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Shipping losses decline, but emerging risks pose serious challenges to marine industry: Allianz


March 13, 2014   by Canadian Underwriter


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There are new risks emerging in the global marine industry despite shipping losses of more than 100 gross tons declining 20% in 2013, notes a report released Thursday by Allianz Global Corporate & Speciality SE (AGCS).

AGCS’s second annual Safety and Shipping Review 2014 shows shipping losses continued their downward trend with 94 losses reported worldwide in 2013 compared to 117 in 2012.

AGCS reports the 2013 total represent only the second time in 12 years that there were fewer than 100 reported shipping losses of more than 100 gross tons.

Also positive, the 2013 accident year represents a significant improvement on the previous 10-year loss average with total worldwide shipping losses declining 45% since 2003, the statement adds.

Still, risks are emerging:

– Vessel size: 2013 marked the arrival of the largest container vessel on record, more than 400 metres long with a capacity in excess of 18,000 teu. AGCS estimates capacity grows by about 30% every four to five years, meaning the arrival of 24,000 teu carriers can be anticipated around 2018. These “‘mega ships” pose unprecedented risks and challenges in terms of operating safety and salvage efforts.

– Rise of LNG-fueled vessels: Use of liquefied natural gas to power ships is expected to dramatically increase by 2020. There are safety concerns, however, as the industry will see the rise of ports that have never previously handled LNG providing bunkering stations on dock.

– Arctic trading routes: The International Marine Organization reports there has been a tenfold increase in the number of vessels using the Northern Sea route during recent years. Shipping casualties in Arctic Circle waters have increased to an average of 45 per year during 2009-2013 from only seven during 2002-2007. Damage to machinery caused a third of these incidents, higher than average elsewhere, reflecting the harsher operating environment.

In addition, AGCS notes, piracy attacks continue to be a concern. In 2013, statistics from the International Maritime Bureau indicate these attacks declined 11% to 264 reported incidents worldwide. Of these, 106 occurred in Indonesia, which has seen a 700% increase in attacks since 2009.

“An emerging piracy hotspot with more organized crime is the Gulf of Guinea/West Africa, with 48incidents in 2013, accounting for 18% of all attacks worldwide. Piracy attacks in Somalia have declined dramatically, with only seven incidents in 2013 compared with 160 attacks in 2011.”

“While the long-term downward trend in shipping losses is encouraging, there is more work to be done to improve the overall safety of these vessels as well as their cargo, crew and passengers, especially in Asian waters,” Tim Donney, global head of marine risk consulting for Allianz, cautions in the statement.

“As an insurer, we are always concerned about recognized issues such as training and safety management. Human error is not something we can ignore and lack of skilled workforce is still an issue, but we also need to be alert for new risks as the industry continues to develop,” Donney adds.

Other report findings include the following:

– Looking at North American water, the eastern seaboard region of the United States did not register a total loss during 2013 and the west coast region reported one total loss.

– More than a third of 2013’s total losses were concentrated in two maritime regions, with the South China, Indo China, Indonesia and the Philippines region having most losses (18 ships), closely followed by the seas around Japan, Korea and North China (17 ships).

– With the 25th anniversary of the Exxon Valdez oil spill, oil pollution prevention is a significant concern in the U.S. A regulation was passed last year requiring owners of vessels (both foreign and domestic) of more than 400 gross tons to submit an oil spill response plan to the U.S. Coast Guard.

– The total loss of two bulk carriers in Asian waters in 2013 highlighted the importance of proper cargo handling and stowage of bulk cargoes. AGCS experts believe high moisture content leading to destabilization of the cargo to be the primary cause of the accidents.


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