Total losses in marine sector running at historically low levels
During 2020, 1 in 3 losses occurred in South China, Indochina, Indonesia and the Philippines, but overall incidents declined.
Despite making gripping headlines, with grounded boats and lost cargo churning through news cycles, the number of shipping incidents declined around 4% year-on-year in 2020, according to Allianz Global Corporate & Specialty (AGCS), which noted the total losses of vessels has dropped by 50% during the past decade.
While overall incidents dropped, events in certain regions ticked up. For example, 1 in 3 losses occurred in South China, Indochina, Indonesia and the Philippines, a region that saw a slight increase in incidents during 2020. The region was a major location of losses during the past decade as well, largely due to high levels of local and international trade, congested ports, busy shipping lanes, older fleets and extreme weather.
Although that region in the Pacific saw an increase in incidents, it didn’t account for the most reported events. The British Isles, North Sea, English Channel and Bay of Biscay region saw the highest number of incidents reported in 2020, reaching a total of 579 events. This, however, was actually a year-on-year decline for the region.
A Greek Island ferry and a roll-on/roll-off ferry in Canadian waters were the two most accident-prone vehicles during the past year. Each was involved in six separate incidents.
Foundered (sunk/submerged) ships were the main causes of total losses in 2020, accounting for 1 in 2 losses, while machinery damage and failure was responsible for 40% of shipping incidents globally, AGCS reported.
“Total losses are at historic low levels for the third year running,” Captain Rahul Khanna, global head of marine risk consulting at AGCS, said in a release. “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 crews.”
Larger ships, larger losses
So-called “mega-ship,” which can carry more than 20,000 containers, are presenting unique risks, according to Nitin Chopra, senior marine risk consultant at AGCS, who noted responding to incidents involving these super-sized ships is often more complex and expensive.
While ports have been dredged deeper and berths and wharfs extended to make way for mega-ships, the overall size of ports has largely remained unchanged, Chopra explained, adding: “As a result, a ‘miss’ can turn into a ‘hit’ more often for the ultra-large container vessels.”
This was highlighted by the Ever Given incident, which saw a mega-ship wedge nearly perpendicularly across the Suez Canal. The vessel was eventually freed, but if a salvage operation would have been needed, it would have required the unloading of some 18,000 containers by specialist cranes, AGCS reported.
Additionally, the number of fires and explosions on large ships increased during 2020, hitting a four-year high of 10 and continuing a trend that has been percolating in recent years. Fires often start in containers holding hazardous cargo that either wasn’t declared or was improperly declared, according to AGCS. Past incidents have shown containers fires can quickly get out of control, often leading the crew to abandon the vessel for their safety. This, in turn, increases the size of losses.
This past year also saw a spike in the number of containers lost at sea, hitting a seven-year high of more than 3,000. This trend has continued at a high level into 2021, the insurance carrier reported. Larger vessels, extreme weather, growing demand and surging freight rates were all drivers of these losses. Additionally, improperly declared cargo weights, which can cause container stacks to collapse, played a factor.
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