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Triple-I Blog | Reduce freight risk benefits all



(Photo by Mahmoud Khaled / Getty Images)

By Captain Andrew Kinsey, Senior Marine Risk Consultant at Allianz Global & Corporate Specialty

When an Amazon package arrives at our door, we hardly think about what it is took to get here. It is likely that your school supplies or clothing items have traveled a large distance across the ocean by ship.

International shipping accounts for 90 percent of world trade and the old adage "there are many slips" between the cup and the lip "is appropriate. climate, economy and public health that can affect the odds of a successful delivery.

The annual safety and shipping review produced by Allianz describes trends and developments in shipping losses and safety and is a valuable resource for marine insurance companies.

Losses at sea

Let's first look at losses for ships at sea, where the trend is stable, there were 49 total losses of 1

00 gross tonnes or more in 2020, compared to 48 a Credit better safety measures, regulation, improved ship design and technology and advances in risk management. ck a variety of volatile factors, such as extreme weather, machine crashes, fires and even piracy. Ship operators can improve fire detection and firefighting on large ships and ensure that machines have been inspected and operated. In addition, weather effects can be mitigated by improving forecasts and ship routing.

Another major concern for insurers is the transport of lost containers at sea. Last year, more than 1,000 people fell overboard during the first months due to harsh weather and heavier loads. An increase in the demand for consumer goods is another factor; In response, containers are stacked on board at unprecedented heights, leading to concerns that they are not properly secured. In total, more than 3,000 containers were lost at sea in 2020, compared with a longer visibility average of 1,382 per year.

Pandemic impact

Next is the global pandemic, which has had little effect on marine insurance claims so far. It is quite possible that claims can increase when more vessels are taken into use again and we see the effects of delayed maintenance. Another major concern is crews who are restricted to their ships in ports due to public health mandates, which delay crew changes and medical treatment. Crew fatigue leads to human error – an important cause of many losses.

These are factors that justify immediate action by all stakeholders in the supply chain, including cargo owners. One solution is to appoint sailors as vital workers so that they can receive vaccines and move freely.

Larger ships, bigger problems

Size plays a role in global shipping. Do you remember that the ship was stuck in the Suez Canal for over three months? The Ever given incident was a vivid illustration of how difficult it is to free up large ships. When more equipment and more labor are needed, someone has to pay. Not to mention the societal and economic costs of disruptions in the supply chain. There is a real possibility that we will see bare shelves and lots of "items unavailable" this holiday shopping season.

So if larger ships cause bigger problems, why are there so many of them? It's about economies of scale and fuel efficiency, and shipping companies can certainly not be blamed for trying to comply with increased environmental regulations and trying to reduce their operating costs. Large ships, however, pose problems for the supply chain, often overwhelming ports when so many containers are released at once.

Ship size also has a direct correlation to potential loss size, and this is an issue that keeps marine insurance companies up at night. Too often goods are declared or incorrectly declared, which can lead to fires. For example, if self-igniting carbon, chemicals or batteries are not stored properly, the risk of ignition escalates dramatically. And if the object is incorrectly declared in the first place, the crew does not know what it is doing in an emergency.

Combining the problem is insufficient fire detection and firefighting on large ships; for this reason, the International Union of Marine Insurers (IUMI) brings together stakeholders to set stricter standards.

At first glance, it seems that the risks of global shipping are a moving target. However, a closer examination reveals patterns and trends which, when carefully analyzed, can lead to improved loss reduction and thus reduce the "slips" that may occur during transit.

Captain Andrew Kinsey is a Senior Marine Risk Consultant at Allianz Global & Corporate Specialty and chairs the Technical Committee of the American Institute of Marine Underwriters, which is a Triple-I Associate Member.


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