SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty

Page created by Corey Hale
 
CONTINUE READING
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
ALLIANZ GLOBAL CORPORATE & SPECIALTY

SAFETY AND
SHIPPING
REVIEW 2018
An annual review of trends and developments
in shipping losses and safety
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                     Safety and Shipping Review 2018

                                                                                                                               04
                                                                        CONTENTS
                                                                                                                                            Executive summary

                                                                                                                               08           Losses in focus

                                                                                                                   CASUALTIES
                                                                                                                       18 Behavioral and cultural risk still needs addressing
                                                                                                                      20 Industry’s struggle with container ship fires continues
                                                                                                                      22 Safety responses round-up
                                                                                                                   CLIMATE
                                                                                                                       24 Record-breaking hurricane season brings supply chain pressure
                                                                                                                       26 Superstorms pose future challenges for yacht market
                                                                                                                       28 Fast-changing Arctic and North Atlantic conditions bring route risks
                                                                                                                       30 Exploitation of the seas
                                                                                                                       31 Compliance with new emissions rules likely to be problematic
                                                                                                                   TECHNOLOGY
                                                                                                                       34 Shippers get serious about cyber threat
                                                                                                                       36 Use of drones in the shipping sector set to take-off
                                                                                                                       38 Sensors could improve navigation, supply chain and cargo risk management
                                                                                                                      40 Autonomous shipping progresses but risk management and regulatory challenges remain
                                                                                                                   SECURITY
                                                                                                                       42 Rising political risk brings safety fears
                                                                                                                       44 Piracy numbers hit record low but threat remains

                                                                                                                               46           Data and sources

                                                                                                                               47           Contacts

                                                                                   Photo: iStock
                                       Shipping incidents in Arctic Circle waters are on the rise.

                                                                                                     Cover images: Indian Coast Guard, iStock, US Navy

2                                                                                                                                                                                                                     3
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                                                                        Safety and Shipping Review 2018

                                                                                                                                                                                            and Black Sea region is the second major
                                                                                                                                                                                            loss hotspot (17), followed by the British
SAFETY & SHIPPING REVIEW 2018 IN NUMBERS                                                                                                                                                    Isles (8) and the Arabian Gulf (6).

                                                                                                                                                                                            Cargo ships (53) account for over half of all
                              1,129 total losses                                                                                                                                            vessels lost during 2017, with activity up
                              over past 10 years                                           30 losses in South China,                         Container ships are                            annually by 56%, driven by a rise in
                                                                                           Indochina, Indonesia and                        getting bigger. Capacity                         foundering (sinking) incidents. Fishing and
90% of global
trade transported
                              94 total losses in
                              2017. Second lowest          Bad weather a
                                                                                           Philippines - the main hotspot                  has increased by almost                          passenger vessel losses are down year-on-
                                                                                                                                                                                            year. Losses involving bulk carriers and
                                                                                                                                                                                                                                                              94
                                                                                                                                             1,500% in 50 years
by shipping                   total in a decade.           factor in 21 losses                                                                                                              tankers increased, with bulk carriers
                                                                                           Major risks                                                                                      accounting for five of the 10 largest
                                                                                                                                       Major risks                                          reported total losses by gross tonnage (GT).
                                                                                                                                                                                                                                                        losses in 2017
                                                                                                                                                                                            Foundering has been the cause of over half
                                                                                                                                                                                            of the 1,129 total losses reported over the
                                                                                                                                                                                            past decade. It accounted for an even
                                                                                             Busy seas            Typhoons                                                                  higher share of 2017 losses (65%), with bad
                                                                                                                                        Fire-fighting                  Cargo                weather often a factor. Wrecking/stranding
                                                                                                                                         capability                misdeclaration           ranks second (13), followed by machinery
                                                                                                                                                                                            damage/failure (8). Fire/explosion losses
                                                                                                                                                                                            declined year-on-year (6).

                                                                                               Piracy               Safety                                                                  There were 2,712 reported shipping
180 piracy                                                                                                        standards                                                                 incidents (casualties) in 2017, up slightly
attacks in 20171 .                                                                                                                         Salvage                      Ports of            year-on-year by 3%, driven by a rise in
Down year-on-                                                                                                                             challenges                    refuge              machinery damage incidents – the top cause
year. Lowest                                                                                                                                                                                of casualties around the globe (42%). The
total for 22 years                                   3 regions account for                                                                                                                  East Mediterranean and Black Sea region

      ↓
                                                     almost half of all losses                                                                                                              is the most frequent location for incidents.
                                                                                            Political risk                              75% of shipping insurance
                                                                                                                                        losses are caused by human                          Behavioral and cultural risk needs
                                                                                                                                        error. Equivalent to $1.6bn                         addressing. Technology can help. Despite
                                                                                                                                                                                            huge improvements in maritime safety,
    53 losses - cargo ship               ↑        61 losses caused by            ↑              6 vessels lost
                                                                                                                          ↓                                                                 fatal accidents at sea persist. Human error                             Allianz Global Corporate & Specialty

    most frequent vessel               Up year-                              Up year-
                                                                                                                         Down       Source: Allianz Global Corporate & Specialty            continues to be a major driver of incidents
                                                                                                                                                                                                                                                                    Safety and

                                                  foundering in 2017.                          to fire in 2017.         year-on-
                                                                                                                                                                                                                                                                    Shipping

    lost globally in 2017              on-year                               on-year
                                                                                                                          year      Additional references: 1 International Maritime         and captains and crews are under
                                                                                                                                                                                                                                                                    Review 2017
                                                                                                                                                                                                                                                                    An annual review of trends and developments
                                                                                                                                                                                                                                                                    in shipping losses and safety

                                                                                                                                    Bureau; Lloyd’s List Intelligence Casualty Statistics   increasing commercial pressure as supply
                                                                                                                                                                                            chains are streamlined. Tight schedules can
                                                                                                                                                                                            have a detrimental effect on safety culture
                                                                                                                                                                                            and decision-making leading to the
                                                                                                                                                                                            “normalization of risk”. Better use of data

EXECUTIVE
                                                                                                                                                                                            and analytics can help to address this. The
                                                                    Shipping is the lifeblood of the global economy,                Disparities remain. The South China,                    shipping industry has learned from losses in
                                                                    transporting approximately 90% of global trade. There           Indochina, Indonesia and Philippines                    the past but predictive analysis is important
                                                                                                                                                                                                                                                    This sixth annual review
                                                                    are over 50,000 merchant ships trading internationally,1        maritime region has been the number one                 for the future. New insights from crew                  focuses on key developments
                                                                    carrying every kind of cargo, so the safety of vessels is       area worldwide for major shipping                       behavior and near-misses can help identify

SUMMARY
                                                                                                                                                                                                                                                    in maritime safety and
                                                                    critical. The maritime industry saw the number of total         incidents for the past decade, leading                  human error trends. Sensor technology can               analyzes shipping losses
                                                                    shipping losses remain stable during 2017, declining slightly   some media commentators to call it the                  also enhance risk management. For                       (of over 100 gross tons)
                                                                                                                                                                                                                                                    during the 12 months prior to
                                                                    to 94 – the second lowest total over the past decade.           “new Bermuda Triangle”. Last year,                      example, hull stress monitoring sensors                 December 31, 2017. It follows
                                                                                                                                    almost a third (32%) of losses occurred here            could be linked to ship navigation in bad               the Safety & Shipping
                                                                    Losses were down 4% compared with a year earlier (98) –         (30) – up 25% annually. Not only are the                weather, feeding real-time information on               Review 2017 available at
                                                                    current figures show a significant improvement on the           seas busy, they are also prone to bad                   structural integrity. However, over-reliance            www.agcs.allianz.com/
                                                                                                                                                                                                                                                    insights
                                                                    10-year loss average (113) – down 17%. Over the past            weather – in 2017 Typhoon Damrey                        on technology on board must be avoided.
                                                                    decade, total losses have declined by more than a third         contributed to a number of losses (6). In               Continual training is imperative to ensure
                                                                    (38%), driven by improved ship design, technology and           addition, safety processes on some                      the right balance is achieved between
                                                                    advances in risk management and safety. Recent lower            domestic routes continue to lag behind                  technology and human intervention.
                                                                    shipping activity is also a factor.                             global standards. The East Mediterranean

                                                                                                                                                   1 I nternational Chamber of Shipping
4                                                                                                                                                                                                                                                                                                                 5
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                                                                                            Safety and Shipping Review 2018

