The international shipping industry continued its long-term positive safety trend over the past year but has to master Covid challenges, apply the learnings from the Ever Given Suez Canal incident and prepare for cyber and climate change challenges ahead.
The number of large vessels lost remained at record low levels in 2020, while reported incidents declined year-on-year, according to marine insurer Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2021.
“The shipping sector has shown great resilience through the coronavirus pandemic, as evidenced by strong trade volumes and the recovery we are seeing in several parts of the industry today,” says Captain Rahul Khanna, global head of Marine Risk Consulting at AGCS.
“Total losses are at historic low levels for the third year running. However, it is not all smooth sailing. The ongoing crew crises, the increasing number of issues posed by larger vessels, growing concerns around supply chain delays and disruptions, as well as complying with environmental targets, bring significant risk management challenges for ship-owners and their crews.”
The annual AGCS study analyzes reported shipping losses and casualties (incidents) over 100 gross tons. During 2020 year, 49 total losses of vessels were reported globally, similar to a year earlier (48) and the second lowest total this century. This represents a 50 percent decline over 10 years (98 in 2011). The number of shipping incidents declined from 2,818 to 2,703 in 2020 (by 4 percent).There have been more than 870 shipping losses over the past decade.
The South China, Indochina, Indonesia and Philippines maritime region remains the global loss hotspot, accounting for one in every three losses in 2020 (16) with incidents up year-on-year. Cargo ships (18) accounts for more than a third of vessels lost in the past year and 40 percent of total losses over the past decade. Foundered (sunk/submerged) was the main cause of total losses over the past year, accounting for one in two vessels. Machinery damage / failure was the top cause of shipping incidents globally, accounting for 40 percent.
Covid-19 factors
Despite the devastating economic impact of Covid-19, the effect on maritime trade has been less than first feared. Global seaborne trade volumes are on course to surpass 2019 levels this year after declining slightly in 2020. However, the recovery remains volatile. Covid-19-related delays at ports and shipping capacity management problems have led to congestion at peak times and a shortage of empty containers. In June 2021, it was estimated there was a record 300 freighters waiting to enter overcrowded ports. The time container ships are spending waiting for port berths has more than doubled since 2019.
Larger vessels, larger exposures
The blocking of the Suez Canal by the Ever Given container ship in March 2021 is the latest in a growing list of incidents involving large vessels or mega-ships. Ships have become ever-larger as shipping companies seek economies of scale and fuel efficiency. The largest container ships break the 20,000 teu mark, with vessels over 24,000 teu on order – capacity of container ships vessels alone has increased by 1,500 percent over 50 years and has more than doubled over the past 15 years.
“Larger vessels present unique risks. Responding to incidents is more complex and expensive. Approach channels to existing ports may have been dredged deeper and berths and wharfs extended to accommodate large vessels but the overall size of ports has remained the same. As a result, a ‘miss’ can turn into a ‘hit’ more often for the ultra-large container vessels,” says Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS.
Delay and supply chain issues
Maritime supply chain resilience is in the spotlight after a series of recent events. The Ever Given incident sent shockwaves through global supply chains dependent on seaborne transport. It compounded delays and disruption already caused by trade disputes, extreme weather, the pandemic and surges in demand for containerized goods and commodities. “Such events expose the weak links in supply chains and have magnified them,” says Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS. “Developing more robust and diversified supply chains will become increasingly important, as will understanding pinch points and supply chain nodes.”
Piracy and cyber concerns
The world’s piracy hotspot, the Gulf of Guinea, accounted for over 95 percent of crew numbers kidnapped worldwide in 2020. Last year, 130 crew were kidnapped in 22 incidents in the region – the highest number ever – and the problem has continued. Vessels are being targeted further away from the shore –over 200 nautical miles (nm) in some cases. The Covid-19 pandemic could exacerbate piracy as it is tied to underlying social, political and economic problems, which could deteriorate further. Former hotspots like Somalia could re-emerge.
– Businessday
