The South China, Indochina, Indonesia and Philippines shipping region continued to top the list of regions for shipping losses in 2020, according to Allianz Global Corporate & Specialty (AGCS) in its report titled "Safety and Shipping Review 2021".
The report, which identifies loss trends and highlights a number of risk challenges for the maritime sector, says that the region accounted for a third of all losses in 2020 (16), with incidents up slightly year-on-year (2019: 14).
Together, the South China, Indochina, Indonesia and Philippines, East Mediterranean and Black Sea, and Japan, Korea and North China maritime regions accounted for half of the 876 shipping losses of the past 10 years (437).
Overall, the international shipping sector continued its long-term positive safety trend through 2020 with the number of reported total losses of over 100GT remaining stable at 49 compared with 48 a year earlier.
This means annual shipping losses have halved over the past decade (2011 – 98), although 2020 represented the first time in five years that losses have not declined, suggesting the loss total could be stabilising around the minimum achievable level. This reflects the positive effect of an increased focus on safety measures over time, such as regulation, improved ship design and technology, and risk management advances.
The table below shows the total losses in 2020 by the top 10 regions:
|
Region |
2020 Loss |
|
S. China, Indochina, Indonesia and Philippines |
16 |
|
East Mediterranean and Black Sea |
7 |
|
Arabian Gulf and approaches |
4 |
|
British Isles, N.Sea, Eng. Channel and Bay of Biscay |
3 |
|
Russian Arctic and Bering Sea |
3 |
|
S. Atlantic and East Coast South America |
3 |
|
West African Coast |
3 |
|
Japan, Korea and North China |
2 |
|
West Indies |
2 |
|
East African Coast |
1 |
|
Other |
5 |
|
Total |
49 |
Cargo vessels accounted for more than a third (18) of all vessels lost in 2020. The number of losses involving cargo and passenger vessels increased year- on-year. Analysis shows cargo vessels account for 40% of total losses over the past decade (348).
Foundered (sunk/submerged) was the main cause of total losses during 2020, accounting for one in two. Contributing factors include bad weather, poor visibility leading to contact, flooding and water ingress and machinery breakdown. The number of fires/explosions resulting in total losses of vessels increased again year-on-year, hitting a four-year high of 10.
COVID-19
Despite the devastating economic impact of COVID-19, the effect on maritime trade has been less than first feared, demonstrating the resilience of the shipping industry.
While the cruise industry and the car carrier segment have been worst affected by the pandemic, the industry’s three largest markets – tankers, bulkers and containers – have been quick to recover. Global container throughput in the first months of 2021 exceeded pre-pandemic levels.
The crew change situation is a humanitarian crisis that continues to have a major impact on the health and wellbeing of seafarers. In March 2021, it was estimated that some 200,000 seafarers remained onboard vessels with a similar number urgently needing to join ships to replace them. Extended periods at sea can lead to mental fatigue and poor decision-making, which ultimately impact safety.
Insurers
Overall, COVID-19 has had only limited impact on marine claims to date. Hull insurance has seen little direct impact. Marine liability insurers are expected to face passenger liability claims from cruise ships. Cargo insurers have seen an uptick in perishable goods claims. However, the surge in demand for shipping, coupled with the pandemic, has put shipyards under pressure.
There is 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. The costs of salvage and repairs have also increased.
Potentially, insurers could see an uptick in machinery breakdown claims if COVID-19 has affected crews’ ability to carry out maintenance or follow manufacturers’ protocols. Machinery breakdown claims could arise from the reactivation of the cruise ship industry if maintenance protocols have not been followed – there have also been fires onboard vessels in lay-up.