                                       Industry’s struggle with container          will need to be disseminated faster
                                       ship fires continues: Major fires on        than at present in future. Ice also
                                       container vessels are one of the most       poses a significant hazard elsewhere.
                                       significant safety issues. The blaze on     Over 1,000 icebergs drifted into North
                                       the ultra-large container ship (ULCS)       Atlantic shipping lanes in 2017 – the
                                       Maersk Honam in March 2018 is one           fourth consecutive “extreme” season 4 .
           21                          of a number of incidents in recent
                                       years. Issues driving container ship fire
                                                                                   Sailing in such conditions necessitates
                                                                                   specialist training for seafarers and
                                       exposures include the adequacy of fire-     additional routing support.
                                       fighting capabilities as vessels become
                                       larger, misdeclaration of cargo,            Exploitation of the seas increases:         Photo: iStock                                             Photo: US Navy                                           Photo: US Navy
    losses from bad                    salvage challenges and time taken to        The marine environment is seen as a         Container-carrying capacity has increased by almost       The USS Fitzgerald collided with                         Human error was a factor in the El Faro loss in late 2015,
    weather in 2017                    access a port of refuge. ULCS provide       resource, bringing environmental risks      1,500% in 50 years, bringing new risks.                   a container ship in June 2017.                           which has led to new safety legislation being proposed.
                                       economies of scale but the industry         for shipping, such as pollution of fish
                                       needs to ensure risk management             farms or even pirate fishing, which is      masks the true picture in shipping                        human error entirely. It will still be
                                       standards are up to speed, as larger        estimated to cost the global economy        when it comes to cyber risk. New                          present in the algorithms that drive
                                       container ships are on their way.           as much as $23.5bn a year5 .                regulations such as the European                          the decision-making of vessels, while
                                                                                   Increasing maritime activity also           Union’s Network and Information                           manned onshore bases will continue
                                       Record-breaking hurricane season            brings potential new collision hazards,     Security Directive will change that                       to control and monitor. Automation
                                       brings supply chain and yacht               such as the growing number of               and also exacerbate the fall-out from                     raises questions about who is at fault
                                       problems: Hurricanes Harvey, Irma and       offshore wind farms in the North Sea        any cyber failure. Many shipping                          in an accident – the manufacturer,
                                       Maria (HIM) and other severe weather        – offshore wind In Europe grew 25% in       companies are looking to improve                          software provider or the onshore
                                       events in 2017, such as Typhoons            2017; a record year6 .                      cyber security on board, by separating                    bases. New kinds of losses, such as
                                       Damrey and Hato, show traditional                                                       IT systems for different functions, such                  cyber or product liability, could
                                       maritime risks should not be overlooked.    New emissions rules problematic:            as navigation, propulsion and loading.                    replace traditional claims. Technical
                                       AGCS analysis shows bad weather             Increasing environmental and                                                                          management and maintenance of
                                       directly contributed to at least 21 total   sustainability pressures – such as the      Drones ready for take-off:                                ships will also need to be rethought.
                                       losses in 2017 and this could yet           new “Paris Agreement for the                Unmanned aircraft systems are                             One of the main challenges for the
                                       increase further (see page 9). Fuel         shipping industry”, which aims to           finding a growing number of                               insurance industry in future will be
                                       market, cargo, cruise ship and port         significantly cut all emissions – and       applications in the maritime sector.                      dealing with more technical shipping
                                       operations were also disrupted,             existing industry commitments to            They are increasingly used by class                       claims, resulting from greater use of
                                       leading to natural catastrophes being       reduce sulphur oxide emissions – will       societies and marine surveyors to                         new technology.
                                       ranked the top risk by shipping experts     enhance innovation in ship design and       assess vessel damage and more uses
                                       in the Allianz Risk Barometer 2018.         practices but will also bring changes       are likely in future, which could have                    Political risk and piracy still rule the
                                       Shippers need to consider scenarios         in risk profile and financial challenges.   the potential to make a significant                       waves: Heightened political tensions
                                       where multiple locations are impacted       The shipping industry is increasingly       contribution to safety and risk                           around major shipping routes, such as
                                       when drawing up contingency plans.          looking to technical solutions to           management. These include assessing                       off the coast of Yemen in the Middle
                                       Meanwhile, the estimated 60,000             reduce emissions, which could bring         environmental pollution, monitoring                       East and the South China Sea in Asia,
    M TWT F S S                        pleasure craft 2 damaged or destroyed       accompanying risk issues with engines       cargo loading and pirate activity                         pose a risk of disruption. Although
                                       by HIM in the US and Caribbean raises       and bunkering of biofuels, as well as       along coastlines and carrying out                         piracy incidents have dropped to a
                                       questions over the insurability of such
                                       vessels remaining in the region during
                                                                                   questions over appropriate training of
                                                                                   crew. The reduction in sulphur
                                                                                                                               cargo tank inspections. Drones could
                                                                                                                               enable faster, more informed decision-
                                                                                                                                                                                         22-year low (180 attacks) 7, hotspots
                                                                                                                                                                                         remain. Three quarters of incidents
                                                                                                                                                                                                                                                                                $1.6bn
Friday is the most frequent
day for shipping losses over           the season.                                 emissions by 2020 comes with cost           making on board, reducing the impact                      occur in South East Asia and Africa.
the past decade (175) with                                                         implications and doubts over sufficient     of any incident.                                          Indonesia (43 attacks) remains the
Saturday (143) the safest day          Fast-changing ice conditions bring          availability of affordable low-sulphur                                                                main location although activity has
at sea. Friday 13th can be             route risks: Climate change is              fuel. Exhaust gas-cleaning systems or       Autonomous shipping progresses                            declined. Conversely, activity in the                                                  Cost of losses
unlucky with five ships lost,
                                       impacting ice hazards for shipping,         “scrubbers” are costly, with demand         but challenges remain: Significant                        Philippines more than doubled year-                                                    resulting from
including three on January 13,                                                                                                                                                                                                                                                   human error,
2012 – one of which was                freeing up new trade routes. For            outstripping supply. Compliance is          milestones continue to be reached but                     on-year (22 attacks). In Africa, there
Costa Concordia.                       example, cargo volumes on the               likely to be problematic and industry       legal, safety and security issues are                     was an increase in Somalian pirate                                                   based on analysis
                                       Northern Sea Route increased by             preparation lacking.                        likely to limit growth of crewless                        activity. In South America, Venezuela                                                of 15,000 marine
                                       nearly 40% to 9.7 million tons over the                                                 vessels for the foreseeable future.                       saw a significant increase in piracy                                                 insurance claims8
     J F M A M J
     J A S O N D                       past year – the biggest annual volume       Shippers get serious on cyber: Major        Autonomous shipping could improve                         activity, with one happening every
                                       ever3 . China has also announced            attacks, such as NotPetya, which            maritime safety but will not remove                       month on average during 2017.
                                       plans for an “Arctic Silk Road”,            caused around $3bn of economic
November is the busiest
month for losses (36) in the top       developing shipping lanes opened up         losses, have created a renewed
                                                                                                                               2   oat Owners Association of The United States
                                                                                                                                  B
hotspot over the past decade           by global warming. There were 71            urgency in tackling the threats posed       3   ussian Federal Agency For Maritime and River Transport
                                                                                                                                  R
– South China, Indochina,              reported shipping incidents in Arctic       to vessels and the supply chain, as         4   Captain, Ice Patrol More Than 1,000 Icebergs Drifted Into N. Atlantic Shipping Lanes in 2017, December 2017
                                                                                                                                  G
Indonesia and Philippines – a          Circle waters during 2017, up 29%           well as increasing interest in cyber        5   gnew DJ, Pearce J, Pramod G, Peatman T, Watson R, Beddington JR, et al. (2009) Estimating the Worldwide
                                                                                                                                  A
third were directly caused by                                                                                                     Extent of Illegal Fishing. PLoS ONE 4(2): e4570.
typhoons (12).                         year-on-year. Arctic conditions can         business interruption insurance. The        6 W ind Europe, Offshore wind in Europe grew 25% in 2017, February, 2018
                                       change quickly and transit information      current lack of incident reporting          7 I nternational Maritime Bureau
                                                                                                                               8 A llianz Global Corporate & Specialty, Global Claims Review: Liability In Focus, 2017
6                                                                                                                                                                                                                                                                                                         7
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                                                                                                                                                                                 Safety and Shipping Review 2018

         LOSSES IN FOCUS                                                                                                                           The analysis over the following pages
                                                                                                                                                   covers both total losses and casualties/
                                                                                                                                                   incidents. See page 46 for further details
                                                                                                                                                                                                                                                                                                                                                                       2017 REVIEW
                                                                                                                                                                                                                                     2017: The database shows 94 total           TOTAL LOSSES BY TOP 10 REGIONS
                                                                                                                                                                                                                                     losses reported during 2017. This           FROM JANUARY 1, 2017 TO DECEMBER 31, 2017
                                                                                                                                                                                                                                     compares with 98 during 2016 – a
         TOTAL LOSSES BY TOP 10 REGIONS                                                                                                                                                                                              decline of 4%. South China, Indochina,      Region                                                        Loss Total     Year-on-year change

         2008-2017 AND 2017                                                                                                                                                                                                          Indonesia and Philippines is once           S. China, Indochina, Indonesia and Philippines                      30                  ↑6
                                                                                                                                                                                                                                     again the top region for total losses.      East Mediterranean and Black Sea                                    17                  ↓2
                                                                                                                                                                  94 total losses in 2017
                                                                                                                                                                                                                                     Almost a third (32%) of losses occurred     British Isles, N. Sea, Eng. Channel and Bay of Biscay                8                   =
                                                                                                                                                                                                                Russian Arctic and
                                                                                                                                                                                                                                     in this region (30 total losses). Over      Arabian Gulf and approaches                                          6                  ↑3
                                                                                                                                                                                                                Bering Sea
                                                                                                                                                                                                                                     three quarters of these incidents           Japan, Korea and North China                                         6                  ↓5
                                                                                    89                                                                                                                                     29
                                                                                                                                                                                                                                     involved cargo vessels. Foundered
                                                                                                                                                                                                                                                                                 S. Atlantic and East Coast S. America                                5                  ↑1
                                                                                                                                                                                                    126
                                                                                                                                                                                                                                     (sunk/submerged) was the top cause,
                                                                                                                                                                                                                                                                                 West Mediterranean                                                   4                   =
                                                                                    8                                                                                                                                                accounting for 80% of losses in this
                                                                                                                                                                                                                                                                                 West African Coast                                                   3                   =
                                                           British Isles, N. Sea,             2               169                                                                                                                    region. Typhoon Damrey was a
                                                           Eng. Channel and
                                                           Bay of Biscay
                                                                                     Baltic
                                                                                                  Baltic                                                                                              6                              contributing factor to at least 6 losses.   Baltic                                                               2                  ↑2
                                                                                                                                                                      252
                                                                                    48                                                                                                                                                                                           Bay of Bengal                                                        2                  ↓1
                                                                                                                  17                                                                            Japan, Korea and
                                                                                     4                                             62                                                           North China                                                                      Other                                                               11                  ↓4

