Weathering the Storm

What's Your Plan When Disaster Strikes?


By: Tim Danford, Roanoke Trade



With the most volatile part of hurricane season and its inevitable arrival, there’s no time like the present for business owners to develop a detailed action plan for execution that’s designed to minimize losses should a hurricane touch down in your area.


There are a vast number of preventative measures business owners should employ before a hurricane hits to circumvent the loss of property and life. Some of these critical steps include:


  •  Formulating an evacuation plan;
  •  Securing loose property;
  •  Backing up data;
  •  Reviewing insurance coverage to ensure all policies are up-to-date and flood coverage is in place


 Being vigilant with your emergency preparedness plan is vital but logistics service providers (LSPs) should consider taking their course of action one step further. Do not merely consider potential losses to your own property but also to your clients’ cargo in a warehouse, at the docks or in transit. Even the most experienced shipper may need to be reminded of the potential risks to their supply chain, and will need the help of their transportation professional to assist in identifying and mitigating these risks. Freight forwarders and custom house brokers have an opportunity to hone in and earn a client’s long-term trust.


LSPs should make absolutely certain that cargo insurance has been offered to all clients and that they understand its  necessity. Some shippers assume that if damage occurs to their cargo during a storm while in a third party warehouse, that the warehouse operator’s insurance will cover their loss. This false assumption could cost your client thousands of dollars or more in losses that could have been avoided. Standard terms & conditions, warehouse receipts, and bills of lading exclude acts of God from liability as supported by civil law. There’s no better time than the present to remind your clients of your terms and conditions, as well as those of your carriers. 


In addition to protecting financial interest in cargo stored in a warehouse, shippers must also consider the risk imposed for goods on the dock awaiting shipment or delivery. Recent hurricanes, like Superstorm Sandy, wiped out millions of dollars’ worth of cargo at ports leaving a significant amount uninsured. Consequently, the shippers had no recourse in recovering their losses. Several of these unfortunate shippers mistakenly assumed they were not at risk because of IncoTerms. Others simply failed to purchase insurance for unwarranted reasons.


Maintaining cargo insurance is the most effective way to minimize the risk of financial loss from damage to cargo. This is most evident in the event of a natural disaster such as a hurricane. Even experienced shippers may not be aware of the risks to their cargo as it moves through the supply chain. Transportation professionals and their insurance providers can guide them through these hazards and offer cargo insurance solutions to ensure their interests are properly addressed and covered. Looking out for the financial interest of your client is a best business practice that will secure the longevity of your partnership.


As with any disaster preparedness, the time to address these risks is well in advance of trouble. At the time this article was written, there were no hurricanes posing a threat to our coastal waters or shores. There’s no better time than the present to have a discussion about the value of cargo insurance in order to weather the storm.

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