Allianz Global

Corporate & Specialty

Safety and Shipping

Review 2023
An annual review of trends and
developments in shipping losses and safety
Safety and Shipping Review 2023

About AGCS
Allianz Global Corporate & Specialty (AGCS) is a leading
global corporate insurance carrier and a key business
unit of Allianz Group. We provide risk consultancy,
Property‑Casualty insurance solutions and alternative
risk transfer for a wide spectrum of commercial,
corporate and specialty risks across nine dedicated lines
of business and six regional hubs.

Our customers are as diverse as business can be, ranging

from Fortune Global 500 companies to small businesses.
Among them are not only the world’s largest consumer
brands, financial institutions, tech companies, and the
global aviation and shipping industry, but also floating
wind parks or Hollywood film productions. They all look
to AGCS for smart solutions to, and global programs
for, their largest and most complex risks in a dynamic,
multinational business environment and trust us to deliver
an outstanding claims experience.

Worldwide, AGCS operates with its own teams in more than

30 countries and through the Allianz Group network and
partners in over 200 countries and territories, employing
more than 4,200 people. As one of the largest Property-
Casualty units of Allianz Group, we are backed by strong
and stable financial ratings. In 2022, AGCS generated a total
of €11.2bn gross premium globally.

www.agcs.allianz.com

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 Safety and Shipping Review 2023

Contents
Page 4

Executive summary

Page 11

Losses in focus

Page 19

Economic outlook

Page 23

Hull and cargo risks

Page 29

War and crime

Page 35

Claims

Page 36

Decarbonization and sustainability

3
Safety and Shipping Review 2023

Executive summary
Allianz Global Corporate & Specialty’s (AGCS) annual Safety
and Shipping Review identifies loss trends and highlights a
number of risk challenges for the maritime sector.

Loss developments ↘ page 11

Shipping transports between 80% to 90% of world trade Around a quarter of vessels lost in 2022 were cargo
onboard different vessels so maritime safety is critical. (10). Together, fishing (6) and passenger (5) vessels also
Improvements have been significant over the past decade accounted for a quarter of the total. Foundered (sunk/
in particular. Thirty years ago, the global fleet was losing submerged) was the main cause of total loss across all
200+ vessels a year. At the end of 2022 fewer than 40 vessel types (20), accounting for over 50%. Contributing
losses were reported. It has now been six years since a factors included bad weather, poor visibility, flooding and
triple-digit total loss year. machinery breakdown. Fire/explosion ranked as the second
top cause of loss (8). Vessel collision ranked third (4).
The review shows 38 total losses of vessels (over 100
gross tonnage [GT]) during 2022, compared with 59 Extreme weather was reported as a factor in at least 8
a year earlier, down by 36%. Annual shipping losses losses during 2022, while January was the most frequent
have declined by 65% over the past decade (109 total month for losses with 6.
losses in 2013) reflecting the positive effect of an
increased focus on safety measures over time, such as While total losses declined over the past year, the number
regulation, improved ship design and technology and risk of shipping casualties or incidents reported remained
management advances. consistent (3,032 compared to 3,000 a year earlier). The
British Isles saw the highest number of incidents (679) while
South China, Indochina, Indonesia and the Philippines machinery damage/failure accounted for close to half of
is the global loss hotspot, both over the past year and all incidents globally (1,478). There were over 200 fires
decade (204 total losses). It accounted for one in four reported during 2022 (209) – the highest for a decade,
losses in 2022 (10), driven by factors such as high levels of making this the third top cause of incidents with activity up
trade, congested ports, older fleets and extreme weather. 17% year-on-year.
The Arabian Gulf, British Isles, and West Mediterranean
waters were the second top loss locations (3). The past 10 The East Mediterranean and Black Sea region has seen
years have seen 807 total losses reported. Three regions, the most shipping incidents over the past decade (4,969).
South China, Indochina, Indonesia and the Philippines, East Globally, most of the 27,477 incidents reported over the
Mediterranean and Black Sea (118), and Japan, Korea and past decade have been caused by machinery damage/
North China (76) account for almost 50% of global loss failure (10,753), followed by collision (3,098) and wrecked/
activity over this time. stranded (2,936).

Shipping losses are now at the lowest level that

we have seen in the 12-year history of our annual
review, reflecting the positive impact safety programs,
trainings, changes in ship design and regulation have
had over time.
Ulrich Kadow, Global Head of Marine, Allianz Global Corporate & Specialty.

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 Safety and Shipping Review 2023

Safety and Shipping

Review 2023 in numbers

807
total losses in 10 years
38
total losses in 2022
65%
decline over a decade

679 incidents
in 2022 in the British Isles

9 incidents
involving the most accident-
prone vessel in 2022 – a
Greek Island ferry

Around 1 in 4
total losses in 2022 occurred
in the South China Sea
region – the global hotspot

10 3,032 8
cargo ships lost shipping incidents minimum number of total
in 2022 – a 1/4 reported in 2022 – losses in 2022 where
of all vessels lost Machinery damage extreme weather was
is the top cause reported as being a factor

January
the most frequent month for
64 Fire is the

most
total losses
total losses in 2022 (6)
caused by fire expensive
in the past cause of marine
five years. insurance claims

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Safety and Shipping Review 2023

Economic outlook ↘ page 19

Following the post-pandemic boom in container shipping, An increase in larger vessels leads to higher container
economic and geopolitical uncertainty and falling demand cargo accumulation and exposure, a trend which could
have hit freight rates. The cost of shipping a container compound problems seen in recent years such as fires,
between Asia and the US or Europe in April 2023 was groundings and port blockages. The salvage cost for large
more than 80% lower than a year earlier. As freight rates container ships is tremendously high, with only a limited
have declined, new vessels ordered during the boom have number of ports and shipyards able to service and repair
begun to arrive – equivalent to an additional 19% of the such vessels. Industry analysis of hull claims trends shows
fleet size – adding to already excess capacity. the container ship segment is the only large segment
with an increase in the frequency of large losses. In
A potential consequence is whether the decline in freight particular, the frequency of claims in excess of US$500,000
rates, together with the prospect of an economic downturn, remains high.
will impact maintenance, levels and risk management
budgets. Prior downturns have impacted investment in The larger the vessel, the higher the risk of having multiple
vessel maintenance, leading to losses and an uptick in interests involved in an incident. Companies need to
machinery damage claims. Such conditions could also consider the risks of container shipping cargo delays and
jeopardize vital investments in fire safety and the industry’s prepare contingency plans should their cargo become
decarbonization targets as record profits for the container involved in an incident.
industry supported innovation in these areas. If the market
comes under pressure, there is a risk such initiatives will A downturn in freight rates mean shipowners are likely to
lose momentum. take the opportunity to scrap older vessels, many of which
have had their working lives extended by high demand
Decarbonization and the drive for more efficient shipping in recent years. This trend is likely to be reinforced by the
will accelerate the trend for larger vessels, which now make industry’s move to decarbonize shipping – it is predicted
up a significant proportion of the world fleet, and account that around 1 million teu could be recycled in the near
for a disproportionate amount of container trade. Container- future. Scrapping older tonnage is a positive from a risk
carrying capacity has increased by around 1,500% since quality perspective. However, the disposal of old ships
1968 with the capacity of the largest vessels doubling in the may challenge the industry’s environmental, social, and
last 20 years alone. There are currently more than 50 ships governance (ESG) credentials. As shipping companies
with a capacity of over 21,000 teu or more, practically all of begin to publish ESG information, the sustainability of ship
them were built in the last five years – 65% of fleet growth recycling will come under increasing scrutiny.
over the next two years is expected to be concentrated in
the segment of ships larger than 15,000 teu.

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 Safety and Shipping Review 2023

Hull and cargo risks ↘ page 23

A combination of factors is increasing the risk of fires The cause of many cargo fires can be attributed to mis-
at sea and on land. Decarbonization is leading to new declared dangerous goods, such as chemicals, batteries
types of cargo such as electric vehicles (EVs) and battery- and charcoal. Failure to properly declare, document and
powered goods which bring different risks. Hazardous pack hazardous cargo can result in containers stowed
and combustible goods are increasingly transported by incorrectly or hamper firefighting efforts. Labeling a cargo
containers, while the prevalence of Lithium-ion (Li-ion) as dangerous is more expensive and therefore some
batteries poses a growing risk for container shipping and companies try to circumvent this by labeling fireworks as
car carriers – this market is expected to grow by over 30% toys or Li-ion batteries as computer parts, for example.
annually over the next decade. Nearly 10% of global car
sales were electric in 2021, four times the market share A number of large container shipping companies have
in 2019. turned to technology to address this issue, using cargo
screening software to detect suspicious bookings and
One of the main hazards of Li-ion batteries is ‘thermal cargo details, while several large container operators are
runaway’, a rapid self-heating fire that can cause an imposing penalties. However, currently, each shipping
explosion. The main causes of Li-ion fires are substandard company and jurisdiction has its own requirements while
manufacturing or damaged battery cells or devices, the rate of container inspections in many countries remains
over-charging, and short circuiting. Fires in EVs with Li- low. Unified requirements and penalties for mis-declared
ion batteries can burn more ferociously, are difficult to hazardous cargo would be welcomed.
extinguish, and are capable of spontaneously reigniting.
Most ships lack the suitable fire protection, firefighting Container losses at sea have spiked in recent years. More
capabilities, and detection systems to tackle such fires at than 3,100 containers were lost on average annually
sea. Attention must be focused on pre-emptive measures during 2020 and 2021 – four times the total reported in the
to help mitigate the peril such as ensuring crew receive previous period – and incidents have continued, albeit at a
adequate training and access to appropriate firefighting lower rate. This increase is driven by factors such as larger
equipment, improving early detection systems and ships, extreme weather and mis-declared cargo weights
developing hazard control and emergency plans. Purpose- (leading to container stack collapse). Large container
built vessels for transporting EVs would be advantageous. vessels, where containers can be stacked as many as 26
deep, are vulnerable to extreme rolling and pitching in
At the same time, hazardous cargos are increasingly certain sea conditions, exerting extreme stress. Human
transported by larger vessels, meaning the consequences error around storage and lashing of containers needs to be
of fires are amplified, resulting in more severe losses and addressed while proposals for the mandatory reporting of
longer delays. Fire is one of the biggest causes of general lost containers will improve accountability.
average (GA) claims on container vessels – GA has a
significant impact on cargo customers because the time it Transporting large bulky equipment by sea, such as
takes to release cargo is exponentially longer, impacting wind turbines or mining equipment, is a specialized sub-
supply chains and seasonal goods. Fire is also one of the sector of the shipping industry and a recent increase in
most frequent causes of total losses across all vessel types expensive loss incidents points to a worrying trend at a
with 64 ships lost in the past five years alone. A small time of increased activity in the so-called project cargo
container fire can easily take hold and overwhelm the market. This market has seen increased activity since the
ability of its crew to deal with the situation, leading to the Covid-19 pandemic, with growing demand from increasing
abandonment of the vessel, and potentially its loss. investment in infrastructure development and the
decarbonization of industries. The handling of this critical
cargo requires specialist vessels, equipment, and port
infrastructure. It also relies on skilled personnel to load
and transport project cargo safely but there is concern that
these specialist skills are slowly eroding. Many losses are
caused by a poor understanding of specialist loading and
stowing procedures.

