ukraine are proving catalysts to ignite underlying economic and environmental trends that will continue to fuel long-term changes in the pattern of global supply and demand.

Speaking at the Annual Conference of the European Sea Ports Organisation in Valencia this month, Dorota Jilli, a senior underwriter at TT Club says a thorough understanding of the practical risks is vital in mitigating the dangers to safety and security that are a consequence of these dynamic factors.

“We are suffering from a disappearing ability to absorb short-term shocks to the supply chain because of fundamental societal and geopolitical changes to the global equilibrium.

“Yes, Covid and the war are disruptive and are driving up prices but the longer-term trends of production cost increases in Asia and stricter demands of ESG mean that cheaper goods and transport services are features of a past global economy.”

Abandoned cargo is more prevalent with delays through port congestion and lockdown closures meaning the incidence of consignee bankruptcy or goods being unwanted due to loss of markets is higher, Jilli added. This is particularly concerning when dangerous goods are left in storage for excessive periods as the tragic incidents in Beirut last year and in Chittagong more recently attest.

“Trends in cargo theft are also in flux with more essential goods such as food and beverages being targeted and luxury goods and electronics not so much as in the past,” she said. “Cargo at rest, either at ports or inland staging areas, some of which have been hurriedly pressed into service as overflow facilities, is increasingly subject to theft. With shippers looking for ‘workarounds’ to reduce costs or avoid congestion, thieves have been quick to adapt their methodologies and the use of online means of deception and insider recruitment are now both more common.”


For more on the long-term changes to supply chain risk profiles, read Deborah Ritchie's recent Comment in CIR Magazine.

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