Allianz: Shipping losses at record low

(Posted on 20/07/20)

Large shipping losses are at a record low having fallen by over 20% year-on-year, according to marine insurer Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2020. However, the coronavirus crisis could endanger the long-term safety improvements in the shipping industry for 2020 and beyond, as difficult operating conditions and a sharp economic downturn present a unique set of challenges.

“Coronavirus has struck at a difficult time for the maritime industry as it seeks to reduce its emissions, navigates issues such as climate change, political risks and piracy, and deals with ongoing problems such as fires on vessels,” says Baptiste Ossena, Global Product Leader Hull Insurance, AGCS. “Now the sector also faces the task of operating in a very different world, with the uncertain public health and economic implications of the pandemic.”

The annual AGCS study analyzes reported shipping losses over 100 gross tons (GT) and also identifies 10 challenges of the coronavirus crisis for the shipping industry which could impact safety and risk management. In 2019, 41 total losses of vessels were reported around the world, down from 53 12 months earlier. This represents an approximate 70% decline over 10 years and is a result of sustained efforts in the areas of regulation, training and technological advancement, among others. More than 950 shipping losses have been reported since the start of 2010.

The shipping industry has continued to operate through the pandemic, despite disruption at ports and to crew changes. While any reduction in sailings due to coronavirus restrictions could see loss activity fall in the interim, the report highlights 10 challenges that could heighten risks. Among these are:

• The inability to change crews is impacting the welfare of sailors, which could lead to an increase in human error on board vessels.
• Disruption of essential maintenance and servicing heightens the risk of machinery damage, which is already one of the major causes of insurance claims.
• Reduced or delayed statutory surveys and port inspections could lead to unsafe practices or defective equipment being undetected.
• Cargo damage and delay are likely as supply chains come under strain.
• The ability to respond quickly to an emergency could also be compromised with consequences for major incidents which are dependent on external support.
• The growing number of cruise ships and oil tankers in lay-up around the world pose significant financial exposures, due to the potential threat from extreme weather, piracy or political risks.

“Ship-owners also face additional cost pressures from a downturn in the economy and trade,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS. “We know from past downturns that crew and maintenance budgets are among the first areas that can be cut and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions. It is crucial that safety and maintenance standards are not impacted by any downturn.”

According to the report, the South China, Indochina, Indonesia and Philippines maritime region remains the top loss location with 12 vessels in 2019 and 228 vessels over the past decade – one in four of all losses. High levels of trade, busy shipping lanes, older fleets, typhoon exposure, and safety issues on some domestic ferry routes are contributing factors. However, in 2019, losses declined for the second successive year. The Gulf of Mexico (4) and the West African Coast (3) rank second and third.

Cargo ships (15) accounted for more than a third of vessels lost in the past year, while foundered (sunk/submerged) was the main cause of all total losses, accounting for three in four (31). Bad weather accounted for one in five losses.

Latest News

INTERCARGO highlights progress and priorities in bulk carrier safety

Bulk carrier safety continues to show steady long-term improvement, but the nature of risk facing seafarers... Read more

Norden raises full-year guidance following strong performance in dry cargo

Following stronger than expected operational performance in dry cargo, reduced costs associated with... Read more

Algoma announces refinancing of long-term debt

Algoma Central Corporation, a leading provider of marine transportation services, has announced that... Read more

Global maritime under threat from Fortibleed incident, warns Cydome

Major maritime, ports and energy companies have been identified by Cydome’s threat-intelligence... Read more

Crewing specialist expands global recruitment network with Indonesian seafarers

As the global shipping industry faces mounting concerns over future crew availability, Danica Crewing... Read more

IMO pauses evacuation in Strait of Hormuz following attack

Following an attack on a vessel in the Gulf of Oman, IMO has decided to temporarily pause its evacuation... Read more

Human cost of keeping world trade moving highlighted on Day of the Seafarer

Leading health and wellness platform OneCare Group is calling on shipping leaders to recognise the immense... Read more

Partnership to put seafarer wellbeing at heart of maritime safety

NorthStandard will partner maritime welfare charity Sailors’ Society to support seafarers&rsquo... Read more

IMCA urges focus on diver safety amid rising demand as Strait of Hormuz reopens

The International Marine Contractors Association (IMCA) has reminded vessel owners and operators of... Read more

Dark side of AI exposes maritime cyber training gap, warns SmartSea

AI is promising enormous benefits for the maritime industry. However, as shipping embraces digitalisation... Read more