- 41 large ships lost worldwide in 2019, down by more than 20% year-on-year and almost 70% over a decade.
- The Gulf of Guinea accounted for 90% of global kidnappings reported at sea in 2019
- The West African Coast is the third top hotspot for ship losses – the highest-ever ranking.
- The East African Coast in the fourth spot
Admin l Friday, July 17, 2020
JOHANNESBURG, South Africa- Large shipping losses are at a record low having fallen by over 20% year-on-year, according to marine insurer Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2020.
However, the coronavirus crisis could endanger the long-term safety improvements in the shipping industry for 2020 and beyond, as difficult operating conditions and a sharp economic downturn present a unique set of challenges.
“Coronavirus has struck at adifficult time for the maritime industry as it seeks to reduce its emissions, navigates issues such as climate change, political risks and piracy, and deals with ongoing problems such as fires on vessels,” says Baptiste Ossena, Global Product Leader Hull Insurance, AGCS. “Now the sector also faces the task of operating in a very different world, with the uncertain public health and economic implications of the pandemic.”
The annual AGCS study analyzes reported shipping losses over 100 gross tons (GT) and also identifies 10 challenges of the coronavirus crisis for the shipping industry which could impact safety and risk management.In2019, 41 total losses of vessels were reported around the world, down from 5312 months earlier. This represents an approximate 70% decline over 10 years and is a result of sustained efforts in the areas of regulation, training and technological advancement, among others. More than 950 shipping losses have been reported since the start of 2010.
Gulf of Guinea sees piracy activity soar
Piracy remains a major risk for shipping.In 2019, there were 162 incidents of piracy and armed robbery against ships worldwide, down from 201 in 2018. This is despite the recent success in tackling Somali pirates. Somalia reported zero piracy incidents in 2019, a trend that continued through the beginning of 2020. However, Somali pirates continue to possessthe capacity to carry out attacks in the Somali basin and wider Indian Ocean.
The Gulf of Guinea has re-emerged as the global piracy hotspot accounting for 90% of global kidnappings reported at sea in 2019 with the number of crew taken increasing by more than 50% to 121 according to the International Chamber of Commerce’s International Maritime Bureau (IMB) . Given heightened political and economic uncertainty in the world today, piracy is a threat that is likely to remain for the foreseeable future.
“Piracy remains an ongoing issue. We thought we had a handle on it but it has manifested yet again,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS. “Hijackings by Somalian pirates may have reduced for now, but incidents have been increasing in West Africa and parts of Asia, where we see a worrying pattern of violent attacks against crew, as well as kidnappings.”
Following an active 2019, there has been no let-up in piracy in 2020. There were 47 attacks reported to the IMB in the first three months of the year, up from 38 in the same period last year, mostly targeting tankers, as well as container ships and bulk carriers. Again, the Gulf of Guinea accounted for the highest number of attacks (21) although there were also (five) vessels boarded in the Singapore Strait and several incidents of armed robbery in Latin America.
In April 2020, the Portugal-flagged container ship Tommi Ritscher became the latest vessel attacked by pirates in the Gulf of Guinea. While at the Cotonou Anchorage, Benin, the 4,785 teu Singapore-owned vessel was boarded by pirates and eight crew were kidnapped. The incident followed the kidnapping of nine crew from the tanker Alpine Penelope in the same area in February 2020.
“Piracy is typically local in nature but it can have a global geopolitical impact,” says Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS. “It has proved to be an easy business model, especially in parts of the world where governments are dysfunctional or where there is little rule of law. There is a strong connection between piracy and unstable governments, which provides opportunities for pirates to carry out attacks where the state is not strong enough to properly police its coastal waters.”
CORONAVIRUS CHALLENGES
The shipping industry has continued to operate through the pandemic,despite disruption at ports and to crew changes. While anyreduction in sailings due to coronavirus restrictions could see loss activity fall in the interim, the report highlights10 challengesthat could heighten risks.
“Ship-owners also face additional cost pressures from a downturn in the economy and trade,” says Khanna. “We know from past downturns that crew and maintenance budgets are among the first areas that can be cut and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions. It is crucial that safety and maintenance standards are not impacted by any downturn.”