                                                       West Mediterranean                                                                                                                                                                                                        Total                                                               94                  ↓4
                                                                                                                                    6                                 30
                                                                                            East Mediterranean
                                                                                            and Black Sea
                                                                                                                                                     28                                                                                                                                                                                         Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                                                  Arabian Gulf                                                                                                                                                                                      Data Analysis & Graphic: Allianz Global Corporate & Specialty
                241                                                            51                                                 and approaches      2                             S. China, Indochina,
                                                                                                                         34                                                         Indonesia and Philippines

                                                                                3                                                                  Bay of
                                                                                                                                                   Bengal

                 11
                                                                       West African Coast
                                                                                                                       East African Coast
                                                                                                                                                                                                                                                                                                                                                          2008 - 2017 REVIEW
                                                                                                                                                                                                                                     All figures are based on reported total     TOTAL LOSSES BY TOP 10 REGIONS
           All other regions
                                                       5                                                                                                                                                                             losses as of February 5, 2018. 2017         FROM JANUARY 1, 2008 TO DECEMBER 31, 2017
                                               S. Atlantic and
                                                                                                                                                                                                                                     total losses may increase slightly as,
                                               East Coast S. America                                                   Total Losses by region: from Jan 1 2008 - Dec 31 2017
                                                                                                                                                                                                                                     based on previous years’ experience,        Region                                                        Total Loss
         1,129 total losses between                                                                                    Total Losses by region: from Jan 1 2017 - Dec 31 2017
                                                                                                                                                                                                                                     developments in losses lead to a            S. China, Indochina, Indonesia and Philippines                     252
         2008 and 2017
                                                                                                                                                                                                                                     number of total losses being                East Mediterranean and Black Sea                                   169
                                                                                                                                            Source: Lloyd’s List Intelligence Casualty Statistics                                    confirmed after year-end. The               Japan, Korea and North China                                       126
                                                                                                                                Data Analysis & Graphic: Allianz Global Corporate & Specialty
                                                                                                                                                                                                                                     average variance over the past nine         British Isles, N. Sea, Eng. Channel and Bay of Biscay               89
                                                                                                                                                                                                                                     years has been an increase of fewer         Arabian Gulf and approaches                                         62
                                                                                                                                                                                                                                     than three total losses per year.
                                                                                                                                                                                                                                                                                 West African Coast                                                  51
                                                                                                                                                                                                                                     However, in some years this varies,
                                                                                                                                                                                                                                                                                 West Mediterranean                                                  48
                                                                                                                                                                                                                                     with up to 13 additional losses being
                                                                                                                                                                                                                                                                                 East African Coast                                                  34
                                                                                                                                                                                                                                     notified for one year.
         TOTAL LOSSES BY YEAR                                                                                                               Shipping losses have declined by 38% over the
                                                                                                                                            past decade - from 151 in 2008 to 94 in 2017.
                                                                                                                                                                                                                                                                                 Russian Arctic and Bering Sea                                       29

         A DECLINING TREND                                                                                                                                                                                                                                                       Bay of Bengal                                                       28
                                                                                                                                                                                                                                                                                 Other                                                              241
                                                                                                                                                                                                                                                                                 Total                                                            1,129
         200

                                                                                                                                                                                                                                                                                                                                                Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                                                                                                                                                                                                                                                    Data Analysis & Graphic: Allianz Global Corporate & Specialty
                  151
         150
                                 130     127                                        125
                                                                                                              112                                                                                                                                                                2008 to 2017: The 2017 accident year (94) represents a significant
                                                    97                                                                                                      106
                                                                                                                                    89                                         98                     94                                                                         improvement on the rolling 10-year loss average (113) – down 17%.
         100
                                                                                                                                                                                                                                                                                 South China, Indochina, Indonesia and Philippines (252 total losses)
                                                                                                                                                                                                                                                                                 has been the top loss hotspot for a decade.
          50
                                                                                                                                                                                                                                                                                 There have been 1,129 total losses over the past decade.

                                                                                                                                                                                                                                                                                 Three shipping regions account for almost half (48%) of all losses
               2008            2009    2010     2011                        2012                           2013                2014                   2015              2016                    2017                                                                             over the past 10 years.
                                                                                                                                            Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                                                Data Analysis & Graphic: Allianz Global Corporate & Specialty

8                                                                                                                                                                                                                                                                                                                                                                                                  9
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
MAJOR LOSSES: 2017                                                                                                                                 LARGEST SHIPS LOST
                                                                                                                                                        STELLAR DAISY
                                                                                                                                                        March 31, 2017. Sank after taking on water following hull
     LARGEST SHIPS LOST                                                                                                                                 crack, approximately 3,700km off the coast of Uruguay.
                                                                                                                                                        22 crew missing.
     10 LARGEST VESSELS LOST FROM JANUARY 1, 2017 TO DECEMBER 31, 2017                                                                                  148,431 GT                                                   Half of the 10
     (showing approximate location of loss and type of vessel)                                                                                                                                                       largest ships
                                                                                                                                                        THERESA ARCTIC                                               reported as total
                                                                                                                                                                                                                     losses in 2017 were
                                                                                                                                                        June 20, 2017. Grounded on reefs off Kilifi, Kenya.
                                                                                                                                                                                                                     bulk carriers
                                                                                                                                                        Refloated. Sent for scrap.
                                                                                                                                                        43,414 GT

                                                                                                                                                        MELITE
                                                                                                                                                        July 26, 2017. Grounded at Pulau Laut, Indonesia.
                                                                                                                                                        Hull damage.
                                                                                                                                                        39,964 GT
                                                                 MED
                                                                 STAR              SAINT                                                                                                                             Fire was the cause
                                                                                  NEKTARIS                                                              EMERALD STAR                                                 of loss for three of
                                                                                                                                                        October 13, 2017. Sank off the coast of the Philippines.     the 10 largest
                                                                                                                                                        11 crew missing.                                             vessels lost
                                           MAERSK
                                          PEMBROKE                                                                                                      33,205 GT
                                                                                                          MELITE                  EMERALD
                                                                                                                                    STAR
                                                                                  NORM                                                                  MAERSK PEMBROKE
                                                                                                                                                        August 22, 2017. Fire broke out approximately 400km off
                                                                                                                                                        Isles of Scilly. Extinguished. Towed and sold for break-up
                                                                                                                                                 KEA    31,333 GT
                                                                                                                                               TRADER

           BULK                                                                                                                                         NORM                                                         The Stellar Daisy
           CHEMICAL/PRODUCT                                                                                                                             August 30, 2017. Engine malfunction near Rondo Island,       was the largest
                                                     STELLAR                                   MUTIARA
           CONTAINER                                  DAISY                                   SENTOSA 1                                                 Indonesia. Towed. Sent for demolition.                       vessel lost last year
                                                                        THERESA
           PASSENGER                                                     ARCTIC                                                                         25,190 GT

                                                                                                                                                        KEA TRADER
                                                                                               Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                   Data Analysis & Graphic: Allianz Global Corporate & Specialty
                                                                                                                                                        July 12, 2017. Ran aground on the Durand reefs off Mare,
                                                                                                                                                        New Caledonia. Damaged beyond repair.
                                                                                                                                                        25,145 GT
     “The frequency and severity of total losses declined over the past year, continuing
       the positive trend seen over the past decade. Claims have been relatively benign                                                                 MED STAR
                                                                                                                                                        June 15, 2017. Fire broke out off Rhodes, Greece.
       due to lower shipping activity in some maritime industry segments but reflecting                                                                 Extinguished. Towed and sent for break-up.
       mainly improved ship design, positive effects of risk management policy and                                                                      16,776 GT

       shipping safety regulation over time.                                                                                                            SAINT NEKTARIS
                                                                                                                                                        February 28, 2017. Engine failure at Varna, Bulgaria.
     “However, as the use of new technologies on board vessels grows, we expect to see                                                                 Towed to scrapyard pier.
       changes in both the risk profile of shipowners and the maritime loss environment                                                                 13,697 GT

       in future. Insurers will have to deal with a growing number of more technical                                                                    MUTIARA SENTOSA 1
       claims - such as cyber incidents or technological defects - in addition to                                                                       May 19, 2017. Fire broke out near Masalembu Island
                                                                                                                                                        in the Java Sea. 5 fatalities, several missing.
       traditional losses, such as collisions or groundings.”                                                                                           12,365 GT
                                                                                                     Baptiste Ossena
                                                               Global Product Leader, Hull and Marine Liabilities, AGCS

10                                                                                                                                                                                                                                           11
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                                                                                         Safety and Shipping Review 2018

TOTAL LOSSES BY TYPE OF VESSEL
2008 - 2017                                                                                                                      Cargo, fishery, bulk, passenger and tug
                                                                                                                                 are the vessel types that have seen the
                                                                                                                                                                               Cargo vessels accounted for over half
                                                                                                                                                                               of all total losses during 2017, with
                                                                                                                                                                               activity up year-on-year from 34 in
                                                                                                                                 most total losses over the past decade.       2016 to 53 in 2017 (an increase of 56%
                                                                                                                                                                               year-on-year).
                             TOP 5 VESSEL TYPES LOST                                                                                                                                                                                                                           2017 REVIEW
                                                                                                                                                                               Fishing, passenger and tug losses
                             80
                                                                                                                                                                               were down year-on-year. Bulk and         TOTAL LOSSES BY TYPE OF VESSEL
                                                                                                                                                                               tanker losses increased.                 JANUARY 1, 2017 TO DECEMBER 31, 2017
                             70
Cargo
                                                                                                                                                                                                                                                         Cargo Cargo                             53% 53
                             60                                                                                                                                                                                                                          FisheryFishery                           8% 8
                                                                                                                                                                                                                                                         Bulk                                     7%
                                                                                                                                                                                                                                                                Bulk                                  7
Fishery                      50                                                                                                                                                                                                                          Passenger                                5%
                                                                                                                                                                                                                                                                Passenger                             5
                                                                                                                                                                                                                                                         Tug                                      5%
                                                                                                                                                                                                                                                                Tug
                                                                                                                                                                                                                                                         Chemical/Product                         4% 5
                             40                                                                                                                                                                                                                                 Chemical/Product
                                                                                                                                                                                                                                                         Container                                3% 4
Bulk                                                                                                                                                                                                                                                     DredgerContainer                         3% 3
                             30                                                                                                                                                                                                                          Supply/Offshore
                                                                                                                                                                                                                                                                Dredger                           2% 3
                                                                                                                                                                                                                                                         TankerSupply/Offshore                    2% 2
                             20                                                                                                                                                                                                                          Barge Tanker                             1% 2
Passenger
                                                                                                                                                                                                                                                         Other Barge                              1% 1
                             10                                                                                                                                                                                                                                     Other                                 1
                                                                                                                                                                                                                                                                    Total                               94
Tug
                              2008       2009             2010          2011          2012          2013           2014              2015            2016            2017
                                                                                                                                                                                                                                                        Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                                                                                                                                                            Data Analysis & Graphic: Allianz Global Corporate & Specialty

