When the supply chain snaps: trade disruption insurance protects profit when the just-in-time system breaks down.

When tanks rolled through Beijing's Tiananmen Square. something a tad less lofty than democracy and human rights was also at stake.

It looked as if a highly-promoted retail fashion sale in the U.S. was going to take place without the star attraction: the clothing. That's because a strict curfew imposed by the government prevented Chinese garment-assemblers from getting to work.

Since they couldn't get to work, they couldn't finish sewing the clothing in time to make a scheduled sailing that would land the garments in the U.S. just in time for the sale.

Once the curfew was lifted, there was still time to stage the sale within the seasonal parameters (the fashion year has seven, not four). But to meet the deadline the importer had to pay the workers overtime and book space with far pricier air carriers.

To make matters worse, the crisis caused a run on air cargo capacity, which pushed freight rates even higher. Then, …