Considering the stress the supply chain has been under this year, conditions are even worse for shippers of perishable goods such as seafood, meat, produce, frozen foods and pharmaceuticals. The reefer segment makes up 15%-20% of the total contracted truckload demand, so when market volatility occurs, “the reefer market feels it more acutely, since its capacity is more scarce,” said Zach Strickland, director of freight market intelligence at FreightWaves.
Unlike most dry van cargo, refrigerated freight has a fragile life span, and the current supply chain bottlenecks and capacity constraints are only further highlighting the cold chain’s antiquated insurance and risk management solutions.
“You only have to turn on the news to see pictures of the vessels docked out at Long Beach and the stress on the supply chain that we’re currently seeing,” said Gavin Spencer, head of insurance at Parsyl, a Denver-based insurance technology company. “That’s a problem for everyone in the supply chain, but for those involved in perishable shipments where the shelf life is so sensitive, any type of delay can be extremely worrisome. There’s not a plethora of options for how companies can insure against some of the challenges they’re seeing.”
The perishable goods sector has historically been misunderstood by insurers, which often fail to take into account the scientific makeup of individual commodities, making it difficult to adequately quantify risk. While data has become widely available, it often lacks the standards and structure that allow for meaningful insights. Therefore, a common tactic has been to place these clients in overgeneralized buckets for insurance purposes, irrespective of those clients’ actual needs.
A 20-year veteran in logistics and supply chain insurance, Spencer recently joined the team at Parsyl, offering him the opportunity to develop data-driven insurance policies specific to every individual client and commodity. By leveraging granular supply chain data for perishable goods in storage or transit, Parsyl creates transparency in risk evaluation, which breaks the cycle of managing against perceived risk. Shippers who partner with Parsyl are offered policies based on actual risk and are able to uncover insights to improve future performance.
“At Parsyl’s core is building technology and innovative sensing devices that capture different challenges in that commodity sector, whether it be temperature, humidity, light,” said Spencer. “It’s not simply about transportation conditions and data relating to the transportation; it’s also about understanding the makeup of the commodity itself.”
First, Parsyl works to understand how those environmental challenges impact individual commodities. Then, Parsyl extracts data from devices and transforms that data into actionable insights for that particular commodity’s transportation network. This process allows Parsyl to write appropriate insurance language specific to a client and its commodity sector.
By illuminating supply chain inefficiencies, clients can take corrective action to avoid insurance claims in the first place. But even when claims occur, insurers like Parsyl can ease this process by determining the precise moment the product went past the point of no return and then offer quick payouts.
Iceland seafood supplier Niceland Seafood recently experienced the power of Parsyl firsthand. Earlier this year, Niceland had a shipment traveling from Reykjavik to Los Angeles that sat for too long on a hot tarmac. As a customer of Parsyl’s supply chain monitoring and parametric insurance policy, Niceland received text alerts on the temperature exposures and was able to confirm the loss and receive a same-day payout on an insurance claim. A process that would typically take months to resolve, hindering cash flow and business operations, was resolved within a single day. [Read the full case study here.]
“Parsyl gives us the data we need to stand behind the quality of our fish, and peace of mind knowing we’ll be paid fast if something goes wrong,” Patrick Dunaway, Niceland sales and sustainability director, said in a press release. “As a small business working hard for our customers, getting that cash fast lets us focus on moving our business forward.
“The reactive model in how we look at historical losses wasn’t really going to change the solution for the future,” he said. “Understanding how we can utilize and repurpose data, as well as understanding what that data can tell us, can help us mitigate risk and exposure for the future. That’s something that Parsyl has intrinsic attachment to with the technology, the data and the insurance solution.”
While there’s no magic wand, improved data and partnerships with cold chain shippers will make their challenges less opaque. Spencer emphasized that Parsyl’s solution isn’t just about insurance and solving the end problem — it’s about being present from the start of robust risk management.
“It’s about understanding product fragility and how we can support shippers, both in distribution and storage, and ultimately support their business growth.”
To learn more about Parsyl or to request a demo, visit www.parsyl.com.