Philippine waters are among the major hotspots where almost a third of the world’s ships are lost yearly, mainly due to higher trading activity, congested ports, old fleets and bad weather, according to a study by a global insurance firm.
One of three vessels lost last year were reported to have happened in the waters of South China, Indochina, Indonesia and the Philippines, making the area the “global hotspot” for shipping losses across the globe, according to Allianz Global Corporate & Specialty’s Safety and Shipping Review 2020 released on Wednesday.
“The South China, Indochina, Indonesia and Philippine maritime region remains the main loss hotspot, accounting for almost 30% of losses over the past year with 12 vessels,” it said. “These waters are also the major loss location of the past 10 years,” it added.
Forty-one vessels with more than 100 gross ton (GT) capacity were lost in 2019 globally, significantly lower than the rolling 10-year loss average of 95, according to the report. But shipping casualties increased by 5% to 2,815 last year.
Of the 41 ships lost last year, 31 were reported to have sunk, five were due to fire or explosion, three were either wrecked or stranded, one was due to collision and one reported damages.
From 2010 to 2019, 951 losses were recorded across the world, 228 of which were reported to have happened in the waters of South China, Indochina, Indonesia and the Philippines, the highest among all regions.
Other top maritime regions are the East Mediterranean and Black Sea that recorded 137 losses in 10 years, the region of Japan, Korea and North China with 104 and unnamed regions under the “other” group with 207 losses.
“Cargo, fishing, bulk, passenger and tug are the vessel types that have seen the most total losses over the past decade, accounting for 75% of all reported losses,” according to the insurance firm’s report.
Bad weather was also said to be a major factor, accounting for one of five cases, while issues on car carriers and roll-on, roll-off (Ro-Ro) vessels remained to be one of the largest safety concerns of the industry.
“The rise in number and severity of claims on Ro-Ro vessels is concerning,” Allianz Global said.
“Ro-Ros can be more exposed to fire and stability issues than other vessels. 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,” it added.
Too many times, commercial considerations have endangered vessels and crews “and it is vital that this is addressed on shore and on board,” Rahul Khanna, global head of Marine Risk Consulting at Allianz Global said in a separate statement.
The report also said the industry had largely been resilient to the impact of the coronavirus pandemic as it kept the flow of supply chains moving.
But the report named 10 new risks that emerged for the shipping industry, the biggest concern being the inability to change crews easily due to travel bans and other restrictions.
It also expects marine insurance claims to rise due to delays and operation disruptions, especially on cruise ship operators.
The impact of the global economic downturn will also be felt in the shipping industry because of weak demand and production, according to the study, which noted that companies would likely try to cut costs.
“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,” Mr. Khanna said. “It is crucial that safety and maintenance standards are not impacted by any downturn.”
Delays in major operations such as cargo transportation, bunker analysis that heightens risk of engine damage, and port inspection and surveys that risk crew safety also present risks, according to the study.
Meanwhile, the industry faces higher liabilities under new safety measures, disruption in maintenance and servicing due to supply chain issues, possible accumulation of laid-up cruise ships, and risks in soaring demand for floating storage that pushed prices to record highs.
Source: Business World