Around 60,000 trading ships, manned by roughly 1.5 million seafarers, facilitate about 90% of global trade, encompassing everything from raw materials to finished products. For most traders, the potential risks linked with any specific vessel remain shrouded in uncertainty.
Overview of risks in shipping
- The average age of the global fleet is rising due to the reluctance to invest in new vessels amid ongoing technological advancements.
- Increasing vessel value extends operational lifetimes, influenced by fluctuating market conditions that impact maintenance practices, potentially affecting asset quality and reliability.
- The pandemic disrupted crew changes, leaving seafarers aboard ships for extended periods, while travel restrictions hindered inspections and repatriation efforts.
- Some shipowners faced financial challenges and abandoned vessels along with their crews, leading to a record number of seafarer abandonment cases in 2022.
- Despite industry demands and evolving technologies, experienced seafarers are leaving the sector, exacerbating risks and threatening industry sustainability.
Recent Trends and Inherent Risks
In 2022, 4,604 incidents were registered by RightShip, with dry bulk vessels, cargo vessels, and chemical tankers having the highest incident numbers.
Incidents occurred on young and old vessels, with 46 incidents in the past two years occurring on vessels only one-year-old. Of these 46, 25% of the incidents were RightShip Category B, the second-most severe kind of incident.
Tragically within these 4,604 incidents, 193 lives were lost, 113 crew members reported missing, and 86 seafarers suffered serious injuries.
Impact of Incidents
- Traders often face time pressures when deciding on vessels, leading to choices made with limited information.
- Selection criteria for vessels frequently revolve around basic compliance, flag registration, classification society, insurance, and sometimes preference for newer ships.
The Hidden Spectrum of Risk:
Ship quality encompasses a broader spectrum of risks, from poor operational quality to incident history, potentially resulting in significant consequential damages.
A wide array of conditions and risks can impact vessels, ranging from maintenance issues to serious incidents like grounding, fires, and explosions.
Traders face varying impacts, from delays and claims to cargo damage, pecuniary costs, reputational harm, and breach of contractual provisions.
Surprising Frequency:
RightShip data reveals 10.4% of vessels experiencing port detentions, lasting an average of 5.4 days.
Nearly 18% of recorded incidents pertain to hull and machinery damage.
Increasing Assurance
RightShip’s vision is a zero-harm maritime industry. Over 22 years, we have helped charterers and traders gain greater assurance of the vessels used in their supply chain activities through, inter alia, due diligence processes that go beyond basic compliance with statutory and regulatory requirements.
Criteria used in Vessel Trade Check include:
- checks on recent incidents and incident performance,
- port state control detention and deficiency activity and status,
- sanctions breaches,
- ILO or ITF open abandonment cases,
- other critical factors.
Traders seeking greater vessel assurance within the confines of their fast-paced environment can rely on Trade Check for an initial assessment.
Should Trade Check signal potential vessel risks, traders have the opportunity to delve deeper using RightShip’s comprehensive vetting process.
RightShip
Orchestrated by the global vetting and operations teams, this thorough evaluation integrates additional criteria like Class Survey Status reports and incident reports, facilitating suitable precautionary measures for recent events.
RightShip’s extensive data exhibits a significant decrease in detention rates, from 11.3% for non-vetted vessels to 8.5% for those vetted by RightShip’s Operations team. The due diligence process encompasses environmental and social risks, encompassing crew welfare and seafarer abandonment, recognized as factors contributing to incident likelihood.
This third-party due diligence emerges as a fundamental component of traders’ practices, underpinned by RightShip’s data-driven insights, advancing ESG-focused maritime solutions. Ultimately, mitigating vessel risks stands to benefit all stakeholders in the ocean cargo transportation realm.
