The containerized shipping industry's race for mega boxships
is posing unique risks for the supply chain, particularly with concerns that
port infrastructures have not kept pace with the increasing size of vessels,
according to global insurer Allianz.
Allianz is raising the red flag over growing risks
associated with larger vessels, ranging from navigational challenges at ports,
fires, loss of containers at sea to unprecedented complex and expensive salvage
processes in case of incidents.
Cargo ships accounted for more than a third of vessels lost
in 2020, with 18 lossesm and for 40 percent of total losses over the past
decade.
As shown by the boxship Ever Given's blockade of the Suez
Canal in March, the pursuit of mega-ships - which give shipping companies
economies of scale and fuel efficiency - means the global supply chain must
prepare to deal with large-vessel disruption and risk.
"The different consequences of larger vessels are now
becoming more apparent, including impacting supply chains. Large vessels and
the ports required to handle them present a massive accumulation of risk, while
the costs are disproportionately greater when things go wrong,” said Andrew
Kinsey, Allianz Global Corporate & Specialty (AGCS) Senior Marine Risk
Consultant.
Container ships, car carriers and bulk carriers have grown
larger in recent decades as shipping companies seek economies of scale and fuel
efficiency. This is a trend that is likely to continue with climate change and
the introduction of greenhouse gas emissions reduction targets for the
industry.
However, port infrastructure has not kept pace, with overall
size of existing ports remaining largely the same despite approach channels
being dredged deeper and berths and wharfs extended to accommodate ultra large
vessels.
As witnessed with the Ever Given blockage, responding to
incidents is more complex and expensive because port facilities and salvage
equipment to handle large ships is highly specialized and limited.
“We need to look more closely at how we can minimize the
risks of mega-ships, especially in ports or in bottleneck passages like the
Suez Canal or the Panama Canal given the disruption we have seen that grounding
incidents can cause,” said Rahul Khanna, AGCS Global Head of Marine Risk
Consulting.
Container-carrying capacity has increased by around 1,500
percent since 1968 and has almost doubled over the past decade. The HMM
Algeciras, introduced in April 2020, currently holds the title of the world’s
largest container ship with a capacity of just under 24,000 twenty-foot
equivalent units - and bigger vessels are on order.
According to the Allianz report, the international shipping
industry continued its long-term positive safety trend despite COVID-19 related
challenges. Last year, a total of 49 losses of vessels were reported globally,
similar to 2019 when 48 losses. This represented a 50 percent decline over 10
years from 98 in 2011. The number of shipping casualties or incidents declined
from 2,818 to 2,703 in 2020, a four percent drop.
Allianz added that global seaborne trade volumes declined
only by around 3.6 percent in 2020 and are on course to surpass 2019 levels
this year. “Despite the devastating economic impact of COVID-19, the effect on
maritime trade has been less than first feared, demonstrating the resilience of
the shipping industry,” noted