Risk mitigation

Lost at sea: 4 big risks facing the maritime sector

Shipping losses lowest for 10 years but mega-ships and cyber-attacks pose new threats for maritime sector.

How many shipping containers were lost at sea?

Shipping losses continued their long-term downward trend with 75 reported worldwide in 2014, making it the safest year in shipping for 10 years, according to Allianz Global Corporate & Specialty SE’s (AGCS) third annual Safety and Shipping Review 2015.

The British Isles, North Sea, English Channel and Bay of Biscay has been the location of the most shipping casualties since 2005 (4,381). Nearly one in five of all incidents (18 per cent) have occurred in this region. It was also the scene of the second highest number of casualties during 2014 (465), up 29 per cent year-on-year. The East Mediterranean & Black Sea region was the top hotspot (490), up 5 per cent year-on-year. Total losses in the British Isles and surrounding waters doubled year-on-year during 2014.

Over reliance on electronic navigation aids has caused a number of incidents in 2014. Captain Rahul Khanna said: “Inadequate training at grass roots level is to blame for this overdependence on e-navigation tools. The minimum standards have been met, but this is not good enough. We need to go above and beyond them to give robust training.”

The most common cause of total losses is foundering (sinking/submerging), accounting for 65 per cent of losses in 2014 (49). With 13 ships wrecked or stranded, grounding was the second most common cause with fires/explosions (4) third, but significantly down year-on-year.

According to the report, there were 2,773 shipping incidents (casualties) globally (including total losses) during 2014. December is the worst month for losses in the Northern Hemisphere and August in the Southern Hemisphere. For every total loss in the Southern Hemisphere there are 7 in the Northern Hemisphere.

The most significant risks identified in the 2015 Safety & Shipping Review include:

Increased threat from cyber-attacks

Cyber risks are another new threat for a shipping sector which is highly interconnected and increasingly reliant on automation.

“Cyber risk may be in its infancy in the sector today, but ships and ports could become enticing targets for hackers in future. Companies must simulate potential scenarios and identify appropriate mitigation strategies,” said Khanna. “A cyber-attack targeting technology on board, in particular electronic navigation systems, could possibly lead to a total loss or even involve several vessels from one company,” said Gerhard.

Other scenarios include cyber criminals targeting a major port, closing terminals, or interfering with containers or confidential data. Such attacks could also result in significant business interruption costs, notwithstanding liability or reputational losses.

Condition of ship and crew

While the long-term downward trend in shipping losses is encouraging, recent casualties such as Sewol and Norman Atlantic have once again raised significant concerns over training and emergency preparedness on passenger ships three years after the Costa Concordia disaster. Seven passenger ships were lost during 2014, accounting for almost 10 per cent of total losses. “In many cases construction of the vessel is not the only weak point. These two incidents underline a worrying gap in crew training when it comes to emergency operations on ro-ro ferries or passenger ships,” says Sven Gerhard, Global Product Leader Hull & Marine Liabilities, AGCS.  

The general shipping trend for smaller crews means seafarers are being asked to do more with less. Minimum manning levels reduce the ability to train people onboard, which can provide invaluable insight and should not become the normal day-to-day level for safe operations.

Rise in geopolitical uncertainty

The recent rise in geo-political tension around the world is concerning. The increase in human trafficking of refugees by sea creates search and rescue issues. More than 207,000 migrants crossed the Mediterranean in 2014, driven by the civil war in Syria.

The International Maritime Organization estimates at least 600 merchant ships were diverted in 2014 to rescue people, stretching resources and rescue infrastructure. Conflicts in the Middle East also put increasing pressure on the supply chain. Ships should not underestimate the security risks.

Piracy risks move from Africa to Asia

Although there has been good progress tackling activity in Somalia and the Gulf of Guinea, ensuring global attacks (245) are down for a fourth year in a row, piracy thrives elsewhere. Attacks in South East Asian waters are up year-on-year, as are incidents in the Indian subcontinent, with Bangladesh a new hotspot.