Stockpiling goods grows amid tariff uncertainty and competition
In the lead-up to the imposition of tariffs by the US administration last year, there was a significant increase in the ordering and movement of goods as businesses sought to bring in supplies before the new measures took effect. There was a 228% increase in Days of Inventory on Hand (DIOH) between February and April 2025, according to research by one supply chain tech company.1
Some companies also sought to reroute goods through third countries, such as Mexico, to reduce the cost of importing directly from source markets.
One in four businesses aren't prepared for the risks
In many cases, businesses are importing goods ahead of anticipated tariffs to mitigate future cost increases. Yet, one in four admits they're not prepared for the risks associated with building up inventory buffers. These risks include higher operating costs, heightened theft exposure and greater concentrations of assets exposed to catastrophe losses.
More broadly, tariffs can add to inflationary pressure across supply chains and end markets; in the US, motor vehicle maintenance and repair prices rose 4.9% year over year between January 2025 and January 2026,2 illustrating how trade and cost pressures can flow through to customers and businesses alike.
“
When governments move to secure supply without coordination, they can unintentionally increase vulnerability across the wider system.
JD Crouch, managing director, Global Strategy, Gallagher
When multiple large economies simultaneously build buffer stocks in already-tight markets, they can amplify supply pressures. Stockpiling may drive up prices, distort physical flows and disadvantage smaller economies with less purchasing power.
JD Crouch, managing director, Global Strategy in Gallagher's retail brokerage division, says: "When governments move to secure supply without coordination, they can unintentionally increase vulnerability across the wider system. Stockpiling may look like prudent risk management from a national or corporate perspective, but in aggregate it can concentrate exposure, distort flows and create a new set of risks for businesses and their insurers."
Why higher concentrations of risk can result in bigger claims
Holding inventory and materials for long periods exposes warehouses and storage facilities to greater risks. Higher concentrations of goods in warehouses near ports, logistics hubs and industrial estates can materially increase the severity of claims in the event of floods, fires or other catastrophic events.
“
Effectively, you can de-risk in one place and pass that on to another.
Alec Russell, managing director, Marine Cargo, Gallagher Specialty
Stockpiling also increases accumulation risks, and with it the cost and severity of claims for insurers. "Effectively, you can de-risk in one place and pass that on to another," says Alec Russell, managing director, Marine Cargo, Gallagher Specialty. "If a large windstorm comes through, you could get a bigger loss because you have a greater accumulation of values in single locations."
Amid a rise in cargo crime, the stockpiling of goods is also creating larger and more attractive targets for organized criminal gangs. These actors are increasingly using technology and forged documentation to intercept and steal goods.
"Stockpiling may help companies meet immediate needs, but it also creates bigger targets for theft and larger concentrations of risk," says Brian Stout, area senior vice president, WK Webster, a Gallagher Bassett company. "The challenge is finding the right balance between having enough inventory to keep operations moving and not creating new vulnerabilities in the process."
In some industries, stockpiling can create a more strategic problem: obsolescence. This is especially relevant for emerging technology and specialist components, where innovation cycles are short and specifications can change quickly. If goods are stored for too long, businesses may face financial losses because components no longer meet project requirements or market demand by the time they're needed.
Why supply chain insurance strategy and valuations matter
Amid an increasing frequency of losses from secondary perils, the requirement for accurate valuations has grown in importance. Beyond property valuations, businesses are also encouraged to update inventory values if they're storing more materials on site than they were in the past.
This can help avoid underinsurance and ensure there's adequate property and business interruption coverage. This is an important consideration for data center construction projects, notes Stuart Freeman, partner, Construction, Gallagher Specialty, where tariff uncertainty, combined with heightened competition for specialist components, has prompted an increase in stockpiling.
"A construction policy will have a sub limit for off-site storage, which might be $10 million-$20 million," he says. "On one of our data center projects, they revealed they had $130 million worth of equipment stored, which had been brought in ahead of tariffs coming in. And so, we needed to amend the policy to pick up that off-site storage risk."
Effective inventory risk mitigation includes enhanced warehouse security and inventory diversification across locations to avoid overstocking and correctly store hazardous materials. Effective storage strategies include:
- Organizing warehouse layouts for safety
- Using climate control for sensitive goods
- Implementing strict access controls
- Using technology for real-time inventory tracking
As a key source of risk and insurance insights, brokers help clients assess regional and location-specific accumulation risk and map potential contingent business interruption exposures, supporting more informed decisions about where and how inventory is stored.
"Many businesses are still not thinking hard enough about supply chain health until it's too late," says Alush Garzon, senior area vice president, Manufacturing Vertical leader, Gallagher. "They may diversify their customers, but not their critical suppliers, and that can leave them exposed to contingent business interruption that is often overlooked and underinsured."
In a dynamic economic and geopolitical risk environment, businesses need to balance short-term cost-saving measures with long-term risk management. Stockpiling may provide a buffer against tariffs and trade disruption, but it can also create new concentrations of risk that demand tailored mitigation strategies.
By combining accurate valuations, appropriate property and business interruption cover, stronger site security and a clearer understanding of accumulation and contingent exposures, businesses can better protect assets, reduce the total cost of risk and build greater supply chain resilience.
