- Disruption to shipping has persisted longer than expected and is likely to remain for the foreseeable future.
- Allianz Commercial marine experts look at some of the major consequences, including the effect on crew, the prospect of more cyber-attacks and drone strikes, the threat the rise of the ‘shadow fleet’ poses to vessels and the environment, as well as the multi-faceted impacts of rerouting.
A report from global insurer Allianz Commercial highlighted the looming safety threats to the global shipping sector this year, reports Engine.
The international maritime industry has been “increasingly subject” to growing volatility because of geopolitical conflicts, unethical practices, the threat due to the rise of the shadow fleet, and the impacts of vessel rerouting, Allianz Commercial said in its analysis.
“Disruption to shipping has persisted longer than expected and is likely to remain for the foreseeable future,” the insurers said.
Red Sea attacks and proxy wars increase vulnerability
Between 19 November 2023, and April of this year, merchant vessels transiting important chokepoints for commercial shipping in the Red Sea have been subject to over 50 attacks by Yemen-based Houthi militants, the insurance company argued.
These unprecedented incidents led to the first seizure of a vessel and tragic fatal attacks on seafarers.
“Even if a political solution is reached, we may see attacks continue as there is now an opportunity for those wishing to disrupt shipping in the Red Sea and beyond,” said Captain Rahul Khanna, global head of marine risk consulting at Allianz Commercial.
Rerouting costs raises inflation risks
Due to the ongoing attacks in the Red Sea, shipowners have been avoiding transits through the Suez Canal and instead choosing longer alternative routes, such as around the Cape of Good Hope. This shift has added an extra 3,000 nautical miles and 10 days to each voyage between Asia and Europe.
The additional cost to cover this extra voyage time has put pressure on global supply chains, the report said.
“Businesses that source goods and components from factories in China and South-East Asia have faced delays and higher costs from longer transit times,” the insurance company said.
Growing shadow fleet
Allianz Commercial highlighted that international sanctions imposed on Russia, Iran and Venezuela have led to the “emergence of a sizable shadow fleet of tankers.”
By assembling a shadow fleet of poorly maintained vessels that are used to circumvent sanctions meant to restrict the movement of crude oil, these countries have effectively traded outside the imposed price cap.
“This situation presents serious environmental and safety risks in key chokepoints where oil is shipped,” it added.
The insurance company estimated that about 600 to 1,400 vessels operate under ‘shadow fleet’, making up roughly one-fifth of the total global crude oil tanker fleet.
“As long as there are sanctions on countries like Russia and Iran, the shadow fleet looks here to stay,” said Justus Heinrich, global product leader marine hull at Allianz Commercial.
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Source: Engine
