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Fires, shadow tanker fleet and economic uncertainty pose new safety challenges in shipping


A combination of factors impacting fire risk, ongoing and new threats posed by the ripple effects of the Ukraine conflict, decarbonization challenges, economic uncertainty, as well as the rising cost of marine claims, means the shipping sector still has plenty of obstacles to navigate over the next 12 months and beyond, according to insurer Allianz Global Corporate & Specialty SE's (AGCS) "Safety & Shipping Review 2023".

"Shipping losses have sunk to the lowest number we have seen in the 12-year history of our annual study reflecting the positive impact safety programmes, trainings, changes in ship design and regulation have had over time," said Captain Rahul Khanna, global head of Marine Risk Consulting at AGCS.


Every year, AGCS analyses reported shipping losses and casualties (incidents) involving ships over 100 gross tons. During 2022, 38 total losses of vessels were reported globally, compared with 59 a year earlier. This represents a 65% decline in annual losses over 10 years (109 in 2013). Thirty years ago, the global fleet was losing 200+ vessels a year.

"While these results are gratifying, several clouds appear on the horizon. More than a year after Russia's invasion of Ukraine, the growth of the shadow oil tanker fleet is the latest consequence to challenge shipowners, their crew and insurers.

"Fire safety and the problem of mis-declaration of hazardous cargo must be fixed if the industry is to benefit from the efficiency of ever-larger vessels. Inflation is pushing up the cost of hull, machinery and cargo claims." Meanwhile, although the industry's decarbonization efforts are progressing, this remains by far the sector's biggest challenge. Economic pressures could put vital investments in companies' strategies, as well as in other safety initiatives, in jeopardy."

Factors impacting the cost of claims


Increased commodity prices, higher labor costs and supply chain disruption have had a significant impact on marine insurance claims, in particular hull and machinery.


"The price of steel, a key cost driver in hull claims, increased sharply post-pandemic, as did spare parts. A typical propeller or machinery claim now costs around two times more than pre-pandemic," explained Régis Broudin, global head of Marine Claims at AGCS. "Shortages and delays in obtaining replacement parts have also led to longer stays in repair yards while labor shortages have also increased costs. This comes on top of the increased expense of dealing with large vessels, which face higher costs for repairs, salvage, and towing."


The post-pandemic boom in container shipping has also impacted. Cargo values have risen with the increase in the price of goods and raw materials.


Hotspots


According to the report, there have been more than 800 total losses over the past decade (807). The South China, Indochina, Indonesia, and the Philippines maritime region is the global loss hotspot, both over the past year and decade (204 total losses). It accounted for one-in-five losses in 2022 (10) driven by factors including high levels of trade, congested ports, older fleets and extreme weather.


The Arabian Gulf, British Isles and West Mediterranean waters were the second top loss locations (3). Around a quarter of vessels lost in 2022 were cargo (10). Foundered (sunk/submerged) was the main cause of total loss across all vessel types (20), accounting for over 50%. Fire/explosion ranked as the second top cause of loss (8). Vessel collision third (4).



Source: asiainsurancereview.com

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