                                       TOTAL LOSSES BY TYPE OF VESSEL: 2008-2017
                                                                                                                                                                                                                        Passenger ship total losses halved over the past
                                                                 2008     2009      2010     2011   2012   2013           2014       2015     2016      2017     TOTAL                                                  year to 5 losses, with activity located in the top
                                       Cargo                      59           52    61       38      62      41           31          40       34          53     471                                                  hotspots of the South China waters and the
                                       Fishery                    36           29    21       14      12     13            15          16       10           8     174                                                  Mediterranean. Fire was the cause of 3 losses.
                                       Bulk                        8           10    11       14      10     15             5          13        5           7      98

Cargo (42%) and fishing                Passenger                   5            5     3        7       7       8           10           7       11           5      68
vessels (15%) account for              Tug                         7            5     7        2       6       7            7           6        7           5       59
almost 60% of the 1,129
                                       Chemical/Product            7           9      6        2       8     10             2           3        7           4      58
total losses over the past
decade.                                Ro-ro                       8           6      1        3       5       2            5           6        9                  45
                                       Container                   2           4      5        3       6       4            4           5        4           3      40
                                       Other                       5           5      3        5       3       6            4           4        3           1      39
                                       Supply/Offshore             1           3      2        2       3       2            3           3        2           2      23
                                       Dredger                     5                  2        2       1                    1           1        1           3      16
                                       Tanker                      3           2      3        4       1                    1                                2      16
                                       Barge                       3                  1                        3            1                    3           1      12
                                       LPG                          1                 1        1       1                                         1                    5
                                       Unknown                     1                                           1                        2        1                    5
                                       Total                     151       130      127       97     125    112            89         106       98          94   1,129

                                                                                                                       Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                           Data Analysis & Graphic: Allianz Global Corporate & Specialty

12                                                                                                                                                                                                                                                                                                       13
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                                                                                                    Safety and Shipping Review 2018

TOTAL LOSSES BY CAUSE                                                                                                                                                          Foundered (sunk/submerged) has

2008 - 2017                                                                                                        Foundered, wrecked/stranded, fire/explosion, machinery
                                                                                                                   damage and collision are the most frequent causes of
                                                                                                                                                                               been the cause of over half of all total
                                                                                                                                                                               losses over the past decade. It
                                                                                                                                                                               accounted for an even higher share of
                                                                                                                   loss at sea over the past decade.                           all losses through 2017 (65%). Bad
                                                                                                                                                                               weather is often a factor.                                                                                 2017 REVIEW
                        TOP 5 CAUSES OF LOSS
                                                                                                                                                                                                                          CAUSES OF TOTAL LOSS
                          80
                                                                                                                                                                                                                          JANUARY 1, 2017 TO DECEMBER 31, 2017

                          70
                                                                                                                                                                                                                                                                    Cargo                                   53%
Foundered
                                                                                                                                                                                                                                                                    Fishery                                  8%
                          60                                                                                                                                                                                                                                        Bulk                                     7%
                                                                                                                                                                                                                                                                    Passenger                                5%
Wrecked/stranded          50                                                                                                                                                                                                                                        Tug Foundered                            5% 61
                                                                                                                                                                                                                                                                    Chemical/Product
                                                                                                                                                                                                                                                                           Wrecked/stranded                  4% 13
                                                                                                                                                                                                                                                                    Container
                                                                                                                                                                                                                                                                           Machinery damage/                 3%
                          40                                                                                                                                                                                                                                                                                     8
                                                                                                                                                                                                                                                                    Dredgerfailure                           3%
Fire/explosion                                                                                                                                                                                                                                                      Supply/Offshore
                                                                                                                                                                                                                                                                           Fire/explosion                    2% 6
                          30                                                                                                                                                                                                                                        TankerHull damage                        2% 5
                                                                                                                                                                                                                                                                    Barge Collision                          1% 1
                          20                                                                                                                                                                                                                                        Other Total                              1% 94
Machinery damage

                          10                                                                                                                                                                                                                                       Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                                                                                                                                                                       Data Analysis & Graphic: Allianz Global Corporate & Specialty

Collision
                           2008          2009               2010           2011           2012           2013          2014            2015              2016           2017
                                                                                                                                                                                                                          The number of total losses caused by fire and explosion
                                                                                                                                                                                                                          halved year-on-year to 6, although three of these
                                                                                                                                                                                                                          vessels were among the 10 largest lost.

                                       ALL CAUSES OF TOTAL LOSS: 2008 - 2017

                                                                             2008      2009      2010   2011    2012   2013     2014     2015      2016         2017   TOTAL
                                                                                                                                                                                                                          Don’t bother leaving port...
                                       Foundered (sunk, submerged)                73    61        64     45      55      70      50           66    48           61     593
                                       Wrecked/stranded (grounded)                34    23        24     29      27      21      18           20    20           13     229                                               The unluckiest ship of 2017 is a passenger ferry operating in
                                       Fire/explosion                             16    14        12      9      13      15       6            9    12            6     112                                               the East Mediterranean and Black Sea region. It was involved
                                       Machinery damage/failure                    8     7         4      6      15       2       5            2    10            8      67                                               in seven reported incidents in just 12 months, all caused by
                                       Collision (involving vessels)              13    13        10      3       5       2       2            7     1            1      57                                               machinery/damage failure.
                                       Hull damage (holed, cracks, etc.)           4     8         4      3       7       1       5            2     4            5      43
                                       Miscellaneous                               1     2         6      1       1       1       2                  1                   15
                                       Contact (e.g harbor wall)                   1     1                        2               1                                       5
                                       Missing/overdue                             1               1                                                 2                    4
                                       Piracy                                            1         2      1                                                               4
                                       Total                                  151      130       127     97     125     112      89       106       98           94    1,129

14                                                                                                                                                                                                                                                                                                                  15
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                                                                                                                                                                                                  Safety and Shipping Review 2018

         TOTAL LOSSES IN ALL REGIONS: 2017                                                                                                                                                                                                                                                                                                                                              2017 REVIEW
                                                                                                                                                                                                                                    2017: The East Mediterranean and                              ALL CASUALTIES INCLUDING TOTAL LOSSES: 2017
                                                                                                                                                                                                                                    Black Sea region has been the                                 TOP 10 REGIONS
         This map shows the approximate locations of all reported total losses during 2017.                                                                                                                                         location of the most shipping
                                                                                                                                                                                                                                    incidents (casualties) for the past six                       Region                                                        Casualty Total      Year-on-year change

                                                                                                                                                                                                                                    years. However, 2017 saw a significant                        East Mediterranean and Black Sea                                      464                  ↓ 101
                                                                                                                                                                                                                                    decline in activity – 18%.                                    British Isles, N. Sea, Eng. Channel and Bay of Biscay                 430                   ↑ 58
                                                                                                                                                                                                           1
                                                                                                                                                                                                                                                                                                  S. China, Indochina, Indonesia and Philippines                        263                   ↑ 18
                          1                                                                                                                                                                                    Russian Arctic and
       Canadian Arctic
       and Alaska                                                                                                     Iceland and                                                                              Bering Sea           Machinery damage is the top cause                             Baltic                                                                162                   ↑ 21
                                                                                                                 1    Northern Norway
                                                                                                                                                                                                                                    of incidents around the globe,                                Great Lakes                                                           145                   ↑ 30
                                                                                              8
                                                                                                                          2                                                                                                         accounting for 42% of casualties,
                                                                                                                                                                                                                                                                                                  Japan, Korea and North China                                          142                   ↑ 17
                                                                                                                 Baltic
                                                                                                                                                                                       30                         6                 followed by collision (13%) and
                                                                                                                                                                                                                                                                                                  West Mediterranean                                                    122                   ↑ 14
                                                                   British Isles, N. Sea,                                       17                                                                                                  wrecked/stranded (12%).
                                                                   Eng. Channel and
                                                                   Bay of Biscay
                                                                                                                                                                                                                                                                                                  North American West Coast                                             114                   ↓ 29
                                                                                                          4                                                                                               Japan, Korea and                                                                        Newfoundland                                                          110                   ↑ 40
                                                                                                                                                                                                          North China
                                                                                                                                                                                                                                    There were 2,712 casualties reported during 2017. These
                                                                                                                                                       6                                                                                                                                          Iceland and Northern Norway                                              101                ↑ 19
                                                                          West Mediterranean                                                                                                                                        figures include total losses of 94 during this period. This
                                    1                                                                                East Mediterranean                                                                                             total is up year-on-year, driven by a rise in machinery       Other                                                                 659
                                          Gulf of Mexico                                                             and Black Sea
                                                                                                                                                                                              S. China, Indochina,
                                                                                                                                                                                              Indonesia and Philippines             damage/failure incidents.                                     Total                                                               2,712
             2                                 2                                                                                                     Arabian Gulf
                                                    West Indies                                                                                      and approaches      2
                                                                                                                                                                                                                                                                                                                                                                 Source: Lloyd’s List Intelligence Casualty Statistics
        South Pacific                                                                              3                                             2                                                                                                                                                                                                   Data Analysis & Graphic: Allianz Global Corporate & Specialty
                                                                                                                                                                      Bay of
                                                                                                                                                                      Bengal
                                                                                                                                          East African Coast
                                                                                            West African Coast
                                   1

