The shipping sector has reported a record low number of large ships lost over the past year, but a combination of impacting fire risk, ongoing and new threats posed by the ripple effects of the Ukraine conflict, decarbonization challenges, economic uncertainty, as well as the rising cost of marine claims, means the sector still has plenty of obstacles to navigate over the next 12 months and beyond, according to insurer AGCS.

The firm’s Safety & Shipping Review 2023 found that 38 large ships were lost worldwide last year – down by more than a third and the lowest total in the report’s history. The South China Sea region saw most total losses, while the British Isles reported the most shipping incidents.

Fire is the second top cause of loss over the past year with eight vessels lost and more than 200 incidents reported – the highest for a decade. Transport of electric vehicles and battery-powered goods bring new fire risks while larger vessels and mis-declaration of cargo amplify consequences.

Captain Rahul Khanna, global head of marine risk consulting at AGCS, said: “Shipping losses have sunk to the lowest number we have seen in the 12-year history of our annual study, reflecting the positive impact safety programs, training, changes in ship design and regulation have had over time.”

“While these results are gratifying, several clouds appear on the horizon. More than a year after Russia’s invasion of Ukraine, the growth of the shadow oil tanker fleet is the latest consequence to challenge shipowners, their crew and insurers. Fire safety and the problem of mis-declaration of hazardous cargo must be fixed if the industry is to benefit from the efficiency of ever-larger vessels. Inflation is pushing up the cost of hull, machinery and cargo claims. Meanwhile, although the industry’s decarbonization efforts are progressing, this remains by far the sector’s biggest challenge. Economic pressures could put vital investments in companies’ strategies, as well as in other safety initiatives, in jeopardy.”

Every year AGCS analyses reported shipping losses and casualties (incidents) involving ships over 100 gross tons. During 2022, 38 total losses of vessels were reported globally, compared with 59 a year earlier. This represents a 65% decline in annual losses over 10 years (109 in 2013). Thirty years ago, the global fleet was losing 200+ vessels a year.

Industry reporting systems attribute around 25% of serious incidents onboard container ships to mis-declared dangerous goods, such as chemicals, batteries, and charcoal, although many believe this number to be higher.

Khanna said: “Failure to properly declare, document and pack hazardous cargo can contribute to blazes or hamper firefighting efforts. Labelling a cargo as dangerous is more expensive, so some companies try to circumvent this by labelling fireworks as toys or Li-ion batteries as computer parts, for example.”

Several large container shipping companies have turned to technology to address this issue using cargo screening software to detect suspicious bookings and cargo details, while large container operators are imposing penalties. Khanna added: “Unified requirements and penalties for mis-declared hazardous cargo would be welcomed.”

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