What’s at Risk? The War on Ukraine, Inflation, and Supply Chain Disruption - Current Events and New Art Market Challenges | Risk Strategies

Supply chain issues, the rising cost of fuel, COVID, the war in Ukraine: the current climate affects almost every aspect of life. This includes your fine art. How can you protect your art during this period of global volatility?

Supply Chain and Fuel Costs

In short, everything is much more complicated than before. Accounting for shipping delays and asking the right questions of your customs broker, shippers, borrowers and consignees will be critically important to protecting your art in the coming months.

• Plan WAY ahead – Every transportation logistics-related vendor - local suppliers, crate shops, art handlers and trucking companies - is working to maximum capacity: That means that every stage is suffering shortages and delays.
• Be prepared to pay more – Customs brokers are sometimes having to contact four vendors for price quotes and prices are shifting daily.

Ocean Cargo

Ocean cargo shipments were once a relatively safe way to transport art, provided some basic guidelines were followed such as booking a roll-on roll off (RORO) vessel, and using a climate controlled container (REEFER). Today, ocean cargo shipments are not as safe a bet as they used to be. Other considerations include:

• Although the overall price is still lower than air, container prices have increased at a higher percentage than air freight.
• Unreliable ship schedules. Your container is likely to get bumped multiple times resulting in weeks or months of your container sitting at a port.
• Some shipments arrive at a port but do not get unloaded for weeks. They sit on ships at the port, waiting for a berth, so the containers can be unloaded.
• As a tiny portion of worldwide cargo shipments, fine art is low priority handling.
• Fine art should not sit at a port for weeks on end, especially if it is sensitive to temperature and humidity. Even a REEFER container cannot guarantee climate if the power goes out or the container is unplugged.
• Given current circumstances, outdoor sculptures or artworks not sensitive to climatic changes are the only class of artwork that would safely withstand an ocean cargo shipment at present.

Russian Air Space Restrictions / Shipments to Asia

Business friction has increased with Russian sanctions and air space restrictions. Between the supply chain, fuel costs and flight routes, shipping in general has become more difficult; shipping to and from Asia has become particularly challenging.

• Closing Russian air space to all European and USA air carriers and flights originating in the Northern hemisphere traveling to Asia pushes routing over the Arctic, requiring more fuel, time, and money.

• Flights to Asia have been slashed by 95%. The limited cargo space available is taken up by high-demand consumer products from China, leaving little room for fine art.

• Air freight capacity cannot keep up with the current demand triggering sharp price increases for shipments.

• Art Fairs in Asia require much more lead time for dealer’s shipment. Expect to have shipments depart by mid-April to reach the May fairs on time. We recommend doubling the shipment time from last year when making your plans.

• Expect severe price increases for the return shipments. Shipping costs can be as much as ten times more expensive than in the past.

Tips for Protecting Your Artwork

• Plan ahead. Give yourself plenty of time to arrange for shipments.
• If you are lending or consigning items, ask for details regarding shipping. How long will your work take to get from point A to point B?
• High valued shipments should be accompanied by a courier.
• Consider cargo shipments only for artworks that are not at all sensitive to climatic variations or a strict timeline for delivery.
• Political Risk and Political Violence coverage should be considered if you are conducting business in locations with political tensions or in locales close to Ukraine.
• Adjust your expectations for turnaround time and cost.

A special thanks to Fritz Dietl, Delaware Freeport and Margaret Bussiere, Risk Strategies for their generous contributions to this article.

Want to learn more?

Connect with the Risk Strategies Fine Art team at fineart@risk-strategies.com.

Connect with me directly at: mpontillo@risk-strategies.com