War and other factors threaten maritime sector: report
While the decrease in total cargo losses worldwide is good news for marine insurers, the number of maritime accidents has increased in 2021, said the annual review of safety and navigation of Allianz Global Corporate & Specialties (AGCS).
Globally, 54 total ship losses were reported in 2021, 11 less than in 2020. This is a big improvement from the 1990s, when more than 200 ships per year were reported as total losses. (Impressive, since there are around 130,000 freighters operating in the world today, up from around 80,000 in the 1990s.)
The maritime region of southern China, Indochina, Indonesia and the Philippines recorded 12 losses in 2021. Loss factors were high levels of trade, congested ports, older fleets and poor conditions. extreme weather.
But, while overall losses have decreased, reports of maritime accidents or incidents have increased. The British Isles reported the most incidents (668 out of 3,000). Worldwide in 2021, 1,311 incidents were caused by damage to machinery, 222 by collisions and 178 by fires.
Over the past decade, 10 total ship losses have been reported in the Canadian Arctic and Alaska region, making it the 19e most frequent place of loss in the world, said the ACGS Canadian underwriter. The most common cause was sinking (sinking/submergence).
In addition, over the past 10 years, 508 maritime incidents have been reported in this region (most often machinery breakdowns), making it the 14e location of the most frequent incident.
The report also highlights impending factors that could quickly change what is now a generally positive story.
“The tragic situation in Ukraine has caused widespread disruptions in the Black Sea and elsewhere, exacerbating the ongoing supply chain, port congestion and crew crisis issues caused by the COVID-19 pandemic,” said Captain Rahul Khanna, who leads the Global Maritime Risk Advisory at AGCS. .
“[And] some of the industry’s responses to the shipping boom, such as changing usage or extending vessel life, also set off warning signals.
Russia’s invasion of Ukraine has affected the shipping industry in several ways, the report notes, including loss of life and ships in the Black Sea, disruption of trade and growing sanctions burden . Additionally, there are implications for day-to-day operations, crews, the cost and availability of marine fuel oil, and potentially more cyber risks.
A long war could potentially reshape global trade in energy and other commodities; and a stricter ban on Russian oil could push shipowners to use alternative fuels. “If these fuels are of substandard quality,” the report says, “this could lead to machine failure claims in the future.”
Onboard fires are also a growing concern. The report says there have been more than 70 reported fires on container ships over the past five years.
Fires can start due to misdeclaration (or lack of declaration) of dangerous goods, such as chemicals and batteries. And the increase in EV shipments creates challenges, as existing fire suppression measures might not respond properly to an EV fire.
Additionally, losses can be costly as the cargo is high value and it is costly to remove wrecks and mitigate pollution.
“Previously, a wreck could have been left in place if it posed no hazard to navigation,” Khanna said. “Now the authorities want the wrecks removed and the marine environment restored, whatever the cost.”
Photo courtesy of iStock.com/Federico Rostagno