- Even before the pandemic, the average age of vessels in the global merchant fleet was rising – 21,75 years in 2021, or 14,7 years for vessels greater than 2 000 gross tonnages (GT).
- Accumulations of cargo exposures at mega ports have been rising, while commercial pressures increase the risks of mistakes and accidents.
- “Cyber risk is a major concern and we do see more and more incidents involving non-marine operations, such as ports,” says Régis Broudin, global head of marine claims at AGCS.
While the Covid-19 pandemic resulted in few direct claims for the marine insurance industry, the impact on crew welfare and the surge in shipping and port congestion, which has been exacerbated by the Ukraine invasion, raises potential safety concerns, according to Allianz Global Corporate & Specialty Insurance (AGCS) as reported by It-Online.
Crew demand
Demand for the crew is currently high with the shipping boom, yet following the Covid-19 pandemic many skilled and experienced crew are leaving the industry, having endured many months, and in some cases, years, stuck on vessels.
High demand for shipping is also affecting the risk profile of certain sub-sectors, including container shipping.
Yet, Covid-19, and now Russia’s invasion of Ukraine, have taken their toll on the industry’s workforce.
However, morale among seafarers is currently low and the pandemic has had an impact on the mental health and well-being of the crew.
“Now crews face a rising workload, while the ever-growing burden of compliance is making the job less attractive.”
Great resignation
In what has been termed the ‘great resignation’, the pandemic prompted many workers to rethink their work-life balance, with some choosing to retire or switch careers.
The combination of the pandemic and current working conditions risks a future skill shortage for the shipping industry, according to Captain Nitin Chopra, the senior marine risk consultant at AGCS.
“During the pandemic, hundreds of thousands of seafarers were unable to leave their vessels or see their families for a prolonged period.”
Ship owners in some segments could feel the pinch.
The operator had previously made over 800 crew redundant and replaced them with lower-paid workers.
“From the perspective of our risk assessment, we like to see high levels of crew retention and evidence of good people risk management.”
Flights suspended
With many direct flights to Russia suspended, and with fewer vessels calling at Russian and Ukrainian ports, seafarers from these countries may struggle to return home or re-join ships at the end of the current contracts.
Higher values, conversions and older vessels increase exposures The economic rebound from Covid-19 lockdowns has created a boom time for shipping, with huge increases in charter and freight rates.
The value of a five-year-old Panamax boxship more than tripled from $ 22 million in January 2020 to $82 million a year later.
Charter rates for a Panamax have increased 274% over the same period.
“This results in a significant increase in the risk profile, which is not necessarily reflected in the premium.”
It has also led some tanker operators to explore the possibility of converting vessels.
Global merchant fleet
The use of non-container vessels to carry containers can raise questions about stability, firefighting and the securing of cargo, according to Captain Nitin Chopra, senior marine risk consultant at AGCS: “Bulk carriers and tankers are not designed to carry containers.
Crews may not be trained or experienced enough to handle containers or respond appropriately to an incident at sea.
Even before the pandemic, the average age of vessels in the global merchant fleet was rising – 21,75 years in 2021, or 14,7 years for vessels greater than 2 000 gross tonnages (GT).
Newer ships need less maintenance and have the latest technology, which typically translates to a lower risk.
Of course, that is not to say we don’t also see well-managed and maintained fleets composed of older vessels as well.”
Overall, port congestion globally is running above the levels seen last year, with specific container fleet congestion trending towards previous highs, Clarksons Research noted in March 2022, while the impacts of the invasion are likely to create further inefficiencies across the maritime transport system.
Port congestion
Port congestion puts crews, port handlers and facilities under additional pressure, increasing risk at a critical stage of a ship’s journey, according to Captain Anastasios Leonburg, the senior marine risk consultant at AGCS.
Busy container ports have little space while the experienced labour required to handle the containers properly is in short supply.
Accumulations of cargo exposures at mega ports have been rising, while commercial pressures increase the risks of mistakes and accidents.
The pressure on vessels and crew is currently very high.
“The reality is that some may be tempted to ignore issues or take shortcuts, which could result in future losses.”
Earlier this year, a number of European oil terminals were also affected by a cyber-attack.
Cybercrime
Cybercriminals have also targeted shipping and logistics companies.
Of these, 3% agreed to pay a ransom, which averaged around $ 3 million.
It also found that 32% of organizations do not conduct regular cyber security training while 38% do not have a cyber response plan.
As the industry becomes more reliant on technology and automation, the potential for disruption from a cyber-attack or technical failure increases.
Security agencies have warned of a heightened cyber risk due to the conflict in Ukraine.
“There is concern that shipping assets and ports could become collateral damage if the conflict in Ukraine results in an increase in cyber activity,” says Captain Rahul Khanna, global head of marine risk consulting, AGCS.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: It-Online
