Shipping goods across the ocean is no simple task. Not only do shippers have to deal with carriers and recipients on the other end, but they also need to manage an entire supply chain that begins with sourcing and ends with delivery. A lot could go wrong. That is why smart shippers protect their shipments with insurance.
There are different types of insurance policies shippers can invest in. But those looking specifically to protect shipments across the world’s oceans tend to invest in a stock throughput insurance policy (STI).
STI is a unique type of ocean marine insurance that provides coverage for both physical loss and damage to cargo being shipped across the oceans on cargo vessels. Best of all, a comprehensive policy doesn’t cover just the time cargo spends on an ocean-going vessel. It protects cargo along the entire supply chain.
The Supply Chain Can Be Large
If you are wondering why STI is so important to global shippers, consider how large the supply chain can be. It starts with the company from whom products are sourced. That company takes an overseas order, fills it, and then arranges shipping. But the company does not send somebody from the warehouse to board a private boat, sail to the destination, and deliver the package directly to the customer.
Quite to the contrary, marine shipments require a long supply chain consisting of many, many partners. Those partners include, but are not limited to:
- Local logistics providers
- Organizations that assist with domestic customs
- Domestic customs officials
- Domestic ports and their contractors
- Cargo vessels and their crews
- Foreign ports and their contractors
- Foreign customs officials
- Local logistics providers at the destination
- Last mile delivery providers
Every one of these partners could lose or damage cargo. Even customs officials, who are trained to treat cargo as delicately as possible, sometimes go overboard in their techniques to ultimately damage sensitive pieces. And once such damage occurs, someone needs to pay for it.
What a Typical Policy Covers
STI is an insurance product offered by carriers around the world. As with all things insurance, policies and coverage amounts vary from one provider to the next. As a general rule however, most policies cover a few standard things:
- Items and Materials – A typical policy covers a long list of items including raw materials, stocks, and finished products. That means products that are assembled along the supply chain could theoretically be covered in their entirety.
- Transit – Covered items are protected against loss and damage during transit. This includes transport to and from seaports, as well as actual time spent on a cargo vessel.
- Storage – From time to time, shipments are pulled out of the supply chain and put into storage. Most STI policies cover shipments while in storage, whether the storage is related to customs or some other matter.
The key to understanding the value of STI is to look at the name itself, particularly the word ‘throughput’. This word denotes protection from start to finish. No matter where a shipper’s stock is in the supply chain, it is protected against loss or damage.
Export Coverage and so Much More
STI is a good idea for any supplier looking for export protection. A solid policy ensures the supplier’s inventory. It ensures the flow of goods from their original source all the way to their final destination.
If a supplier is willing to pay for it, door-to-door coverage is available. Such comprehensive protection protects against loss or damage related to natural disasters, theft, loading or unloading mishaps, flooding, fire, and even roof collapse in a storage facility.
The reality is that STI is more than just export coverage. It is comprehensive enough to follow shipments along the entire supply chain, even when they need to be pulled off and placed in storage temporarily.
The Alternative Could Be More Expensive
I am guessing that some international shippers forego STI because they think their standard liability insurance covers them. Still others probably don’t purchase STI because they don’t want to spend the money. But consider this: lost or damaged inventory could cost a shipper a lot more than monthly insurance premiums.
There is also the hassle of dealing with supply chain partners in hopes of recovering some of the losses from them. Third parties are not necessarily cooperative, especially if they don’t have their own insurance coverage. A shipper could be left holding the entire bag while banging his head against a wall trying to get shippers to be part of a solution.
Stock throughput insurance may not be the most popular or well-known type of insurance in the business world, but it plays a vital role in protecting raw materials and finished goods. Insured by a solid STI policy, international shippers can approach marine shipments with more confidence. They can sleep at night, knowing that they are covered from the moment they source shipments to the time they reach that final destination.