                                  South American
                                  West Coast                             5
                                                                                                                                                                                                                                                                                                                                                                           2008 - 2017 REVIEW
                        TOTAL

                    94                                            S. Atlantic and
                                                                  East Coast S. America                                                                                                                                             2008-2017: The East Mediterranean
                                                                                                                                                                                                                                    and Black Sea region is also the
                                                                                                                                                                                                                                                                                                  ALL CASUALTIES INCLUDING TOTAL LOSSES: 2008 - 2017
                                                                                                                                                                                                                                                                                                  TOP 10 REGIONS
                                                                                                                                                                                                                                    location with the most shipping
                                                                                                                                                                                                                                    incidents over the past decade (4,618).                       Region                                                           Total
                                                                                                                                                                                                                                                                                                  East Mediterranean and Black Sea                                 4,618
                                                                                                           Regional loss rankings                                                           Losses        % Share                   Of the 25,967 reported casualties                             British Isles, N. Sea, Eng. Channel and Bay of Biscay            4,086
                                                                                              1            South China, Indochina, Indonesia & Philippines                                  30             32%                      over the past decade, approximately                           S. China, Indochina, Indonesia and Philippines                   2,285
                                                                                              2            East Mediterranean and Black Sea                                                 17             18%                      a third were caused by machinery                              Baltic                                                           1,661
                                                                                              3            British Isles, North Sea, English Channel and Bay of Biscay                       8              9%                      damage (8,532), followed by collision                         Japan, Korea and North China                                     1,618
                                                                                              4            Arabian Gulf and approaches                                                       6              6%                      (3,787) and wrecked/stranded (3,740).
                                                                                                                                                                                                                                                                                                  Great Lakes                                                      1,274
                                                                                                           Japan, Korea and North China                                                      6              6%                                                                                    Iceland and Northern Norway                                      1,060
                                                                                                                                                                                                                                    These figures include total losses
                                                                                              6            South Atlantic and East Coast South America                                       5              5%                                                                                    West Mediterranean                                                 948
                                                                                                                                                                                                                                    of 1,129.
                                                                                              7            West Mediterranean                                                                4              4%                                                                                    North American West Coast                                          898
                                                                                              8            West African Coast                                                                3              3%                                                                                    West African Coast                                                 707
                                                                                              9            Baltic                                                                            2              2%                                                                                    Other                                                            6,812
                                                                                                           Bay of Bengal                                                                     2              2%                                                                                    Total                                                           25,967
                                                                                                           East African Coast                                                                2              2%
                                                                                                           South Pacific                                                                     2              2%                                                                                                                                                   Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                                                                                                                                                                                                                                                                     Data Analysis & Graphic: Allianz Global Corporate & Specialty
                                                                                                           West Indies                                                                       2              2%
                                                                                              14           Canadian Arctic and Alaska                                                        1              1%

                          21                                                                               Gulf of Mexico
                                                                                                           Iceland and Northern Norway
                                                                                                                                                                                             1
                                                                                                                                                                                             1
                                                                                                                                                                                                            1%
                                                                                                                                                                                                            1%
                                                                                                           Russian Arctic and Bering Sea                                                     1              1%
                                                                                                           South American West Coast                                                         1              1%

                    losses from
                   bad weather                                                                                                                              Source: Lloyd’s List Intelligence Casualty Statistics
                                                                                                                                                Data Analysis & Graphic: Allianz Global Corporate & Specialty

16                                                                                                                                                                                                                                                                                                                                                                                                                17
SAFETY AND SHIPPING REVIEW 2018 - An annual review of trends and developments in shipping losses and safety - Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty                                                                                                                                                                                                                                         Safety and Shipping Review 2018

CASUALTIES
                                                                                                                                                  “There is always the need to strike the right                “There are many good reasons why a captain
                                                                                                                                                  balance between safety and commercial                        may deviate from procedures in order to avoid
                                                                                                                                                  pressures. We all have to meet deadlines in our              an incident, but they may also do so to save
                                                                                                                                                  working lives, but commercial factors can lead               time. There is simple information available that
                                                                                                                                                  to undue pressures on board. We have to make                 can help us to understand these types of
                                                                                                                                                  sure this is understood and addressed and look               behavioral issues,” says Khanna.

BEHAVIORAL AND
                                                                                                                                                  more closely at human nature – not just human
                                                                                                                                                  error – both on board and onshore. We need to                Analyzing complex or unstructured data like
                                                                                                                                                  look at behavior modification and how to get                 voice recorders is still some way off. However,
                                                                                                                                                  crew and personnel to move away from                         simple data like weather, vessel speed and

CULTURAL RISK STILL
                                                                                                                                                  normalizing risk.”                                           location can be analyzed 24/7 and compared
                                                                                                                                                                                                               with benchmarks. For example, ships are
                                                                                                                                                  According to Khanna, the use of technology is                required to keep a minimum clearance between
                                                                                                                                                  vital in addressing this: “Technology can help               the keel and the sea bed, but an automatic alert

NEEDS ADDRESSING                                                                                                                                  better understand the behavior and decision-
                                                                                                                                                  making process of seafarers. By analyzing data
                                                                                                                                                  24/7 we can gain new insights from crew
                                                                                                                                                  behavior and near-misses that can help us to
                                                                                                                                                                                                               can be created if this is not maintained.

                                                                                                                                                                                                               “We have the data. How we make best use of it will
                                                                                                                                                                                                               be key,” says Khanna. “At the moment, it is down to
                                                                                                                                                  identify trends that are behind human error                  shipowners to use data to improve safety but there
Human error continues to be a major driver of shipping incidents                                                                                  being the main cause of accidents.”                          is no reason why the International Maritime
                                                                                                                                                                                                               Organization (IMO) or other industry associations
across the board. Better use of data and analytics could help                                                                                     Operators are beginning to use Voyage Data                   cannot take the lead and be more proactive.”
change behavior and significantly improve safety.                                                                                                 Recorder (VDR) analytics to improve safety and
                                                                                                                                                  risk behavior, but this has so far focused on                By using such technology, tragic losses could be
                                                                                                                                                  periodic analysis of data. The industry needs to             avoided in future. “Analysis of the decision-
                                                                                                                                                  go further, Khanna believes.                                 making process of the captain and officers can
                                                                                                                                                                                                               be the difference between a safe voyage and a
Despite decades of improvements in maritime             “Understanding human behavior and how it can                                              “It is no longer sufficient to analyze data just             disaster,” says Khanna.
safety regulation, training, technology and risk        lead to accidents is the missing link in the                                              once or twice a year. It should be done in ‘real
management, fatal accidents at sea persist. And         shipping industry today. We need to understand                                            time’. The industry needs to be proactive and not            However, greater deployment of technology
human behavior is often a factor, with many             how and why seafarers make decisions, especially                                          reactive. We have, in the past, learned from                 doesn’t mean becoming over-reliant, adds Chris
captains and crews operating in an increasingly         when this deviates from protocols and training.”                                          losses, but predictive analysis is important. This is        Turberville, Head of Marine Hull & Liabilities,
time- and resource-pressured industry. It is                                                                                                      possible with technology already available.”                 UK, AGCS.
estimated that 75% to 96% of marine accidents           Inadequate shore-side support and commercial
can be attributed to human error1 . Furthermore,        pressures have an important role to play in                                               Some operators are now starting to continually               “This brings its own risks. Continual training is
AGCS analysis of almost 15,000 marine liability         maritime safety and risk exposure, Khanna                                                 monitor bridge data recorders, looking to                    therefore imperative to ensure the right balance
insurance claims between 2011 and 2016 shows            believes. “These can push people to make                                                  identify any deviation from procedures, which                is achieved between technology and human
that human error is a primary factor in 75% of          decisions that lead to mistakes and accidents.                                            would raise an alarm to alert ship managers in               intervention.”
the value of all claims analyzed – equivalent to        At times, captains can be under commercial                                                real time. While not perfect, this gives operators
over $1.6bn of losses.                                  pressure to cut corners.”                                                                 far greater information on what is happening on
                                                                                                                                                  board and the decisions being made.                                                                                    Cargo
                                                                                                                                                                                                                                                             TOP CAUSES OF  LIABILITY LOSS: MARINE       53%
In recent years, a number of major casualties           Captains and crews are under increasing                                                                                                                                                              (BY VALUE OFFishery
                                                                                                                                                                                                                                                                          CLAIMS)                          8%
have been linked to human error, including the          pressure as shipping supply chains are                                                                                                                                                                           Bulk                              7%
sinking of the El Faro (see page 23) in late 2015       streamlined for greater efficiency. While vessels                                                                                                                                                                Passenger                         5%
and the grounding of the Costa Concordia in             once spent weeks in port, turn-around times for                                                                                                                                                                  Tug                               5%
2012. More recently, the sinking of the oil tanker      a cargo vessel are now measured in days. And                                                                                                                                                                       Human error
                                                                                                                                                                                                                                                                         Chemical/Product
                                                                                                                                                                                                                                                                                                       75%
                                                                                                                                                                                                                                                                                                           4%
Sanchi in January 2018 and the collisions of the        tight schedules can have a detrimental effect on                                                                                                                                                                   Accidental nature/damage
                                                                                                                                                                                                                                                                         Container                     18%
                                                                                                                                                                                                                                                                                                           3%
USS Fitzgerald and the USS John S. McCain               safety culture and decision-making.                                                                                                                                                                                Natural hazards              1% 3%
                                                                                                                                                                                                                                                                         Dredger
navy ships with commercial vessels in Asia
1996                                 Regina Maersk 6,400 teu