Top loss locations and most affected ships: the West African Coast is third hotspot for losses. The East African Cost is ranked fourth
According to the report, the South China, Indochina, Indonesia and Philippines maritime region remains thetoploss location with 12 vessels in 2019 and 228 vessels over the past decade – one in four of all losses. High levels of trade, busy shipping lanes, older fleets, typhoon exposure, and safety issues on some domestic ferry routes are contributing factors. However, in 2019, losses declined for the second successive year. The Gulf of Mexico (4) and the West African Coast (3) rank second and third. The East African Coast was tied in the fourth spot.
Cargo ships (15) accounted for more than a third of vessels lost in the past year, while foundered (sunk/submerged) was the main cause of all total losses, accounting for three in four (31). Bad weather accounted for one in five losses. Issues with car carriers and roll-on/roll-off (ro-ro) vessels remain among the biggest safety issues. Total losses involving ro-ros are up year-on-year, as well as smaller incidents (up by 20%) – a trend continuing through 2020.
“The rise in number and severity of claims on ro-ro vessels is concerning. Ro-ros can be more exposed to fire and stability issues than other vessels,” says Khanna. “Many have quick turnarounds in port and a number of accident investigations have revealed that pre-sail away stability checks were either not carried out as required, or were based on inaccurate cargo information. Too many times commercial considerations have endangered vessels and crews and it is vital that this is addressed on shore and on board.”
Number of smaller shipping incidents on the rise
While total losses continue to see a positive trend, the number of reported shipping incidents (2,815) increased by 5% year-on-year, driven by machinery damage, which caused over one in three incidents (1,044). A rise in incidents in the waters of the British Isles, North Sea, English Channel and Bay of Biscay (605), meant it replaced the East Mediterranean as the top hotspot for the first time since 2011, accounting for one in five incidents worldwide.
“We cannot lose sight of the fact that, while total losses have reduced significantly, the total number of incidents increased year-on-year,” says Ossena. “It does not take much for a serious incident to result in a total loss and, hence, the warning signs are there.”
There were almost 200 reported fires on vessels over the past year, up 13%, with five total losses in 2019 alone. Mis-declared cargois a major cause. Taking steps to address this issue is vital as it will only worsen as vessels become bigger and the range of goods transported grows. Chemicals and batteries are increasingly shipped in containers and pose a serious fire risk if they are mis-declared or wrongly stowed.
Geopolitical tensions and cyber impact shipping safety
Meanwhile, events in the Gulf of Oman and the South China Sea show political rivalries are increasingly being played out on the high seas and shipping will continue to be drawn into geopolitical disputes. Heightened political risk and unrest globally has implications for shipping, such as the ability to secure crews and access ports safely.
Ship-owners are also increasingly concerned about the prospect of cyber-conflicts. There has been a growing number of GPS spoofing attacks on ships, particularly in the Middle East and China, while there have been reports of a 400% increase in attempted cyber-attacks on the maritime sector since the coronavirus outbreak.
Other risk topics in the AGCS Safety&Shipping Review include:
• Targets to cut emissions will shape shipping risk for years to come. The aim to halve CO2 emissions by 2050 will require the industry to radically change fuels, engine technology and even vessel design. Since January 1, 2020 allowable sulphur levels in marine fuel oil were slashed. However, compliance is not straightforward and teething problems could lead to a surge in machinery damage claims.Ultimately, de-carbonization will also have regulatory, operational and reputational implications. Progress on addressing climate change could stall with the focus on the coronavirus pandemic. This must not be allowed to happen.
• New technology not a panacea, but an increasingly useful tool: Shipping techcan be a positive for safety and claims and is increasingly being deployed to combat some of the risks highlighted in the report – fromreducing the threat of fire on vessels through temperature monitoring of cargo to even potentially integrating suppression systems in drones in future. Increased use of industrial control systems to monitor and maintain engines could significantly reduce machinery damage and breakdown incidents, one of the biggest causes of claims.
• Unluckiest ships– The most accident-prone vessels of the last year were two Greek Island ferries and a bulk carrier in North America, all involved in six different incidents.