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Safety and Shipping Review 2023

War and crime ↘ page 29

More than a year after Russia’s invasion of Ukraine the Globally, maritime piracy is at its lowest level for almost
ripple effects continue to be felt. As of March 2023, around three decades. There were 115 incidents during 2022.
300 seafarers, and some 40 or more vessels, remained Ten years ago there were 138 in the first six months of
trapped in the region, in addition to several vessels that 2013 alone. The overall reduction in activity in the Gulf
were damaged or destroyed in Ukrainian ports during the of Guinea – down from 35 incidents in 2021 to 19 in
war. Meanwhile, embargoes and sanctions severely limit 2022 – is a significant contributor. In 2019, it accounted
trade with Russia. for 90% of global kidnappings reported at sea. However,
sustained efforts are needed to ensure the continued
The longer vessels are trapped, the higher the likely loss. safety of seafarers in the region, which remains dangerous.
Owners and operators have no access for maintenance or Piracy is tied to underlying social, political and economic
repairs while the passage of time means salvage values problems, which have not disappeared and a number of
decline. The one-year mark is an important trigger for incidents have occurred in recent months. Seafarers are
marine insurance policies. Under a war risk policy, a vessel encouraged to follow industry best management practice
could be considered a total loss when trapped or blocked recommendations in these waters.
for a defined period. However, insureds are expected to
have taken reasonable measures to try to minimize the loss Developments outside of the Gulf of Guinea should also
or secure the vessel’s release, such as making use of any remain on the risk radar. A third of all incidents reported
safe passage arrangements, for example the Black Sea globally in 2022 were in the Singapore Straits with vessels
Grain Agreement. successfully boarded in all 38 incidents. In February 2023,
eight incidents of armed robbery against ships were
The threat of collateral damage on civilian shipping reported in the Straits of Malacca and Singapore.
in the war risk area of the Black Sea remains high,
while harassment and diversion of shipping, electronic Shipping also continues to fall victim to cyber-attacks
interference and cyber-attacks cannot be excluded. with several ports, companies and classification societies
Floating mines will pose a risk, even after the war ends. impacted by incidents in 2023. To date, most incidents
have been shore-based, such as ransomware attacks
Oil embargoes have also resulted in Russia and its allies against shipping companies’ database systems. But with
creating a shadow tanker fleet to transport and sell its oil. the growing connectivity of shipping, and the fact that
Estimates of the size of the fleet vary – from 300 to 600+ – geopolitical conflict is increasingly being played out in
roughly a fifth of the overall global crude oil tanker fleet. cyber space, that may change in future. Standard practices
Vessels are more likely to be older ships, operating under can be implemented to reduce cyber risk, such as defining
flags of convenience with lower maintenance standards. personnel roles and responsibilities and identifying the
Reports indicate there were at least eight groundings, systems, assets and data that, when disrupted, pose risks
collisions or near misses involving tankers carrying to operations. Shipowners also need to implement risk
sanctioned oil products in 2022 – the same number as in control processes and contingency planning, developing
the previous three years. A major incident could cause loss and implementing activities necessary to quickly detect a
of life, as well as uninsured damage or pollution – in May cyber event. Identifying measures to back up and restore
2023 an uninsured tanker exploded in Southeast Asia, systems is crucial.
reportedly killing crew members.

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 Safety and Shipping Review 2023

Claims ↘ page 35 Top causes of loss

by value of claims in marine
Increased commodity prices, higher labor costs and supply
Based on analysis of 244,451 insurance claims between
chain disruption have had a significant impact on marine
January 1, 2017, and December 31, 2021, worth
insurance claims, in particular hull and machinery. The approximately €9.2bn in value. “Other” causes of loss account
price of steel, a key cost driver in hull claims, increased for 32% of the value of all claims. Claims total includes the
sharply post-pandemic, as did spare parts. A typical share of other insurers in addition to AGCS.
propeller or machinery damage claim now costs around
two times more than pre-pandemic.

Fire and explosion 18%

Shortages and delays in obtaining replacement parts
have led to longer stays in repair yards. Labor shortages
have also increased costs, contributing to longer repair
Shipping incidents
times and increased yard costs. This comes on top of the
(e.g. sinking, 17%
increased expense of dealing with large vessels, which collision, etc.)
face higher costs for repairs, salvage and towing. Industry
estimates calculate an overall +18% increase in ship repair
Damaged goods
costs between 2020 and 2022 from inflation. The post- (including 12%
pandemic boom in container shipping has also impacted. handling/storage)

Cargo values have risen with the increase in the price of

goods and raw materials, while the shift to increased levels Machinery breakdown
of storage in ports and warehouses has led to higher costs (including 12%
engine failure)
and aggregation issues for insurers. Even companies with
the best risk management will see the impact of inflation
on claims. Natural catastrophes
(e.g. hurricanes,
9%
storms, floods,
AGCS analysis of close to 250,000 marine insurance wildfires)

industry claims shows that fire is the most expensive cause, 0% 5% 10% 15% 20%
accounting for 18% of the value of all analyzed.
Source: Allianz Global Corporate & Specialty (AGCS)

9
Safety and Shipping Review 2023

Decarbonization and sustainability ↘ page 36

Shipping is thought to contribute almost 3% of global Transitioning away from carbon-based shipping will
greenhouse gas (GHG) emissions annually. If it were a involve a challenging period of adjustment and change,
country, it would be the sixth largest emitter. In 2018, the taking years to build the scale of infrastructure required.
International Maritime Organization committed to cut A mix of fuels is likely to exist for the next five to 10 years
annual GHG emissions from international shipping by at posing challenges for shipowners, operators and ports.
least half by 2050, compared with their level in 2008, and
work towards phasing out all GHG emissions from shipping From a loss perspective the industry has not seen any
as soon as possible in this century. It also set a goal to major claims from alternative technologies like wind-
reduce the carbon intensity of international shipping by at assisted propulsion or alternative fuels like biofuel.
least 40% by 2030, and 70% by 2050. However, bigger changes lie ahead. As hydrogen, green
methanol, ammonia and battery-assisted technologies are
Decarbonization is by far the sector’s biggest challenge. introduced at scale, more issues may surface. Hydrogen
The pace and progress of these efforts are influenced by and ammonia are not easy to handle and hydrogen is
a range of factors, including technological developments, difficult to transport. Collaboration is key when it comes
adoption of energy-efficient fuels, regulatory frameworks, to exposure and innovation and regular exchanges
and market forces. Overall, while progress has been made, of information and data from testing and experiences
much more needs to be done. between companies and insurers will be important in
helping to reduce transition risks.
Reducing GHG emissions will require changes in ship
and propulsion design, as well as changes to the way Decarbonization is also leading to growing interest in
companies operate. Meeting the IMO GHG emission autonomous vessels, which present unique risks for
reduction targets could cost as much as $1.4trn, according operators in addition to benefits. Last year, the world’s
to industry estimates. Shipping companies and cargo first fully electric, autonomous container ship completed
operators are already switching to vessels powered by its maiden voyage (with crew on board). Fire detection,
liquefied natural gas (LNG), as well as trialing and using prevention, fighting and emergency response capabilities
alternative fuels such as biofuels, methanol, ammonia will be important considerations in the development of
and hydrogen, and solar and battery powered all-electric their safe operation.
vessels, wind assisted propulsion systems, more efficient
propellers and bulbous bow designs. Coastal trade has provided a good testing ground for this
technology, and from an insurance perspective, continued
testing with smaller coastal vessels, learning and refining
systems over time is important before moving on to scaled-
up ocean transit operations.

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 Safety and Shipping Review 2023

Losses in focus
The analysis over the following pages
covers both total losses and casualties/
incidents. See page 42 for further details.

Total losses by top 10 regions

2013-2022 and 2022. Vessels over 100GT only

38
Total losses in 2022
British Isles, N.Sea,
Eng. Channel and 54
East Mediterranean
and Black Sea
S.China, Indochina,
Indonesia and
Philippines

Bay of Biscay
3 2 118 204

807
1
32 Baltic
Canadian Arctic United States 2 76
and Alaska Eastern Seaboard 3 45
North 2
2 Atlantic West 3
Mediterranean
Total losses between 20 Japan, Korea and
Arabian Gulf and 27 10
West Indies approaches North China
2013 and 2022
Bay of
Bengal
174 34

West African
Coast 2
Total losses by region 23
for 2013-2022
Australasia
S.Atlantic and East
8 Coast S.America
Total losses by region
for 2022 Other

Total losses by year

Vessels over 100GT only

109 105 102

95 Improvements in maritime safety
89
have been significant over the
73 72 past 10 years in particular.
65
59 During the 1990s the global fleet
38 was losing 200+ vessels a year.

65%
decline over the
This total plummeted to fewer
than 40 by the end of 2022. It has
now been six years since a triple-
past decade
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 digit loss year.

Source: Lloyd’s List Intelligence Casualty Statistics

Data Analysis & Graphic: Allianz Global Corporate & Specialty 11
Safety and Shipping Review 2023

2022 review
Total losses by top 10 regions. From January 1, 2022 to December 31, 2022. Vessels over 100GT only

Region Loss Annual The database shows 38 total losses

change of vessels over 100GT at the end
S.China, Indochina, Indonesia and Philippines 10 -4 of 2022, compared with 59 a year
earlier and 109 10 years previously.
Arabian Gulf and approaches 3 -6
South China, Indochina, Indonesia
British Isles, N.Sea, Eng. Channel and Bay of Biscay 3 - and Philippines is the main loss
West Mediterranean 3 - hotspot, both over the past year
and the past decade, accounting
Baltic 2 -
for one in four losses in 2022. The
East Mediterranean and Black Sea 2 -6 Arabian Gulf, British Isles and West
North Atlantic 2 +1 Mediterranean waters jointly rank
as the second top loss location.
United States Eastern Seaboard 2 -

Australasia 2 +1

Canadian Arctic and Alaska 1 -

Other 8

Total 38 -21

2013 – 2022 review

Total losses by top 10 regions. From January 1, 2013 to December 31, 2022. Vessels over 100GT only

Region Loss The past 10 years have seen 807

reported total losses, with the
S.China, Indochina, Indonesia and Philippines 204
2022 loss year (38) representing
East Mediterranean and Black Sea 118 a significant improvement on the
Japan, Korea and North China 76 annual loss average over this period
(81). This is even more impressive
British Isles, N.Sea, Eng. Channel and Bay of Biscay 54
given the fact that there are well
Arabian Gulf and approaches 45 over 100,000 ships in the global fleet
West African Coast 34 (100GT+) compared with around
80,000 30 years ago.
West Mediterranean 32

Bay of Bengal 27 Loss activity in the South China

S.Atlantic and East Coast S.America 23 Sea region is typically driven by a
number of different factors including
West Indies 20
high levels of local and international
Other 174 trade, congested ports, older fleets
Total 807 and extreme weather. Together, the
top three maritime regions account
for almost 50% of loss activity over
the past decade.