                                                                                                                                                                                                                 1997                                   Susan Maersk 8,000+ teu
Allianz Global Corporate & Specialty                                                                                                                                                                                                                      Safety and Shipping Review 2018
                                                                                                                                                                                                                 2002                                    Charlotte Maersk 8,890 teu

INDUSTRY’S STRUGGLE
                                                                                                                                                                                                                 2003                                       Anna Maersk 9,000+ teu

                                                                                                                                50 YEARS OF CONTAINER SHIP GROWTH
                                                                                                                                                                                                                 2005                           Container-carrying  capacity
                                                                                                                                                                                                                                                           Gjertrud Maersk     has teu
                                                                                                                                                                                                                                                                           10,000+
                                                                                                                                                                                                                                                increased by almost 1,500% since 1968

WITH CONTAINER SHIP
                                                                                                                                1968             Encounter Bay 1,530 teu                                         2006
                                                                                                                                1972                  Hamburg Express 2,950 teu                                                     Emma Maersk 11,000+ teu

                                                                                                                                1980                      Neptune Garnet 4,100 teu
                                                                                                                                                                                                                 2012

FIRES CONTINUES
                                                                                                                                1984                             American New York 4,600 teu                                        Marco Polo (CMA CGM) 16,000+ teu

                                                                                                                                1996                                     Regina Maersk 6,400 teu
                                                                                                                                                                                                                 2013
                                                                                                                                                                                                                                      Maersk Mc-Kinney Møller 18,270 teu
                                                                                                                                1997                                       Susan Maersk 8,000+ teu

                                                                                                                                2002                                       Charlotte Maersk 8,890 teu            2015
There are a number of issues driving                                                                                                                                                                                                        MSC Oscar 19,000+ teu

container ship fire exposures, including                                                                                        2003                                           Anna Maersk 9,000+ teu
                                                                                                                                                                                                                 2017
                                                                                                                                                                                                                                               OOCL Hong Kong 21,413 teu
the adequacy of fire-fighting capabilities,                                                                                     2005                                             Gjertrud Maersk 10,000+ teu

ongoing problems with misdeclaration of                                                                                         2006                                                                             2019
                                                                                                                                                                                                                                                        24,000 teu
cargo, salvage challenges and how long                                                                                                               Emma Maersk 11,000+ teu                                       ?

it can take to access ports of refuge.                                                                                          2012
                                                                                                                                Approximate ship capacity data: Container-transportation.com; AGCS                                                Source: Allianz Global Corporate & Specialty (AGCS)
                                                                                                                                                     Marco Polo (CMA CGM) 16,000+ teu

                                                                                                                                2013
                                                                                                                                                       Maersk Mc-Kinney Møller 18,270 teu

                                          Major fires on container vessels are       The incident is not the first major fire   can
                                                                                                                                 2015 make fighting fires challenging.
                                                                                                                                                       MSC Oscar 19,000+ teu
                                                                                                                                                                                 “Improved fire-fighting equipment on
                                          among the largest hazards for the          to involve a large container vessel in     The salvage of ULCS also represents              board ULCS and correct cargo
                                          global shipping industry and the           recent times. In 2017, the 13,800 teu      unchartered waters, as, due to their             declaration and storage should
                                          insurance industry’s fears of a major
                                          cargo ship fire was realized on March
                                                                                     MSC Daniela was on fire for more
                                                                                     than a week, off the coast of Sri
                                                                                                                                 2017
                                                                                                                                size, there are only a small  number
                                                                                                                                                         OOCL Hong         of teugreatly reduce the risk of fire,” says
                                                                                                                                                                     Kong 21,413
                                                                                                                                ports that can accommodate them and Volker Dierks, Head of Marine Hull
                                                                                                                                                                                                                                                                        12%
                                                                                                                                                                                                                                                                 of global container
                                          7, 2018, with a fire on board the ultra-   Lanka. There were a number of              provide safe refuge following a fire.”           Underwriting, AGCS Central &                                                     trade comprises
                                                                                                                                 2019
                                          large container ship (ULCS) Maersk         incidents during 2016 including the           ?                              24,000 teu     Eastern Europe.                                                                 dangerous goods3
                                          Honam. The 353-meter vessel caught         9,000 teu CCNI Arauco, which caught        Insurers such as Allianz and the
                                          fire southeast of Oman en route from       fire in Hamburg. In 2012, a fire           International Union of Marine                    “The issue of fires on ULCS has been
                                          Singapore to Suez. The fire was            onboard the German container ship          Insurance (IUMI) have previously                 raised by insurers but it appears to
                                          stopped at the superstructure and          the MSC Flaminia burned for six            warned of safety concerns and are                have fallen on deaf ears. As an insurer,
                                          crew members were evacuated.               weeks, resulting in the death of three     promoting improved ship design and               we would like to see an urgent review
                                          Tragically, five died.                     crew, the destruction of 70% of the        fire-fighting equipment to prevent and by the IMO and class societies, or at
                                                                                     cargo and the vessel being declared a      extinguish fires on ULCS.                        the very least a study into the
                                          The salvage operation was                  constructive total loss2 .                                                                  adequacy of current requirements
                                          challenging. It took five days to bring
                                          the fire under control, and a further      “ULCS’ can create a serious exposure
                                                                                                                                “While fire-fighting systems have
                                                                                                                                developed to ensure the crew are able
                                                                                                                                                                                 and controls,” says Khanna.                                                            65%
                                                                                                                                                                                                                                                               Increase in incorrectly
                    Photo: Adobe Stock    seven weeks before the vessel could        and risk for shipowners and insurers,”     to ensure their safety, and thereby              Bigger ULCS are on their way. More                                             declared dangerous
                                          be towed to a suitable port of refuge      says Khanna. Fire-fighting capabilities    complying with International                     than 20 ships in excess of 18,000 teu                                          goods during 20154
What’s in a teu?
Container ship capacity is measured in    – Jebel Ali in the UAE – for unloading.    on board have not necessarily kept         Convention for the Safety of Life At             are expected to enter into service
20-foot equivalent units (teu). Typical   It was carrying 7,860 containers,          pace with the increasing vessel sizes.     Sea (SOLAS) requirements, fire-                  during 2018, followed by another 30 in
loads are a mix of 20-foot and 40-foot    corresponding to 12,416 teu, when the      ULCS’ provide economies of scale for       fighting capabilities on board have              2019. Meanwhile, there have been at
containers. The world’s largest
container ship – the 21,000+ teu OOCL     incident occurred. At the time of          shipping companies but the industry        not kept up with the upsizing of                 least 20 orders for 22,000 teu vessels
Hong Kong1 – has the capacity to carry    writing, the cause of the fire is          needs to make sure that risk               container vessels, to ensure the                 from companies such as the
around 21,000 containers, which can       unknown, but the ULCS is less than a       management and safety standards            preservation of the vessel itself,” says         Mediterranean Shipping Company
be laden with anything from cars to
electrical goods to shoes. And 22,000+    year old and was fitted with up-to-        are brought up to speed.                   Turberville. “This is one of the most            and CMA CGM. And 24,000 teu ships
teu vessels are coming soon.              date fire-fighting equipment. The                                                     significant safety issues on board this          have been predicted to quickly follow.
                                          incident is expected to be one of the
                                          largest general average claims on
                                                                                     “Despite International Maritime
                                                                                     Organization (IMO) requirements that
                                                                                                                                type of vessel and there needs to be
                                                                                                                                considerable development to protect
                                                                                                                                                                                                                                                                     $500m
                                                                                                                                                                                                                                                                Annual supply chain
                                          record, (in the hundreds of millions of    shippers declare container contents,       container ships in the event of fire.”                                                                                           losses related to
                                          dollars). A total loss could have seen     there are still many cases where cargo                                                                                                                                      packing failures3
                                          damages in excess of $1 billion.           is not being properly declared. This
                                                                                                                                1    OCL, OOCL Japan Named. Sister Vessel OOCL Hong Kong Achieved A Guinness World Records Title
                                                                                                                                    O
                                                                                                                                2   International Union of Marine Insurance
                                                                                                                                3    International Cargo Handling Coordination Association
                                                                                                                                4     Container Management, Hapag-Lloyd Warns of 65% Increase in Mislabelling of Dangerous Goods
20                                                                                                                                                                                                                                                                                                21
Allianz Global Corporate & Specialty                                                                                                                                                                                                                    Safety and Shipping Review 2018

SAFETY                                                                                         First steps taken to address
                                                                                               autonomous shipping:
                                                                                               The IMO’s senior technical body, the
                                                                                                                                                     length and over (with a view to
                                                                                                                                                     alignment with the 2012 Cape Town
                                                                                                                                                     Agreement) and pleasure yachts
                                                                                                                                                                                                                         NTSB publishes El Faro report

                                                                                                                                                                                                                         On October 1, 2015, the US cargo ship El Faro sailed

RESPONSES
                                                                                               Maritime Safety Committee (MSC),                      above 300 gross tonnage not                                         directly into Hurricane Joaquin, sinking with the loss of 33
                                                                                               announced at its 99th session meeting                 engaged in trade.                                                   crew – the deadliest US maritime disaster for over 30 years.
                                                                                               in May 2018 that it will start looking at
                                                                                               how safe, secure and environmentally-                 New ships’ routing measures in                                      Published in February 2018, the final report into the

