Increasing risks form the accumulation of cargo: TT Club warns
THE current pandemic has disrupted global supply chains in a wide variety of ways and in particular the significant build-ups of goods produced in the sourcing regions of China and parts of Asia, but not yet required in the consuming markets of Europe and North America
THE current pandemic has disrupted global supply chains in a wide variety of ways and in particular the significant build-ups of goods produced in the sourcing regions of China and parts of Asia, but not yet required in the consuming markets of Europe and North America.
Such accumulations include cargo in containers at both transshipment and destination port terminals, as well as import consignments that have been delivered to warehouses and distribution centres (DC).
In the UK for instance, the latest estimates are that 90 per cent of the country's warehouse capacity is full, with the UK Warehousing Association (UKWA) forecasting no available space by two weeks' time. One high-street fashion retailer has reportedly leased 40 per cent more storage than it would have under normal circumstances.
'Security is clearly the most dominant of the risk issues as operators seek alternative storage,' comments Michael Yarwood, managing director Loss Prevention at TT Club. 'Whether it's taking up buildings not usually used for storage or laden vehicles parked adjacent to a full warehouse, or simply facilities unfamiliar to the operator, the security regime may not be of a similar standard.'
The physical characteristics of a temporary facility may also be unsuitable in a range of ways, such as weather-tightness and phytosanitary issues.
Mr Yarwood also draws attention to the importance of maintaining records and an efficient documentation flow. 'In a situation where goods and cargo units are located in unusual facilities, perhaps off-site at some distance, it is vital for accurate records of movements, storage times and potential drawdown requirements to be preserved.'
Such bottlenecks in the supply chain through the lack of demand for goods may be temporary as diminishing orders start to affect the flow through. However, one of the knock-on effects currently being experienced is that some port terminal operators, along with their ocean carrier customers, are attempting to help importers by delaying delivery and/or providing temporary storage for containers.
TT Club's Risk Management director, Peregrine Storrs-Fox, commented: 'As inbound congestion on terminals rises, we are seeing some European ports offering off-terminal storage for undelivered import containers. In the current extraordinary environment, all involved in the supply chain should be taking extra steps to assist in finding solutions. Care must be taken however to ensure that in providing such a facility, operators do not expose themselves to additional liability and risk.'