- Allianz Safety and Shipping Review 2024: 26 large ships lost
worldwide in 2023, down by one third year-on-year, the industry’s
lowest ever total
- War and geopolitical conflicts shake up the shipping
industry, with a number of major consequences
- Climate risks on the rise while decarbonization of fleets
remains a major challenge
Given as much as 90% of international trade is transported
across oceans, maritime safety is critical. Thirty years ago, the
global shipping fleet lost around 200 large vessels a year. This
total fell to a record low of 26 in 2023, a decline of more than
one third year-on-year and by 70% over the past decade. However,
the fact that shipping is increasingly subject to growing
volatility and uncertainties from war and geopolitical events, the
consequences of climate change, as well as ongoing risks resulting
from the trend for larger vessels means the sector will have its
work cut out to maintain this status quo in future, according to
marine insurer Allianz Commercial’s Safety and Shipping Review
2024.
“The speed and extent of the way the industry’s risk profile is
changing is unprecedented in modern times. Conflicts such as in
Gaza and Ukraine are reshaping global shipping, impacting crew and
vessel safety, supply chains and infrastructure, and even the
environment. Piracy is on the rise, with a worrying re-emergence
off the Horn of Africa. The ongoing disruption caused by drought in
the Panama Canal shows how the changing climate is affecting
shipping , all at a time when it is having to undertake its most
significant challenge, decarbonization,” says Captain Rahul
Khanna, Global Head of Marine Risk Consulting, Allianz
Commercial.
Southeast Asia emerges as maritime region with highest total
losses
During 2023, 26 total losses were reported globally compared
with 41 a year earlier. There have been more than 700 total losses
reported over the past decade (729). The South China, Indochina,
Indonesia and the Philippines maritime region is the global loss
hotspot, both over the past year and decade (184). It accounted for
almost a third of vessels lost last year (8). The East
Mediterranean and Black Sea ranks second (6) with activity up
year-on-year. Cargo ships accounted for over 60% of vessels lost
globally in 2023. Foundered (sunk) was the main cause of all total
losses, accounting for 50%. Extreme weather was reported as being a
factor in at least 8 vessel losses around the world in 2023, with
the final total likely higher.
The number of shipping incidents reported globally declined
slightly last year (2,951 compared to 3,036), with the British
Isles seeing the highest number (695). Fires onboard vessels – a
perennial concern – also declined. However, there have still been
55 total losses in the past five years, and over 200 fire incidents
reported during 2023 alone (205) – the second highest total for a
decade after 2022. Fires remain a key safety issue on larger
vessels given the potential threat to life, scale of the damage,
and the fact associated costs can be severe, a factor contributing
to the long-term increase in the cost of large marine insurance
claims.
Consequences of geopolitical conflicts
Recent incidents, such as in the wake of the conflict in Gaza,
have demonstrated the increasing vulnerability of global shipping
to proxy wars, disputes and geopolitical events, with more than 100
ships targeted in the Red Sea alone by Houthi militants in response
to the conflict. Disruption to shipping in and around the region
has persisted and is likely to remain for the foreseeable future.
The re-emergence of Somali pirates, following their first
successful hijacking since 2017, is an additional cause for
concern.
“Both the war in Ukraine and the Red Sea attacks have also
revealed the increasing threat to commercial shipping posed by new
technology such as drones, which are relatively cheap and easy to
make, and difficult to defend against without a large naval
presence,” says Khanna. “Looking to the future, more
technologically driven attacks against shipping and ports are also
a distinct possibility. Reports of vessels experiencing GPS
interference are increasing, particularly in the Strait of Hormuz,
the Mediterranean and the Black Sea.”
The report also notes that in the three years since Russia
invaded Ukraine the gradual tightening of international sanctions
on Russian oil and gas exports has contributed to the growth of a
sizable ‘shadow fleet’ of tankers, somewhere between 600 to 1,400
vessels. “These are mostly older, often poorly maintained vessels
that operate outside international regulation, often without proper
insurance. This situation presents serious environmental and safety
risks,” says Justus Heinrich, Global Product Leader, Marine
Hull, Allianz Commercial. Vessels have been involved in at
least 50 incidents to date, including fires, engine failures,
collisions, loss of steerage, and oil spills. “The cost of dealing
with these incidents often falls on governments or other vessels’
insurers if one is involved in an incident.”
