- Safety& Shipping Review 2018: Globally 94 large ships lost in 2017, down by morethan a third over 10 years. Bad weather involved in 1 in 4 losses. Asia topglobal loss region accounting for 38% ofshipping losses in 2017.
- In SouthChina and South East Asian waters, losses are up 25% (30 ships) annually with foundering/sinking accounting for 80% of claims.Typhoons, traffic, political risk, and safety on Asian routes are major lossfactors. Japan, Korea and North China ranks joint fourth top loss location globally,and third highest over a decade.
- Globallyhuman error is still a major driver of incidents. Big data analysis of crewbehavior and near-misses could help prevent disasters.
- "Megaship" fires, emissions rules, climate change and autonomous shipping pose newrisk challenges. Insurers expect to see more losses from cyber incidents andtechnological defects.
LONDON/NEW YORK/MUNICH/PARIS/SINGAPORE - Media OutReach- July 19, 2018 - Large shipping losses have declined by more than a third(38%) globally over the past decade, according to Allianz Global Corporate& Specialty SE's (AGCS) Safety & Shipping Review 2018, with thisdownward trend continuing in 2017. Yet, incidents in the South China,Indochina, Indonesia and Philippine maritime region rose by 25% in the pastyear and remain the number one area worldwide for major shipping incidents forthe past decade leading it to be dubbed the "new Bermuda Triangle" by somemedia commentators.
In 2017, almost athird of losses globally (32%) occurred here, driven by activity in Vietnamesewaters. The major loss factors include weather -- Typhoon Hato and Typhoon Damreycaused more than six losses -- busy seas and lower safety standards on somedomestic routes.
There were 94 totallosses reported around the shipping world in 2017, down 4% year-on-year (98) --the second lowest in 10 years after 2014. Bad weather, such as typhoons in Asiaand hurricanes in the US, contributed to the loss of more than 20 vessels,according to the annual review, which analyzes reported shipping losses over100 gross tons (GT).
"Globally, the declinein frequency and severity of total losses over the past year continues thepositive trend of the past decade. Insurance claims have been relativelybenign, reflecting improved ship design and the positive effects of riskmanagement policy and safety regulation over time," says Baptiste Ossena,Global Product Leader Hull & Marine Liabilities, AGCS.
However,disparities remain as losses in Asia rose year-on-year. The region continues tobe the top global loss area accounting for more than 1 in 3 of shipping losses in 2017. The East Mediterranean andBlack Sea region is the second major loss hotspot (17) followed by the BritishIsles (8). There was also a 29% annual increase in reported shipping incidentsin Arctic Circle waters (71), according to AGCS analysis.
Dangerous Seas, Friday 13th andthe unluckiest ship
Political tensionsaround major shipping routes in Asia are leading to disruption and a potential heightenedrisk of collision. Already a key transit route for east-west trade from China,South Korea and Japan and accounting for one-third of global shipping trade,the South China Sea is also the cause of territorial disputes between severalcountries within the region.
These territorialdisputes have resulted in an increasing military presence in the South ChinaSea, with the US and China conducting naval exercises. Last year saw two majorcollisions between US naval ships and commercial vessels. The US-guided missiledestroyer USS Fitzgerald collided with a container ship off Japan while anotherdestroyer, the USS John S. McCain struck an oil tanker off Singapore.
"The territorialclaims and disputes may have larger implications long term and threaten thevery freedom of the seas and navigation in South East Asia, with far reachingimplications for trade with Asia. A growing concentration of trade andpolitical tensions makes for a volatile situation in the region that couldcreate safety issues," said Andrew Kinsley, Senior Marine Risk Consultant AGCS
Piracy, the long-timebane of the maritime industry has hit record lows globally but across Asia andAfrica the threat remains high with regional waters accounting forthree-quarters of all piracy incidents around the globe. Southeast Asia had 76 incidentsin 2017 up 11% compared with a year earlier while Indonesia continues to beglobal hotspot for piracy with 43 attacks. The number of attacks in thePhilippines more than doubled year-on-year from 10 in 2016 to 22 in 2017.
Analysis also showsFriday is the most dangerous day at sea -- 175 losses of 1,129 total lossesreported have occurred on this day over the past decade. Friday 13threally can be unlucky -- three ships were lost on this day in 2012 includingCosta Concordia, the largest-ever marine insurance loss. The unluckiest ship of the past year is apassenger ferry operating in the East Mediterranean and Black Sea region that wasinvolved in seven accidents in 12 months. For Asia, November is the busiest month for losses over the pastdecade with 36 ships lost during this month, a third of which were caused bytyphoons (12).