Source: Lloyd’s List Intelligence Casualty Statistics

12 Data Analysis & Graphic: Allianz Global Corporate & Specialty
 Safety and Shipping Review 2023

Total losses by type of vessel 2013 – 2022

From January 1, 2013 to December 31, 2022. Vessels over 100GT only

60 Cargo, fishing
and passenger
vessels account
for over
50

60%
of ships lost
40 over the past
decade

30

20

• Cargo

10 • Fishery

• Passenger

• Bulk
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
• Tug

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total

Cargo 40 31 40 35 54 24 22 25 30 10 311

Fishery 12 15 16 10 8 16 14 13 7 6 117

Passenger 8 11 6 11 5 7 5 7 5 5 70

Bulk 15 5 13 5 7 3 3 2 0 0 53

Tug 6 6 6 7 4 5 4 4 2 5 49

Chemical/Product 10 2 3 7 4 3 2 2 2 3 38

Ro-ro 2 5 6 10 0 3 6 1 1 3 37

Container 4 4 5 5 3 2 1 1 1 1 27

Supply/Offshore 2 3 3 2 2 2 1 1 3 0 19

Dredger 0 1 1 1 3 2 1 2 1 2 14

Barge 3 1 0 3 1 2 1 0 2 0 13

Tanker 0 1 0 0 2 3 0 2 2 2 12

LPG/LNP 0 0 0 1 1 0 2 0 0 0 4

Other 6 4 4 4 1 1 7 5 3 1 36

Unknown 1 0 2 1 0 0 3 0 0 0 7

Total 109 89 105 102 95 73 72 65 59 38 807

Source: Lloyd’s List Intelligence Casualty Statistics

Data Analysis & Graphic: Allianz Global Corporate & Specialty 13
Safety and Shipping Review 2023

Total losses by type of vessel 2022

From January 1, 2022 to December 31, 2022. Vessels over 100GT only

Cargo 10

Fishery 6

Passenger 5

Tug 5
Total

38
Chemical/Product 3

Ro-ro 3

Tanker 2

Dredger 2

Container 1

Other 1

The average age of a vessel involved in a

Cargo ships accounted for around total loss over the past 10 years is

29
a quarter of all vessels lost in 2022.
Foundering was the most frequent
cause and most of these vessels
were lost in South East Asian waters.
Collectively fishing and passenger
vessels also account for around a
quarter of total losses.

Source: Lloyd’s List Intelligence Casualty Statistics

14 Data Analysis & Graphic: Allianz Global Corporate & Specialty
 Safety and Shipping Review 2023

Total losses by cause 2013 – 2022

From January 1, 2013 to December 31, 2022. Vessels over 100GT only

80

70

60

50

40

30

20
• Foundered

• Wrecked/stranded
10
• Fire/explosion

• Machinery damage/failure
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
• Collision

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total

Foundered 69 49 66 48 57 33 32 25 35 20 434
(sunk)

Wrecked/stranded 20 18 19 22 15 18 9 12 1 3 137
(grounded)

Fire/explosion 15 7 9 13 8 12 21 14 9 8 116

Machinery 1 5 2 10 9 3 3 4 7 2 46
damage/failure

Collision 2 2 7 2 1 3 3 3 3 4 30
(involving vessels)

Hull damage 1 5 2 4 5 2 1 1 1 1 23
(holed, cracks etc.)

Contact 0 1 0 0 0 2 1 0 0 0 4
(e.g. harbor wall)

Missing/overdue 0 0 0 2 0 0 1 0 0 0 3

Miscellaneous 1 2 0 1 0 0 1 6 3 0 14

Total 109 89 105 102 95 73 72 65 59 38 807

Source: Lloyd’s List Intelligence Casualty Statistics

Data Analysis & Graphic: Allianz Global Corporate & Specialty 15
Safety and Shipping Review 2023

Total losses by cause 2022

From January 1, 2022 to December 31, 2022. Vessels over 100GT only

Foundered (sunk) 20

Fire/explosion 8
Total

38
Collision (involving vessels) 4

Wrecked/stranded (grounded) 3

Machinery damage/failure 2

Hull damage 1

Extreme weather was reported as being a factor in

Foundered (sunk) was the main cause of total
losses reported during 2022, accounting for
over 50%. Fire/explosion ranked second (21%),
with collisions involving vessels third (11%).
at least 8 losses during 2022.

There have been 64 total losses of vessels

caused by fires in the past five years alone. January
was the most frequent month for losses in 2022 (6).

Source: Lloyd’s List Intelligence Casualty Statistics

16 Data Analysis & Graphic: Allianz Global Corporate & Specialty
 Safety and Shipping Review 2023

Total losses in all regions 2022

This map shows the approximate locations of all 38 reported total losses to date during 2022. Vessels over 100GT only

British Isles, N.Sea,

Eng. Channel and
Bay of Biscay
1 Baltic
Iceland 3 2
Newfoundland
and
1 1 Northern
Norway East Mediterranean
Canadian Arctic 2 3 2 and Black Sea
and Alaska United States
Eastern Seaboard 2 10
North Atlantic Arabian Gulf
West 3 and approaches
Mediterranean
1
Gulf of Mexico 1 1
West Indies Red Sea
S.China, Indochina,
Indonesia and
1 1 Philippines

West African East African Coast

Coast

2
Australasia

1
South Pacific

Loss Share

1 S.China, Indochina, Indonesia and Philippines 10 26%

2 Arabian Gulf and approaches 3 8%

British Isles, N.Sea, Eng. Channel and Bay of Biscay 3 8%

West Mediterranean 3 8%

3 Baltic 2 5%

East Mediterranean and Black Sea 2 5%

North Atlantic 2 5%

United States Eastern Seaboard 2 5%

Australasia 2 5%

4 Canadian Arctic and Alaska 1 3%

East African Coast 1 3%

Gulf of Mexico 1 3%

Iceland and Northern Norway 1 3%

Newfoundland 1 3%

Red Sea 1 3%

South Pacific 1 3%

West African Coast 1 3%

West Indies 1 3%

Source: Lloyd’s List Intelligence Casualty Statistics

Data Analysis & Graphic: Allianz Global Corporate & Specialty 17
Safety and Shipping Review 2023

All casualties/incidents (including total losses)

2022 review 2022 review
From January 1, 2022 to December 31, 2022. Vessels over 100GT only Top causes of incidents. From January 1, 2022 to December 31, 2022. Vessels over 100GT only

Top 10 regions Loss Annual While the number of total losses

change has declined over the past year, Machinery
1,478
British Isles, N.Sea, Eng. Channel and Bay of Biscay 679 +9 the number of reported shipping damage/failure
casualties or incidents remained
East Mediterranean and Black Sea 584 +47
relatively consistent (3,032 Collision
280
S.China, Indochina, Indonesia and Philippines 242 -34 compared to 3,000). The British (involving vessels)

West Mediterranean 191 +14 Isles region saw the highest

number of reported incidents Fire/explosion 209
Great Lakes 186 +64
(679). Machinery damage/failure
North American West Coast 148 +10 accounted for close to half of all
Wrecked/stranded
Iceland and Northern Norway 138 +33 incidents globally (1,478). There (grounded)
209
were over 200 reported fire
Baltic 119 -5
incidents during 2022 alone (209)
Contact
Newfoundland 108 +22 – the highest total for a decade, 155
(e.g. harbor wall)

Japan, Korea and North China 88 -15

making this the third top cause of
incidents with activity up 17% year- Total

3,032
Other 549 Other 701
on-year.
Total 3,032 +32
0 250 500 750 1,000 1,250 1,500

2013 – 2022 review 2013 – 2022 review

From January 1, 2013 to December 31, 2022. Vessels over 100GT only Top causes of incidents. From January 1, 2013 to December 31, 2022. Vessels over 100GT only

Top 10 regions Loss The East Mediterranean and Black

Sea region is the location of the
East Mediterranean and Black Sea 4,969 Machinery
10,753
most shipping incidents over the damage/failure
British Isles, N.Sea, Eng. Channel and Bay of Biscay 4,938 past decade (4,969), accounting
S.China, Indochina, Indonesia and Philippines 2,598 for 18%. Globally, most of the Collision
3,098
27,477 incidents reported over the (involving vessels)
Great Lakes 1,529
past decade have been caused
Baltic 1,433 by machinery damage or failure Wrecked/stranded
2,936
(grounded)
Japan, Korea and North China 1,255 (10,753), followed by collision (3,098)
and wrecked/stranded (2,936).
West Mediterranean 1,208 Contact
1,980
(e.g. harbor wall)
North American West Coast 1,156

Iceland and Northern Norway 1,136

Piracy/robbery 1,980
West African Coast 911

Other 6,344 Total

27,477
Other 6,730
Total 27,477

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000

Source: Lloyd’s List Intelligence Casualty Statistics

Data Analysis & Graphic: Allianz Global Corporate & Specialty
Note: All figures are based on reported total losses for the year-end 2022 as of March 31, 2023. 2022’s total losses may increase in future as, based on previous years’ experience, developments in losses
18 sometimes lead to a number of total losses being confirmed after year-end, particularly in the case of constructive total losses or because of late reporting, such as during the Covid-19 pandemic or Ukraine war.
 Safety and Shipping Review 2023

Trends | Economic outlook

Downturn challenges
safety and decarbonization
progress
The decline in freight rates threatens future investments in these areas
and could impact maintenance levels and risk management budgets.

Following the post-pandemic boom in container As freight rates have declined, new vessels
shipping, economic and geopolitical uncertainty ordered during the boom have begun to
and falling demand has hit freight rates. The arrive, adding to already excess capacity.
cost of shipping a container between Asia and The Mediterranean Shipping Company2 took
the US or Europe in April 2023 was more than delivery of two mega ships in March 2023 – MSC
80% lower1 than a year earlier, while some Tessa and MSC Irina – which are among the
routes are now at pre-pandemic levels. world’s largest container ships to date at more
than 24,000 teu each. It followed the delivery in
February of the 24,188 teu OOCL Spain, the first
of six under construction.

19
Safety and Shipping Review 2023

Trends | Economic outlook

In prior downturns, investment

in vessel maintenance has not
always been at the required
level, leading to losses and an
increase in machinery claims

The Baltic and International Maritime Council Lower freight rates could also potentially
(BIMCO) 3 forecasts weak demand for container put vital investments in fire safety and
shipping outstripping supply in 2023, putting decarbonization in jeopardy, according to
freight rates and second-hand ship values under Captain Rahul Khanna, Global Head of Marine
pressure through to next year. The shipping Risk Consulting at AGCS.
body predicts negative demand growth through
the first half of 2023, with a recovery in the “We are on the cusp of the delivery of new
second half leading to overall demand growth larger vessels at a time when the industry is
of 1-2% in 2023, followed by 5-6% in 2024. already under pressure from lower freight rates.
This may be good news for cargo owners, but
The global container fleet is forecast to grow not so for the container shipping industry,”
by 6.3% in 2023 and by 8.1% in 2024. Supply is says Khanna.
set to rise with the easing of port congestion
and deliveries of new vessels ordered during “Record profits for the container industry
the boom period of the past two years. BIMCO supported innovation in areas such as
predicts that 4.9 million teu will be delivered decarbonization, alternative fuels and fire
during 2023 and 2024, equivalent to an detection and prevention. If the market comes
additional 19% of the fleet size at the beginning under pressure, there is a risk such initiatives
of 2023. will lose momentum. We would not like to see
safety initiatives, especially in terms of the
“A big question is whether the decline in freight improvements we are hoping to see in container
rates will result in cost-cutting and, if so, will this ship and roll-off, roll-on (Ro-ro) design and fire
impact maintenance levels or result in lower protection in particular, take a back seat.”
risk management budgets? In prior downturns,
investment in vessel maintenance has not
always been at the required level, leading to
losses and an increase in machinery claims,”
says Justus Heinrich, Global Product Leader
Marine Hull at Allianz Global Corporate &
Specialty (AGCS).