Rerouting brings risks and environmental challenges
Attacks against shipping in Middle East waters have also
severely impacted Suez Canal transits – down by more than 40% at
the beginning of 2024 – and trade. Coming so soon after the ongoing
disruption caused by drought in the Panama Canal, this amounts to a
double strike on shipping, causing yet more issues for global
supply chains. Whichever alternative routes vessels take, they face
lengthy diversions and increased costs, also impacting their
customers. Avoiding the Suez Canal adds at least 3,000 nautical
miles (over 5,500km) and 10 days sailing time, rerouting via the
Cape of Good Hope.
Rerouting also impacts the risk landscape and the environment.
Storms and rough seas can be more challenging for smaller vessels
used to sailing coastal waters, while infrastructure to support an
incident involving the largest vessels, such as a suitable port of
refuge or a sophisticated salvage operation may not be available.
Environmental gains may be lost as rerouted vessels increase speeds
to cover longer distances. Red Sea diversions are already cited as
being a primary contributor to a 14% surge in emissions in the EU
shipping sector this year.
Green shipping challenges
Shipping contributes around 3% of global emissions caused by
human activities and the industry is committed to tough targets to
cut these. Reaching these targets will require a mix of strategies,
including measures to improve energy efficiency, the adoption of
alternative fuels, innovative ship design and methods of
propulsion.
Decarbonization presents various challenges for an industry
juggling new technologies alongside existing ways of working. For
example, the industry will need to develop infrastructure to
support vessels using alternative fuels, such as bunkering and
maintenance, while at the same time phasing out fossil fuels. There
are also potential safety issues with terminal operators and
vessels’ crew handling alternative fuels that can be toxic or
highly explosive.
“Increasing shipyard capacity will also be key as the demand for
green ships accelerates. Such capacity is currently constrained
with long waiting times and high building prices,” says Heinrich.
Over 3,500 ships must be built or refitted annually until 2050, yet
the number of shipyards more than halved between 2007 and 2022.
“Capacity constraints on shipyards could have a knock-on effect for
repairs and maintenance, with damaged vessels or those with
machinery issues potentially facing long delays.” Machinery damage
or failure is the most frequent cause of shipping incidents,
accounting for over half of these globally in 2023 (1,587).
About Allianz Commercial
Allianz Commercial is the center of expertise and global line of
Allianz Group for insuring mid-sized businesses, large enterprises
and specialist risks. Among our customers are the world’s largest
consumer brands, financial institutions and industry players, the
global aviation and shipping industry as well as family-owned and
medium enterprises which are the backbone of the economy. We also
cover unique risks such as offshore wind parks, infrastructure
projects or film productions. Powered by the employees, financial
strength, and network of the world’s #1 insurance brand, as ranked
by Interbrand, we work together to help our customers prepare for
what’s ahead: They trust us to provide a wide range of traditional
and alternative risk transfer solutions, outstanding risk
consulting and Multinational services, as well as seamless claims
handling. The trade name Allianz Commercial brings together the
large corporate insurance business of Allianz Global Corporate
& Specialty (AGCS) and the commercial insurance business of
national Allianz Property & Casualty entities serving mid-sized
companies. We are present in over 200 countries and territories
either through our own teams or the Allianz Group network and
partners. In 2023, the integrated business of Allianz Commercial
generated more than €18 billion gross premium globally.
Cautionary Note Regarding Forward-Looking Statements
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version on businesswire.com: https://www.businesswire.com/news/home/20240522431348/en/
Jo-Anne Chasen Tel. 917 826 2183 jo-anne.chasen@agcs.allianz.com
Erin Burke Tel. 631 681 8770 eburke@stantonprm.com