The number of major damages in shipping has decreased by 50% over the past decade. This according to the fifth annual Safety & Shipping Review 2017 of Allianz Global Corporate & Specialty (AGCS). The outcome has been attributed to the development of more stable safety measures by industry businesses.
An estimate of 85 damages were reported in 2016 where ships were completely ruined. This indicates a decrease of 16% in comparison with the year before (101). Provisional figures show that 2016 has the lowest damages in the last 10 years. According to the report the number of shipping accidents have decreased slightly by 4% to 2611. In the Safety & Shipping Review damages above 100 ton are analysed.
Baptiste Ossena, the global product leader of Hull & Marine Liabilities at AGCS says that while this trend of consistent decrease looks encouraging there is no room for complacency as the sector has several economic deficiencies to contend with.
Environmental custodianship is on the rise leading to colossal fines for pollution by ships. New regulations around ballast water that come into effect this year are welcomed. However, the costs of compliance can have a considerable impact on shipowners. There are also political risks involved such as heightened activity at hotspots such as Yemen and the South-Chinese Sea which threaten shipping routes.
The threat from offshore cyber-attacks is considerable too.
Statistics of shipping damage
More than a quarter of damages to ships in 2016 (23) occurred in in South China, Indochina, Indonesia and the Phillipines, also seen as the problem areas of the past decade. These figures remain constant but are still more than double as many as the Mediterranean Black Sea (12), the region with the second highest damage.
The number of damages rose in Japan, Korea. North China, East Africa, the South Atlantic Ocean, the East Coast of South America, the Canadian Arctic Waters and the maritime regions of Alaska.
Freight ships (30) are responsible for more than a third of the damages, Damages related to passenger ships increased slightly (8). This can be attributed to the increasing influx to the Meditteranean Sea and the South East of Asia.
The foremost cause of global shipping damage remains sinking often caused by extreme or treacherous weather conditions. In 2016 more than a third of the incidents were caused by machine failure.
Pirating in Arctic waters are decreasing at a yearly rate. However, the risks remain, particularly the growing number of kidnappings of crew members in Asia and West Africa and the expected increase in shipping routes across the North pole.
After Hanjin – Economic situation still under pressure
The fall of Hanjin Shipping, one of the biggest shipping companies in the world, highlights some of the challenges faced by the sector. The number of bankruptcies are increasing and when debts are high and services too low shipowners search for ways to save by altering the maintenance budget, training and crew. This can inadvertently increase damage.
According to AGCS, negligence in maintenance is the leading cause of liability claims in the maritime sector. It is therefore, vital to implement strict maintenance regimes and inspections.
Impacts of technology
Technology that leads to increased safety already has a considerable influence on shipping, from electronic navigation to shore positioning controls and crew wellness. These technologies have the potential to reduce human error and machine failure. An analysis by AGCS shows that 75% of the 15.000 damages caused were caused by human error which accounts for approximately $1,6 billion.
The danger of cyber-attacks remains significant. The majority of attacks are aimed at rendering security and control of the ship helpless. Up to 80% of the offshore violations were due to human error.
The review also highlights other risks including the structural integrity of ships, fire at sea, financial losses and autonomous shipping.