20
 Safety and Shipping Review 2023

Trends | Economic outlook

Trend towards large

ships intensifies
Driven by the downturn and decarbonization
targets a high proportion of new container ship
orders are concentrated on larger vessels but risk
exposures continue to grow too.

Over two-thirds (65%) of fleet growth over

the next two years will be concentrated in the 20 years of container ship growth
segment of ships larger than 15,000 teu, while the
fleet of ships smaller than 3,000 teu will reduce,
2005
The Baltic and International Maritime Council Gjertrud Maersk
(BIMCO) estimates.4 10,000+ teu

2006
Emma Maersk
“Decarbonization and the drive for more 11,000+ teu
efficient shipping will reinforce and accelerate
2012
the trend for large vessels, which now make Marco Polo (CMA CGM)
16,000+ teu
up a significant proportion of the world fleet,
and account for a disproportionate amount of 2013
Maersk Mc-Kinney Møller
container trade,” says Captain Rahul Khanna, 18,270 teu

Global Head of Marine Risk Consulting at 2015

Allianz Global Corporate & Specialty (AGCS). MSC Oscar
19,000+ teu

2017
“Large container vessels are clearly here to stay. OOCL Hong Kong
21,413 teu
Efforts now need to focus squarely on making
them more efficient, less polluting, and safer. If 2023
OOCL Spain
the risks are not appropriately managed, some 24,188 teu
insurers may look to scale back their exposure to
large container vessels and other mega ships.” Capacity of the largest container vessels has doubled in the last 20 years.

What’s in a teu?

Container ship capacity is measured in 20-foot

equivalent units (teu). Typical loads are a mix of 20-foot
and 40-foot containers. The world’s largest container
ships have the capacity to carry well over 20,000
containers. Carrying capacity has increased by around
1,500% since 1968 with the capacity of the largest vessels
doubling in the last 20 years alone. There are currently
more than 50 ships with a capacity of over 21,000 teu or
more, practically all of them built in the last five years.
21
Safety and Shipping Review 2023

Trends | Economic outlook

Scrapping to turn As new orders are delivered, smaller, older tonnage

spotlight on ESG issues is being replaced by large container vessels, Justus
Heinrich, Global Product Leader Marine Hull at
AGCS notes. The 10 largest container operators have
With the downturn in freight rates, shipowners 440 new vessels on order, and the majority will be
are likely to take the opportunity to scrap older larger than the ships they replace.
vessels, many of which have had their working
lives extended by high demand in recent “An increase in the number of larger vessels leads to
years. This trend is likely to be reinforced by higher container cargo accumulation and exposure,”
tougher International Maritime Organization says Heinrich. “This trend could compound the
(IMO) climate regulations and the industry’s problems seen in recent years with large vessels,
move to decarbonize shipping. The Baltic including fires, grounding and port blockages. The
and International Maritime Council (BIMCO) salvage cost for large container ships is tremendously
expects that around 1 million teu will now high, with only a limited number of ports and shipyards
be recycled. 5 able to service and repair such vessels.”

Scrapping older tonnage is a positive trend According to Cefor (the Nordic Association of Marine
from a risk quality perspective, and it should Insurers) analysis6 of hull claims trends, the container
help stabilize freight rates, explains Justus ship segment is the only large segment with an
Heinrich, Global Product Leader Marine increase in the claim cost per vessel between 2020 and
Hull at Allianz Global Corporate & Specialty 2022 and an increase in the frequency of large losses.
(AGCS): “Scrapping had all but stopped after The frequency of claims in excess of US$500,000
the Covid-19 pandemic as every vessel was remained high, contrary to the bulk and tank segment.
needed to meet demand, resulting in many
vessels operating beyond their usual life The increase in the number of large vessels may be one
expectancy. With the fall in freight rates, we of the factors behind high levels of shipping incidents
have seen an uptick in the scrapping of older in South East Asia, with the region being something
and less efficient vessels.” of a hot spot in recent years for marine insurance
claims and total losses (see data, page 12). “We have
However, the disposal of old ships may seen a number of grounding and collision incidents
challenge the industry’s environmental, social, involving large vessels in both the Singapore Strait and
and governance (ESG) credentials. As shipping the South China Sea. The waters around Singapore
companies begin to publish ESG information, can be congested and the shipping lanes narrow. A
the sustainability of ship recycling will come small mistake by a large vessel can easily result in a
under increasing scrutiny, according to Captain grounding or collision,” says Captain Nitin Chopra,
Nitin Chopra, Senior Marine Risk Consultant Senior Marine Risk Consultant at AGCS.
at AGCS.
Large vessels can also lead to longer delays for cargo
“With the introduction of ESG requirements, owners. Whether it is a fire or a grounding incident,
and with Scope 3 emissions (those that are not if it involves a large container vessel it will likely take
under a company’s direct control, for example longer to resolve, leading to increased costs. Large
in its supply chain), shipowners will need to vessels can take longer to re-float when grounded and
demonstrate due diligence and responsible may have to travel further to reach an appropriate
behavior, even when scrapping vessels,” port of refuge or repair yard. “The larger the vessel, the
says Chopra. higher the risks of having multiple interests involved
in an incident. Companies need to consider the risks
of container shipping cargo delays and prepare
contingency plans should their cargo become involved
in an incident,” says Régis Broudin, Global Head of
Marine Claims at AGCS.

22
 Safety and Shipping Review 2023

Trends | Hull and cargo risks

Cargo fire risks continue to rise

A combination of factors is increasing the risk of blazes at sea and on land.

Hazardous and combustible goods are Recent incidents include the ZIM Charleston fire
increasingly transported by containers, while in August 2022, in which some 300 containers
the prevalence of Lithium-ion (Li-ion) batteries were reportedly damaged.7 This was followed
poses a growing risk for both container shipping by the TSS Pearl in the Red Sea in October
and car carrier vessels. At the same time, these 2022, 8 which sank after the crew were forced
hazardous cargos are increasingly transported to abandon ship. There have also been several
by large vessels, where the consequences of fires fires at ports and warehouses, including the
are amplified, resulting in more severe losses 2022 fire and explosion9 at a container depot in
and longer delays. Chittagong, Bangladesh, which killed 40 people.

“Decarbonization is leading to new types of “General average has a significant impact on

cargo, some more hazardous than in the past, cargo customers because if it occurs, the time it
such as electric scooters and battery-powered takes to release cargo is exponentially longer on
goods,” says Captain Rahul Khanna, Global a large container vessel, which has implications
Head of Marine Risk Consulting at Allianz for supply chains and seasonal cargo,”
Global Corporate & Specialty (AGCS). says Ackermann.

“A lot of conventional power sources have been “When we look at significant general average
replaced by batteries, and that industry has incidents involving container vessels over the
seen huge increases in demand in recent years, past five years, they are largely related to fires.
a trend that will only continue. These new cargos General average risk these days comes down
mean new risks,” says Khanna. to fire, and the majority of these incidents are
related to mis-declaration of cargo.”
Fire is one of the biggest causes of general
average claims on container vessels, and one of
the main causes of total losses across all vessel
types with 64 ships lost in the past five years
alone. With upwards of 20,000 containers on
board some vessels, the risk of a fire originating
from a container increase, while detecting and What is general average?
fighting a fire at sea is particularly difficult for a
crew of just 20 to 30 people, according to Marcel
Ackermann, Global Product Leader Cargo at General average is the long-standing principle of
AGCS. A small container fire can easily take hold maritime law that all parties share in any damage or
and overwhelm the ability of crew to deal with expenditure incurred while preserving property, for
the situation, leading to the abandonment of the example to save a vessel and its cargo during a storm.
vessel, and potentially its loss. Under the terms of general average, which date back
to the York-Antwerp Rules of 1890, cargo interests
pay a contribution – based on a percentage of their
own interests’ value – to cover the damages or costs
of others involved in a common maritime venture.

23
Safety and Shipping Review 2023

Trends | Hull and cargo risks

Addressing the root cause of

fires – mis-declared cargo
Fire safety and the problem of mis-declaration must be
fixed if the industry is to benefit from the efficiencies of large
container vessels.

In recent years the role that mis-declared In 2020, a US National Cargo Bureau (NCB)
dangerous goods, such as chemicals, batteries survey11 focusing on 500 containers showed
and charcoal, have played in cargo fires has that more than half failed with one or more
become increasingly documented. Failure to deficiencies, 69% of the import containers
properly declare, document and pack such contained dangerous goods and 38% of the
hazardous cargo can result in containers export ones. Of the import containers with
stowed inappropriately, or hamper firefighting dangerous goods, 44% had problems with the
efforts. Labeling a cargo as dangerous is more way cargo was secured, 39% had improper
expensive and therefore some companies try placarding and 8% had mis-declared cargo. Of
to circumvent this by labeling items such as the export containers with dangerous goods,
fireworks as toys or lithium-ion batteries as 25% had securing issues, 15% were improperly
computer parts for example. placarded and 5% were mis‑declared.

Meanwhile, the Cargo Incident Notification A number of large container shipping companies
System (CINS10) says nearly 25% of all have turned to technology to address mis-
serious incidents onboard container ships are declared cargo, using cargo screening software
attributable to mis-declared cargo. – like the US National Cargo Bureau’s Hazcheck
Detect12 tool – to detect suspicious bookings and
cargo details. Several large container operators
are now imposing penalties on mis-declared
dangerous goods.

“Mis-declaration of cargo is an important factor

in many container fires, but no real holistic
solution to this problem is in sight. Currently,
each shipping company and jurisdiction has its
own requirements while the rate of container
inspections in many countries is low,” says
Marcel Ackermann, Global Product Leader
Cargo at Allianz Global Corporate & Specialty
(AGCS).

“The challenge is how to regulate a global

industry in which millions of diversified containers
are transported every year. What we would
really like to see is unified requirements for mis-
declared hazardous cargo on all shippers and
fines for those that mis-declare hazardous cargo,”
says Captain Rahul Khanna, Global Head of
Marine Risk Consulting at AGCS.

24
 Safety and Shipping Review 2023

Trends | Hull and cargo risks

Addressing the risks from

Li-ion batteries
Lithium-ion (Li-ion) batteries are increasingly impacting shipping
safety with a number of fires in shipping containers and onboard roll-
on roll-off (Ro-ro) vessels where batteries were a contributing factor.

