Rising geopolitical tensions, emissions rules and de-carbonization targets continue to pose risk challenges for the shipping industry, according to marine insurer Allianz Global Corporate & Specialty’s (AGCS) Safety & Shipping Review 2020.
Events in the Gulf of Oman and South China Sea show political rivalries are increasingly being played out on the high seas and shipping will continue to be drawn into geopolitical disputes. Heightened political risk and unrest globally has implications for shipping, such as the ability to secure crews and access ports safely.
In addition, piracy remains a major threat with the Gulf of Guinea re-emerging as the global hotspot, Latin America seeing armed robbery increase and renewed activity in the Singapore Strait.
Shipowners are also increasingly concerned about the prospect of cyber-conflicts. There has been a growing number of GPS spoofing attacks on ships, particularly in the Middle East and China, while there have been reports of a 400% increase in attempted cyber-attacks on the maritime sector since the coronavirus outbreak.
Targets to cut emissions will shape shipping risk for years to come. The aim to halve CO2 emissions by 2050 will require the industry to radically change fuels, engine technology and even vessel design.
Since January 1, 2020 allowable sulphur levels in marine fuel oil were slashed. However, compliance is not straightforward and teething problems could lead to a surge in machinery damage claims.
Ultimately, de-carbonization will also have regulatory, operational and reputational implications. Progress on addressing climate change could stall with the focus on the coronavirus pandemic. This must not be allowed to happen.