Shipping losses hit all-time low in 2022, says AGCS

Shipping total losses hit a record low in 2022, down by more than a third to 38 from 59 the year before, according to Allianz Global Corporate & Specialty (AGCS). However, the number of shipping incidents remained stable at around 3,000, driven by machinery damage or failure that accounted for almost half of all incidents globally. The British Isles recorded the highest number of incidents at 679. AGCS says a jump in fires claimed eight total shipping losses last year. In fact, shipping incidents involving fire reported a ten-year peak at more than 200 cases. Publishing its annual Safety & Shipping Review, AGCS says the risk of fires at sea and on land has increased because of the transportation of electric vehicles and lithium-ion batteries, which are known to generate self-heating fires leading to explosion. It added that fires in electric vehicles caused by lithium-ion batteries are difficult to extinguish and can reignite. “Most ships lack the suitable protection, detection and firefighting capabilities to tackle such fires at sea,” says Captain Rahul Khanna, global head of marine risk consulting at AGCS. “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,” he adds. AGCS’s report says that hazardous cargos are increasingly transported by larger vessels, which only amplifies the impact of fires and will potentially lead to more severe losses. Mis-declared or mis-labelled goods are also driving fire risk, accounting for 25% of serious incidents onboard container ships, warns the insurer. In an analysis of 250,000 marine insurance claims across the industry, AGCS found fire was the most expensive cause of loss, accounting for 18% of claims value. In addition to increased fire risks, AGCS says the marine sector still faces ongoing challenges from the conflict in Ukraine, including the emergence of a shadow tanker fleet to avoid sanctions imposed on Russia. The sector also faces more expensive claims from inflation and supply chain disruption, in particular for hull and machinery. “Shipping losses have sunk to the lowest number we have seen in the 12-year history of our annual study, reflecting the positive impact that safety programmes, trainings, changes in ship design and regulation have had over time,” says Khanna. “While these results are gratifying, several clouds appear on the horizon. 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. Fire safety and the problem of mis-declaration of hazardous cargo must be fixed if the industry is to benefit from the efficiency of ever-larger vessels. Inflation is pushing up the cost of hull, machinery and cargo claims,” he adds.

Shipping losses hit all-time low in 2022, says AGCS

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