Growing cargo mountain due to coronavirus a security risk

The disruption to global supply chains caused by COVID-19 has resulted in a massive increased in stored goods that is vulnerable to theft and other criminal activity.

That’s according to TT Club, which provides insurance and risk management services to the international transport and logistics industry.

In particular, the impact of social distancing and lockdown in the consumer markets of North America and Europe has resulted in a glut of non-essential products made in producing regions like China and other parts of Asia – and space to store them is fast running out.

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 in two weeks.

One high-street fashion retailer has reportedly leased 40% more storage than it would have under normal circumstances, according to TT Club. With vanishing capacity, companies are turning to unsuitable and sometimes unsecure storage.

“Security is clearly the most dominant of the risk issues as operators seek alternative storage,” says Michael Yarwood, managing director of 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,” he cautions.

Emergency storage could lack suitable fencing, lighting, security and CCTV, and also create issues with hauliers delivering to unfamiliar premises, which raises the risk of shipments being diverted into the hands of criminals – known as ‘around the corner theft’.

Makeshift storage units may also have other problems, such as “weather-tightness, phytosanitary issues, uneven hard standing,” according to TT Club.

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.

One of the knock-on effects currently being experienced however 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.

A recent survey by the International Association of Ports & Harbors (IAPH) shows a mixed picture at ports around the world. 35 per cent of ports reported an increase in utilisation of warehousing and distribution facilities for foodstuffs and medical supplies, with some ports reporting capacity shortages.

“As inbound congestion on terminals rises, we are seeing some European ports offering off-terminal storage for undelivered import containers,” notes TT Club’s risk management director Peregrine Storrs-Fox.

“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.”