Decarbonization and electrification are Fires in EVs with Li-ion batteries can burn more Allianz Global
Corporate & Specialty

increasing the number of shipping goods that ferociously, are very difficult to extinguish, and Lithium-ion batteries:
Fire risks and loss prevention
measures in shipping
contain Li-ion batteries, from electric vehicles to are capable of spontaneously reigniting hours Allianz Risk Consulting bulletin

a wide range of consumer and electronic goods. or even days after they have been put out. Most
The global Li-ion battery market is expected to ships lack the suitable fire protection, firefighting Firefighting efforts around the Hoegh Xiamen after it caught fire in Jacksonville, Florida, in June 2020. The fire was linked to
a car battery. Photo: Jacksonville Fire and Rescue Department, Wikimedia Commons

Lithium-ion (Li-ion) batteries are increasingly impacting However, the overwhelming challenge investigators face in

grow by over 30% annually from 2022 to 2030, capabilities, and detection systems to tackle
shipping safety with a number of fires. Allianz Global determining the cause and origin of such incidents is the fact
Corporate & Specialty (AGCS) marine risk consultants that shipboard fires burn at such extreme temperatures,
have long warned about the potential dangers that Li- and for such extended periods of time (usually days), that
ion batteries can pose if they are not handled correctly. In little, if any, traces of evidence remain for them to examine.
this risk bulletin, the AGCS team takes a deeper dive into
the hazards and storage concerns associated with newly In most shipboard incidents, a thermal runaway event (see
manufactured Li-ion batteries being shipped on vessels page 2) is almost inevitable unless immediate action can be
as cargo or already installed in new electric vehicles. taken by the vessel’s crew to mitigate the fire. Unfortunately,

according to McKinsey.13 The number of electric such fires at sea, which has been made more
this is rarely possible due to a lack of early detection, a
All of the recommendations in this bulletin are technical shortage of manpower, and a lack of adequate firefighting
advisory in nature from a risk management perspective and capabilities on board.
may not apply to your specific operations. Please review the
recommendations carefully and determine how they can be So what can be done? The primary focus must be on
applied to your specific needs prior to implementation. Any prevention and Allianz marine risk consultants offer the
queries relating to insurance cover should be made with following recommendations to manufacturers, shippers,
your local contact in underwriting and/or broker. carriers (transporters), as well as insurance underwriters,

vehicles (EVs) is also growing at a fast pace: difficult by the dramatic increase in ship size.
based on the information and testing currently available.
Introduction This information is provided to assist in determining the risks
associated with shipments of Li-ion batteries as standalone
AGCS marine risk experts continue to see incidents involving cargo and when installed within vehicles.
fires on board container ships and ro-ro (roll-on roll-off)
vessels, with investigators looking into the involvement of
Li-ion batteries as a possible cause or contributing factor.

Nearly 10%14 of global car sales were electric in

2021, four times the market share in 2019. “Li-ion batteries on their own are not new, and AGCS has warned
about the risks
the risks are well documented,” says Captain associated with Li-ion
The main hazards of Li-ion batteries are fire, Randall Lund, Senior Marine Risk Consultant batteries in shipping
for a number of years,
explosion, and ‘thermal runaway’, a rapid at Allianz Global Corporate & Specialty
first highlighting this
self-heating fire that can cause an explosion. (AGCS). “But the explosion of demand for issue in 2017. Its latest
They can also produce irritating, corrosive or these batteries is flooding the market with new report highlights a
full list of loss
poisonous gases that cause an explosion in a manufacturers, raising questions around quality prevention measures
confined space. The main causes of Li-ion fires control. We have seen many fires where the to consider.
are substandard manufacturing or damaged cause has been traced to malfunctioning or ↗ Download
battery cells or devices, over-charging, and damaged batteries.”
short circuiting.

25
Safety and Shipping Review 2023

Trends | Hull and cargo risks

Making progress on Li-ion fire risks will likely ease over time as
manufacturers, carriers, and regulators address
container ship fire safety the current challenges. In the meantime,
attention must be focused on pre-emptive
For almost a decade Allianz Global Corporate & measures to help mitigate the peril. Measures
Specialty (AGCS) and others in the insurance industry to consider include ensuring staff/crew receive
have called for enhanced fire detection and fighting adequate training and access to appropriate
systems for container ships. In 2017, the International firefighting equipment, improving early
Union of Marine Insurance (IUMI) co-sponsored a detection systems and developing hazard
submission to the International Maritime Organization control and emergency plans.
(IMO) Maritime Safety Committee with a view to
amending The International Convention for the “The debate about electric vehicles in the
Safety of Life at Sea (SOLAS) to enhance provisions shipping industry is ongoing, with conversations
for early fire detection and effective control of fires in about whether there is a need for dedicated
containerized cargos. Although delayed by Covid-19, Ro-ro vessels for EVs. From an insurance
the process to amend SOLAS is underway. perspective, this is something we would like
to see – purpose built vessels for transporting
In March 2023, the European Maritime Safety Agency electric vehicles, designed to substantially
published its CARGOSAFE study,15 which assesses reduce the risk of fire,” says Captain Rahul
the risks associated with fires on container ships and Khanna, Global Head of Marine Risk
evaluates prevention, detection, firefighting, and Consulting at AGCS.
containment measures. The IMO is to review the study,
alongside other industry and insurer proposals to When it comes to concrete actions to mitigate
improve the firefighting capability for the cargo deck battery fire risk in containers and on Ro-Ros,
area of container ships. The amendments to SOLAS, there is no clear universal solution as yet,
which apply to new ships, are expected to enter into says Justus Heinrich, Global Product Leader
force on January 1, 2028. Marine Hull at AGCS: “If this risk is not properly
mitigated, insurers will have to address it
In addition to the IMO work, the private sector has through portfolio management methods.”
been developing technical solutions to the problem,
such as using sensors and thermal imaging to detect
fires early. In another positive development, a group
of leading shipping companies16 launched the Cargo
Fire & Loss Innovation Initiative, which aims to reduce
the impact of cargo fires and cargo loss through joint
requirements, technology solutions, and best practices
and recommendations.

“We are seeing innovation in the private sector to

address the issue of fires on container ships, and inside
containers, which makes us optimistic that realization
of the problem has increased. This is no longer about
raising awareness but moving to concrete measures
through investment in fire detection and protection for
existing vessels, in combination with discussions at IMO
level on new ship design,” says Captain Rahul Khanna,
Global Head of Marine Risk Consulting at AGCS.

26
 Safety and Shipping Review 2023

Containers overboard

New regulations will require operators to “Shipowners will be required to trace container
keep track of shipping containers lost at losses at sea in order to recover them. It is no
sea, which pose a threat to navigation and longer acceptable that a vessel can easily lose
the environment. containers which are a danger to navigation
and a threat to the environment,” says Régis
In March, 2023, an MSC container ship17 lost Broudin, Global Head of Marine Claims at
46 empty shipping containers at three different Allianz Global Corporate & Specialty.
times during bad weather east of Bermuda.
The incident followed one of the worst periods “There were fewer incidents in 2022, but this
on record for container losses. According to the remains an important issue for the container
World Shipping Council18 (WSC), over 3,100 industry, in particular large container ships,
containers were lost on average annually for where the size of vessels may be a factor in the
the two-year period 2020-2021, more than four loss of containers in heavy seas,” says Broudin.
times the 779 reported in the previous period.
Large container vessels, where containers can
Last year, the International Maritime be stacked as many as 26 deep, are vulnerable
Organization (IMO) agreed proposals for to parametric rolling (extreme rolling and
the mandatory reporting of lost containers. pitching) in certain sea conditions, exerting
The draft amendments to the International extreme stresses on container stacks and their
Convention for the Safety of Life at Sea (SOLAS) securing systems.
and the International Convention for the
Prevention of Pollution from Ships (MARPOL) “We cannot stop stronger weather conditions
treaties will require vessels to report the loss of at sea. But we can address the risk of human
freight containers without delay to ships in the error with storage and lashing of containers,”
vicinity, and to the nearest coastal state and flag says Broudin.
state. The draft amendments are expected to
enter into force on January 1, 2026.

27
Safety and Shipping Review 2023

Trends | Hull and cargo risks

Erosion of specialist skills

leads to project cargo losses
Transporting large bulky equipment by sea, such as engineered project
cargo, heavy modules, wind turbines or mining equipment, is a highly
specialized sub-sector of the shipping industry. However, recent incidents
point to a worrying trend at a time of increased activity.

Allianz Global Corporate & Specialty

Allianz Global Corporate & Specialty

UK P&I CLUB
In January 2023, a 375-ton column broke free The project cargo market has seen increased
How to safely load,
stow, secure and
discharge heavy lifts
and fell off the deck of a bulk carrier into the activity since the Covid-19 pandemic, with
& project cargo
Adriatic Sea near Italy. Both the shipping growing demand from increasing investment
company and the vessel were not specialist in infrastructure development and the
project cargo carriers. This is not the only such decarbonization of industries. However,
incident seen by insurers in recent years. handling critical cargo requires specialist
vessels, equipment, and port infrastructure.
Critical project cargo is typically high value, Being heavy and cumbersome, it also relies on
UK P&I CLUB

with long lead times, explains Captain skilled personnel and robust procedures to load
1

AGCS has previously Rahul Khanna, Global Head of Marine Risk and transport project cargo safely.
issued safety
guidance on handling Consulting at Allianz Global Corporate &
project cargo. Specialty (AGCS): “Values can range from “The specialist skills and vessels required to
How to safely load, under $1mn to tens of millions of dollars, but transport project cargo are in high demand as
stow, secure and
discharge heavy lifts
delay in start-up claims can be many times the the number of such items has increased since the
and project cargo. value of the cargo. A damaged turbine could pandemic. But there is concern in the insurance
↗ Download take 12 to 18 months to replace, for example.” industry that the specialist skills required to load
and transport project cargo are slowly eroding,”
says Khanna.

“We are experiencing an increase in losses, and

we need to see a tightening up of processes
and procedures. Ships and crews and levels
of training should be of the highest level when
handling critical cargo. It is important they are

We need to see not carried on non-specialist ships with crews

that are not trained for heavy lift vessels.

a tightening up “Many of the losses are caused by a poor

understanding of procedures to load and stow
of processes project cargo. Damage typically happens due to
usage of inadequate lifting equipment or poor
and procedures cargo securing arrangements. It is therefore
imperative that experienced personnel are in
charge of such operations and marine warranty
surveyors are appointed,” says Khanna.

28
 Safety and Shipping Review 2023

Trends | War and crime

Ukraine hull and cargo

claims crystalize
Black Sea shipping risks remain heightened as the
insurance industry faces unprecedented total loss
scenarios from trapped vessels and cargo.

More than a year after Russia’s invasion of The longer vessels are trapped, the higher
Ukraine, and the ripple effects of the conflict the likely loss for insurers. Owners and
continue to be felt by shipping companies operators have no access to trapped vessels
and insurers, while embargoes and sanctions for maintenance or repairs, while insurers are
severely limit trade with Russia. not able to carry out loss assessments. With the
passage of time, salvage values decline.
When Russia invaded Ukraine in February
2022, 112 vessels crewed by more than 2,000 The one-year mark is an important trigger for
seafarers were caught in Ukrainian ports marine insurance policies. Under a marine war
across the Black Sea and the Sea of Azov. One risk policy, a vessel could be considered a total
year later, and 331 seafarers were still stuck in loss when trapped or blocked for a defined
Ukrainian ports.19 Some 40 or more vessels were period, typically one year for a hull policy, but as
believed to still be trapped in the region as of little as six months for cargo.
March 2023, in addition to several merchant
vessels that were damaged or destroyed in
Ukrainian ports in the first months of the war.

