Strike teaches perishable industry valuable lessons

An increased awareness of the need for adequate risk insurance was one of the positive outcomes of the 17-day Transnet strike which brought shipping operations at all SA ports to a standstill in April this year. And while Bob Child of Aon admits to precious little knowledge of strike mechanisms, he was encouraged by the resilience of South African fruit exporters during the shutdown. The recently retired Aon South Africa director, who is back in the saddle as a consultant with one of the world’s premier risk insurance groups, lauds the manner in which the fruit industry rose to the occasion in the face of adversity during the debacle. A sentiment wholly endorsed by Drew Moll, Aon’s marine manager in Cape Town. “A lot of exporters have, as a result, come to realise where their cover was, or was not, and that they may not be adequately protected.” If not handled with the utmost care for the duration of the logistics chain, from the time of harvest to the sparkle on a New York or London supermarket shelf, it could go horribly wrong for grower and exporter. Which is why fruit risk insurance cover is probably amongst the most expensive to be had, says Child. That said, FTW wanted to know from Child and Moll why a financially sound fruit exporter would need to seek out-of-house cover? “At the end of the day, there’s a real financial risk which the exporter could incur even without physical loss or damage to the fruit – and therefore the risk to profits,” said Child. As Moll further explained, a crucial aspect for fruit exports is to meet the clock as there are strict time limits in the infrastructural chain, which if not met can cause a loss of profit. In addition, a late arrival for reasons beyond the control of the grower/exporter, such as a lengthy berthing delay or on-board cooling misadventure, may well result in an advantage for a competitor country – all the more reason for adequate insurance. As brokers, Aon places risk coverage with reputable companies according to the insured’s needs, ranging from fruit to the fishing and ship repair sectors. The Aon Cape Town branch insures some of the leading fruit exporters in the country with multi-billion turnovers at stake. The lion’s share of exports, possibly 40%, is shipped to the US, with the Far East also an important market although Africa remains a minor player with no more than 10% of the cake. Says Child: “We have over the years developed a cover-related product which goes beyond whatever else is available in the risk insurance business. “The ‘R’ word (rejection by overseas markets) is a major concern for fruit growers and exporters as it is very difficult for them to manage a situation thousands of kilometres away. That is where we come in.”