IIn principle, the trend seems positive: fewer large ships are lost from year to year, since 2015 the number has fallen continuously from 105 to 54 last year. Nevertheless, when Allianz looks at current events in its shipping study, there is talk of “stormy seas” because, in addition to security, there are a number of new problems between the consequences of the war and the transport boom. Last but not least, the implementation of the current sanctions against Russia requires a certain amount of flexibility.
On the high seas, it is above all the increasing number of fires that shipping has to contend with. In the past five years alone there have been 70 fires on large ships. One reason for this is, among other things, that containers with dangerous goods are not or incorrectly declared. This affects around 5 percent of the containers shipped, reports Anastasios Leonburg, who, as an engineer with a nautical captain’s license, contributes his practical knowledge to the Allianz industry division. These are often chemicals that are difficult to extinguish.
Risk experts are also skeptical about car freighters because fires often develop there due to electrical short circuits. The risk is particularly high in the case of electric cars. Lithium-ion batteries are highly flammable. “And if there is a fire, they are very difficult to extinguish with today’s options and they burn for a very long time,” explains Leonburg. If the fire cannot be brought under control, not only will the entire cargo be endangered, but also the crew, who will then have to abandon the ship – increasing the overall damage to the ship and the environment even more. As an example, the Allianz study cites the car transporter Golden Ray, which caught fire off the east coast of America in autumn 2019 with 4,200 vehicles on board and then capsized. The salvage took nearly two years and cost $800 million.
The pandemic is also having an impact
Unlike in the past, the authorities are now demanding that wrecks be removed and the marine environment restored, Leonburg points out. Insurance companies are increasingly concerned with prosecuting the owners of the cargo to share in the costs of such major damage. Expert jargon then speaks of “gross accident” – for example, when it comes to cases such as the Ever Given, which blocked the Suez Canal last spring and its sister ship Ever Forward, which ran aground in the Chesapeake Bay near Washington this spring.
In the case of ever larger ships, special equipment, tugboats, cranes and port facilities are also required, which increases the time and cost of salvage. The ports, which are asked for help when an accident occurs, are often not up to the extent of the problems and therefore refuse entry, Leonburg describes the increasing difficulties with the size of the ships. For example, in the case of the X-Press Pearl, which caught fire off Colombo and then capsized, two nearby ports refused sanctuary because they were unable or unwilling to unload the nitric acid from the leaking tank.
Safety at sea has also suffered as a result of the corona pandemic and its consequences. Torn supply chains combined with high demand for ship transport have overloaded ports and people. The demand for crew members is high, but many qualified and experienced seafarers are leaving the industry, according to the Allianz study. Among the remaining seafarers, morale is poor because of the high economic pressure and workload. “Such a work situation increases the tendency to make mistakes. 75 percent of incidents in shipping are due to human error,” says the Allianz study.
The high demand for container transport has led some shipping companies to use bulk carriers for container transport or to convert tankers. This is questionable for structural reasons and also raises questions about firefighting. In addition, such ships are not so easy to maneuver in bad weather. The alliance also suspects that the current boom is enticing ship owners to use their fleet for longer. However, older ships were more prone to damage because they suffered from corrosion and systems and machines tended to fail more frequently.
The average age of ships involved in a total loss in the past ten years was 28 years, according to Allianz. However, completely new ships are also affected again and again. The X-Press was only a few months old when it burned out from the nitric acid. The Golden Ray car transporter was less than two years old when it caught fire.
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