SHIPPING losses and casualties are in decline, but increases in port congestion, the consequences of the crew-change crisis, piracy and cyber security present challenges, according to the 2021 Safety and Shipping Review, published by insurer Allianz.
Allianz head of marine risk consulting Captain Rahul Khanna said although total losses are at historically low levels for the third year running, challenges that surfaced during COVID-19 remain at the forefront of the industry.
“The shipping sector has shown great resilience through the coronavirus pandemic, as evidenced by strong trade volumes and the recovery we are seeing in several parts of the industry today,” Mr Khanna said.
“The ongoing crew crisis, the increasing number of issues posed by larger vessels, growing concerns around supply chain delays and disruptions, as well as complying with environmental targets, bring significant risk management challenges for ship owners and their crews.”
Shipping losses and casualties
The Safety and Shipping Review reported 49 total losses of vessels in 2020, representing a 50% decline over the past decade, with 98 lost in 2011.
The South China, Indochina, Indonesia, and the Philippines maritime region remains the global loss hotspot, accounting for one in every three losses in 2020, with incidents up year-on-year.
Cargo ships account for more than a third of vessels lost in the past year, with foundered being the main cause of total losses, accounting for one in two vessels.
The number of shipping incidents declined by 4% in 2020, dropping from 2818 to 2703.
COVID-19 impact and crew change
Despite the economic impact of COVID-19, the effect on maritime trade has been less than initially feared, with this year’s global seaborne trade volumes on course to surpass 2019 levels.
However, recovery remains volatile as COVID-related delays at ports and shipping capacity management problems have led to congestion at peak times and a shortage of empty containers.
In June 2021, a record estimate of 300 freighters were waiting to enter overcrowded ports, with the time container ships spend waiting for port berths more than doubling since 2019.
A major factor discussed in the Safety and Shipping Review is the crew change crisis, which continues to affect the health and wellbeing of seafarers, as the extended periods at sea can lead to mental fatigue, which ultimately impacts safety.
Seafarer training is also suffering, while attracting new talent is problematic given the working conditions.
Future crew shortages could impact the surge in demand for shipping as international trade rebounds.
Suez Canal blockage and the risks of larger vessels
The review highlighted the growing list of incidents involving large vessels or mega-ships, exemplified by the blocking of the Suez Canal in March 2021.
Ships have become increasingly larger as shipping companies seek economies of scale and fuel efficiency, with the capacity of container ships alone more than doubling over the past 15 years.
Allianz senior marine risk consultant Captain Nitin Chopra said that larger vessels present unique risks, and that responding to incidents has become more complex and expensive.
“Approach channels to existing ports may have been dredged deeper and berths and wharfs extended to accommodate large vessels, but the overall size of ports has remained the same,” he said.
“As a result, a miss can turn into a hit more often for the ultra-large container vessels.”
The report also examines the significant increase in the number of fires on board large vessels in recent years, with a record of 40 cargo-related fires alone in 2019.
The loss of containers at sea also spiked in 2020, and continued at a high in 2021, disrupting supply chains and posing a potential pollution and navigation risk.
The report attributes the increasing number of containers lost to larger vessels, more extreme weather, a surge in freight-weights and mis-declared cargo weights, as well as the surge in demand for consumer goods.
Other challenges
Shifting its focus to piracy, the report noted that piracy hotspot the Gulf of Guinea accounted for over 95% of crew numbers kidnapped worldwide in 2020, and that the number of incidents in the region was at its highest number ever.
It also highlighted the threat of cyber-attacks, with all four of the world’s largest shipping companies having already been hit, and the growing concern regarding a potential strike on critical maritime infrastructure.
Addressing the environmental impact of the shipping industry, the momentum gathering behind international efforts to tackle climate change will likely increase the pressure on the shipping industry to accelerate its efforts.
