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    Lessons learned: Loss of redundancy in diving bell launch and recovery PLC system

    Lessons learned: Steam and water released from filter

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    maritime mental health

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    Cargo fires: An issue that needs to be tackled

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    Book Review: A role model for ship managers

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    contemplation as a spiritual practice

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    power of hug

    The power of hugging: How it affects our health

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    Mental Health Focus: How to deal with Impostor Syndrome

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    HHI wins AiP from KR for tank shape optimized for liquefied fuels

    HHI wins AiP from KR for tank shape optimized for liquefied fuels

    Four major parties to assess emissions throughout the life cycle of LNG carrier

    Four major parties to assess emissions throughout the life cycle of LNG carrier

    Port of Klaipeda and Proman shake hands on methanol bunkering

    Port of Klaipeda and Proman shake hands on methanol bunkering

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    U.S. Senators introduce legislation to eliminate in-port ship emissions

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    DNV Maritime Cyber Priority 2023: Shipping faces 5 major cyber security challenges

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    Ship detentions in Paris MoU in February 2021

    AMSA bans bulk carrier Babuza Wisdom for 90 days

    tanker arrested in singapore

    AMSA convicts master and company after pilot ladder injury

    amsa planned maintenance fic

    OCIMF Annual Report 2023: Key amendments and additions under SIRE 2.0

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    StenaRoRo’s ESG reporting making leaps due to Mercy Ships partnership

    StenaRoRo’s ESG reporting making leaps due to Mercy Ships partnership

    IWSA opens voting for “Wind Ship – the Future” poster design contest

    IWSA opens voting for “Wind Ship – the Future” poster design contest

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SAFETY4SEA

Allianz: Post-pandemic world brings heightened risks for shipping

by The Editorial Team
May 13, 2022
in Shipping
Singapore Chamber of Maritime
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Marine insurer Allianz Global Corporate & Specialty SE (AGCS) issued the Safety & Shipping Review 2022, explaining that while the Covid-19 pandemic resulted in few direct claims for the marine insurance sector, the impact on the welfare of crews and the boom in shipping and port congestion, exacerbated by the Ukraine invasion, raises potential safety concerns.

Demand for crew is currently high with the shipping boom, yet following the Covid-19 pandemic many skilled and experienced crew are leaving the industry, having endured many months, and in some cases, years, stuck on vessels. For those that choose to remain,  commercial pressures are running high, which can lead to mistakes and shortcuts.

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High demand for shipping is also affecting the risk profile of certain sub-sectors, including container shipping. The global fleet is ageing, yet values and exposures are rising. High freight rates are also leading some operators to carry containers on bulk carriers, where crews are not trained or experienced in handling containers, while such vessels are not designed to carry them.

Crew crisis – a skill shortage in the making

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Seafarers were the unsung heroes of the pandemic, keeping the world supplied with food, energy, raw materials and manufactured goods. Yet Covid-19, and now Russia’s invasion of the Ukraine, has taken its toll on the industry’s workforce. Crew crisis – a skill shortage in the making Covid-19 restrictions and travel bans meant hundreds of thousands of crew members were stranded on ships, some for years.

At its peak in 2020, it was thought that up to 400,00055 seafarers were unable to be repatriated, falling to 200,000 in 2021. The Covid-19 crew crisis is now largely over, but the experience is likely to have long-lasting effects.

The health and wellbeing of crew has always been a critical factor in safety

…Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS, said.

However, morale among seafarers is currently low and the pandemic has had an impact on the mental health and well-being of crew. Now crews face a rising workload, while the ever-growing burden of compliance is making the job less attractive

…Captain Rahul Khanna, added.

In what has been termed the ‘great resignation’, the pandemic prompted many workers to rethink their work life balance, with some choosing to retire or switch careers. The combination of the pandemic and current working conditions risks a future skill shortage for the shipping industry, according to Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS.

During March and April 2022, a number of vessels owned by ferry operator P&O Ferries were detained by UK authorities over safety concerns56, including crew familiarization and training. The operator had previously made over 800 crew redundant and replaced them with lower paid workers. Crew welfare and retention rate is a risk factor considered in underwriting, explains Justus Heinrich, Global Product Leader Marine Hull at AGCS.