Emerging risks poses challenges and leads tolosses
There are multiplenew risk exposures for the shipping sector: Ever-larger container ships --longer than the length of four football fields -- pose fire containment andsalvage issues, while the changing climate brings new route risks, withfast-changing conditions in Arctic and North Atlantic waters posing newhazards. Environmental scrutiny is also growing as the industry seeks to cutemissions, bringing new technical risks and the threat of machinery damageincidents at the same time.
Shippers alsocontinue to grapple with balancing the benefits and risks of increasingautomation on board. Recent events such as the NotPetya malware on harborlogistics that caused cargo delays and congestion at nearly 80 ports, underlinethat the shipping sector is being tested by a number of emerging riskchallenges, in addition to traditional ones.
Human error still a big issue. Data canhelp.
Despite decades ofsafety improvements, the shipping industry has no room for complacency. Fatalaccidents such as the "Sanchi" oil tanker sinking off Shanghai waters inJanuary 2018 and the two collisions involving the USS Fitzgerald and the USSJohn S McCain navy ships in Asia persist with human often a factor. Just thisweek, a cargo ship collided with a chemical tanker, off Shanghai andsubsequently sank with 10 of its 13 crew members missing. Estimates indicatethat 75% to 96% of shipping accidents involve human error.It is also behind 75% of 15,000 marine liability insurance industry claimsanalyzed by AGCS -- costing $1.6bn.
"Human errorcontinues to be a major driver of incidents," says Captain Rahul Khanna, GlobalHead of Marine Risk Consulting, AGCS. "Inadequate shore-side support andcommercial pressures have an important role to play in maritime safety and riskexposure. Tight schedules can have a detrimental impact on safety culture anddecision-making."
The mass amount ofdata produced by the industry is currently underutilized, and better use ofdata and analytics to produce real-time findings and alerts could help in reducingincidents, Khanna believes. "By analyzing data 24/7 we can gain new insightsfrom crew behavior and near-misses that can identify trends. The shippingindustry has learned from losses in the past but predictive analysis could bethe difference between a safe voyage and a disaster."
Container ship fire struggles continue: While container-carrying capacity hasincreased by almost 1,500% in 50 years, fire-fighting capabilities have notnecessary kept pace with increasing vessel sizes. Today's "mega-ships" createnew risk exposures and there have been a number of fires at sea in recentyears.
Climate change brings new route risks: Climate change is impacting ice hazards forshipping, freeing up new trade routes in some areas, while increasing the riskof collisions with ice in others. China has plans for an "Artic Silk Road"developing new shipping lanes opened up by global warming and will encourageinfrastructure development as well as conduct commercial trial voyages in Articwaters with the intention to build its first polar expedition cruise ship by2019.
Emissions rules bring problems: Estimates suggest that the shipping sector'semissions levels are as high as Germany's, ranked sixth in the world,prompting a recent pledge to reduce all emissions by 50% in the long-term,alongside existing commitments to reduce sulphur oxide emissions by 2020. Asthe industry looks to technical solutions to achieve these aims, there could beaccompanying risk issues with engines and bunkering of biofuels, as well asoperator training.
Autonomous shipping and drones: Legal, safety and cyber security issues arelikely to limit widespread growth of crewless ships for now. Human error riskwill still be present in decision-making algorithms and onshore monitoringbases. Technology has the potential to eliminate human error as expected, butcould end up merely transposing the point of occurrence," says Captain NitinChopra, a Senior Marine Risk Consultant at AGCS, based in Singapore. "It isdifficult to imagine that unmanned ships calling at automated ports will not bemarred by loss events. On the contrary, due to absence of manpower, theimmediate response to mitigate loss could be delayed."
Drones andsubmersibles have the potential to make a significant contribution to shippingsafety and risk management, with future uses including pollution assessment,cargo tank inspections, monitoring pirates and assessment of the condition of aship's hull in a grounding incident. The Maritime Port Authority of Singaporeplans to introduce autonomous harbor ships in future for a number of operationssuch as berthing, mooring and towing.
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AGCS, Safety & Shipping1912-2012 From Titanic to Costa Concordia
AGCS, Global Claims Review: Liability In Focus, 2017
BBC, Reality Check: Are Ships More Polluting Than Germany, April 2018