Cost pressures, new fuels impact vessel safety

In its fourth annual Shipping and Safety Review, the company notes that 85 large ships (over 100gt) were lost last year. While this marks a 3% decline on the previous year, Allianz recorded an increase in frequency losses over the past year “which can likely be attributed to some extent to this environment,” said Duncan Southcott, global head of claims – marine, Allianz Global Corporate & Specialty (AGCS).

The report noted that some sectors, including general cargo, bulk and offshore, are already ‘challenged’ in safety terms and that any drop in standards would be a serious case for concern. The reactivation of laid-up vessels – plentiful in this economic situation – also poses particular challenge, particularly where the market may have advanced technologically in the interim. Allianz highlighted the need for standardised lay-up procedures to counter this threat.

Allianz also observed an increase in machinery claims relating to fuel, and warned that ultra-low sulphur fuel had raised unexpected safety implications, including engine problems and power issues. “Such incidents could increase as regulations on sulphur content in fuel tighten further,” the insurer said.

Captain Andrew Kinsey, senior marine risk consultant at AGCS said: “Pilots have reported power losses during critical manoeuvres. These lighter fuels are not used in the deep-sea trades, so we are seeing electrical blackouts when the ships are at their most vulnerable in tight areas and when changing speed. At worst, this could lead to groundings.”

Allianz stressed the importance of investing in separate fuel tanks for older tonnage using low-sulphur fuels, as well as ensuring adequate bunker monitoring and protection against abrasive cat fines.

The report highlighted a range of other emerging threats, including the impact of cyber security issues on navigation and piracy incidents; the difficulties of salvage in relation to ‘megs ships’; the increasing frequency of superstorms; and the growing number of casualties related to Arctic shipping.

Machinery damage or failure accounted for two out of 85 total losses in 2015, with the same number caused by hull damage. Fire and explosions caused three losses.

The full report can be downloaded here.