29
Safety and Shipping Review 2023

Trends | War and crime

“As we have passed the 12-month time period, Despite the Black Sea Grain Agreement,
outstanding claims for trapped vessels have risks for shipping in the Black Sea remain at
been declared as total losses,” says Régis a high level, with an ever-present threat of
Broudin, Global Head of Marine Claims at war. NATO20 recently warned that the threat
Allianz Global Corporate & Specialty (AGCS). of collateral damage or direct hits on civilian
“In almost 30 years of experience, this is the shipping in the war risk area of the Black Sea
first time I have seen this theoretical total loss remains high, while harassment and diversion
scenario realized under a blocking and trapping of shipping in the area cannot be excluded.
hull cover. This situation is unprecedented.” The threat of Global Positioning System (GPS)
jamming, Automatic Identification System (AIS)
Insureds would, however, be expected to take spoofing, communications jamming, electronic
reasonable measures to try minimizing the loss interference and cyber-attacks in the area are
or secure the vessel’s release, such as making also considered high.
use of any safe passage agreements. Signed
in Istanbul on July 22, 2022, facilitated by the Mines also continue to pose a threat, and a
United Nations and Turkey, the Black Sea Grain number have been detected and deactivated
Agreement is intended to create safe passage in the western Black Sea by coastal nations’
for vessels in the Black Sea exporting grain authorities in 2023. During a storm in March
and fertilizer. 2023, a stray mine drifted ashore and exploded,
damaging the dock at a Ukrainian resort. Last
The grain corridor has enabled some vessels year a Romanian minesweeper was damaged
trapped by the war in Ukraine to escape. Vessels by a floating mine. 21
using the corridor are covered by a special
insurance facility. “Floating mines will continue to pose a risk,
even after the war ends. There is no reliable
information on where mines are located, and
many can go missing or drift, and that would be
a big risk for vessels navigating these waters for
some years,” says Captain Nitin Chopra, Senior
Marine Risk Consultant at AGCS.

30
 Safety and Shipping Review 2023

Trends | War and crime

Shadow tanker fleet poses

safety and environmental risk
Concerns grow as Russia oil embargoes create shadow
tanker fleet and sanctions challenge.

In December 2022, the G7, the European Union This so-called shadow fleet enables Russia to
and Australia agreed to set a maximum price of sell its oil effectively without valid insurance.
$60 per barrel for seaborne Russian oil products, Of the 900 or so very large and ultra large
with an option to adjust the price cap in the tankers operating worldwide, around 20%
future to respond to market developments. were operating in a way that technically
breaks sanctions against Iran, Venezuela
The price cap, which is in addition to US, UK or, increasingly, Russia, according to
and EU bans on Russian oil imports, prohibits TankerTrackers. 24 Some 15% of the suezmax
operators and service providers in participating fleet and 11% of the aframax fleet were
countries – including insurers – from facilitating breaking rules.
the transportation of Russian oil above the
price cap. Even above the price cap, there is Sanctions and Russia’s invasion of Ukraine
limited appetite among insurers and reinsurers have caused many leading certification
to underwrite Russian oil trade due to the providers, engine makers and insurers to
administrative burden and enhanced safety and withdraw their services from ships carrying oil
pollution concerns. Where insurance is provided, from sanctioned Iran, Russia and Venezuela,
any breach of the price cap would result in the resulting in reduced oversight of vessels carrying
vessel being uninsured. oil exports from these countries. Vessels in the
shadow fleet are more likely to be older ships,
Russia and its allies, however, are seeking to operating under flags of convenience and
circumvent these sanctions. According to the under lower maintenance standards, explains
International Union of Marine Insurance (IUMI), Justus Heinrich, Global Product Leader
Russia has assembled its own fleet of about 100 Marine Hull at Allianz Global Corporate &
vessels to transport its oil and may have access Specialty (AGCS): “The sanctions environment
to a further 200 vessels from countries like has intensified significantly over the past
Venezuela and North Korea. 22 Estimates of the year and the complexity of doing business
size of the shadow fleet vary, and range to more for insurers and customers has increased
than 600, or roughly a fifth of the overall global significantly. At the same time, the increase in
crude oil tanker fleet, according to Reuters. 23 the number of shadow tankers is a worrying
development, threatening the world fleet and
the environment.”

31
Safety and Shipping Review 2023

Trends | War and crime

According to analysis25 of ship tracking and In May 2023, an uninsured, unladen 1997-built
accident data, there were at least eight tanker, Pablo, exploded in Southeast Asia,
groundings, collisions or near misses involving reportedly killing three crew and washing oil up
tankers carrying sanctioned oil products in 2022 on nearby shores. 26
– the same number as in the previous three years
combined. In March last year, shadow tanker “As this incident shows, there are a number
Arzoyi ran aground off eastern China. Just days of worrying scenarios, such as a collision with
later the Petion was involved in a collision near an uninsured shadow fleet vessel that causes
Cuba. In November 2022, oil tanker Linda I was major environmental damage,” says Captain
seized in Spain for drifting out of control – it was Nitin Chopra, Senior Marine RIsk Consultant
found to have several deficiencies and was in at AGCS.
contravention of pollution regulations for using
high-sulphur marine fuel without an exhaust gas
cleaning system.

32
 Safety and Shipping Review 2023

Trends | War and crime

Progress made in fighting

piracy but recent activity shows
no room for complacency
Globally, maritime piracy is at its lowest recorded level in almost three
decades, but the root cause of these incidents has not gone away.

There were just 115 recorded piracy incidents “However, sustained efforts are needed to
during 2022, down from 132 in 2021 according ensure the continued safety of seafarers in
to the International Maritime Bureau. 27 Ten the Gulf of Guinea region. Piracy is tied to
years ago there were 138 incidents recorded in underlying social, political and economic
the first six months of 2013 alone. problems, which could deteriorate further.
The region remains dangerous,” says Captain
The overall reduction in piracy activity in the Rahul Khanna, Global Head of Marine Risk
high-risk waters of the Gulf of Guinea – down Consulting at Allianz Global Corporate &
from 35 incidents in 2021 to 19 in 2022 – is a Specialty (AGCS). Two incidents were reported
significant contributor to this decreased activity in the last quarter of 2022. In March 2023
overall. In 2019, the Gulf of Guinea was the pirates boarded a product tanker off the coast
global piracy hotspot, accounting for 90% of of Democratic Republic of the Congo, while in
global kidnappings reported at sea, with the April another tanker was boarded about 300
number of crew taken increasing by more than nautical miles southwest of Abidjan, Ivory Coast
50% to 121. Today, piracy is at a near three – all crew were later reported safe with the oil
decade low in the region. cargo the target 28 . Seafarers are encouraged
to follow industry best management practice
The prompt and decisive actions and recommendations in these waters.
collaboration between international navies
and regional authorities and navies in Developments outside of the Gulf of Guinea
the region, such as the Nigerian Maritime should remain on the risk radar. A third of all
Administration and Safety Agency (NIMASA) incidents reported globally in 2022 were in
and initiatives such as the Gulf of Guinea the Singapore Strait with underway vessels
Maritime Collaboration Forum SHADE (which successfully boarded in all 38 incidents. These
was established to implement more effective incidents fall under the definition of armed
operational counter piracy cooperation between robbery, but crews continue to be at risk. In
navies, both regional and international, as well February 2023, the Regional Cooperation
as the shipping industry and reporting centers) Agreement on Combating Piracy and Armed
have positively contributed to the drop in Robbery against Ships in Asia Information
reported incidents. Sharing Centre (ReCAAP ISC) reported nine
incidents of armed robbery against ships in Asia
(8 in the Straits of Malacca and Singapore). 29
Armed robbery is distinguished from piracy
in that the former occurs in internal waters,
archipelagic waters and territorial seas, rather
than on the international high seas.

33
Safety and Shipping Review 2023

Trends | War and crime

Shipping continues to fall

victim to cyber-attacks
IT security should not be put on the backburner despite industry
challenges and economic pressures.
In January 2023, DNV, 30 a Norwegian shipping Fortunately, there are also a growing number
classification society confirmed its systems of resources available to help mariners learn
had been disrupted by a ransomware attack, about common vulnerabilities. Just one example
affecting around 1,000 vessels that rely on is the internationally-recognized United States
its technology. In April 2023, several ports Maritime Resource Center, which assists the
in Canada including Halifax, Montreal, and industry in cyber awareness, safety and security
Québec, suffered multiple cyber-attacks after through evidence-based research. Then there
being targeted by a distributed denial-of-service are an increasing number of cyber security
attack (DDOS) which caused their websites to guidelines which can be followed, such as those
crash. Reports indicated that a pro-Russian from the International Maritime Organization,
hacking group had claimed responsibility. 31 but also from other important organizations
such as the Baltic and International Maritime
The digital era may be opening up new possibilities Council (BIMCO), the Cruise Lines International
for the maritime industry but its growing reliance Association (CLIA), Intercargo and Intertanko.
on computer and software and increasing
interconnectivity within the sector is also making it “There are also standard practices that can
highly vulnerable. All four of the largest shipping be implemented to reduce cyber risk, such as
companies, Maersk, Cosco, MSC, and CMA CGM defining personnel roles and responsibilities
have been victims of cyber-attacks in recent years. for cyber risk management and identifying
And according to an industry survey32 just under the systems, assets and data that, when
half (44%) of maritime professionals reported disrupted, pose risks to ship operations,” says
that their organization has been the subject of a Captain Rahul Khanna, Global Head of
cyber-attack over a three year period. It also found Marine Risk Consulting at Allianz Global
almost a third of organizations do not conduct Corporate & Specialty (AGCS). “Shipowners
regular cyber security training while 38% do not also need to implement risk control processes
have a cyber response plan. and contingency planning, developing and
implementing activities necessary to quickly
To date, most cyber incidents in the shipping detect a cyber event. Identifying measures to
industry have been shore-based, such as back up and restore cyber systems impacted by
ransomware and malware attacks against a cyber event is obviously crucial.”
shipping companies’ and ports’ database systems.
But with the growing connectivity of shipping, These are challenging times for the shipping
the fact that geopolitical conflict is increasingly industry, but it is vital that investment in cyber
being played out in cyber space – recent years risk education and security is not neglected at
have seen a growing number of GPS spoofing this time, despite economic and decarbonization
incidents, particularly in the Middle East and pressures, as this risk has the potential to have
China, which can cause vessels to believe they are catastrophic consequences, given the right
in a different position than they actually are – and confluence of events.
with the advancement of autonomous shipping,
there is little doubt that cyber risk has become an
important exposure that will require much more
detailed risk assessment going forward.

