While safety levels continue to improve in shipping in general, insurer Allianz warns that a “perfect storm” of increasing regulation and narrowing margins means owners need to be on their guard.
The German insurer’s annual shipping safety review shows that large shipping losses have declined by 50% over the past decade. There were 85 total shipping losses reported in 2016, down 16% compared with a year earlier.
Captain Andrew Kinsey, Allianz’s senior marine risk consultant, warned owners needed to remain vigilant.
“The maritime sector is entering a period of considerable change and unrest from economic pressures, technology and political factors. There is a perfect storm of increasing regulation and narrowing margins,” Kinsey said.
More than a quarter of shipping losses in 2016 occurred in the South China, Indochina, Indonesia and Philippines region – the top hotspot for the last decade. Loss activity there remained stable but was still almost double the East Mediterranean and Black Sea region.
Cargo vessels (30) accounted for more than a third of all vessels lost. Passenger ferry losses increased slightly (8).
“Standards remain an issue in some parts of Asia with bad weather, poor maintenance, weak enforcement of regulations and overcrowding contributing to loss activity,” Allianz noted in its annual review.
The insurer also warned about the growing threat of cyber attacks. As most attacks to date have been aimed at breaching corporate security rather than taking control of a vessel, Allianz was concerned that many in the industry are “complacent” on the issue.
“However, IT security should not be put on the backburner – if hackers were able to take control of a large container ship on a strategic route, significant economic losses would occur,” Allianz’s maritime consultant Kinsey commented.
Turning to autonomous vessels, Kinsey said: “Autonomous technology has the potential to revolutionise the movement of cargo on a scale not seen since containerization was introduced some 50 years ago. Despite unknowns and regulatory issues, autonomous shipping will happen. Economic pressures on the shipping industry and the need to find efficiencies will support and speed up developments in maritime automation.”
The lengthy downturn was forcing some owners to cut corners, something that worries Allianz.
“Bankruptcies are rising and when debt levels are high and earnings low, shipowners often seek to make cost savings from maintenance budgets, training and crewing levels, all of which can spike loss activity,” the insurer noted.