The flow of trade will always find a way to circumvent risk. It has to. Trade at rest is not making money. The freedom of navigation lifts the global economy. It also comes with massive risk that in the end governments and industry pay for, reports Freight Waves.
Marine insurer
The waterway superhighway has been altered many, many times to ensure freight arrives at its final destination as safely and with as much certainty as possible. This year, the most obvious challenge is the Red Sea diversions. The safety of seafarers is a priority for the maritime industry. While a handful of ocean carriers continue to traverse the waterway, most are taking the longer route to ensure the safety of their crews and cargo.
In the Safety and Shipping Review 2024 by marine insurer Allianz Commercial, Capt. Rahul Khanna, global head of marine risk consulting, explained that the maritime industry’s increased risk is changing at unprecedented speed.
Since Russia invaded Ukraine, the report noted sizable growth in Russia’s “shadow fleet” of tankers, somewhere between 600 and 1,400 vessels.
According to Allianz Commercial, the vessels have been involved in at least 50 incidents to date, including fires, engine failures, collisions, loss of steerage, and oil spills.
U.S. Defense officials tell American Shipper that 154 vessels have been attacked by the Houthis since Nov. 19, 2023. The most recent attack, on May 28, damaged the bulker. Finally, after months of silence, Chinese government officials are calling for attacks on civilian ships to stop. The recent declarations are a result of a series of Chinese-run tankers being inadvertently attacked in the Red Sea based on old vessel information used by the Houthis.
Ocean carriers are going around the Cape of Good Hope to mitigate this risk. Khanna tells American Shipper quantifying the risk on these transits can be very difficult.
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Source: Freight Waves
