Canadian Underwriter

Global ship losses increase in 2012, but downward trend continues

January 8, 2013   by Canadian Underwriter

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Technological improvements are expected to reduce shipping accidents that result in losses, but only when properly applied with effective training and management oversight, notes marine insurer Allianz Global Corporate Specialty (AGCS).


Technological improvements such as the introduction of Electronic Chart Display and Information Systems (ECDIS) last July are expected to reduce accidents, notes a statement from AGCS, which provides insurance and risk management support across the whole spectrum of marine, aviation and corporate business.

ECDIS carriage is mandatory on a rolling timetable from July 2012, with  legislation being phased in by ship type and size to apply eventually to almost all large merchant and passenger vessels.

“Technology is only as useful as the training behind it – and we don’t see this human element keeping up with other advances,” cautions Dr. Sven Gerhard, AGCS’s global product leader, hull and liability. Dr. Gerhard made the comments as part of the insurer’s release of its annual Safety and Shipping Review 2013. Data from the report, which focuses on key developments in maritime safety during 2012, is based on actual total losses or constructive total losses recorded for vessels of 100 gross tons or more.

The report notes that 106 ship losses were reported worldwide in the 12 months to November 25, 2012 – up approximately 16% from the 91 ships in the previous year, but down 27% from the 10-year average of 146 ships annually.

Last year witnessed two high-profile losses: the cruise ship Costa Concordia off Italy (a loss of 114,137 gross tons) and the ferry Rabaul Queen off Papua New Guinea (a loss of 259 gross tons), both of which resulted in multiple fatalities.

Of the remaining major losses reported in 2012, the report lists gross tons lost as ranging from a low of 1,028 for Togi, a yacht that drifted and then sank (no fatalities), to a high of 77,458 for Pacific Carrier, in which a dragged anchor in high winds caused the vessel to run aground (no fatalities).

The primary data source for total loss statistics is Lloyd’s List Intelligence Casualty Statistics (data run on December 14, 2012). The report lists the most common causes of the 106 incidents in 2012 as follows: foundered, 52; wrecked/stranded, 23; fire/explosion, 11; collision, 6; machinery damage/failure, 6; hull damage, 5; contact, 2; and miscellaneous, 1.

Due to the concentration of commercial shipping in geographical areas, at 30, 58% of total losses occurred in one of four maritime regions, namely South China, Indo China, Indonesia and the Philippines, the report states. That was followed by 15 losses in the East Mediterranean and the Black Sea; 10 around Japan, Korea and North China; seven in the British Isles, North Sea, English Channel and Bay of Biscay; five apiece in the Arabian Gulf and approaches, and the West Mediterranean; two each in the West African coast, the West Indies, the Bay of Bengal, and the United States eastern seaboard; and 26 in Others.

The long-term downward trend in accidents – driven by technology, training, regulation and the shipping industry’s response to safety improvements – is set against the influence of human error, which continues to be the core challenge.

Human error remains a root cause of most incidents, notes the AGCS statement, citing fatigue, economic pressures and inadequate training as causes for concern. “For some commercial ship-owners, especially in the hard-pressed bulk cargo and tanker sectors, there is little money for maintenance and little money for training,” Dr. Gerhard points out.

States the report: “Commentators point out there are many remaining challenges, such as economic pressures and under-investment in crews and maintenance, which are unlikely to reduce in today’s increasingly tough economic climate.”

But what the industry is seeing from the best ship-owners, Dr. Gerhard says, is a safety management culture that goes beyond minimum standards and runs from top to bottom of the organization. “This can really make an impact in improving safety,” he adds.

Among the initiatives that offer optimism are the ECDIS, which was introduced last summer; the Maritime Labor Convention (2006), aimed at improving safety by addressing the welfare and working conditions of seafarers, which takes effect later in 2013; efforts throughout 2012 by both the International Maritime Organisation and the cruise ship industry to tighten regulation and continuously improve operational practices of passenger vessels; and post-Costa Concordia, the Cruise Lines International Association and the European Cruise Council partnering to lead industry-wide voluntary adoption of policies that go beyond international regulatory requirements.

“We see such self-regulation of the industry as the core driver of safety,” says Gerhard, who further suggests these concepts will soon trickle down to other sectors where passenger safety is paramount.