Aon  |  Energy
Navigating Supply Chain Disruption: How Can Fuel & Commodities Price Insurance Stabilise Operating Costs?

Release Date: November 2021
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In April 2021, near-record supply chain disruption led to fastest rise in commodity prices since August 20081.

Construction, logistics, marine, aviation and many other industries continue to recover from the disruption caused by COVID-19. At the peak of the pandemic, the sharp decline in demand for materials brought industries and supply chains to a standstill.

Demand for materials and services has grown exponentially as economies and global commerce return to pre-pandemic activity, but different industries and businesses are resuming operations at different rates. Bottlenecks are forming across shipping, ports, trucks, railroads, air and warehouses, with the widespread impact of supply chain disruption being amplified in several regions.

Challenged by high operating costs, workforce shortages and raw material price volatility, the cost of scaling up operations to meet the uptick in demand is reducing margins for manufacturing and distribution businesses.

As the demands on key industries accelerate, access to a tailored solution will be critical for firms to protect their operating costs as they scale up operations to meet the growing demand for goods and services.


A Solution: Fuel and Commodities Price Insurance


Fuel and Commodities Price Insurance – a new product launched in the insurance market – provides a mechanism for companies to protect their balance sheets from fluctuating fuel and commodity prices.

The coverage is activated if the price of the commodity rises and exceeds the agreed limit. The policy will cover the difference between the agreed price and the higher monthly price, with payments being made monthly.

Amid the current supply chain disruption driving both demand and costs, Fuel and Commodity Price Insurance is designed to support the long-term sustainability of organizations’ operating models. By stabilizing costs, leaders can look ahead to new growth opportunities to contribute to a recovering economy.


Navigating Uncertainty


The COVID-19 pandemic has exposed fragilities in the just-in-time global supply chain model, but economies continue to gather momentum, providing new growth opportunities for key industries. Since transportation, construction and manufacturing businesses typically operate with thinner margins than other industries, the need for a solution which stabilises operating costs will be critical for firms’ immediate and long-term sustainability.




Contact


Contact our specialist team to explore how Fuel and Commodity Price Insurance can support your business: Chris Bhatt.
Chris Bhatt

Chris Bhatt
Head of Sales – Global Marine & Global Broking Centre (GBC)
United Kingdom







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