The USA federal Goverment under the Trump Presidency shows how countries actions can impose change and disruption for businesses. Not only their threats but actual actions mean companies need to plan and have back up plans particularly if they are part of or rely on an international supply chain. Political risk is a real issue.

With campaign promises to build a wall between the Mexico-United States border and continued threats to close Ports of Entry and to impose tariffs on foreign goods, organisations must now evaluate the damage that such events could have on their supply chain.

The efforts that the USA are going to deal with migration has created hours-long waits at the borders. The president’s tougher immigration policy is causing problems not just for immigrants but also has the potential to disrupt cross border trade.

As an example, approximately $177 billion of U.S. exports and $246 billion worth of imports make their way across the Mexico-United States border each year by truck, based on data from the U.S. Bureau of Transportation Statistics. Mexico is the third largest trading partner for the U.S. behind Canada and China. The automotive industry makes up a large portion of that trade. The U.S. also receives more than 40 percent of its fruit and vegetable imports from Mexico, according to a 2017 analysis from the U.S. Department of Agriculture.

With estimated wait times increasing to cross the border, the financial effect on companies is proving to be very damaging.

“The longer these delays get, the bigger the economic impact can be because businesses have to make monumental decisions” -- Gary Becker, Chief EconomistWashington D.C., based consulting firm Catalyst Partners

When the produce being transported is fruit and vegetables, any disruption in the supply chain can lead to substantial losses because they are perishable goods. In these situations how can businesses know what decisions to make and how to deal with these issues?

On solution is to use detailed tracking of such perishable goods and other delicate products. We have a developed a tracker in partnership with an IoT company that can provide greater visibility into supply chain operations and allow users to make pro-active decisions relating to the condition of consignments.

When alerts of exceptional events are trigged – such as a shipment location, time at location, being dropped, opened, tilted or in this case, exposed to temperature or humidity outside of defined parameters, the user will be informed via our analytics portal. This auditable data can aid in resolving disputes as it allows everyone to identify the facts behind late and damaged goods.

In some cases, truckers may turn off their engines to save fuel meaning that the power supply to refrigerators will be turned off. Fruit and vegetables will soon expire if exposed to high temperatures for extended periods of time. In situations such as this, our users will be alerted in real-time of the rise in temperature which will give them the option to get in touch with the appropriate party to inform them of the risk being placed on the goods being transported.

Our solution puts shippers in control by enabling them to see what’s really happening and trending within their delivery network. Customer service will also be dramatically improved by enabling shippers and logistics suppliers to identify where delays and issues are happening and report back to customers.

The automotive supply chain is also heavily affected by these border crossings. Car parts tend to be manufactured in one country and then need to be shipped abroad to be matched with other parts. If delays become a common occurrence, organisations will need to start holding larger reserves of parts so they have enough products to keep their factories running. This will then undermine the benefits, and effect decision makers in the supply chain.

For businesses heavily dependent on goods arriving at the right place at the right time, reacting to supply chain failures can be just as important as preventing them. Our tracking solution is enabling those using just in time deliveries, specifically in the automotive sector, to react and be pro-active about failures in real time.

Tracking is part of the answer. Real time data and allows better decision making.

Further Reading:

gigeconomy and sharing economy

micro-insurance

why disasters needs insurance

Parametric Insurance

At Microinsurance we are focused on changing the way business insurance is developed and processed. We are insurance with an API. We are in the forefront of that change; developing policies by the season, job, by the hour, by the day and by the Km, thus fitting our model to that of the platforms and the way small and micro businesses see risk. We are unbundling business policies so that the cover offered fits with peoples and business needs or the actual job or process being undertaken. Making Business Insurance transactional.

Posted in InsurTech blog, MicroInsurance blog on Apr 09, 2019