According to Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2018 overall losses in 2017 fell by more than a third (38%) over the past 10 years, but typhoons, traffic and safety on domestic routes were major factors in contributing to the higher losses in Asia.
The review analyzes reported shipping losses over 100 gross tons (GT).
Bad weather was involved in 1 in 4 losses amounting to more than 20 vessels, the review found, although human error was still a major driver of incidents, with the Sanchi oil tanker collision cited as a particularly bad case.
“Human error continues to be a major driver of incidents,” said Rahul Khanna, global head of Marine Risk Consulting, AGCS. “Inadequate shore-side support and commercial pressures have an important role to play in maritime safety and risk exposure. Tight schedules can have a detrimental impact on safety culture and decision-making,” he added.
Better use of data and analytics could help. The shipping industry produces a lot of data but could utilize it better, producing real-time findings and alerts, Khanna believed. “By analyzing data 24/7 we can gain new insights from crew behaviour and near-misses that can identify trends. The shipping industry has learned from losses in the past but predictive analysis could be the difference between a safe voyage and a disaster.”
Other emerging risks included mega ship fires, emissions rules, climate change and autonomous shipping, AGCS said. Meanwhile, insurers also expect to see more losses from cyber incidents and technological defects, with the review highlighting the impact of the NotPetya malware on container terminals and box shipping, causing cargo delays and congestion at nearly 80 ports.
“The decline in frequency and severity of total losses over the past year continues the positive trend of the past decade. Insurance claims have been relatively benign, reflecting improved ship design and the positive effects of risk management policy and safety regulation over time,” said Baptiste Ossena, global product leader Hull & Marine Liabilities, AGCS. “However, as the use of new technologies on board vessels grows, we expect to see changes in the maritime loss environment in future. The number of more technical claims will grow – such as cyber incidents or technological defects – in addition to traditional losses, such as collisions or groundings.”
The losses occurring in the South China, Indochina, Indonesia and Philippines maritime region, were up 25% annually, driven by activity in Vietnamese waters, AGCS said. It noted that this area has been the major global loss hotspot for the past decade, leading some media commentators to label it the “new Bermuda Triangle”.
AGCS pointed out however that the major loss factors are actually weather, with Typhoon Damrey in November alone causing six losses, busy seas and lower safety standards on some domestic routes. Besides Asia, the next major loss hotspot is the Eastern Mediterranean and Black Sea region with 17 losses, followed by the British Isles with eight. More worryingly, there was also a 29% annual increase in reported shipping incidents in Arctic Circle waters (71), according to AGCS analysis.
Cargo vessels (53) accounted for over half of all vessels lost globally in 2017, and among these, bulk carriers accounted for five of the 10 largest reported total losses by gross tonnage. The most common cause of global losses remains foundering (sinking), with 61 sinkings in 2017. Wrecked/stranded ranks second (13), followed by machinery damage/failure (8).
Looking ahead, AGCS noted that there are multiple new risk exposures for the shipping sector. Among these, increasing container ship size poses fire containment and salvage issues and climate change is bringing new route risks, with fast-changing conditions in Arctic and North Atlantic waters posing new hazards.
Meanwhile with the new emissions regime imminent, new technical risks and the threat of machinery damage incidents could prove to be a double whammy. And finally, in terms of the rising use of automation and the trends towards digitalization, the industry continues to grapple with balancing the benefits and risks of increasing automation on board.
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