Navigating Cargo Transportation Challenges in the Food, Agribusiness and Beverage Industry

Navigating Cargo Transportation Challenges in the Food, Agribusiness and Beverage Industry
May 21, 2025 13 mins

Navigating Cargo Transportation Challenges in the Food, Agribusiness and Beverage Industry

Navigating Cargo Transportation Challenges in the Food, Agribusiness and Beverage Industry

The FAB industry faces significant supply chain challenges requiring innovative solutions and strategic planning. As organizations work to optimize capital and manage costs, they must also address geopolitical risks and regulatory updates.

Key Takeaways
  1. The FAB industry is facing major challenges in capital optimization and cost containment, compounded by emerging regulatory requirements and cost impacts across various operations.
  2. The logistics and marine cargo landscape is noticeably changing, influenced by technological advancements and evolving criminal tactics. These shifts have increased risks related to fraudulent misrepresentation, logistical and storage failures and geopolitical disruptions.
  3. Navigating the complexities of cargo transport in the FAB industry requires tailored risk mitigation and technological solutions to ensure supply chain integrity and resilience.

Global supply chains are crucial to economic stability, and the food, agribusiness and beverage (FAB) industry plays a vital role in international trade. In this sector, transportation extends beyond mere movement of goods; it encompasses quality assurance, risk management and sustaining profitability amid market volatility.

The FAB industry must navigate a landscape marked by geopolitical tensions, evolving regulatory frameworks, the rapidly growing interconnectedness of the world and increasing fragmentation, all of which impact the efficiency and reliability of cargo transportation.

Understanding these dynamics is crucial for industry stakeholders seeking to enhance their resilience and ensure the smooth flow of goods across borders. By planning strategically and adopting innovative risk management solutions, stakeholders can make better decisions to navigate today's challenging environment.

Key Trends Impacting the Food, Agribusiness and Beverage Sector

The FAB industry faces major capital optimization and cost containment challenges, with a trend for businesses to operate on slim profit margins of around 10 percent. Commodity prices, such as coffee and cocoa,1 have more than doubled in some cases, while packaging, energy and labor costs have surged.2 Adding to these difficulties, U.S. tariffs3 and potential food safety standard changes4 may exacerbate existing global regulatory disparities.

These challenges are further compounded by new regulatory requirements that companies must adhere to. The Food Safety Modernization Act requires companies to maintain additional records for designated foods by January 2026. Meanwhile, the EU's Deforestation Regulations mandate that seven key commodities and their derived products must be “deforestation-free.”5 This sets a new compliance benchmark for supply chains.

Ciara Jackson, Aon’s Global Food, Agribusiness and Beverage leader, notes that businesses are contending with compounded cost impacts across various operations, from human capital to logistics.

“The volatility we are seeing today is unlike anything in recent memory,” Jackson warns. “Companies must innovate rapidly to navigate this unprecedented volatility, reassess supply chain practices, comply with regulations, protect public health and maintain consumer trust amid growing food safety demands.”

Increasing Complexity of Cargo Supply Chain Risks

The dynamic landscape of logistics and marine cargo has seen substantial shifts over the years, influenced by technological advancements and evolving criminal tactics. As the industry grows more complex, so do its associated risks.

Containerized marine cargo faces several distinct risks, necessitating vigilant monitoring and adaptive strategies:

Supply chain/distribution failure is one of the most critical risks facing the food, agribusiness and beverage industry.

Source: Aon’s 9th Global Risk Management Survey (GRMS)

Learn More

Containerized Cargo Risks

Geopolitical disruptions, such as the Iranian seizure of MSC Aries6 and labor strikes at ports,7 can delay perishable goods shipments, which are not usually covered by insurance. For instance, China rejected 1,300 containers of Chilean cherries due to delays8 and the subsequent claims process may take three to six months to finalize. This underscores the importance of including “delay peril” in insurance policies.

Ensuring safety and quality is paramount within the FAB supply chain. Issues such as contamination or improper handling during transportation can lead to significant challenges for companies, as exemplified by the China cooking oil contamination scandal, where it was alleged that fuel tankers were used to transport cooking oil after carrying toxic chemicals, with insufficient cleaning between loads.9 Such incidents disrupt operations, severely damage consumer trust and tarnish company reputations.

Businesses also face growing challenges with cargo claims. The recent example where more than a million trays of kiwifruit were destroyed after mice were found onboard a vessel illustrates that demonstrating a physical loss without obvious evidence is difficult, impacting marine cargo insurance and its coverage.10 Ensuring coverage for losses where damage is not easily demonstrable is essential.