34
 Safety and Shipping Review 2023

Trends | Claims

Inflation pushes up severity

of hull and machinery losses
Supply chain disruption, labor and material costs and delays are driving
up the cost of hull and machinery claims.

Global inflation hit 8.8% in 2022, more than Addressing inflation is a challenge for both ship
double its pre-pandemic level, although it is owners and insurers in the current environment,
forecast to fall back to 6.6% in 2023 and 4.3% in says Justus Heinrich, Global Product Leader
2024. 33 However, higher prices are now baked Marine Hull at AGCS. “Inflation-led increases
in, while the outlook for inflation is uncertain, in repair and yard costs are beyond the control
given current geopolitical and financial of shipowners and can significantly increase the
market instability. cost of claims for insurers. Even companies with
the best risk management on earth will see the
Increased commodity prices, higher labor impact of inflation on claims.”
costs and supply chain disruption have had a
significant impact on marine insurance claims, in The post-pandemic boom in container shipping
particular hull and machinery claims. The price has also impacted values. Cargo values have risen
of steel, a key cost driver in hull claims, increased with the increase in the price of goods and raw
sharply post-pandemic, as did the price of spare materials, while the shift to increased levels of
parts. A typical propeller or machinery damage cargo storage in ports and warehouses has led to
claim, for example, now costs around two times higher costs and aggregation issues for insurers.
more than it did pre-pandemic. The value of container vessels has also been
volatile, having doubled in 2021, but since falling
Shortages and delays in obtaining replacement back sharply with the decline in freight rates.
parts also led to longer stays in repair yards.
Labor shortages have also increased costs,
contributing to longer repair times and increased Top causes of loss
yard costs. Industry estimates calculate a +18% by value of claims in marine
increase in ship repair costs between 2020 and
Based on analysis of 244,451 insurance claims between January 1,
2022 from inflation. 2017, and December 31, 2021, worth approximately €9.2bn in value.
“Other” causes of loss account for 32% of the value of all claims.
The severity of partial and attritional claims has Claims total includes the share of other insurers in addition to AGCS.
risen since the pandemic, according to Régis
Broudin, Global Head of Marine Claims at Fire and explosion 18%
Allianz Global Corporate & Specialty (AGCS).
“Analysis of claims across our portfolio shows Shipping incidents
17%
(e.g. sinking, collision, etc.)
an increased severity for attritional claims for
hull and machinery from higher labor, repair Damaged goods (including
12%
handling/storage)
costs, availability of spare parts and dry docking
for repairs, as well as the increased cost of Machinery breakdown
12%
(including engine failure)
materials like steel. This comes on top of the
Natural catastrophes
increased expense of dealing with large vessels, (e.g. hurricanes, storms, 9%
which face higher costs for repairs, salvage and floods, wildfires)
towing,” says Broudin. 0% 5% 10% 15% 20%

Source: Allianz Global Corporate & Specialty (AGCS)

35
Safety and Shipping Review 2023

Trends | Decarbonization and sustainability

Green efforts progress

and evolve but
acceleration needed
Decarbonization of shipping is now well underway, but
the pace of these efforts is influenced by range of factors,
including green tech, regulation and market forces.

It needs to be full steam ahead for the “Decarbonization is by far the biggest challenge
decarbonization of shipping, which is thought to for the sector, but the shipping industry’s efforts
contribute almost 3% of global greenhouse gas are progressing and rapidly evolving,” explains
(GHG) emissions annually34 . If it were a country, Captain Rahul Khanna, Global Head of Marine
the shipping industry would be considered the Risk Consulting at Allianz Global Corporate
sixth largest35 emitter. & Specialty (AGCS). “The pace and progress
of these efforts are influenced by a range of
In 2018, the International Maritime Organization factors, including technological developments,
(IMO) committed to cut annual GHG emissions regulatory frameworks, and market forces.”
from international shipping by at least half by
2050, compared with their level in 2008, and One key indicator of progress is the reduction in
work towards phasing out all GHG emissions carbon intensity, which is the amount of carbon
from shipping as soon as possible in this century. emissions per unit of transport work (such as
It also set a goal to reduce the carbon intensity per ton-mile). “The IMO’s target of reducing the
of international shipping by at least 40% by shipping industry’s carbon intensity by 40% by
2030, and 70% by 2050. 2030, compared to 2008 levels, is ambitious and
the industry will need to accelerate its adoption
of energy-efficient technologies and fuels, such
as wind propulsion, biofuels, hydrogen, and
ammonia,” Khanna explains.

36
 Safety and Shipping Review 2023

AGCS pilots ESG

Transportation Index
Allianz has committed to transition all greenhouse
gas (GHG) emissions from its underwriting portfolios
to net-zero by 2050 consistent with a maximum
temperature rise of 1.5°C in order to contribute to the
implementation of the Paris Agreement on Climate
Change. Additionally, it is actively engaging with
clients on their own decarbonization strategies.
One pilot project that Allianz Global Corporate &
Specialty (AGCS) is running in 2023 is the AGCS ESG
Transportation Index, which involves collaborating
with selected clients in the marine cargo and hull
sectors (as well as in the aviation industry) on a survey
to gather much-needed data on the maturity of
companies’ environmental, social, and governance
Trends | Decarbonization and sustainability (ESG), and sustainability initiatives and commitments.

Once the pilot is completed the aim of the index is

Another indicator of progress is the adoption to offer access to up-to-date information on ESG
of regulatory frameworks aimed at reducing best practices and trends, and benchmarking,
emissions. The IMO has introduced a range of which measures the ESG maturity of companies
measures to promote energy efficiency and against industry peers, with the longer-term goal
reduce emissions, including the Energy Efficiency of developing sustainable insurance products and
Design Index (EEDI), the Ship Energy Efficiency services. AGCS will also offer discussions to support
Management Plan (SEEMP), and the Carbon clients’ sustainability agendas and additional risk
Intensity Indicator (CII). The CII regulations have consulting based on the results of the index.
come into force from January 1, 2023, and this
should help accelerate the pace of transition.

Market forces are also driving decarbonization

efforts in the shipping sector. Increasingly, “Overall, while progress has been made in the
consumers and investors are demanding shipping sector’s decarbonization efforts, much
sustainable and low-carbon supply chains, and more needs to be done to achieve the targets
shipping companies are responding by adopting set by the IMO,” says Khanna. “We also need
cleaner technologies and fuels. New ships with to keep in mind these targets are less ambitious
engine propulsion using biofuels and methanol than the net zero target being set by many other
are already in the service. The availability industries and IMO will face further pressure to
and affordability of such low-carbon fuels revise these.”
will also play a significant role in the sector’s
decarbonization efforts and in part is dependent According to Justus Heinrich, Global Product
on upstream producers. Leader Marine Hull at AGCS, the sector’s
decarbonization journey will also have
Establishing green corridors is also an idea significant implications for exposure and
gaining in popularity. These are dedicated underwriting: “The big shipping companies have
routes or lanes where special measures are solid controls and steering measures to reduce
taken to promote sustainable shipping and are carbon intensity, and many are in the process
collaborations between industry stakeholders of modernizing their fleet, retrofitting existing
such as shipping companies, ports and vessels, testing alternative fuels, and ordering
local authorities. new greener vessels.”

37
Safety and Shipping Review 2023

Trends | Decarbonization and sustainability

Investment in alternative
fuels takes off
Collaboration is key when it comes to innovation and regular exchanges
of information from testing and experiences between companies and
insurers will be important in helping to reduce transition risks.

Shipping companies and cargo operators AGCS is already supporting ship owners as
are already switching to vessels powered by they test and transition to alternative fuels, in
liquefied natural gas (LNG), as well as trialing particular biofuels. Derived from agriculture
and using alternative fuels, wind-assisted and forestry, biofuels can replace conventional
propulsion systems, more efficient propellers shipping fuel without substantial modifications
and bulbous bow designs. Meeting the to engines, fuel tanks, pumps or supply systems.
International Maritime Organization (IMO) However, there are likely to be challenges with
greenhouse gas emission reduction targets will scalability and sustainability, with questions over
cost as much as $1.4trn, according to a 2020 the ability of the supply chain and logistics to
study from the Global Maritime Forum. 36 meet growing demand for biofuels.

Much of the current activity is focused on Transitioning away from carbon-based shipping
experimenting with alternative fuels, including will involve a challenging period of adjustment
biofuels, methanol, ammonia and hydrogen and change, according to Khanna. “It will take
power, as well as solar and battery powered years to build the scale of infrastructure required
all-electric vessels and hybrid propulsion to support the transition to alternative fuels,
systems. “We are seeing a lot of investment and a mix of fuels is likely to exist for the next
in alternative fuels. The challenge is to find five to 10 years, which poses a challenge for
the one that will take us across the line and shipowners and operators, ports, and bunker
meet decarbonization targets,” says Captain operators,” says Khanna.
Rahul Khanna Global Head of Marine Risk
Consulting at Allianz Global Corporate & The shipping industry also has only limited
Specialty (AGCS) “LNG is helping transition experience of using and handling biofuels, while
away from the heavy fuels of the past. But it is the long-term effects of alternative fuels on
not the solution that will take us there and will engines and fuel systems have yet to be borne out.
only provide short-term temporary relief.”
“Increasing the efficiency of vessels is a move
According to the IMO, 37 some 99.89% of the fuel welcomed by insurers, which share the industry’s
used by shipping in 2021 was carbon-based, commitment to decarbonization and net zero
yet for the shipping industry to meet a 1.5°C targets. However, this is a new field that our
target in line with the Paris Agreement, net customers are exploring, and as insurers we
zero-emission fuels must make up 5%38 of the share in the risks. However, while there is an
international shipping fuel mix by 2030. increase in testing, we have very little data or
loss history on alternative fuels,” says Justus
Heinrich, Global Product Leader Marine Hull
at AGCS. “Collaboration is key when it comes
to exposure and innovation and regular data,
experience and information exchanges with a
willing client base that wants to partner with us
will go a long way towards improving this.”

38
 Safety and Shipping Review 2023

Trends | Decarbonization and sustainability

While the testing of biofuels is already well

underway, the industry is also exploring other
potential low-carbon or zero-carbon fuels,
including hydrogen, green methanol and
ammonia, as well as battery-powered vessels.

“As yet we have not seen any major claims

from alternative technologies like wind-
assisted propulsion or alternative fuels like
biofuel. However, bigger changes lie ahead.
As hydrogen, green methanol, ammonia and
battery-assisted technologies are introduced at
scale, then we will potentially see more issues,”
says Régis Broudin, Global Head of Marine
Claims at AGCS.

Dutch logistics company Samskip recently

ordered two hydrogen-powered feeder
container vessels while Norwegian ferry line
Torghatten Nord is developing hydrogen-
powered ferries. 39 Shipping companies are also
ordering vessels capable of running on green
methanol. Almost two-thirds of new container
ship orders this year will be capable of using
green methanol. 40

“Hydrogen and ammonia have been touted

as possible fuels that could help meet
decarbonization targets, but it is early days in
terms of the additional risks these fuels present
to the industry, especially once they start mass
production of such vessels. Hydrogen and
ammonia are not easy to handle, and hydrogen,
in particular, is difficult to transport,” says
Khanna. In February 2023, a report41 by the
Australian Transport Safety Bureau revealed
than an electrical failure blamed on incorrect
fitting work caused a “serious” incident during
the world’s first international transport of
liquefied hydrogen in January 2022. A one-
meter-high yellow flame erupted from a gas
combustion unit on the liquefied hydrogen
carrier but there was no subsequent fire,
explosion or injuries.

