Allianz: 14 big ships lost in Asian waters in 2019

 Asian waters accounted for a third of large vessels lost at sea globally last year, even as large shipping losses are at a record low having fallen by over 20 per cent year-on-year, according to specialty insurer Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2020. 

As informed, fourteen large ships were lost in Asian waters in 2019, accounting for more than 33 per cent of losses worldwide.

Despite the record low in large ship losses, the coronavirus crisis could endanger the long-term safety improvements in the shipping industry for 2020 and beyond, as difficult operating conditions and a sharp economic downturn present a unique set of challenges, according to Allianz.

“Coronavirus has struck at a difficult time for the maritime industry as it seeks to reduce its emissions, navigates issues such as climate change, political risks and piracy, and deals with ongoing problems such as fires on vessels,” Baptiste Ossena, Global Product Leader Hull Insurance, AGCS.

“Now the sector also faces the task of operating in a very different world, with the uncertain public health and economic implications of the pandemic.”

The annual AGCS study analyzes reported shipping losses over 100 gross tons (GT) and also identifies ten challenges of the coronavirus crisis for the shipping industry which could impact safety and risk management.

In 2019, 41 total losses of vessels were reported around the world, down from 53, twelve months earlier. This represents an approximate 70 per cent fall over ten years and is a result of sustained efforts in the areas of regulation, training and technological advancement, among others.

More than 950 shipping losses have been reported since the start of 2010.

According to the report, the South China, Indochina, Indonesia and Philippines maritime region remains the top loss location with twelve vessels in 2019 and 228 vessels over the past decade — one in four of all losses.

What is more, the Japan, Korea and North China region saw two vessels lost in 2019 and is the third largest loss location overall with 104 since 2010. High levels of trade, busy shipping lanes, older fleets, typhoon exposure, and safety issues on some domestic ferry routes are contributing factors. However, in 2019, losses declined for the second successive year, mirroring a global trend.

Cargo ships accounted for more than a third of vessels lost in the past year, most of them in South East Asian waters. Foundered ships (sunk/submerged) were the main cause of all total losses, accounting for three in four. Bad weather accounted for one in five losses. Issues with car carriers and roll-on/roll-off (RoRo) vessels remain among the biggest safety issues. Total losses involving RoRos are up year-on-year, as well as smaller incidents (up by 20 percent) — a trend continuing through 2020.

“The rise in number and severity of claims on RoRo vessels is concerning. RoRos can be more exposed to fire and stability issues than other vessels,” Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS, said.

“Many have quick turnarounds in port and a number of accident investigations have revealed that pre-sail away stability checks were either not carried out as required, or were based on inaccurate cargo information. Too many times commercial considerations have endangered vessels and crews and it is vital that this is addressed on shore and on board.”

While total losses continue to see a positive trend, the number of reported shipping incidents increased by 5 per cent year-on-year, driven by machinery damage, which caused over one in three incidents.

A rise in incidents in the waters of the British Isles, North Sea, English Channel and Bay of Biscay, meant it replaced the East Mediterranean as the top hotspot for the first time since 2011, accounting for one in five incidents worldwide.

Similarly, incidents in the South China, Indochina, Indonesia and Philippines region also increased by 21 year-on-year for a total of 255 in 2019, making it the third highest region.

“We cannot lose sight of the fact that, while total losses have reduced significantly, the total number of incidents increased year-on-year,” Ossena continued.

“It does not take much for a serious incident to result in a total loss and, hence, the warning signs are there.”

There were almost 200 reported fires on vessels over the past year, up 13 per cent, with five total losses in 2019 alone.

 Misdeclared cargo is a major cause. Taking steps to address this issue is vital as it will only worsen as vessels become bigger and the range of goods transported grows. Chemicals and batteries are increasingly shipped in containers and pose a serious fire risk if they are mis-declared or wrongly stowed.

The shipping industry has continued to operate through the pandemic, despite disruption at ports and to crew changes.

While any reduction in sailings due to coronavirus restrictions could see loss activity fall in the interim, the report highlights ten challenges that could heighten risks. Among these are:

• The inability to change crews is impacting the welfare of sailors, which could lead to an increase in human error on board vessels.
• Disruption of essential maintenance and servicing heightens the risk of machinery damage, which is already one of the major causes of insurance claims.
• Reduced or delayed statutory surveys and port inspections could lead to unsafe practices or defective equipment being undetected.
• Cargo damage and delay are likely as supply chains come under strain.
• The ability to respond quickly to an emergency could also be compromised with consequences for major incidents which are dependent on external support.
• The growing number of cruise ships and oil tankers in lay-up around the world pose significant financial exposures, with many of them anchored in typhoon-exposed areas in Asia or hurricane-exposed areas in North America.

“Ship-owners also face additional cost pressures from a downturn in the economy and trade,” Khanna added.

“We know from past downturns that crew and maintenance budgets are among the first areas that can be cut and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions. It is crucial that safety and maintenance standards are not impacted by any downturn.”

Meanwhile, events in the Gulf of Oman and the South China Sea show political rivalries are increasingly being played out on the high seas and shipping will continue to be drawn into geopolitical disputes. Heightened political risk and unrest globally has implications for shipping, such as the ability to secure crews and access ports safely.

In addition, piracy remains a major threat with the Gulf of Guinea re-emerging as the global hotspot, Latin America seeing armed robbery increase and renewed activity in the Singapore Strait.

Ship-owners are also increasingly concerned about the prospect of cyber-conflicts. There has been a growing number of GPS spoofing attacks on ships, particularly in the Middle East and China, while there have been reports of a 400 per cent increase in attempted cyber-attacks on the maritime sector since the coronavirus outbreak.