FDA compliance adds another layer of complexity since the agency does not explicitly declare goods unusable, making it hard to get claims paid even when cargo is affected.

Cargo Theft is Rising

  • 01
    Over 1,000%

    Estimated increase in fraudulent cargo theft in the U.S. from 2022 to 2024

    Source: Verisk

  • 02
    49%

    Increase in cargo theft rates in the U.S. from 2023 to 2024

    Source: Overhaul

  • 03
    80%

    Percentage of losses stemming from cargo theft, making it one of the largest sources of loss in the high-value FAB sector

    Source: Aon

Emerging Industry Risks to Consider

Alongside traditional risks, FAB businesses face a myriad of emerging risks:

  1. Global Increase in Cargo Theft and Cyber Threats: Theft has evolved into sophisticated operations, exploiting logistics platforms to alter bills of lading, redirect cargo to criminal-controlled warehouses, and employ fraudulent trucking carriers and drivers.
  2. Changing Nature of Cargo Theft: Criminal gangs persistently seek vulnerabilities in security standards to exploit. High-value FAB goods, which are easy to sell in the current cost-of-living crisis, remain a target. According to supply chain security experts, criminals now get 80 cents on the dollar for stolen goods, up from 40 cents five to ten years ago, partly due to online sales platforms.
  3. Labor Availability Issues: Labor shortages have significantly impacted cargo transportation, particularly in the logistics sector.11 During the pandemic, limited labor resources led to severe disruptions, resulting in delays, increased costs and inefficiencies. Geopolitical tensions and economic downturns further influence labor availability. These constraints pose substantial risks in the FAB industry, which relies on timely and efficient transportation.
  4. Ongoing Shipping Disruptions and Ethical Concerns: Geopolitical issues, regulatory changes and logistical complications continue to complicate the shipping process. Additionally, businesses must also address ethical considerations related to live animal transport and manage reputational risks associated with social media.
  5. Consumer Trends and Upstream Risks: Shifts in consumer preferences can significantly disrupt supply chains. For example, the pandemic saw a surge in demand for hand sanitizers and toilet paper, leading to bottlenecks and shortages. This strain on production and logistics highlights the challenges of adapting to sudden shifts.
Quote icon

Sophisticated fraudulent methods and cargo theft have become major concerns for the FAB industry, requiring robust security measures and innovative solutions to protect valuable goods.

Chris Bhatt
Head of Transportation & Logistics & Chief Commercial Officer - MENA Specialty

7 Strategies to Manage Risks in the FAB Industry

Navigating the complexities of cargo transport in the FAB industry requires a tailored approach, including risk mitigation and technological solutions. This ensures supply chain integrity and resilience, protecting operations from threats and losses.

  • 1. Optimize Costs with Stock Throughput Insurance

    Stock Throughput Policies integrate storage exposure into marine cargo insurance, offering cost optimization and financial risk management. These policies provide savings and simplify claims, yet many FAB clients are still unaware of their benefits. Aon’s head of Cargo and Logistics for Europe, the Middle East and Africa, Tomas Winje, encourages companies to consider this approach due to current favorable market conditions. "Organizations may overlook the nuances of stock throughput and therefore risk missing out on the valuable protection and cost-effectiveness it can offer," he adds.

  • 2. Ensure Compliance Through Strategic Insurance Solutions

    FAB companies must understand how insurance coverage can mitigate risks associated with regulatory compliance, such as European Union Deforestation Regulation (EUDR). They should explore the availability and applicability of directors and officers insurance, particularly in the context of complying with environmental regulations and ESG investments.

  • 3. Adopt Dual Sourcing Strategies

    Engaging multiple suppliers reduces dependency on a single source, enhancing resilience against unforeseen challenges such as geopolitical tensions, regulatory changes and economic fluctuations. Flexibility in sourcing allows companies to swiftly adapt to changing market conditions, ensuring continuity and stability. Additionally, diversifying suppliers can open opportunities for competitive pricing and improved quality, further strengthening the supply chain.

  • 4. Leverage Supply Chain Mapping for Improved Transparency

    Conduct thorough supply chain reviews of materials, suppliers, processing and packaging/labeling for regulatory compliance. Robust risk assessments, independent audits and data collection methods can help mitigate delays and disruptions and improve cargo security.

