You are here

Ship losses down in 2022, dark fleet and fires top concerns: Allianz

Ship losses down in 2022, dark fleet and fires top concerns: Allianz
Marcus Hand | May 31, 2023 https://www.seatrade-maritime.com/finance-insurance/ship-losses-down-202...

The number of larger ships lost last year was down by more than a third, but the dark fleet is the latest safety concern, while there was also a jump in the number of fires onboard vessels, according to insurer Allianz.

Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2023 showed that there 38 total losses involving large vessels, a drop in more than a third from 59 in the previous year, and the lowest number in the report’s 12-year history. The South China Sea region saw the largest number of losses.

The industry has seen a steady improvement in safety and losses with 109 in 2013 and looking back 30 years ago losses stood at more than 200 annually.

“Shipping losses have sunk to the lowest number we have seen in the 12-year history of our annual study reflecting the positive impact safety programs, trainings, changes in ship design and regulation have had over time,” said Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS.

However, while numbers were positive there were warnings from AGCS of dark clouds on the horizon. In particular the insurer highlighted the growing dark or shadow fleet of sanction busting tankers, and the issue of fires in particular onboard container vessels and car carriers.

“More than a year after Russia’s invasion of Ukraine, the growth of the shadow oil tanker fleet is the latest consequence to challenge shipowners, their crew and insurers,” Capt Khanna.

The shadow fleet allows Russia to sell oil to international buyers effectively without valid insurance. The shadow fleet is estimated at over 600 ships according to Reuters, with some 15% of the Suezmax and 10% of the Aframax fleet breaking rules based on figures from TankerTrackers.

“The shadow fleet is more likely to be made up of older ships, operating under flags of convenience with lower maintenance standards,” said Justus Heinrich, Global Product Leader Marine Hull at AGCS.

“The increase in their number is a worrying development, threatening the world fleet and the environment. A major incident can cause loss of life as well as uninsured damage or pollution.”

The report highlighted the grounding of the shadow tanker Arzoyi in eastern China in March last year, the collision of the Petion in Cuba few days later, and the seizure of the tanker Linda 1 drifting off Spain in November. The most serious incident was in May this year when the uninsured, Gabon-registered aframax suffered a fire and explosion off the coast of Malaysia leaving three crew members missing and presumed dead.

“As this incident shows, there are a number of worrying scenarios, such as a collision with an uninsured shadow fleet vessel that causes major environmental damage,” commented Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS.

Fires onboard vessels are also a major concern and were the second highest cause of losses in 2022 with eight vessels lost. There were also more than 200 incidents of fires reported, the highest number in a decade.

The report noted highly flammable lithium-ion (Li-ion) batteries pose a growing risk for container shipping and car carriers, and the battery market was expected to grow at 30% annually over the next decade.

“Most ships lack the suitable protection, detection and firefighting capabilities to tackle such fires at sea,” said Khanna. “Attention must focus both on pre-emptive measures and emergency plans to help mitigate this peril such as adequate crew training and access to appropriate firefighting equipment or improving early detection systems. Purpose-built vessels for transporting EVs would be advantageous.”

Ever larger containerships, the growth in the shipment of hazardous cargoes in containers, and the misdeclaration of these cargoes all cause a growing risk for container shipping.

Around 25% of fires onboard containerships are attributed to misdeclared goods as shippers seek to avoid higher charges for transporting dangerous cargoes, and AGCS noted many believe the real figure is actually higher.

“Labeling a cargo as dangerous is more expensive. Therefore, some companies try to circumvent this by labeling fireworks as toys or Li-ion batteries as computer parts, for example,” explained Khanna. “Unified requirements and penalties for mis-declared hazardous cargo would be welcomed.”