The Maersk Route closure isn’t the core issue. Insurance gaps might be

If the Maersk AMEX route closure on 01 October has caught you off guard, it is worth pausing to reflect on the broader logistics risk landscape. The immediate challenges of longer transit times and higher freight costs are real, yet they point to something deeper. Many South African exporters have experienced a fragile trade environment for years – this route closure brings this fragility into sharper focus. And the urgent need to pivot.

The monopoly in plain sight

This change in the logistics risk landscape is particularly challenging for those in time sensitive goods like fruit, wine, and automotive components, which now need to be rerouted through European hubs, rather than the previous and more direct route. MSC now holds significant control over SA-US East Coast shipping. With one dominant carrier comes concentrated risk: pricing power, potential bottlenecks, and a single point where things could go awry.

In such a setup, standard cargo insurance and supply chain cover may fall short if they were designed for a more diverse market. Policies often assume multiple options and stable routes; assumptions that no longer hold. We have seen this pattern before in trade disruptions, and it underscores the need to revisit how your insurance would respond.

Compounding risks

Layering in the 30% US tariff on SA manufactured goods alongside these extended routes, and the risks compound:

• Working capital is encumbered, with goods at sea 30 to 40% longer.
• Each transshipment increases handling, raising chances of spoilage or damage.
• Late deliveries can trigger contract penalties, eroding margins.
• Routing through Europe adds layers of regulatory exposure across jurisdictions.

Consider this. What if MSC faces a labour issue, equipment shortfall, or adjusts rates upward? These are not remote possibilities, but scenarios drawn from past events in global shipping.

Reassess insurance risks for today’s realities

Standard cargo policies cover physical loss, but a thorough understanding of the terms and conditions is key, and in-depth risk modelling with your advisor is crucial. Some of the key areas that should be discussed are:

1) Increased marine risks due to indirect routes and transshipment

Shipments that previously enjoyed direct sailings will now face increased transit durations, more transshipment points (e.g., via European hubs) and greater logistical complexity. Each extra transshipment and handling step increases exposure to loss, theft, damage, misrouting and cargo accumulation at intermediate ports.

Under Institute Cargo Clauses (A), the “ordinary course of transit” and duration of cover may be challenged if cargo spends extended time at ports, warehouses, or in containers awaiting onward shipment beyond the usual limitations. If shipments are delayed in storage at transshipment ports, cover is usually suspended or terminated, unless the policy is specifically extended – usually by an expert risk advisor asking for “deliberate storage” cover.

2) Time-sensitive cargoes face higher insurance and spoilage risks

Sectors like fresh produce exports are at greatest risk. More time in transit means higher likelihood of spoilage, condensation, temperature failure, or time-barred cover expiration. Standard ICC (A) does not cover loss or damage due to ordinary delay or spoilage, unless an additional “perishable goods” clause is added and proper storage/temperature is maintained throughout – an increasing challenge with rerouted or delayed shipments.

3) Route deviations and high-risk zones

Indirect routing may require vessels to pass through or near designated “breach zones” (e.g., areas with high piracy or conflict risk, such as off West Africa or the Red Sea), which are usually excluded from standard policies and demand additional war or strikes cover, often at extra premium and with strict reporting requirements.

Policyholders must notify their insurers about any significant change in route, transshipment, or destination that falls outside the policy’s declared voyage terms or risk claim rejections.

4) Practical risk and insurance advice

• Review and renegotiate policies: Businesses should consult with a qualified risk advisor to clarify how new routings, longer “in transit” storage at hubs, or additional transshipments affect existing covers and seek explicit endorsements for “held covered” situations if routings change unexpectedly.
• Extend storage and “held covered” periods: Consider additional insurance for extended storage or transshipment, particularly where delays are unavoidable or the timeline from discharge to final delivery exceeds ICC (A)’s standard day limit (usually 60 days).
• Purchase added war, strikes, delays, or temperature clauses: For rerouted shipments passing through or delayed at high-risk or perishable-sensitive areas, secure appropriate addenda for war/strikes, perishable/temperature risk or delay (where available).
• Communicate changes: Promptly inform your insurer of any route, carrier, storage, or transshipment change, particularly if vessel substitution or a port change is required due to Maersk’s route closure.

In general, focus on reviewing and, where possible, insuring the business outcomes – not merely the shipment itself. This approach, rooted in first risk principles, ensures your insurance cover aligns with your actual exposures.

Explore geographic alternatives thoughtfully

Beyond the default European paths, consider emerging options:

• India’s expanding ports for transshipment efficiency.
• Brazil’s direct routes with regional connections.
• Middle Eastern corridors that sidestep some European red tape.

New paths bring fresh risk profiles, varied weather, regulations, and claims processes. Pairing these with tailored risk intelligence keeps your strategy agile and informed.

Foster resilient supply chains

True risk resilience comes from building options that strengthen over time:

• Contracts with multiple carriers, including contingency triggers.
• Strategic inventory placement nearer to markets.
• Hedging tools for delay-related costs.
• Real-time tracking that flags issues early, even automating claims.

What to consider implementing today

• Review your risk strategy against prolonged transits and carrier dependency.
• Calculate working capital strain at extended timelines.
• Simulate carrier pricing shifts – 25%, 50% increases, and also test your model’s limits.
• Partner with a risk advisor who is an insurance supply chain expert and who views risk holistically, building trust through shared insights rather than quick fixes.

The game has changed. Certain parties have been outspoken about the “double blow” this causes to SA’s trade competition and supply-chain resilience, over and above a sweeping 30% US tariff that has been imposed on South African manufactured goods. But the situation also gives the local supply chain sector the chance to reinforce their weak points and build the necessary bridges with other BRICS and African nations, who may find themselves in a similar boat (pun intended).

At Chadwicks we believe this is an opportunity for SA business to have robust risk and insurance discussions and to review partnerships with carriers, freight forwarders, backup suppliers and the like, who are able to proactively plan for alternative transportation modes or shipping routes, reducing the impact of supply-chain risk.