Zurich Insurance Insight on Implications of West Coast Port Disruptions is Spot On

Zurich Insurance and their head of Strategic Business Risk, Linda Conrad, are sharing some interesting insights into the longer-term financial implications of the prolonged West Coast port disruption for retailers across the country.

While the labor disputes are now largely resolved, there is still an estimated 45 day backup for ships at the port which will continue to impact profitability for months, as repercussions continue along the supply chain.

For example, Zurich has already encountered scenarios where retailers will not receive Easter and other seasonal items in time to stock for the holidays. The reputational and financial impact from these types of procurement issues can be massive.

Some of Ms. Conrad’s observations on the consequences of the Pacific Rim port congestion and dockside work slowdowns:

• Harsher impact to bottom line for small businesses. Larger national retailers can likely get access to ports in other locations but for many small and medium-sized businesses, the West Coast work stoppage has been far more debilitating.

• Business disruptions not covered by insurance. Because the disputes were not considered to be a strike, the typical strike insurance most companies have would not be triggered here. And since, for the most part, there is no physical damage to cargo – just extreme delays – retailers cannot file a claim against these losses.

• Retailers need to be cognizant of their specific supply chain pain points. Situations like this can be significantly mitigated through businesses analyzing the most prominent points of vulnerability in their supply chain, identifying exactly where money is made and lost, to become more resilient in the face of an unprecedented business interruption.

SCMR will be expanding upon these issues in future blog posts and magazine columns.

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