Navigating the Seas of Shipping Risks: A Comprehensive Guide to Mitigation

Losses at Sea: A Stable Trend Amidst Volatility

The maritime industry has seen a stable trend in vessel losses, with 49 total losses of 100 gross tons or more in 2020, compared to 48 in the previous year. This stability can be attributed to better safety measures, regulation, improved ship design and technology, and advances in risk management. However, behind these numbers lie volatile factors such as extreme weather, machinery breakdown, fires, and even piracy. Ship operators can mitigate these risks by improving fire detection and firefighting capabilities on large vessels, ensuring machinery is inspected and in good working order, and enhancing weather forecasting and vessel routing.

Pandemic Impact: A Double-Edged Sword

The global pandemic has had a minimal impact on Marine insurance claims so far. However, as more vessels return to service and delayed maintenance takes its toll, claims could increase. The confinement of crews to their ships due to public health mandates has led to delays in crew changes and medical treatment, contributing to crew fatigue and human error—a major cause of many losses. Designating merchant seamen as vital workers to receive vaccines and move about freely could be a solution.

Bigger Ships, Bigger Problems: The Ever Given Incident

The Ever Given incident in the Suez Canal highlighted the challenges of freeing large vessels, illustrating the societal and economic costs of supply-chain disruption. Despite these challenges, the shipping industry continues to build larger vessels for economies of scale and fuel efficiency. However, these large vessels pose problems for the supply chain, often overwhelming ports when so many containers are dropped off at once. The potential size of loss is directly correlated to vessel size, and inadequate fire detection and firefighting capabilities on large vessels remain a concern. The International Union of Marine Insurers (IUMI) is rallying stakeholders to establish more stringent standards.

In conclusion, while the risks associated with global shipping may seem like a moving target, careful analysis reveals patterns and trends that can lead to improved loss mitigation. Stakeholders in the supply chain, including cargo owners, must take immediate action to address these risks. For readers, staying informed about these trends and developments can help in making more informed decisions regarding shipping and insurance.