  • 5. Enhance Cargo Security with Cutting-Edge Technology

    Technology like GPS, light sensors and environmental tracking helps prevent loss and monitor cargo in real time, enabling quick action against theft or temperature issues. FAB companies can utilize risk modeling services to support limit adequacy reviews and analyze risk retention. Additionally, employing blockchain technology ensures product provenance.

  • 6. Maximize Efficiency with Captive Insurance Solutions

    Companies often use captives for marine cargo due to relatively predictable loss frequencies, which allow accurate modeling of future losses. Aon recently supported a UK food producer in designing an insurance program through a captive to promote environmentally sustainable methods among growers. Typically, a captive is part of an overall program, with some coverage coming from the traditional market.

  • 7. Explore Alternative Risk Transfer Solutions

    Alternative Risk Transfer (ART) solutions safeguard FAB supply chains against environmental uncertainties. Key solutions include weather index insurance, area-yield index insurance and regenerative agriculture transition yield coverage. These approaches mitigate physical climate risks, support sustainable practices and stabilize incomes. Supply chain transparency and resilience improve through targeted engagement programs focusing on climate and ESG benefits. For example, a parametric insurance program could be structured specifically to secure operations for corporate farmer networks in Latin America.

Top Tips to Enhance Supply Chain Resilience

  • 1. Evaluate Insurance Options Strategically
    • Assess your current insurance strategies.
    • Explore stock throughput policies and ART solutions.
  • 2. Improve End-To-End Supply Chain Visibility
    • Focus on supply chain mapping and holistic logistics profile risk assessments to understand vulnerabilities.
    • Identify and implement integrated layers of loss prevention.
    • Review contracts to ensure liability management.
  • 3. Leverage Emerging Technological Solutions

    • Use technology to maintain real-time supply chain visibility, track cargo, ensure product integrity, monitor compliance performance, identify varying levels of partner risk, and implement corrective actions to prevent theft or environmental losses.
    • Invest in cyber resilience by implementing robust IT cyber security measures and training employees to recognize and prevent social-engineering threats such as phishing.

  • 4. Apply Risk Mitigation Measures
    • Ensure containers, palletized break-bulk cargo and transport vehicles are in good condition to prevent issues such as contamination from prior cargo residues (physical and odor), water/moisture penetration, rough handling/shifting damage and/or temperature deviations due to reefer power failures.
    • Leverage relationships with insurers to navigate challenges, as advocacy is crucial for claims.
    • Develop audit and compliance monitoring processes to ensure that loss prevention and risk mitigation procedures are followed to maintain supply chain integrity.

“The FAB industry can enhance supply chain resilience by diversifying suppliers, investing in technology and developing contingency plans to manage disruptions while promoting sustainable agriculture,” advises Tomas Winje, head of Cargo and Logistics for Europe, the Middle East and Africa.

Engage with Aon’s specialists to explore how we can optimize your cargo transportation strategies for future resilience.

Aon’s Thought Leaders

Ciara Jackson
Global Food, Agribusiness and Beverage Leader, Enterprise Client Group

Tomas Winje
Head of Cargo & Logistics, Europe, the Middle East and Africa

Chris Bhatt
Head of Transportation & Logistics & Chief Commercial Officer - MENA Specialty

Andrew Black
Assistant Vice President, National Marine Practice, United States

Dr. Nick Chapman
Head of Cargo and Logistics, Asia

Andrew Green
Global Claims Leader, Transportation and Logistics

Chris Law
Senior Vice President, National Marine Practice, United States

Richard Waterer
Chief Executive Officer, Global Risk Consulting

Tom Lovett
Executive Director, Marine Cargo, United Kingdom

1 Cocoa and coffee prices rebound on renewed supply concerns, World Bank Blogs
2 Navigating packaging prices: 2024 outlook, Packaging Gateway
3 A Timeline of Trump’s On-Again, Off-Again Tariffs, The New York Times
4 FDA making plans to end its routine food safety inspections, sources say, CBS News
5 EU Deforestation Regulation (EUDR): What it means for your supply chain, Circularise
6 Goodbye, supply & demand. Welcome, supply & volatility, Scan Global Logistics
7 Delays in Singapore, Rotterdam, and Other European Ports: Causes and Impacts, SeaRates
8 China to destroy 1,300 containers of Chilean cherries, Asiafruit
9 China rocked by cooking oil contamination scandal - BBC News
10 More than a million trays of kiwifruit to be destroyed after mice found, Radio New Zealand
11 Addressing Labor Shortages in the Logistics and Transportation Industry, Global Trade

General Disclaimer

The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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