Shipping losses at historic lows, Asia remains global loss hotspot

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  • There were 49 large ships lost worldwide last year, down 50% over 10 years
  • Number of shipping incidents declined year-on-year
  • Shipping industry remains resilient through pandemic, but mega ship, supply chain and climate challenges loom large
  • Suez Canal incident shows ever increasing vessel sizes continue to pose a disproportionately large risk with costly groundings and salvage operations
  • South China, Indochina, Indonesia and Philippines maritime region is the global loss hotspot for last decade

The shipping industry’s number of large vessels lost remained at record low levels in 2020, with Asia still the world’s loss hotspot, according to a new report from marine insurer Allianz Global Corporate & Specialty (AGCS).

There were a total of 49 vessels lost globally last year, just one more than a year earlier and the second lowest total this century, the AGCS’s Safety & Shipping Review 2021 said. This represents a 50% decline over 10 years from 98 in 2011.

The number of shipping incidents declined 4% from 2,818 in 2019 to 2,703 in 2020. There have been more than 870 shipping losses over the past decade.

The South China, Indochina, Indonesia and Philippines maritime region remains the global loss hotspot, accounting for one in every three losses in 2020 with incidents up year-on-year. Cargo ships account for more than a third of vessels lost in the past year and 40% of total losses over the past decade. Foundered (sunk/submerged) was the main cause of total losses over the past year, accounting for one in two vessels. Machinery damage/failure was the top cause of shipping incidents globally, accounting for 40%.

The South China, Indochina, Indonesia and Philippines maritime region is also the major loss location of the past decade (224 vessels), driven by high levels of local and international trade, congested ports and busy shipping lanes, older fleets and extreme weather exposure.

Together, the South China, Indochina, Indonesia and Philippines, East Mediterranean and Black Sea, and Japan, Korea and North China maritime regions account for half of the 876 shipping losses of the past 10 years (437).The British Isles, North Sea, English Channel and Bay of Biscay region saw the highest number of reported incidents (579) in 2020, although this was down year-on-year.

Meanwhile, despite the devastating economic impact of Covid-19, the effect on maritime trade has been less than first feared. Global seaborne trade volumes are on course to surpass 2019 levels this year after declining slightly in 2020.

However, the recovery remains volatile. Covid-19-related delays at ports and shipping capacity management problems have led to congestion at peak times and a shortage of empty containers. In June 2021, a record 300 freighters were estimated to be waiting to enter overcrowded ports. The time container ships are spending waiting for port berths has more than doubled since 2019.

The blocking of the Suez Canal by the Ever Given container ship in March 2021 is the latest in a growing list of incidents involving large vessels or mega ships.

“Larger vessels present unique risks. Responding to incidents is more complex and expensive. Approach channels to existing ports may have been dredged deeper and berths and wharfs extended to accommodate large vessels but the overall size of ports has remained the same. As a result, a ‘miss’ can turn into a ‘hit’ more often for the ultra-large container vessels,” said Captain Nitin Chopra, senior marine risk consultant at AGCS.

If the Ever Given had not been freed, salvage would have required the lengthy process of unloading some 18,000 containers, requiring specialist cranes. The wreck removal of the large car carrier, Golden Ray, which capsized in US waters in 2019 with more than 4,000 vehicles on it has taken over a year and a half and cost several hundreds of millions of dollars.

The number of fires on board large vessels has increased significantly in recent years. There was a record 40 cargo-related fires alone in 2019. Across all vessel types, the number of fires/explosions resulting in total losses increased again in 2020, hitting a four-year high of 10.

Loss of containers at sea also spiked last year to more than 3,000 and have continued at a high level in 2021, disrupting supply chains and posing a potential pollution and navigation risk. The number lost is the worst in seven years. Larger vessels, more extreme weather, a surge in freight rates and mis-declared cargo weights, as well as the surge in demand for consumer goods may all be contributing to this increase.

Photo By Hp.Baumeler