ROUND-UP
                                                                                               sound autonomous ship operations                      Bering Sea adopted:                                                 sinking by the US National Transportation Safety Board
                                                                                               (see page 40) may be addressed in                     The MSC has also adopted new and                                    (NTSB) outlines the factors which contributed to the
                                                                                               IMO conventions. The committee                        amended ships’ routing measures in                                  incident – weather, machinery failure and flooding of the
                                                                                               endorsed a framework for a                            the Bering Sea and Bering Strait,                                   cargo hold, as well as the lack of a damage control plan
                                                                                               regulatory scoping exercise.                          aimed at reducing the risks of                                      and inadequate safety equipment.
The United Nations’ global shipping                                                                                                                  incidents – the first measures adopted
                                                                                               Updating the International Maritime                   by IMO for the Arctic region where the                              The NTSB2 concluded that the probable cause of the
regulator, the International Maritime                                                          Dangerous Goods (IMDG) Code:                          Polar Code applies. It accepted a                                   sinking was the captain’s insufficient action to avoid the
Organization (IMO) has continued its                                                           The IMO has adopted amendments to                     proposal to create six two-way routes                               hurricane, failure to use the most up-to-date weather
                                                                                               update the IMDG Code (Amendment                       for vessels traveling between the                                   information, and the late decision to muster the crew. It
commitment to safety improvements                                                              39-18) in line with the latest United                 Arctic and Pacific oceans. In addition,                             also drew attention to ineffective bridge resource
in the sector with a number of recent                                                          Nations Recommendations on the                        for ecological reasons, protective                                  management, inadequate company oversight, and the
                                                                                               Transport of Dangerous Goods, which                   zones will be established around                                    safety management system.
initiatives1.                                                                                  sets the basic requirements for all                   Nunivak Island, St Lawrence Island
                                                                                               transport modes. The amendments                       and King Island.                                                    In response to the loss, there are plans to introduce a new
                                                                                               include new provisions regarding IMO                                                                                      bill. The Maritime Safety Act of 2018 includes provisions
                                                                                               type 9 tanks, a set of new                            Seating in survival crafts:                                         to ensure proper vessel inspections are undertaken and
                                                                                               abbreviations for segregation groups                  The MSC has also considered the                                     that vessels have necessary safety equipment and timely
                                            Photo: Rolls-Royce Ship Intelligence, flickr.com
                                                                                               and new special provisions for                        issue of personal mobility and                                      weather charts.
                                                                                               carriage of lithium batteries and for                 practical seating capacity in survival
                                                                                               carriage of vehicles powered by                       crafts. The way they are designed
                                                                                               flammable liquid or gas. The                          today leaves seafarers and
                                                                                               amendments are expected to enter                      passengers with very little space, so                               Sanchi oil tanker collision
                                                                                               into force on January 1, 2020.                        they cannot move around the craft for
                                                                                                                                                     sanitary or medical reasons, for                                    When the Panamanian-flagged Suez max crude oil tanker
                                                                                               The second phase of the Polar Code:                   example. The MSC agreed there is an                                 Sanchi collided with the Hong Kong-flagged cargo ship
                                                                                               The International Code for Ships                      urgent need to implement a minimum                                  CF Crystal in January 2018 it led to one of the worst tanker
                                                                                               Operating in Polar Waters (Polar                      standard for personal mobility and                                  incidents for several decades.
                                                                                               Code) entered into force in January                   seating space in survival crafts by
                                                                                               2017 under both SOLAS and The                         developing new regulation.                                          After burning for more than one week, the Sanchi
                                                                                               International Convention for the                                                                                          eventually sank off the coast of Shanghai, China. The
                                                                                               Prevention of Pollution from Ships                    Interim guidelines for the                                          entire crew of 32 died in the incident, which was also the
                                                                                               (MARPOL) treaties. It provides                        harmonized display of navigation                                    worst tanker spill in 35 years, according to the International
                                                                                               additional requirements for ships                     information received via                                            Tanker Owners Pollution Federation.
                                                                                               trading in Arctic waters and the                      communication equipment:
                                                                                               Antarctic area. The MSC is considering                IMO interim guidelines aim to ensure                                At the time of the collision, the Iranian-owned Sanchi was
                                                                                               how the safety measures of the Polar                  that information is displayed in an                                 carrying 1 million barrels of condensate – a highly
                                                                                               Code might be applied in the future to                efficient, reliable and consistent                                  flammable, ultra-light crude oil – from Iran to South Korea.
                                                                                               non-SOLAS vessels operating in polar                  format, in a manner that is easily                                  The nature of condensate limited the extent of pollution
                                                                                               waters and has agreed that the                        interpreted for the seafarer to support                             and environmental impact.
                                                                                               development of such safety measures                   decision-making.
                                                                                               should focus on fishing vessels,                                                                                          The cause of the collision is not known at time of writing,
                                                                                               pleasure yachts above 300 gross                                                                                           although human error is likely to have played a part. China
                                                                                               tonnage not engaged in trade and                                                                                          has opened an investigation into the collision and the
                                                                                               cargo ships below 500 gross tonnage                                                                                       Sanchi’s black box, containing the ship’s sailing data and a
                                                                                               down to 300 gross tonnage. It will                                                                                        voice recorder, was recovered before the vessel sank.
                                                                                               develop recommendatory safety
                                                                                               measures for the following types of                                                                                       Tanker safety has improved significantly since a number of
                                                                                               vessels when operating in polar                                                                                           major pollution incidents led to improved ship design and
                                                                                               waters: fishing vessels of 24m in                                                                                         improvements in risk management in the 1990s. However,
                                                                                                                                                                                                                         the large loss of life on board the Sanchi is likely to focus
The IMO has taken its first steps towards
addressing autonomous shipping.                                                                                                                      2 T he National Transportation Safety Board, Sinking of US Cargo   attention on the adequacy of fire protection for crew.
                                                                                               1 M
                                                                                                  aritime Safety Committee, 99th session, May 16-     Vessel SS El Faro Atlantic Ocean, Northeast of Acklins and
                                                                                                 25, 2018, International Maritime Organization         Crooked Island, Bahamas, October 1, 2015
22                                                                                                                                                                                                                                                                                    23
Allianz Global Corporate & Specialty                                                                                                             Safety and Shipping Review 2018

                                                                                                                      The three powerful storms which struck the
                                                                                                                      Caribbean and southern United States in 2017

           CLIMATE
                                                                                                                      provide a clear reminder to the shipping sector
                                                                                                                      that traditional maritime risks should not be
                                                                                                                      overlooked.

                                                                                                                      “For whatever reason, we are witnessing a rise in
                                                                                                                      the frequency and severity of extreme weather
                                                                                                                      events, while rising sea levels will mean an
                                                                                                                      increased risk of flooding and storm surge for

           RECORD-BREAKING
                                                                                                                      coastal areas and ports,” explains Kinsey.

                                                                                                                      In September 2017, Hurricane Irma caused
                                                                                                                      major disruption to the fuel market in Florida,

           HURRICANE SEASON
                                                                                                                      first by creating increased demand and then by
                                                                                                                      disrupting the supply chain. As people fled the
                                                                                                                      approaching hurricane, it generated a spike in
                                                                                                                      demand for fuel, adding to logistical pressures

           BRINGS SUPPLY
                                                                                                                      already created by Hurricane Harvey, which
                                                                                                                      struck Texas just over a week earlier. Between
                                                                                                                      August 21 and August 28, 2017 when Harvey
                                                                                                                      made landfall in Texas, retail gasoline prices in

           CHAIN PRESSURE
                                                                                                                      Florida and Miami increased 10 cents per gallon
                                                                                                                      and 5 cents per gallon1 respectively.

                                                                                                                      “The events of 2017 have shown that shippers
                                                                                                                      need to look at the seasonal impact of
                                                                                                                      hurricanes across a region, and not just one
                                                                                                                      specific event. Storms can build on top of each
            The impact of Harvey,                                                                                     other and as one port recovers from a storm it
                                                                                                                      can impact the ability of another port to
            Irma and Maria (HIM) in                                                                                   prepare for the next one,” says Kinsey.

            particular highlights the                                                                                 Harvey, Irma and Maria affected parts of Texas,
                                                                                                                      Louisiana and Florida in the space of just one
            fragile nature of just-in-                                                                                month. As each storm struck, it caused freight to
                                                                                                                      be redirected to other ports, with a knock-on
            time supply lines and                                                                                     impact for rail and truck shipments across the
                                                                                                                      region. Major ports along the Gulf Coast and
            the need to consider                                                                                      Caribbean, including Houston and Miami, were
                                                                                                                      closed for up to a week after the hurricanes,
            multiple events in                                                                                        causing delays in cargo shipments and cruise
                                                                                                                      ship operations.
            contingency planning.
                                                                                                                      “When drawing up contingency plans, shippers
                                                                                                                      need to consider scenarios where multiple
                                                                                                                      locations are impacted. Look at the whole
                                                                                                                      season and not just what happens if a storm hits
                                                                                                                      a particular location,” advises Kinsey.

                                                                                               Photo: iStock
                                         In addition to causing significant damage across southern US and the   1 U
                                                                                                                   S Energy Information Administration Weekly Survey of Gasoline Prices
                                              Caribbean, 2017’s hurricanes caused delays in cargo shipments.
24                                                                                                                                                                                    25
Allianz Global Corporate & Specialty                                                                                                                                                                                                                                                 Safety and Shipping Review 2018

                                                                                                                                                                                   SUPERSTORMS
                                                                                                                                                                                   POSE FUTURE
                                                                                                                                                                                   CHALLENGES
                                                                                                                                                                                   FOR YACHT
                                                                                                                                                                                   MARKET
                                                                                                                                                                                    Hurricanes Harvey, Irma and Maria
                                                                                                                                                                                    also damaged or destroyed
                                                                                                                                                                                    thousands of pleasure craft in the
                                                                                                                                                                                    Caribbean and US, raising
                                                                                                                                                                                    questions over the insurability of
                                                                                                                                                                                    vessels remaining in the region
                                                                                                                                                                                    during the season.

Photo: iStock
The 2017 hurricane season resulted in a large number of pleasure craft insurance claims.

