The multinational insurance company Allianz recently published its annual Safety & Shipping Review, which provides an overview of how the global shipping industry has faced the various challenges and the lessons it has learned.
As the review points out, the industry has suffered several blows over the past 18 months, from the Covid-19 pandemic and the ensuing seafarer crisis to the Beirut port explosion and canal incidents. from Suez.
Despite the disruption caused by such events, maritime transport has shown resilience and in some cases the impact has been more positive than expected, with the global number of lost vessels declining by 50% from 98 in 2011 to 49 in 2020.
Over the past year, the number of marine incidents has also declined, from 2,818 to 2,703, highlighting a year-over-year decline.
“The maritime transport sector has shown great resilience through the coronavirus pandemic, as evidenced by the high volumes of trade and the recovery we are seeing today in several sectors of the industry”, explains the global head of maritime risk consulting for Allianz Global Corporate & Specialty (AGCS). Rahul Khanna. âTotal losses are at historically low levels for the third year in a row. However, not everything is smooth.
âThe current crew crisis, the growing number of problems with larger vessels, growing concerns about delays and supply chain disruptions, as well as meeting environmental targets, pose significant challenges for risk management for ship owners and their crews. “
Covid-19 and maritime crisis cause long-term problems
Despite gloomy forecasts, the Covid-19 pandemic has not caused such a significant disruption in shipping, as trade volumes edged down 3.6% from the previous year.
According to data from the Institute of Shipping, global container throughput increased 6.4% in the first months of 2021, exceeding pre-pandemic levels, while dry bulk transport costs increased. by 50%, a triple from the first three months of 2020 and the highest in a decade.
Despite the promising results, the review highlighted how volatile the recovery is still and how Covid-19 has impacted shipping, especially with regard to congestion.
As Allianz has pointed out, the increase in demand triggered by the Covid-19 crisis and the resulting increased dependence on shipping instead of aviation has led to overcrowded ports. The company reported that in June 2021, around the world, 300 freighters were waiting to enter ports, while the time spent by containers waiting to dock has doubled in the past two years.
The humanitarian crisis affecting seafarers around the world is also contributing to the lack of stability in the maritime sector. For the 200,000 sailors stranded at sea for months, the inability to disembark and see their families affected their mental and physical health.
The critical conditions in which crews find themselves can also have a negative ripple effect on their daily tasks on board ships, potentially leading to an increase in human error incidents.
The humanitarian crisis for seafarers will also have long-term consequences for recruitment processes.
“With hundreds of thousands of crew members stranded aboard ships or on extended contracts, I have serious concerns for the next generation of sailors,” said Captain Andrew Kinsey, senior maritime consultant at AGCS.
âThe situation with Covid-19 means that we are not training and developing them, while the sector may struggle to attract new blood due to the current working conditions. ”
If the industry wants attract young talents, it must therefore ensure equal care for its seafarers and fill the knowledge gap existing among young people, who generally know very little about maritime transport and believe in misconceptions.
Big ships and disruptions cause insurance problems
The Suez Canal incident – where the Panamanian-flagged container ship Ever Given got stuck in the Suez Canal, prompting an international rescue operation to pull it out – led the industry to questioning the future of navigation canals.
The incident also raised questions about the risks posed by large ships, especially as the capacity of sea containers has increased by 1,500% over the past 50 years.
Regarding incident response, the review showed how larger ships present specific risks because, although berths and port docks may have become larger to accommodate larger ships , the overall port infrastructure has remained the same, which can lead to ship-to-ship collisions.
Incidents such as Ever Given – and more recently the Coral crystal – and the growing risks associated with the operation of large vessels are also based on insurance claims.
âVery large container ships and other large vessels represent a volatile risk for insurers to underwrite and will increasingly require risk and claims advice,â said Justus Heinrich, global leader in AGCS products.
“As exposures increase, insurers will have to consider whether they are able to insure certain types of large vessels, or whether they can only be purchased as part of a mixed fleet.”
Piracy threats persist and cause concern
Even though the Covid-19 pandemic has crippled the world, the risks of piracy have remained quite high for the shipping industry with incidents – especially crew kidnappings – mostly taking place in the Gulf of Guinea , where 95% of kidnappings take place. .
Data showed that last year alone 130 crew members were kidnapped in 22 incidents, the highest number on record, but things don’t appear to be slowing down with ships being targeted hundreds of miles away. from the shore.
According to Munro Anderson, a partner at security firm Dryad Global, the reasons are manifold and involve weak political and infrastructural systems and high levels of insecurity.
“The main thing to remember is that maritime security concerns the manifestation of a lack of security structure on the onshore domain,” he said. Recount Ship technology in July 2020. âIt’s a confluence of factors that imply weak legislative frameworks, weak governance and high levels of insecurity. ”
âWell-established clusters with high capacity and intention to carry out activities such as these also play an important role.
âAnother reason for the increasing incidence off West Africa is that much of the livelihoods and income of maritime communities has been completely wiped out by illegal and unreported fishing,â decimating communities. “
Experts also believe that the pandemic could exacerbate piracy because it is linked to socio-economic factors and instability, very present in areas such as the Gulf of Guinea.
âWe can still see recent hacking hot spots like Somalia are reappearing, in addition to the tragedy we are already seeing in West Africa, âKinsey said.