Allianz: Shipping losses in Asia buck global trends and continues to rise, making it top region worldwide for major shipping incidents

July 23, 2018 - 02:16
Allianz: Shipping losses in Asia buck global trends and continues to rise, making it top region worldwide for major shipping incidents

  • Safety& Shipping Review 2018: Globally 94 large ships lost in 2017, down 38% over10 years. Bad weather involved in 1 in 4 losses. Asia top global loss region accountingfor 38% of shipping losses in 2017.
  • Japan, Korea and North China ranks joint fourth toploss location globally, and third highest over a decade. In South China and South East Asian waters,losses increased 25% (30 ships) annually with foundering/sinking accounting for 80% of claims. Weather,traffic, political risk and safety on Asian routes are major loss factors.  
  • Globallyhuman error is still key driver of incidents. Big data analysis of crewbehavior and near-misses could help prevention.


TOKYO/SEOUL - Media OutReach - July 23,2018 - Large shipping losses have declined by 38% globally over the pastdecade, according to AllianzGlobal Corporate & Specialty's (AGCS) Safety & Shipping Review 2018,with this downward trend continuing in 2017. However, disparities remain aslosses in Asia rose year-on-year with incidents in South China, Indochina,Indonesia and Philippine maritime regions rising 25% making it the top areaworldwide for major shipping incidents in the past decade, leading it to bedubbed the "new Bermuda Triangle".


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 andstorms in Asia and 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 and safety regulation over time," says Baptiste Ossena, GlobalProduct Leader Hull & Marine Liabilities, AGCS.


Dangerous Seas and territorial disputes

Political tensionsaround major Asian shipping routes are leading to disruption and a potential heightenedrisk of collision. Already a key route for east-west trade from China, SouthKorea and Japan and accounting for one-third of global shipping trade, theSouth China Sea is also the cause of territorial disputes between severalcountries.


These disputes haveresulted in increasing military presence in the South China Sea, with the USand China conducting naval exercises. Last year saw two major collisionsbetween US naval ships and commercial vessels. The US-guided missile destroyerUSS Fitzgerald collided with a container ship off Japan while the USS John S.McCain struck an oil tanker off Singapore.


"The territorialclaims and disputes may have larger implications long term and threaten the freedomof the seas in South East Asia, with implications for trade with Asia. Agrowing concentration of trade and political tensions increases volatility inthe region creating safety issues," said Andrew Kinsley, Senior Marine RiskConsultant AGCS


Across Asia andAfrica the threat of piracy remains high with regional waters accounting for 74%of all incidents worldwide despite record-lows globally. In 2017, incidents in SoutheastAsia increased 11% (68) while Indonesia continues to be leading hotspot with 43.Attacks in the Philippines more than doubled from 10 in 2016 to 22 in 2017[1].


Emerging risks lead to losses


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 climate change is impacting ice hazards, freeing up newtrade routes in some areas but increasing the risk of collisions with ice inothers. China is planning an "Arctic Silk Road" from new shipping lanes openedup by global warming and will conduct commercial voyages in Arctic waters tobuild its first polar expedition cruise ship by 2019.


Environmentalscrutiny is also growing as the industry seeks to cut emissions, bringing newtechnical risks and the threat of machinery damage incidents. Other challengesare balancing the benefits and risks of increasing automation on board. Therecent NotPetya malware on harbor logistics causing cargo delays and congestionat nearly 80 ports underlines the emerging risks that the sector faces, inaddition to traditional ones.


Human error a big issue. Data can help

Despite decades ofsafety improvements, the shipping industry has no room for complacency. Fatalaccidents such as the "Sanchi" tanker sinking off Shanghai waters in January andthe two collisions involving US navy ships in Asia persist with human behavior oftena factor. Estimates indicate that 75% to 96% of accidents involve human error[2].It is also behind 75% of 15,000 marine liability insurance claims analyzed byAGCS -- costing $1.6bn[3].


"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.

By analyzing data24/7 we can gain insights from crew behavior and near-misses that can identify trends.The shipping industry has learned from losses in the past but predictiveanalysis could be the difference between a safe voyage and a disaster."


PDF of AGCS Safety & Shipping Review 2018


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[1]International Maritime Bureau

[2]AGCS, Safety & Shipping1912-2012 From Titanic to Costa Concordia

[3]AGCS, Global Claims Review: Liability In Focus, 2017