39
Safety and Shipping Review 2023

Trends | Decarbonization and sustainability

Electric and autonomous

vessels bring benefits
and new risks
The decarbonization of shipping is leading to growing interest,
continued testing is key to their safe development.

Last year, the world’s first fully electric, Fire detection, prevention and fighting capabilities
autonomous container ship, the Yara Birkeland, will be an important consideration in the
completed its maiden voyage, sailing along the development of safe operation of electric-powered
Norwegian coast from Horten to Oslo. By the vessels, explains Chopra. Crew training and
end of this year, the number of crew on board procedures will also need to reflect the potential
the 80m-long vessel could be halved, 42 and fire risks.
potentially removed completely within two years,
if trials go according to plan. While electric and autonomous vessel development
has so far focused on smaller coastal vessels, the
The builder of the Yara Birkeland, Kongsberg, technology could be deployed in larger ocean-going
is also now developing battery-powered vessels. Last year, a subsidiary of South Korean
autonomous barges for Norwegian grocery shipbuilder HD Hyundai completed the world’s first
wholesaler Asko. In Sweden, the city of Stockholm ocean crossing by a large autonomous ship. The LNG
is due to commence electric autonomous car carrier Prism Courage44 sailed 10,800 nautical miles
ferries by mid-2024,43 although they will be from Texas to South Korea in 33 days, of which half
remotely controlled from the shore, and will still was navigated autonomously.
have crew on board empowered to take over
control if needed. The city also has plans to pilot an “Coastal trade has provided a good testing
electric hydrofoil commuter ferry later this year. ground for this technology, and from an insurance
perspective, we would like to see continued testing
The lithium-ion (Li-ion) batteries used in electric with smaller coastal vessels, learning and refining
vessels are an important risk factor, explains systems over time, before moving on to scaled-up
Captain Nitin Chopra, Senior Marine Risk ocean transit operations,” says Chopra.
Consultant at Allianz Global Corporate &
Specialty (AGCS). Container ship and car- With no crew on board, autonomous technology
carrier fires in recent years have highlighted raises questions around emergency response,
that these batteries can combust or explode Chopra adds. “If there was a cargo or engine fire,
when damaged, or due to faulty manufacturing. collision or grounding, any event, small or large,
Battery fires are also more difficult to extinguish would be amplified and potentially turn into a
and prone to self-reigniting. total loss.”

“The battery power banks, if damaged, could The International Maritime Organization’s Maritime
cause a serious fire. It is well documented that Safety Committee is in the process of developing
Li-ion battery fires are very hard to extinguish new regulations for the operation of maritime
and require additional firefighting measures. autonomous surface ships (MASS), including the role,
As electrification moves to larger vessels, it will competencies and responsibilities of MASS master
require special measures for fire protection and and crew, The aim is to adopt a non-mandatory goal-
fighting, especially in the battery storage area,” based MASS Code to take effect in 2025, which will
says Chopra. form the basis for a mandatory goal-based MASS
Code, expected to enter into force on January 1, 2028.
40
 Safety and Shipping Review 2023

References
1 Freightos, Shipping & freight cost increases, 22 International Union of Marine Insurance, IUMI
current shipping issues, and shipping container Eye newsletter, March 2023
shortage [2023], April 13, 2023 23 Reuters, Oil spills and near misses: more ghost
2 gCaptain, MSC takes delivery of MSC Tessa, one tankers ship sanctioned fuel, March 23, 2023
of the world’s largest container ships, March 9, 24 Tankertrackers.com, March 10, 2023
2023
25 Reuters, Oil spills and near misses: more ghost
3 BIMCO, Container shipping market overview and tankers ship sanctioned fuel, March 23, 2023
outlook Q1, 2023, February 28, 2023
26 Splash247.com, Pablo explosion a warning sign
4 BIMCO, Container shipping market overview and of worse to come, May 8, 2023
outlook Q1, 2023, February 28, 2023
27 ICC International Maritime Bureau, Piracy and
5 BIMCO, Container shipping market overview and armed robbery against ships report, January –
outlook Q1, 2023, February 28, 2023 December 2022
6 Cefor, 2022 hull trends released, April 13, 2023 28 The Maritime Executive, Ongoing incident:
7 Port Technology, General Average declared Pirates board product tanker in the Gulf of
following ZIM Charleston cargo fire, August 23, Guinea, March 27, 2023
2022 29 ReCAAP ISC: Nine incidents of armed robbery
8 The Loadstar, Blaze-hit TSS Pearl sinks in Red against ships in Asia in February, March 14, 2023
Sea after crew abandon ship, October 13, 2022 30 DNV, Cyber-attack on ShipManager servers –
9 Port Technology, Chittagong supply chain update, January 23, 2023
feeling aftershocks of container depot fire, June 31 Port Technology, Pro-Russian hackers suspected
27, 2022 in cyber-attacks on Canadian ports, April 14,
10 Splash 247.com, Hapag-Lloyd to fine shippers 2023
$15,000 per box for any misdeclared hazardous 32 Safety4Sea, Report: Shipowners pay average
cargos, August 7, 2019 of $3.1 million as ransoms due to cyber-attacks,
11 National Cargo Bureau, Container inspection March 22, 2022
safety initiative white paper, July 2022 33 International Monetary Fund, World economic
12 National Cargo Bureau, Hapag-Lloyd adopt outlook update, January 2023
Hazcheck Detect cargo screening tool for 34 OECD and International Transport Forum, Ocean
misdeclared and undeclared dangerous goods, shipping and shipbuilding
January 5, 2022
35 OCEANA, Shipping pollution
13 McKinsey & Company, Battery 2030: Resilient,
36 Global Maritime Forum, The scale of investment
sustainable and circular, January 16, 2023
needed to decarbonize international shipping,
14 International Energy Agency, Global EV outlook January 20, 2020
2022
37 International Maritime Organization, Energy
15 European Maritime Safety Agency, CARGOSAFE efficiency of ships, September 10, 2022
study, March 16, 2023
38 COP26 Climate Champions, UMAS, Shipping
16 Safetytech Accelerator, Major shipping carriers needs 5% zero-carbon fuels by 2030 to meet
unite to improve safety of cargo, February 22, green goals, March 9, 2021
2023
39 Cruise & Ferry, Torghatten Nord develops two
17 gCaptain, MSC container ship loses empty hydrogen-powered ferries, March 6, 2023
containers overboard off Bermuda, March 8,
40 Splash247.com, Methanol boxship orders
2023
growing more rapidly than all other fuel types,
18 World Shipping Council, Containers lost at sea March 1, 2023
report 2022 update published, June 22, 2022
41 TradeWinds, Report reveals serious incident
19 BIMCO, Shipping industry calls for help to on Shell hydrogen carrier’s maiden voyage,
evacuate the 300+ seafarers still trapped in February 2, 2023
Ukraine ports, February 20, 2023
42 BBC, Crewless container ships appear on the
20 NATO, Risk of collateral damage in the horizon, March 24, 2023
northwestern Black Sea area, February 28, 2022
43 HDI, Autonomous and electric ferries set course
21 Romania Journal, Romanian Naval Forces’ for Sweden, April 13, 2023
minesweeper damaged after being hit by mine,
44 gCaptain, South Korean company claims world’s
September 9, 2022
first autonomous ocean crossing by a large ship,
June 7, 2022
41
Safety and Shipping Review 2023

Data and sources

The primary data source for total loss and casualty statistics is Lloyd’s List Intelligence Casualty
Statistics (data run on March 31, 2023).

Total losses are defined as actual total losses or constructive total losses recorded for vessels of 100
gross tons (GT) or over (excluding, for example, pleasure craft and smaller vessels), as at the time of
the analysis.

Some losses may be unreported at this time and, as a result, losses (especially for the most recent
period) can be expected to change as late loss reports are made. As a result, this report does not
provide a comprehensive analysis of all maritime accidents, due to the large number of minor
incidents, which do not result in a “total loss”, and to some casualties which may not be reported in
this database.

This year’s study analyzes reported shipping losses on a January 1 to December 31 basis.

42
 Safety and Shipping Review 2023

Contacts
Global
Ulrich Kadow Régis Broudin Philip Graham
Global Head of Marine Global Head of Marine Claims Global Product Leader Marine
ulrich.kadow@allianz.com regis.broudin@allianz.com Liability
+49 89 3800 12243 +33 1 58 85 9946 philip.graham@allianz.com
+44 7702 776 694
Justus Heinrich Marcel Ackermann
Global Product Leader Marine Hull Global Product Leader Cargo
justus.heinrich@allianz.com marcel.ackermann@allianz.com
+49 40 3617 4477 +44 203 451 3014

Rahul Khanna Richard Soja

Global Head of Marine Risk Global Product Leader Inland Marine
Consulting richard.soja@agcs.allianz.com
rahul.khanna@allianz.com +1 212 823 8977
+44 203 451 3154

Risk Consulting
Nitin Chopra Anastasios Leonburg Randall Lund
Senior Marine Risk Consultant, Senior Marine Risk Consultant, Senior Marine Risk Consultant,
Asia Pacific Central and Eastern Europe North America
nitin.chopra@allianz.com anastasios.leonburg@allianz.com randall.lund@agcs.allianz.com
+65 639 53848 +49 40 3617 4472 +1 917 438 7986

Regional
Delphine Marchessaux Sam Bartram Daniel Santos
Marine Head, Mediterranean & Africa Marine Head, Asia Pacific Marine Head, Ibero LatAm
delphine.marchessaux@allianz.com sam.bartram@allianz.com daniel.sanches@allianz.com
+33 1 58 85 9849 +55 11 3527 0298

43
Contacts
For more information contact your local Allianz Global Corporate & Specialty Communications team.

Asia Pacific Central and Eastern Europe Ibero/LatAm

Shakun Raj Andrej Kornienko Laura Llauradó
shakun.raj@allianz.com andrej.kornienko@allianz.com laura.llaurado@allianz.com
+65 6395 3817 +49 89 3800 14303 +34 91 791 03 24

Mediterranean/Africa North America UK and Nordics

Florence Claret Jo-Anne Chasen Ailsa Sayers
florence.claret@allianz.com jo-anne.chasen@agcs.allianz.com ailsa.sayers@allianz.com
+33 158 858863 +1 917 826 2183 +44 20 3451 3391

Lesiba Sethoga Global

lesiba.sethoga@allianz.com Hugo Kidston
+27 11 214 7948 hugo.kidston@allianz.com
+44 203 451 3891
Olivia Smith
olivia.smith@allianz.com Heidi Polke‑Markmann
+27 11 214 7928 heidi.polke@allianz.com
+49 89 3800 14303

For more information contact agcs.communication@allianz.com

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Cover image: The OS 35 bulk carrier which collided with the Adam LNG tanker off Gibraltar, September 5, 2022. Images: Shutterstock/Adobe Stock
May 2023