Samantha Boyd – Chief Executive: Specialty, Old Mutual Insure
South Africa’s marine cargo industry in Africa is set to enter a boom period over the next few decades. In recent times, pre COVID-19, around 300 million tons of cargo moved through South African ports each year.
The impact of COVID-19 on the marine industry has only served to highlight how critical the maritime transport industry is, especially in the delivery of medicine, food, fuel, and other essential supplies. It has however also highlighted the hardships and risks facing the industry: constant port congestion and lack of ship capacity, which has resulted in a global shortage of products.
These risks are exacerbated by challenges such as poor weather, changes in climatic conditions, poor infrastructure, delays at border posts, legislation that differs from one country to another, crime, corruption, and incidents at sea including machinery breakdown, collision, sinking and piracy.
Civil unrest: a rising risk
In July the civil unrest in KZN and Gauteng greatly impacted the transport industry and trade. Many trucks and warehouses were looted, burnt and the impact thereof affected small, medium and large businesses. Following the theft and destruction, marine insurers saw an influx in requests for Sasria cover from existing clients to either add cover, increase the sums insured or policy limits and several requests were received from uninsured risks for marine insurance. This highlights the need for policy limits to be correctly stated in order to avoid underinsurance of Sasria and Cargo insurance risks. The South African logistics landscape is constantly exposed to rioting on most major routes with trucks being burnt in Harrismith and Mooiriver due to service delivery protests, as well as the targeting of foreign truck drivers.
It is important to note that even with these risks, the marine industry continues to play a crucial role in the transport and export industry. South Africa has an extensive shoreline, which serves as an important trading route for global trade. The oceans are responsible for the transportation of around 80% of world trade.
With South African importers and exporters handling millions of tonnes of cargo via sea every month worth of billions of Rands, it is crucial that these businesses fully understand the major risk factors involved in the transport of marine cargo. The risks must be understood and planned for in advance with proper marine insurance, which is a highly specialised area, to ensure they are adequately covered in the event of theft, loss, or damage to cargo.
Marine insurance coverage helps in managing risks in the event of unfortunate incidents such as damage to the property and environment, accidents, and loss of life. It is designed to minimise the financial loss incurred by a policyholder in the event of an accident, natural hazard, or other catastrophes. Generally, a marine insurance policy is availed to ship owners, cargo owners, and charterers.
Companies also need to be fully aware of all the clauses in their insurance policies and should take all feasible precautions to protect their goods. They should for example exercise proper control during the packing of cargo; making sure there is adequate supervision during the loading, storage and unloading phases; and plan the route of the voyage with the services of a reputable carrier who understands the requirements and protocols of international trade.
Using the services of a specialist marine insurer is therefore the best way to mitigate the chances of any financial, reputational, or legal consequences with the transporting of marine cargo.
By enabling global trade to grow unhindered, proper marine cargo insurance helps to bring prosperity and economic activities to all corners of the globe.