- Safety & Shipping
Review 2021: 49 large ships lost worldwide last year. Total losses down 50%
over 10 years. Number of shipping incidents (2,703) declines year-on-year.
- Shipping industry
remains resilient through pandemic, but mega-ship, supply chain and climate
challenges loom large.
- Suez Canal
incident shows ever-increasing vessel sizes continue to pose a
disproportionately large risk with costly groundings and salvage operations.
High number of fires and containers lost at sea.
- South China,
Indochina, Indonesia and Philippines maritime region is the global loss hotspot
for last decade.
YORK/PARIS/SAO PAOLO/SINGAPORE - Media OutReach - 3 August 2021 - The international shipping industry continued its long-term
positive safety trend over the past year but has to master Covid challenges,
apply the learnings from the Ever
Given Suez Canal incident and prepare for cyber and climate change
challenges ahead. The number of large vessels lost remained at record low
levels in 2020, while reported incidents declined year-on-year, according to marine
insurer Allianz Global Corporate & Specialty SE's (AGCS) Safety & Shipping Review 2021.
"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," says Captain Rahul Khanna, Global Head
of Marine Risk Consulting at AGCS. "Total losses are at historic low levels for
the third year running. However, it is not all smooth sailing. 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
AGCS study analyzes reported shipping losses and casualties (incidents)
over 100 gross tons. During 2020, 49 total losses of vessels were reported globally,
similar to a year earlier (48) and the second lowest total this century. This
represents a 50% decline over 10 years (98 in 2011). The number of shipping incidents declined from 2,818 to 2,703 in 2020 (by
4%). There have
been more than 870 shipping losses over the past decade.
The South China, Indochina, Indonesia and Philippines
maritime region remains the global loss hotspot, accounting for one in every
three losses in 2020 (16) with incidents up year-on-year. Cargo ships (18)
account for more than a third of vessels lost in the past year and 40% of total
losses over the past decade. Foundered (sunk/submerged) was the main cause of
total losses over the past year, accounting for one in two vessels. Machinery damage/failure was the
top cause of shipping incidents globally, accounting for 40%.
Despite the devastating economic impact of Covid-19, the effect on maritime trade has been
less than first feared. Global seaborne trade volumes are on course to surpass
2019 levels this year after declining slightly in 2020. However,
the recovery remains volatile. Covid-19-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, it was estimated there was a record
300 freighters waiting to enter overcrowded ports. The time container
ships are spending waiting for port berths has more than doubled
The crew change situation on
vessels is a humanitarian crisis which continues to affect the health and
wellbeing of seafarers. In March 2021, it was estimated some 200,000 seafarers remained on board vessels unable to be
repatriated due to Covid-19 restrictions. Extended periods at sea can lead to
mental fatigue and poor decision-making, which ultimately impact safety. There have
already been shipping incidents which have featured crews who have been on
board for longer than they should have. Seafarer training is suffering, while attracting
new talent is problematic given working conditions. Future crew shortages could
impact the surge in demand for shipping as international trade rebounds.
Covid-19 infection rates escalated in India, one of the world's largest sources
of seafarers, ports – including Singapore, Hong Kong and the UK - barred
vessels and crew that had recently visited India. Vessels also stopped calling
at Indian ports, which are an important stopover for trade between Europe,
Africa and Asia.
Although Covid-19 has resulted in
limited direct marine claims to date, the sector has not been spared
significant loss activity. "Overall, the frequency of marine claims has not
reduced. We are also seeing an increased cost of hull and machinery claims due
to delays in the manufacture and delivery of spare parts, as well as a squeeze
on available shipyard space," says Justus Heinrich, Global Product
Leader, Marine Hull, at AGCS. "Costs associated with salvage and repairs have also increased." In
future, insurers could potentially see an uptick in machinery breakdown claims if
Covid-19 has affected crews' ability to carry out maintenance or follow manufacturers'
The blocking of the Suez Canal by
the Ever Given container
ship in March 2021 is the latest in a growing list of incidents
involving large vessels or mega-ships. Ships have become ever-larger as shipping companies
seek economies of scale and fuel efficiency. The largest container ships
break the 20,000 teu mark, with vessels over 24,000 teu on order – capacity of container
ships vessels alone has increased by 1,500% over 50 years and has more than doubled
over the past 15 years.
"Larger vessels present unique
risks. Responding to incidents is 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. As a result, a 'miss' can turn into a 'hit' more often for the ultra-large container vessels,"
says Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS. If the Ever Given
had not been freed, salvage would have required the lengthy process of
unloading some 18,000 containers, requiring specialist cranes. The wreck
removal of the large car carrier, Golden Ray, which capsized in US waters in 2019
with more than 4,000 vehicles on it has taken over a year and a half and cost
several hundreds of millions of dollars.
