- 75 large ships lost worldwide in 2014, down by a third year-on-year
- South China and South East Asian waters top loss hotspots
- Increasing size of container ships and floating offshore facilities could cause larger losses exceeding $1 billion
- Cyber risks a growing concern in shipping sector, particularly around e-navigation
- Crewing levels, Arctic shipping, the increase in human trafficking by sea and further geopolitical uncertainty create new industry risks
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Shipping losses continued their long-term downward trend with 75 reported worldwide in 2014, making it the safest year in shipping for 10 years, according to Allianz Global Corporate & Specialty SE’s (AGCS) third annual Safety and Shipping Review 2015, which analyzes reported shipping losses of over 100 gross tons.
Losses declined by 32% compared with the previous year and were well below the 10-year loss average of 127. Since 2005 shipping losses have declined by 50%. More than a third of 2014’s total losses were in two maritime regions. South China, Indo China, Indonesia and the Philippines (17 ships) and Japan, Korea and North China (12 ships). Cargo and fishing vessels accounted for over 50% of all losses.
The most common cause of total losses is foundering (sinking/submerging), accounting for 65% of losses in 2014 (49). With 13 ships wrecked or stranded, grounding was the second most common cause with fires/explosions (4) third, but significantly down year-on-year.
According to the report, there were 2,773 shipping incidents (casualties) globally (including total losses) during 2014. The East Mediterranean & Black Sea region was the top hotspot (490), up 5% year-on-year. The British Isles, North Sea, English Channel and Bay of Biscay ranked second (465), up 29%, and was also the top incident hotspot over the past decade. December is the worst month for losses in the Northern Hemisphere and August in the Southern Hemisphere. For every total loss in the Southern Hemisphere there are 7 in the Northern Hemisphere.
Passenger ship safety and crew levels in the spotlight
While the long-term downward trend in shipping losses is encouraging, recent casualties such as Sewol and Norman Atlantic have once again raised significant concerns over training and emergency preparedness on passenger ships three years after the Costa Concordia disaster. Seven passenger ships were lost during 2014, accounting for almost 10% of total losses. “In many cases construction of the vessel is not the only weak point. These two incidents underline a worrying gap in crew training when it comes to emergency operations on ro-ro ferries or passenger ships,” said Sven Gerhard, Global Product Leader Hull & Marine Liabilities, AGCS.
The general shipping trend for smaller crews means seafarers are being asked to do more with less. Minimum manning levels reduce the ability to train people onboard, which can provide invaluable insight and should not become the normal day-to-day level for safe operations.
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Further risk challenges
Other risks identified in the 2015 Safety & Shipping Review include:
- Overreliance on electronic navigation: The collision of the cargo ship Rickmers Dubai with an unmanned crane barge in 2014 is an example of the perils of overreliance on e-navigation. Training standards around systems such as Electronic Chart Display and Information System (ECDIS) are mixed. “Officers need robust training in order to avoid misinterpretation of ECDIS and operating mistakes that could lead to expensive disasters. Beyond that manual navigation aids and skills are still crucial,” said Khanna.
- Rise in geopolitical uncertainty: The recent rise in geo-political tension around the world is concerning. The increase in human trafficking of refugees by sea creates search and rescue issues. More than 207,000 migrants crossed the Mediterranean in 2014, driven by the civil war in Syria. The International Maritime Organization estimates at least 600 merchant ships were diverted in 2014 to rescue people, stretching resources and rescue infrastructure. Conflicts in the Middle East also put increasing pressure on the supply chain. Ships should not underestimate the security risks.
- Piracy risks move from Africa to Asia: Although there has been good progress tackling activity in Somalia and the Gulf of Guinea, ensuring global attacks (2451) are down for a fourth year in a row, piracy thrives elsewhere. Attacks in South East Asian waters are up year-on-year, as are incidents in the Indian subcontinent, with Bangladesh a new hotspot.
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About Allianz Global Corporate & Specialty
Worldwide, AGCS operates with its own teams in 34 countries and through the Allianz Group network and partners in over 210 countries and territories, employing almost 4,700 people of 70 nationalities. AGCS provides insurance solutions to more than three quarters of the Fortune Global 500 companies, writing a total of €7.4 billion gross premium worldwide in 2017.
AGCS SE is rated AA by Standard & Poor’s and A+ by A.M. Best.