With over 62% of airplanes grounded in April, the value of the top 10 insured airports has shifted, said Suki Basi, managing director, Russell Group speaking to AM Best TV.
Disruption at U.S. ports could capsize U.S. economic recovery and reputation
17 December 2020 | Blog Post
Insurers, risk managers, port logistics and supply chain operators will be startled to read new analysis from Russell Group, which reveals hundred of billions of financial trade exposure across two major U.S, ports – Los Angeles and Long Beach.
With an annual export flow of $6 billion and an import flow of $222 billion, Los Angeles is one of the world’s largest and vital ports, according to Russell Group analysis. Likewise, Long Beach with an annual export flow of $77 billion and import flow of $264 billion is a crucial port for the US economy.
The analysis comes as the port of Los Angeles experienced a 27% surge in TEU (a unit of cargo capacity) over recent months, handling more than 980,000 TEU over four weeks according to experts. More than 500,000 TEU of this total TEU was imported.
The current delays and build-up at Los Angeles and Long Beach threaten to capsize a post COVID-19 recovery, before it gets under way, in the U.S. There is also the prospect of reputational risk to the U.S. as well as significant economic impact on countries such as China, Japan, and South Korea, as imports and exports struggle to enter in and out of the ports.
This surge in demand is symptomatic across the global economy, as a backlog of COVID restrictions coupled with a higher Christmas demand place considerable financial and logistical pressure on ports and shipments.
Russell’s analysis below shows how interconnected the ports of Los Angeles and Long Beach are within the global economy:
Russell Group CEO Suki Basi commented on the release of the figures: “The current disruption across major ports through the global economy is a real-time example of ‘Connected Trading Risk Exposure”. The disruption at LA and Long Beach ports have created a ripple effects across the world economy, from supply chain disruption and higher prices for consumers through to exporting economies struggling to find markets.
“While the current pandemic has rightly forced many organisations to reassess their current risk management techniques, these figures, in our view, show that any effective risk mitigation plan needs to have a Connected Trading Risk Exposure strategy at the heart of it. Data will be at the heart of this strategy, but it is the associated analysis and actions taken by risk management professionals working with their partners in insurance and risk that will help businesses to plan for the worst while exploiting any opportunities that may arise along the way.”
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