According to the Boat Owners                               “The yacht insurance market saw          insurers have quit the market due to
Association of The United States, some                     large losses from the 2017 hurricane     losses and many are now considering                                                                       TOP 5 RISKS IN MARINE & SHIPPING
63,000 boats were damaged by                               season. While larger permanently-        under what circumstances they can                                                                         Figures represent how often a risk was selected as a percentage of all
Harvey and Irma in the US alone, at a                      manned vessels are able to sail away     continue to cover yachts in hurricane-                                                                    responses for that industry sector.
cost of an estimated $655 million1 . For                   from storms, many smaller pleasure       exposed regions, especially during the                                                                    Responses: 104
months after the storms, salvage teams                     craft were not as well-informed or       actual hurricane season,” says Dierks.
                                                                                                                                                                                                              Figures don’t add up to 100% as up to three risks could be selected.
recovered large and small craft that                       alert to the hurricane activity,” says
either sunk or were run-aground on                         Dierks. “Many remained in the area
beaches, coral reefs and mangroves                         and were not adequately-secured.”                                                                                                                   Rank                                                                    Percentage   2017 rank       Trend

– 1,500 vessels were salvaged in                                                                                                                                                                               1 Natural catastrophes (e.g. storm, flood, earthquake)                     34%        4 (23%)          ↑
Florida after Hurricane Irma alone                         Following the storms, the insurance                                                                                                                 2 Business interruption (incl. supply chain disruption)                    31%        2 (28%)           –
and 459 boats were recovered in the                        market is reconsidering the adequacy                                                                                                                3 Cyber incidents (e.g. cyber crime, IT failure, data breaches) NEW        31%           –             ↑
United States Virgin Islands.                              of premiums for pleasure craft                                                                                                                      4 Theft, fraud, corruption                                                 27%        2 (28%)          ↓
                                                           exposed to hurricanes, as well as how                                                                                                               5 Fire, explosion NEW                                                      25%           –             ↑
The series of storms have prompted                         the risk can be covered in the future.
debate within the marine insurance                                                                                                                                                                                                                                                          Source: Allianz Risk Barometer 2018

market about the insurability of                           “The 2017 hurricane season was a
pleasure craft in the region during                        wake-up call and resulted in a large
hurricane season.                                          number of pleasure craft claims. Some

                                                                                                                                             1 B
                                                                                                                                                oatUS, Harvey and Irma Damage Or Destroy More Than 63,000 Recreational Boats
26                                                                                                                                                                                                                                                                                                                          27
Allianz Global Corporate & Specialty                                                                                                                                                                                                                                     Safety and Shipping Review 2018

                                                                                                                                 ARCTIC CIRCLE WATERS

           FAST-CHANGING ARCTIC
                                                                                                                                 CAUSES OF CASUALTIES (SHIPPING INCIDENTS) 2008-2017

                                                                                                                                                                     2008    2009     2010       2011   2012   2013   2014   2015    2016       2017      TOTAL
                                                                                                                                  Machinery damage/failure            13       14      16         12     13     20     27     46      32         46          239

           AND NORTH ATLANTIC
                                                                                                                                  Wrecked/stranded                    11       14       9         9      8      10     14     6       11          9          101
                                                                                                                                  Miscellaneous                        1       4        4         2      6      5      5      6       4           6          43
                                                                                                                                  Collision                            1       4       10         4      4      2             3       2           4          34

           CONDITIONS BRING
                                                                                                                                  Fire/explosion                       1       2        6         6      1      4      2      4       1           3          30
                                                                                                                                  Contact (e.g. harbor wall)           1       2        4         1      3      6      4      5        1          1          28
                                                                                                                                  Hull damage                          1       6        2         2      1      2      1      1        2          2          20

           ROUTE RISKS
                                                                                                                                  Foundered                            1       2                  3      1      1      2               1                     11
                                                                                                                                  Labor dispute                                                                                        1                      1
                                                                                                                                  Total                               30       48      51         39     37     50     55     71      55         71          507

            Climate change is impacting ice hazards for shipping,                                                                Including 16 total losses
                                                                                                                                 Source: Lloyd’s List Intelligence Casualty Statistics                                              ARCTIC CIRCLE WATERS
                                                                                                                                                                                                                                    CAUSES OF CASUALTIES (SHIPPING INCIDENTS) 2017
            freeing up new trade routes in some areas, while                                                                     Data Analysis & Graphic: Allianz Global Corporate & Specialty

            increasing the risk of ice in others.

There was another milestone for Arctic shipping in early         remote hostile environment like the Arctic could prove          There is also a threat of ice hazards in more southerly
2018 when a specially-designed LNG tanker became the             challenging, and would be a long way away from salvage          shipping routes from icebergs. At the end of 2017, the US
first commercial ship to travel the Northern Sea Route in        teams,” says Dierks.                                            Coast Guard’s International Ice Patrol warned shipping
winter and without the assistance of an ice breaker. The                                                                         companies that an unusual number of icebergs were
Eduard Toll successfully journeyed from South Korea to           In February 2018, China announced plans for an “Arctic          drifting into shipping lanes. It found that over 1,000
Montoir, France via northern Russia, shaving around 3,000        Silk Road” by developing shipping lanes opened up by            icebergs had drifted into North Atlantic shipping lanes in
nautical miles off the traditional transit via the Suez Canal.   global warming. China said it would encourage                   2017, marking it the fourth consecutive season where the
                                                                 infrastructure development and conduct commercial trial         danger has been classified as “extreme”. 4
It followed the transit in August 2017 of another specially-     voyages in Arctic waters, with plans to build its first Polar
designed tanker, the Christophe de Margerie, which               expedition cruise ship by 20193 .                               “Such extraordinary conditions require complementary
became the first merchant ship to sail across the Arctic                                                                         training for crew, as well as additional routing support,”
Ocean without the aid of an icebreaker. It took just 19 days     At the beginning of 2017 the International Code of Safety       says Arnaud Gibrais, a Senior Marine Risk Consultant at
to reach South Korea from Norway, almost a week faster           for Ships Operating in Polar Waters (Polar Code) came           AGCS, based in Paris.                                                                                      Machinery damage/failure                                     46

than going via the Mediterranean.                                into force. The code introduces mandatory requirements                                                                                                                     Wrecked/stranded                                                 9
                                                                 for shipping in Polar regions, principally relating to ice      “A melting Arctic could lead to an increase in icebergs                                                    Miscellaneous                                                    6
Arctic ice has been thinning and retreating over the past        navigation, manning and ship design.                            affecting trade routes, although this has not yet been a                                                   Collision                                                        4
40 years, bringing new opportunities for shipping, but also                                                                      problem for the major north, south, east or west shipping
                                                                                                                                                                                                                                            Fire/explosion                                                   3
serious environmental concerns. Research shows the mean          “The Polar Code continues to be refined,” says Kinsey.          lanes. But this might become more of an issue in the
center of shipping activity moved 300km north and east—          “Arctic conditions are fast-changing and the normal             future,” adds Dierks.                                                                                      Hull damage                                                      2

closer to the North Pole—over a seven-year span1 .               International Maritime Organization review updates are                                                                                                                     Contact (e.g. harbor wall)                                       1
                                                                 too slow. For these new shipping routes we need to find         Climate researchers at the University of Manitoba,                                                         Casualties                                                   71
As a result, a growing number of vessels are sailing in          faster ways to disseminate information and the lessons of       Winnipeg have also claimed more Arctic sea ice is entering
Arctic waters. For example, cargo volumes on the Northern        successful transits.”                                           the North Atlantic Ocean, increasing the level of hazard for
                                                                                                                                                                                                                                    Source: Lloyd’s List Intelligence Casualty Statistics
Sea Route (NSR) increased by nearly 40% to 9.7 million                                                                           ships in late spring. Arctic sea ice blocked normally open
tons in 2017, the biggest annual volume ever, according to       Ships operating in Arctic waters are bound by the Polar         areas of ocean around Newfoundland in May and June                                                 Data Analysis & Graphic: Allianz Global Corporate & Specialty
the Russian Federal Agency for Maritime and River                Code, but ice is also posing a significant hazard for           2017. The ice cover trapped many ships and even sunk
Transport 2 . This is expected to rise to 40 million tons by     shipping elsewhere.                                             some boats when it punctured hulls, the research found 5 .                                         The analysis shows there were 71 reported shipping incidents in Arctic
                                                                                                                                                                                                                                    Circle waters during 2017, including one total loss – up 29% year-on-
2022, reflecting the development of oil and gas fields, and                                                                                                                                                                         year. Machinery damage/failure was behind over 60% of incidents,
70 to 80 million tons by 2030.                                   Outside the Arctic and Antarctic, a number of so-called                                                                                                            driven by the harsh operating environment. Fishing vessels were
                                                                 conditional areas also carry a higher risk of ice, including                                                                                                       involved in almost 40% of incidents.
                                                                                                                                 1 N
                                                                                                                                    ASA Earth Observatory
“Climate change could open up new shipping routes in the         the Gulf of St. Lawrence, Alaska, Sakhalin, Russia and the      2 S
                                                                                                                                    afety4Sea.com, Record cargo volumes shipped on Northern Sea Route in                           Machinery damage/failure is also the top cause of shipping incidents
Arctic, such as the North West Passage, and routes across        Baltic Sea. Trading in these areas has also been increasing       2017, January 2018                                                                               in this region over the past decade, accounting for 47% of casualties.
Russia and Canada. These routes will have advantages as          with global warming.                                            3 R
                                                                                                                                    euters, China building up Arctic Cruise Ship For Polar Silk Road, March 2018
                                                                                                                                                                                                                                    Wrecked/ stranded is the second major cause, accounting for 20%
                                                                                                                                 4 G
                                                                                                                                    Captain, Ice Patrol, More Than 1,000 Icebergs Drifted Into N.Atlantic Shipping
well as disadvantages. For example, a collision in a                                                                               Lanes in 2017, December 2017
                                                                                                                                                                                                                                    of incidents.
                                                                                                                                 5 U
                                                                                                                                    niversity of Manitoba, Arctic Sea Ice Becoming A Spring Hazard For North
                                                                                                                                   Atlantic Ships
28                                                                                                                                                                                                                                                                                                       29
You can also read