Marine cargo losses from the Tianjin Port and Superstorm Sandy events have spawned a new cargo model from catastrophe risk modeller Risk Management Solutions (RMS).
Set for launch within a fortnight, the model focuses on the risk posed to cargo held onshore within warehouses and port storage facilities.
The Tianjin event last year, and Sandy in 2012, both devastated large stockpiles of cars, containers and other unloaded marine cargoes accumulated within ports.
The model has a database of 150 ports across 43 countries, focused on hurricane, storm surge and earthquake perils. Blast, flood and convective storm will be added in 2017.
The model is a response to the risk implications of trends in the increasing sizes of ships, and the mega ports that can handle them.
“There’s been a growth in the concentration of cargo, and the peaks are a lot higher now,” said Chris Folkman, product management director at RMS, told Reactions, speaking at the RMS Exceedance event held in Miami this week.
“We got good data from Sandy, regarding the number of autos, containers and other cargo such as fine art that was lost,” said Folkman.
He noted that measurement is dependent on throughput variables such as seasonality and varied commodity types. “How long does cargo sit in port? Turnaround can be five days, but autos and liquid petroleum can spend a lot longer than that before transit,” said Folkman.
“Autos can sit there for months. The consequence of that is you have constant residual exposure,” he said, noting the insurance dispute that arose after Sandy involving carmaker Fisker Automotive, over how long cars had been kept in port storage.
There has also been a trend towards onshore stored cargo being included within marine cargo insurance rather than property covers, driven by cheap, soft marine market pricing, he noted.
“Marine cargo has been slower
That also means a broadening client list for RMS. “Specialty players, for whom marine is their bread and butter, haven’t been the players typically working with RMS,” he added.