Welcome back to the blog Liga Asuransi, a trusted portal to discuss everything about insurance, shipping business, and risk management.
As usual, we’re back with a fresh topic that’s currently trending in the maritime and import-export industries. This time, we’ll discuss something quite crucial: changes to US import tariffs and how this could impact Indonesia’s shipping, shipping, and import-export businesses.
Why is it important? Because import tariffs aren’t just numbers on paper. They directly impact logistics costs, product prices, and even the sustainability of international trade contracts. This means every shipowner, shipping company, and even exporter and importer must be aware of their impact.
Imagine shipping a container full of export products worth billions of rupiah to the US. All costs have been calculated, and profit margins are secure. However, suddenly, import tariffs change. Selling prices become uncompetitive, buyers push prices down, while sea transportation costs remain high. If additional risks arise en route, such as container damage, a tanker engine failure, or a storm delay, losses could multiply.
This is where the role of Ship Insurance is vital. It’s not just a formality, but a “financial shield” that ensures business continuity. From Marine Hull Insurance, which protects vessels, to protection for cargo, containers, and even cruise ships or passenger ships, everything can be tailored to the needs of modern shipping.
So, through this article, we will discuss:
- The impact of changes in US import tariffs on Indonesian shipping.
- The risks to ships and cargo are increasing.
- A type of insurance that can protect ships and exports and imports.
- The role of an insurance broker in helping you choose the best policy.
So, if you’re a shipowner, shipping company, or import-export company, be sure to read this article to the end. The right insurance strategy can be the difference between a business sinking under risk and one that sails safely.
The Impact of US Import Tariffs on Shipping & Export-Import Businesses
Changes in US import tariffs aren’t just a distant international issue. In fact, Indonesia is a country that actively exports to the US, including textiles and furniture, processed food products, and even seafood. This means that any changes in tariff policies will be immediately felt by exporters and shipowners shipping the goods.
1. Ship Operating Costs Increase
When import tariffs increase, many US importers will reduce the purchase price of Indonesian products. Consequently, exporters must cut margins, while ship operating costs—such as fuel, port costs, and insurance—cannot be reduced. As a result, shipping companies are caught in the middle.
2. Increased Vessel and Cargo Risk
Under economic pressure, cargo ships are often forced to sail fully loaded to save costs. This actually increases risks, such as container damage, overworking tanker engines, or even safety issues on passenger ships and ferries.
3. Delays & Legal Claims
Tariff changes can trigger renegotiation of trade contracts. If goods have been shipped but tariffs change mid-shipment, the importer can reject the cargo or request renegotiation. This situation often gives rise to complex legal claims. For shipowners, this clearly poses additional financial risks.
4. Pressure on Export-Import Companies
Not only shipping companies, but also exporters and importers are feeling the impact. They must bear the extra costs of containers, loading and unloading, and even potential returns. In these circumstances, ship insurance for exports and imports becomes a necessity, not an option.
5. Opportunities for those who are ready
While it may sound daunting, there’s actually a significant opportunity. Companies that promptly protect their assets with Marine Hull Insurance for vessels and Cargo Insurance for goods can actually be more resilient in the face of fluctuating tariffs. In other words, while competitors are busy covering losses, you can focus on running your business.
Ship Risks in the Era of New Import Tariffs
When US import tariffs change, many people only see the trade impact. However, for shipowners and shipping operators, these new tariffs can increase risks for ships and cargo. Let’s take a closer look.
1. Risk of Ship Damage (Marine Hull Risk)
Ships are highly valuable assets. Tankers, cruise ships, passenger ships, and ferries can experience:
- Engine damage due to higher operating pressure.
- Accidents at sea due to bad weather or long routes to reduce costs.
- Collisions between ships in busy international trade routes.
2. Risk of Damage or Loss of Cargo (Cargo Risk)
Export-import goods transported in containers are very vulnerable:
- Storms can damage containers.
- Perishable goods (such as processed foods or seafood) may spoil before they arrive.
- Risk of theft at the port or during the voyage.
3. Financial Risks and Legal Claims
Tariff changes could cause US buyers to delay or cancel transactions. As a result:
- Ships have to wait longer at the port (demurrage cost).
- Goods may be rejected or returned, giving rise to legal disputes.
- Ship owners can be sued for late deliveries.
4. Reputational Risk
The losses from shipboard incidents are not only financial, but also reputational. For example, a container ship that is frequently late or a ferry that experiences incidents will lose customer trust.
5. Unpredictable Sea Conditions
Beyond economic factors, the ocean itself is a region full of uncertainties: tropical storms, collisions on busy waterways, and the risk of piracy in some regions. All of this makes marine insurance for imports and exports a non-negotiable protection instrument.
Types of Ship Insurance You Must Understand
Many ship owners, shipping companies, and export-import companies are often confused about choosing the right type of marine insurance. However, each vessel has different characteristics and risks. Here are the main types you need to understand:
1. Marine Hull Insurance
This provides protection against physical damage to a vessel, whether it’s a tanker, cruise ship, container ship, ferry, or passenger ship. Marine Hull protects the vessel from the risks of collision, fire, storms, and even engine failure.
- Suitable for: large ship owners, shipping and ferry operators.
- Benefits: no need to bear the repair costs yourself which can reach billions of rupiah.
2. Cargo Insurance
Protection for cargo carried by ships. This can include containers, mining products, marine products, and even manufactured products.
- Suitable for: exporters and importers.
- Benefits: losses due to damage, loss or theft of goods can be covered by insurance.
