Annual shipping losses declined 50% over the last decade to 2020, with 49 vessels reported lost last year, Allianz Global Corporate and Specialty (AGCS) says in a yearly review of the maritime industry.

The Allianz-owned corporate arm says last year’s loss figure is the second-lowest total this century, reflecting the positive effect of an increased focus on safety measures over time, such as regulation, improved ship design and technology, and risk management advances.

The number of shipping incidents declined 4% to 2703 from 2019, with machinery damage/failure (40%) the top cause of mishaps.

However “not all [is] smooth sailing” for the industry, AGCS Global Head of Marine Risk Consulting Rahul Khanna said.

He says the increasing number of issues posed by larger vessels, growing concerns around supply chain delays and disruptions, as well as complying with environmental targets, bring significant risk management challenges for ship owners and their crews.

The grounding of the Ever Given freighter in March last year in the Suez Canal, bringing traffic in the vital maritime waterway to a standstill for a week, is the latest in a growing list of incidents involving large vessels or mega-ships, AGCS says.

Container freighters have become larger in the last several years as shipping companies seek economies of scale and fuel efficiency.

The largest ships now exceed 20,000 twenty-foot equivalent units (TEUs), an exact unit of measurement used to determine cargo capacity for ships and terminals.

AGCS says the capacity of container ships vessels alone has increased by 1500% over 50 years and has more than doubled over the past 15 years.

“Larger vessels present unique risks,” AGCS Senior Marine Risk Consultant Nitin Chopra said. “Responding to incidents is more complex and expensive.”

He says approach channels to existing ports may have been dredged deeper and berths and wharfs extended to accommodate large vessels but the overall size of ports has remained the same.

“As a result, a ‘miss’ can turn into a ‘hit’ more often for the ultra-large container vessels,” Mr Chopra said.

On COVID, AGCS says the pandemic disruption has resulted in limited direct marine claims to date but points out the sector has not been spared significant loss activity.

Global Product Leader Marine Hull Justus Heinrich says overall marine claims frequency has not declined.

“We are also seeing an increased cost of hull and machinery claims due to delays in the manufacture and delivery of spare parts, as well as a squeeze on available shipyard space,” Mr Heinrich said. “Costs associated with salvage and repairs have also increased.”

AGCS warns insurers could in future potentially see an uptick in machinery breakdown claims if COVID has affected crews’ ability to carry out maintenance or follow manufacturers’ protocols.

Click here to access the AGCS Safety & Shipping Review report.