Global economic downturn, cyber/piracy risk raise safety concern for ships

The continued weakness in global market and economic conditions, which have resulted to low commodity prices, high operational cost and growing number of redundant ships, are raising safety concerns for ships in the international market, notes Allianz Global Corporate and Specialty SE’s (AGCS) fourth annual Safety and Shipping Review 2016.

Also, the drop in the volume of businesses, especially on the Asia-Europe, Asia-Latin America and Asia-West Africa trade routes, resulting to more service cut by shipping liners have left container liners with a growing number of redundant ships that are out of business.

“The global economic downturn and its impact on the shipping sector is likely going to have a negative impact on safety of ships at sea,” says Rahul Khanna, global head, Marine Risk Consulting of AGCS.

AGCS experts, who note that general cargo, bulk and offshore, are already challenged and any drop in safety standards will be a serious case for concern, further warn that the current economic pressures may allow a “put it off until later” safety mentality to develop.

“Some ship owners are already stretching maintenance to longest possible intervals while others are laying up vessels. Reactivation of these vessels to a market that has moved on technologically may result in a painful exercise. There is a need for standardised lay-up procedures,” says Jarek Klimczak, senior Marine Risk consultant of AGCS.

AGCS report further states that the impact of the present economic condition will also affect investment in vessel maintenance cost thereby leading to impair crew conditions, passenger ship safety and salvage as well as rescue operations.

“AGCS has seen an increase in fatigue-related insurance claims over the past decade with crew numbers already at their lowest possible level, and a future staffing shortage anticipated. Meanwhile, training remains below par in areas like electronic navigation, which should not be seen as panacea but as a complementary tool,” the report notes.

According to the report, the shipping industry’s reliance on interconnected technology also poses cyber risk exposure, beyond data loss such that there have been a number of notable cyber incidents and technological advances including the “Internet of Things” (IoT) and electronic navigation.

“Pirates are already abusing holes in cyber security to target the theft of specific cargoes,” says Andrew Kinsey, senior Marine Risk consultant of AGCS.

The report further notes that for the first time in five years, pirate attacks failed to decline in 2015. South-East-Asia attacks rose, accounting for 60 percent of all incidents, while progress continues to be made in Africa with incidents down in West and East Africa amid high risk.