3. Ship Insurance for Export Import
This type is more specific because it provides full protection for ships and cargo involved in international trade.
- Suitable for: export–import companies.
- Benefits: provides a sense of security when facing changes in import/export tariffs that can increase travel risks.
4. Protection & Indemnity (P&I Insurance)
Insurance that protects against legal liability, such as if a ship crashes into a dock, pollutes the sea due to an oil spill, or faces a lawsuit from a third party due to a delay in delivery.
- Suitable for: all ship owners, especially tankers and cargo ships.
- Benefits: protects against legal claims that could be worth more than the physical loss of the ship.
5. Specialist Insurance
Some insurance companies also offer special policies for cruise ships or passenger ships, as their risks differ from those of cargo ships. For example, extra protection for passengers or losses due to trip cancellations.
Strategies for Facing New Tariff Risks with Ship Insurance
Now that we understand that changes in US import tariffs directly impact vessel risk and insurance costs, the question is: what can shipowners, shipping companies, and exporters and importers do to address this? The answer lies in a smart strategy for selecting and managing marine insurance.
1. Evaluation of Ship Type and Shipping Route
Each vessel has a different risk profile.
- Tankers carrying oil are obviously at high risk of fire and pollution.
- Container ships are prone to cargo damage due to extreme weather.
- Ferries and passenger ships pose much more complex human safety risks.
- Cruise ships face huge demands from passengers in the event of delays or service disruptions.
2. Expand Ship Insurance Coverage for Export–Import
As import tariffs change, the value of goods increases. Therefore, don’t just rely on basic Marine Insurance, but expand it to include:
- Cargo Insurance: protects cargo from the risk of damage or loss.
- P&I (Protection & Indemnity) insurance: for legal risks, third party claims, and ship owner liability.
- War Risk Insurance: if the trade route passes through conflict-prone areas.
3. Take Advantage of Indonesian Ship Insurance Brokers
In a volatile market situation, insurance brokers have an important role:
- Helps keep premium negotiations efficient.
- Provide risk analysis according to vessel and business profile.
- Accompany you during the claim process, so that the process is fast and hassle-free.
For example, many large shipping companies in Indonesia have finally chosen to use the services of ship insurance brokers to ensure optimal protection even though premiums have increased due to import tariff policies.
4. Digitalization and Risk Monitoring
Recent trends show many insurance companies are starting to implement digital technology to monitor ship movements. With IoT devices and GPS tracking, ship risks can be mapped in real time.
- If a container ship encounters a storm, the data is immediately sent to the insurance company.
- This helps speed up claims because digital evidence is readily available.
5. Long-Term Planning
Import tariffs are unstable. They can rise or fall. Therefore, the long-term strategy is:
- Creating a flexible ship protection portfolio.
- Develop a financial plan to ensure premiums remain stable.
- Ensuring that every vessel, whether a tanker, ferry, container ship, or cruise ship, has protection appropriate to its respective risks.
Case Study: Indonesian Ships Affected by Tariff Changes
To understand how changes in US import tariffs impact the shipping world, let’s look at a real-life case study of an import-export company in Indonesia.
Case 1: Textile Export Container Ship
A West Java textile company regularly exports its products to the United States using container ships. When US import tariffs increased, logistics costs increased dramatically. As a result:
- The value of goods increases so the risk of loss if damage occurs is greater.
- Marine Hull and Cargo Insurance Premiums are also affected due to higher risk exposure.
- Fortunately, this company already has Export-Import Ship Insurance which includes cargo protection, so if there is damage to part of the cargo due to a storm in the Pacific Ocean, the loss can be covered by insurance.
Case 2: Palm Oil Tanker
A tanker from Sumatra transports palm oil to the American market. When new import tariffs were implemented, the selling price of palm oil fell, while transportation risks remained high:
- Tankers are at risk of oil spills, collisions or fires.
- Insurance premiums rose by 15% because the route passed through busy roads prone to accidents.
However, by using the services of an Indonesian ship insurance broker, the shipowner was able to negotiate a lower premium with the insurance company. Furthermore, when the ship suffered minor damage at the transit port, the claim was paid quickly due to complete documentation.
Case 3: Ferries and Passenger Ships to Overseas
Some shipping companies are also affected by tariff policies, even though they don’t transport goods. Ferries and passenger ships carrying tourists to the United States face additional operational costs.
- The risk level is considered higher because travel delays could result in legal action from passengers.
- With the support of Ship Insurance that covers legal liability (P&I Insurance), shipping can continue safely without fear of major losses if there are delays.
Conclusion
Changes in US import tariffs have become a major issue for the international shipping industry, including Indonesia. From container ships and tankers to cargo ships, cruise ships, ferries, and passenger ships, all parties need to be more vigilant about ship risks that could lead to significant financial losses.
This is where Marine Insurance plays a vital role. Whether it is Marine Hull Insurance to protect the physical condition of the ship, Ship Insurance for Export-Import for cargo security, to special protection for tankers or cruise ships, all become important shields in facing global uncertainty.
As we saw in the previous case study, companies with the right insurance coverage can remain calm even when faced with new tariffs, bad weather, or vessel damage. In fact, with the support of an Indonesian marine insurance broker, shipowners and shipping companies can obtain the best premiums, in-depth risk analysis, and comprehensive claims assistance.
If you’re a shipowner, shipping operator, or import-export company, now is the time to act. Ensure your vessels, cargo, and business are protected with the right marine insurance strategy.
We’re ready to help you choose the best boat insurance policy, negotiate premiums with insurance companies, and assist you from start to finish. Because in this high-risk era, your boat’s safety is our priority.