The number of
fires on board large vessels has increased significantly in recent years. There
was a record 40 cargo-related fires alone in 2019. Across all vessel types, the number of fires/explosions
resulting in total losses increased again in 2020, hitting a four-year high of
10. Fires often
start in containers, which can be the result of non-/mis-declaration of
hazardous cargo, such as chemicals and batteries. When mis-declared, these
might be improperly packed and stowed on board, which can result in ignition
and/or complicate detection and firefighting. Major incidents have shown
container fires can easily get out of control and result in the crew abandoning
the vessel on safety grounds, thus increasing the size of loss.
Loss of containers at sea also spiked
last year (over 3,000) and have continued at a high level in
2021, disrupting supply chains and posing a potential pollution and navigation
risk. The number lost is the worst in seven years. Larger vessels, more extreme
weather, a surge in freight rates and mis-declared cargo weights (leading to
container stack collapse), as well as the surge in demand for consumer goods
may all be contributing to this increase. There are growing questions about how
containers are secured on board ships.
Delay and supply chain issues
Maritime supply chain resilience is in the spotlight after a
series of recent events. The Ever Given incident sent shockwaves through
global supply chains dependent on seaborne transport. It compounded delays and
disruption already caused by trade disputes, extreme weather, the pandemic and
surges in demand for containerized goods and commodities. "Such events
expose the weak links in supply chains and have magnified them," says Captain
Andrew Kinsey, Senior Marine Risk Consultant at AGCS. "Developing more robust and diversified
supply chains will become increasingly important, as will understanding pinch
points and supply chain nodes."
Piracy and cyber concerns
The world's piracy hotspot, the
Gulf of Guinea, accounted for over 95% of crew numbers kidnapped worldwide in 2020. Last year, 130 crew were kidnapped in 22 incidents in the region – the highest number ever – and the
problem has continued. Vessels are being targeted further away from the shore –
over 200 nautical miles (nm) in some cases. The Covid-19 pandemic could
exacerbate piracy as it is tied to underlying social, political and economic
problems, which could deteriorate further. Former hotspots like Somalia could
The report also notes that all four of the world's
largest shipping companies have already been hit by cyber attacks, and with geopolitical
conflict increasingly played out in cyber space, concerns are growing about a potential
strike on critical maritime infrastructure, such as a major port or shipping
route. Increased awareness of – and regulation around – cyber risk is translating
into an uptake of cyber insurance by shipping companies, although mostly for
shore-based operations to date.
With momentum gathering behind
international efforts to tackle climate
change, the shipping industry is likely to come
under increasing pressure to accelerate its efforts. "A huge investment in
research and development is required if the industry is to meet the challenging
targets being set. Today's existing fleet and technology will not get the
shipping industry to the International Maritime Organization's target of a 50%
cut in emissions by 2050, let alone the more ambitious targets being discussed by
national governments," says Khanna.
Last year, the cap on the sulphur content of
ships' fuel was cut. Known as IMO 2020, the cut is expected to reduce emissions
of harmful sulphur oxide (SOx) from shipping by 77%. Insurers have seen a number of machinery damage claims related to
scrubbers, which remove SOx from exhaust gases for vessels using heavy marine
have seen a number of machinery damage claims related to scrubbers and some
arising from the use of 'blended' low-sulphur fuels. For example, there have
been instances of aviation fuel – sold off cheaply due to a drop off in air
traffic during the pandemic – being added to bunkers in Asia to produce blended
low-sulphur fuel, which could cause resulting issues for shippers. Jet fuel has
a lower flash-point and adding too much can lower the temperature at which
fuels catch fire, creating a serious risk for vessels.
Most frequent loss and
to the report, the South China, Indochina, Indonesia and Philippines maritime
region is also the major loss location of the past decade (224 vessels), driven by high levels of local and
international trade, congested ports and busy shipping lanes, older fleets and
extreme weather exposure. Together, the South China, Indochina, Indonesia and
Philippines, East Mediterranean and Black Sea, and Japan, Korea and North China
maritime regions account for half of the 876 shipping losses of the past 10 years
(437).The British Isles, North Sea, English Channel and Bay of Biscay region
saw the highest number of reported incidents (579) in 2020, although this was
down year-on-year. And finally, the most accident-prone vessels of the
last year were a Greek Island ferry and a RoRo ferry in Canadian waters, both involved
in six different incidents.