With many direct flights to Russia suspended, and with fewer vessels calling at Russian and Ukrainian ports, seafarers from these countries may struggle to return home or rejoin ships at the end of the current contracts. Ultimately, seafarers in the Black Sea are in a perilous situation, stuck onboard vessels or in ports with dwindling supplies and under fire, which is yet another blow for the industry and global supply chains, given crew levels have not yet returned to normal levels.

Regular crew changes are required across the world to ensure the flow of manpower is maintained. Last year, the International Chamber of Shipping and shipping trade association BIMCO warned there could be a “serious shortage” of officers within five years if action is not taken to increase training and recruitment levels. The report predicted that there will be a need for an additional 89,510 officers by 2026, yet there was a shortfall of 26,240 certified officers in 2021.

Higher values, conversions and older vessels increase exposures

The economic rebound from Covid-19 lockdowns has created a boom time for shipping, with huge increases in charter and freight rates. While higher rates are a positive for many in the industry’s finances, changing the use of vessels to take advantage of this, and extending the working life of ships raises warning flags for underwriters.

High demand for container and bulk shipping has seen the value of vessels rise dramatically, while charter and freight rates have skyrocketed. Charter rates in the container and LNG markets hit an all-time high last year, and a decade high in the dry bulk market, while values remain well above historical averages, according to VesselsValue.

The value of a five-year old Panamax boxship more than tripled from $22mn in January 2020 to $82mn a year later. Charter rates for a Panamax have increased 274% over the same period. Last year also saw record values for bulkers, with a five-year old Supramax increasing in price by 46% from $19mn to $27mn.

In addition, the International Monetary Fund (IMF) has warned that the invasion of Ukraine by Russia in February will exacerbate already high shipping costs and keep them – and their inflationary effects – higher for longer. At the same time, the impact of inflation resulting in rising claims costs adds to this challenging environment. Higher freight rates and a shortage of container ship capacity has tempted some operators to use bulk and product carriers to transport containers. It has also led some tanker operators to explore the possibility of converting vessels. Swedish tanker shipping company Concordia Maritime and ship designer Stena Teknik have announced a feasibility study into converting
tankers into container vessels.

Port congestion and commercial pressures heighten risk

Covid-19 measures in China, a surge in consumer demand and the invasion of Ukraine have all been factors in ongoing unprecedented port congestion. Congestion at the US ports of Los Angeles and Long Beach reached record levels in November 2021, with 116 container ships either in port or at anchor, while in March 2022, Los Angeles recorded its third-busiest month ever64 as work continued to clear marine terminals of cargo and reduce the number of ships waiting at sea.

At the same time, repeated outbreaks in China, resulting in the staggered lockdown of Shanghai in March/April 2022 for example, and Russia’s invasion of Ukraine is compounding ongoing supply/ demand pressures for shipping, which have resulted in port congestion, higher freight fees and longer transit times.

Overall, port congestion globally is running above the levels seen last year, with specific container fleet congestion trending towards previous highs, Clarksons Research noted in March 2022, while the impacts of the invasion are likely to create further inefficiencies across the maritime transport system. Port congestion puts crews, port handlers and facilities under additional pressure, increasing risk at a critical stage of a ship’s journey, according to Captain Anastasios Leonburg, Senior Marine Risk Consultant at AGCS.

Ports and shipping face heightened cyber threat

As geopolitical risks rise, so does the prospect of malicious digital disruption

…says Allianz.

The shipping industry continues to fall victim to cyber-attacks. In February 2022, a container terminal at Jawaharlal Nehru Port Trust, India’s busiest container port, was hit by a ransomware attack. It is just the latest to be affected, following ransomware incidents at US and South African ports in recent years. Earlier this year, a number of European oil terminals were also affected by a cyber-attack.

Cyber criminals have also targeted shipping and logistics companies. US-based freight forwarder Expeditors was hacked in February, 202267, while Hellmann Worldwide Logistics68 suffered a ransomware attack in December last year that disrupted operations for weeks. In recent years, some of the world’s largest shipping companies – Maersk, Mediterranean Shipping Company, COSCO and CMA CGM have all been targeted.

According to a recent industry survey, just under half (44%) of maritime professionals reported that their organization has been the subject of a cyber-attack in the last three years. Of these, 3% agreed to pay a ransom, which averaged at around $3mn. It also found 32% of organizations do not conduct regular cyber security training while 38% do not have a cyber response plan.

Tags: AllianzCOVID-19maritime healthomicron variantport congestionRussiaseafarer's rightsshipping industryUkraine

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