Allianz Global Corporate & Speciality SE’s (AGCS) third annual Safety and Shipping Review 2015 suggests that while shipping losses are the lowest for 10 years, the increase in mega-ships and cyber attacks could pose a significant threat to the industry.
In 2014 losses went down by 32 percent in comparison to the previous year and were well below the 10-year loss average of 127. While shipping losses have declined by 50 percent since 2005, more than a third of last year’s total losses were in two specific regions; South China, Indo China, Indonesia and the Philippines (17 ships) and Japan, Korea and North China (12 ships).
The report states that there were 2,773 shipping incidents (or casualties) across the world in 2014, with the East Mediterranean & Black Sea region coming up as the top hotspot (with 490 incidents). The British Isles, North Sea, English Channel and Bay of Biscay ranked second (465).
AGCS says that recent casualties such as Sewol have raised concerns about training and emergency preparedness on passenger ships. All in all seven vessels were lost during 2014, which account for nearly 10 percent of the total. “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.
Container ship safety is also a worry, especially in light of the rise in the popularity of mega ships such as the MSC Oscar which weighs in at 19,224 teu. But 22,000 teu are likely to be on the waters soon. “Larger ships can also mean larger losses. The industry should prepare for a loss exceeding $1 billion in future featuring a container vessel or even a specialized floating offshore facility,” Gerhard said. A key risk for mega ships is that operation is currently limited to a small number of deep water ports, which means an increased concentration of risk. Added to this is the lack of qualified crew and the fact that salvage and removal will be challenging.
“The shipping industry should think long and hard before making the leap to the next ship size,” said Captain Rahul Khanna, Global Head of Marine Risk Consulting, AGCS.
Cyber risks are also pointed out as a key threat for the shipping sector. While still in its infancy the increase in interconnectedness along with the industry’s reliance on automation could put ports and vessels in danger of hacking. (Read our article on why the shipping industry should be taking cyber threats seriously for more information)
"Companies must simulate potential scenarios and identify appropriate mitigation strategies,” said Khanna. “A cyber-attack targeting technology on board, in particular electronic navigation systems, could possibly lead to a total loss or even involve several vessels from one company,” said Gerhard.