Cargo in transit (by rail and truck) is one of the largest risks covered under inland marine insurance. Key economic factors such as factory sales, retail sales, and industrial production provide a good indication of the outlook for the trucking industry.
Cargo hauled by trucks accounts for almost 70 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, according to the American Trucking Associations. Increased new construction spending across the country will also contribute to growth in the transportation industry, as goods need to be delivered to job sites. We expect a continued strong performance for the domestic transportation sector through 2019.
Cargo theft is a major concern for inland marine insurers and the freight transportation industry. In 2016, CargoNet recorded $114 million in stolen cargo across 554 cargo theft incidents with an average loss value of $236,837. Food and beverage remained the most stolen category of cargo in 2016 with electronic items the next most stolen commodity.
On the regulatory front, the Food Safety Modernization Act is likely to affect food manufacturers, transporters, and cargo insurers. New rules and guidelines have been put in place with the intent to prevent problems in the food supply chain rather than responding to outbreaks. The new rules fall under the jurisdiction of the Food and Drug Administration and gives the FDA the ability to hold food companies accountable for preventing contamination. The law could lead to more charges of food adulteration and give rise to more cargo insurance claims.
Other issues we will be taking a hard look at this year include the importance of blockchain and its implications for the insurance industry, managing the risks of drones, and the emergence of driverless trucks.
Overall, given the positive indicators for the transportation and construction industries, the 2018 outlook for the commercial inland marine insurance market is continued growth.