Canadian Underwriter

How pandemic is making a common marine risk problem worse

July 16, 2020   by Greg Meckbach

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The pandemic is making it difficult for shipping companies to get spare parts and technical professionals aboard to perform essential maintenance and repair, a new report from Allianz Global Corporate & Specialty suggests.

For the insurance industry, the most common cause of shipping incidents over the past 10 years has been machinery damage or breakdown, Munich-based AGCS reported in Safety and Shipping Review 2020, a paper released Wednesday.

“Right now, the biggest challenge is making sure that the [maintainers, technicians and engineers] can get to the vessel and then, that they can actually get on board,” Captain Andrew Kinsey, senior marine risk consultant at AGCS, said in an interview Wednesday with Canadian Underwriter.

The travel restrictions arising from COVID-19, which was declared a pandemic by the World Health Organization Mar. 11, in some cases prevents vendors from getting on board ships.

It is also affecting availability of some spare parts, Kinsey told Canadian Underwriter.

For shipowners and their insurers, this means scheduled maintenance can be delayed; there is a risk that crews might use alternative grades of hydraulic oil or lubrication oil, AGCS said in the report.

Machinery damage or breakdown accounted for more than a third of shipping incidents (9,081 out of 26,071) analyzed between January 2010 and December 2019, industry-wide and worldwide.

There were 2,815 shipping incidents in 2019, up 5% from 2018. Of those, 1,044 were from machine damage or failure; 298 involved collisions; 252 were grounded; 197 were due to fires or explosions; 194 were due to contact with an object such as a habour wall; and 839 were due to other causes.

The number of total shipping losses in 2019 was 41, less than half the 10-year rolling average of 95 a year, AGCS reports, quoting from Lloyd’s List Intelligence Casualty Statistics. Those total shipping losses apply only to vessels with more than 100 gross tonnage (GT). In a separate report earlier, Steamship Mutual described GT as a function of volume, using a complicated formula intended to measure of overall size of a ship.

AGCS also warns of delays in relieving crews because of pandemic travel restrictions.

It is a worldwide problem but tends to fluctuate with the level of outbreaks, said Kinsey.

“Right now the situation is better in Canada than it is south of the border,” he told Canadian Underwriter. “We have seen it starting to improve in China, where it had originally been the worst, and it’s also tied hand-in-hand with the current issue of repatriating ships’ crews.”

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