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Monday, 31 March 2014 00:00 - - {{hitsCtrl.values.hits}}
Losses declined by 20% from 2012 when there were 117 reported losses. The 2013 accident year also represents a significant improvement on the previous 10-year loss average with total worldwide shipping losses declining 45% since 2003.
“More than 90% of global trade is carried by sea so the safety of international shipping vessels and routes is critical to the health of the global economy,” said Tim Donney, Global Head of Marine Risk Consulting.
“While the long-term downward trend in shipping losses is encouraging, there is more work to be done to improve the overall safety of these vessels as well as their cargo, crew and passengers, especially in Asian waters. As an insurer we are always concerned about recognised issues such as training and safety management, - human error is not something we can ignore and lack of skilled workforce is still an issue – but we also need to be alert for new risks as the industry continues to develop.”
Asia saw highest number of marine losses and continues to be an area of focus
According to the report, more than a third of 2013’s total losses were concentrated in two maritime regions. As in 2012, the South China, Indo China, Indonesia and the Philippines region saw the highest number of losses (18 ships), closely followed by the seas around Japan, Korea and North China (17 ships).
More than two years after the Costa Concordia disaster, improving passenger ship safety continues to be a priority, with 2014 likely to see the 100th loss of a passenger vessel since 2002. Asia remains a hotspot for passenger shipping losses, especially for smaller passenger vessels and ferries as demonstrated by the sinking of the ferry St. Thomas of Aquinas as a result of a collision with another vessel off Cebu in the Philippines in August 2013, with the loss of at least 116 lives.
“We have to ask how some Asian ship operators measure safety and quality, particularly when speaking about domestic trade shipping in South East Asia,” said Captain Jarek Klimczak, Senior Marine Risk Consultant at AGCS. “The understanding of quality and standards can sometimes appear 50 years behind Europe – maybe even more.”
Around the world, more than a third of the vessels lost were cargo ships with fishery and bulk carriers the only other type of vessels to record double-digit losses. The total loss of two bulk carriers in Asian waters in 2013, Harita Bauxite and Trans Summer, highlighted the importance of proper cargo handling and stowage of bulk cargoes. AGCS experts believe high moisture content and subsequent liquidisation, leading to free flowing instabilisation of the cargo to be the primary cause of the accidents.
The most common cause of losses in the past year was foundering (sinking or submerging), often driven by heavy weather, accounting for almost 75% of all losses, which was a significant increase from both 2012 (47%) and the previous 10-year average (44%).
For the first time the report includes not only total losses but also the total number of shipping casualties by region. The East Mediterranean and Black Sea region is shown to be a casualty hotspot, responsible for 464 casualties (18%) out of a worldwide total of 2,596 during 2013, including the year’s oldest ship to be a total loss: the 108 year old Hantallar which grounded off Tekirdag, Turkey. This region combines busy shipping routes and a reputation for weaker safety management practices with a regional fleet that has a higher proportion of lower quality older vessels.
The report also shows that over the past decade the British Isles have been the location of the most casualties, while January is the worst month for all casualties (including total losses) in the Northern Hemisphere. In the Southern Hemisphere it is July.
Piracy attacks still a concern – different models pose new challenges
In 2013, piracy attacks declined 11% to 264 reported incidents worldwide according to International Maritime Bureau statistics - 106 of these occurred in Indonesia, which has seen a 700% increase in attacks since 2009. Most of these attacks remain low level opportunistic thefts carried 
out by small bands of individuals but one third of incidents in these waters were reported in the last quarter of 2013, and there is potential for such attacks to escalate into a more organised piracy model unless they are controlled.
An emerging piracy hotspot with more organised crime is the Gulf of Guinea with 48 incidents in 2013, accounting for 18% of all attacks worldwide. Piracy attacks in Somalia have declined dramatically with only seven incidents in 2013 compared with 160 attacks in 2011. The report suggests the piracy model could be broken in Somalia in a couple of years if naval patrols continue.
Emerging risks
An increasingly difficult operating climate for ship operators has forced a number of innovations, including larger ship sizes to capitalise on economies of scale, the use of alternative fuels and changes in ship designs. At the same time, more economical trading routes are fast appearing in Arctic regions during the summer months, but these present their own set of challenges. Emerging risks identified in the 2014 report include:
Vessel size
Last year marked the arrival of the largest container vessel on record, over 400 meters long and boasting capacity in excess of 18,000 teu. This trend is set to continue. AGCS estimates capacity grows by around 30 per cent every four to five years, meaning the arrival of 24,000 teu carriers can be anticipated around 2018.
“The claims arising out of maritime emergencies of these ‘mega ships’ can be huge. For example, just think of the business interruption of ports and terminals if an accident was to block the entrance,” said Dr. Sven Gerhard, Global Product Leader, Hull & Marine Liabilities, AGCS.
“In addition, salvage might require unprecedented efforts and complex operations – in some cases it may take many months, or possibly a year or longer, to remove all the containers, particularly if the accident were to happen in a remote location. The large loss potential has increased for events which are not extraordinary on these big ships. And these are unchartered waters for salvors.”
Rise of LNG-fuelled vessels
Use of Liquefied Natural Gas (LNG) to power ships is expected to dramatically increase by 2020. There are safety concerns however, as the industry will see the rise of ports that have never previously handled LNG providing bunkering stations on dock. “We need to ask what risks LNG-fuelled ships will present to the industry. The concern is storing the LNG as fuel and handling it onboard. LNG expertise is not easily available – there needs to be a change in mindset and training,” said Capt. Rahul Khanna, Senior Risk Consultant, Marine, AGCS.
Arctic trading routes
Shipping casualties in Arctic Circle waters have increased to an average of 45 per year during 2009-2013 from only seven during 2002-2007. Damage to machinery caused a third of these incidents, higher than the average elsewhere, reflecting the harsher operating environment.
