Piracy in South East Asia and Pacific increases during 2015

9 May 2016

According to the fourth annual Allianz Global Corporate & Specialty (AGCS) Safety and Shipping Review 2016, piracy is still a major concern for Australian ship owners and operators. Piracy attacks in South East Asia continue to rise

The International Maritime Organisation (IMO) reported that while on the decline elsewhere in the world, pirate attacks in South East Asia, through which most of Australia’s international trade is shipped, are on the increase. SE Asia now accounts for around 60% of all incidents (246 piracy attacks), with Vietnam the new hotspot. Almost 55% of the region’s 147 attacks were against moving vessels compared with 37% a year earlier. Most were aimed at low-level theft.

The report also notes that cyber risks in the maritime and shipping industry are evolving rapidly and require industry attention. Ron Johnson, Regional Marine Manager at AGCS Pacific in Sydney, said “The internet of things has opened up the shipping industry to the potential for hackers to access shipping company and port records, as well as on-board vessel identification and navigational systems. This leaves the entire shipping system exposed, enabling pirates and terrorists to identify target cargoes and obtain information about more vulnerable ships and locations”.

Supply chain exposure

The August 2015 Port of Tianjin explosions highlighted the significant new accumulation exposures in Asian logistics centres, bringing to the fore supply chain issues.

“Tianjin was not on many people’s radar as an accumulation risk prior to the explosions, yet as the report highlights, 285 of the Fortune Global 500 companies had facilities there and it clearly represented a significant supply chain risk many businesses were not prepared for,”
said Ron Johnson.

“If as expected, half of the now estimated US$4billion insured losses arising out of the Tianjin explosions end up falling to the marine insurance industry, it will severely impact the profitability of global marine insurers. Based on rough estimates of global annual marine cargo insurance premiums, this could add as much as 7% to the 2015 global loss ratio for cargo insurers, at a time when cargo insurance premium rates are at their lowest on record,” he said.

Challenges exposed by ‘mega ships’ and ‘superstorms’

The appetite for ever-larger container ships has seen cargo-carrying capacity of the largest vessels increase by 70% over 10 years to 19,000+ containers. One ’mega ship’, the CSCL Indian Ocean, was grounded in the river Elbe, Germany for days in February 2016, raising questions about the impact of a more serious incident. There are concerns that commercial pressures in the salvage business have reduced easy access to the salvors required for recovery work on this scale.

Additionally, increased risks created by ’super storms’ and weather phenomena like the “super El Nino” in the Pacific demonstrate how safety risks and the potential for a billion dollar shipping loss need to be factored in by the industry, as well as weather routing, which ensure the safe navigation of vessels.

The report also covers aspects of the increased safety risks created by depressed market conditions for shipping and seafarer fatigue issues. These are of concern in the Asia Pacific region, which accounted for more than 30% of global total ship losses during the year.

Further subjects covered that will be of interest to businesses involved in international trade are:

The report is recommended reading for anyone involved in international trade and shipping and can be downloaded from the AGCS website .

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