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Allianz: Shipping losses in Asia buck global trends and continues to rise, making it top region worldwide for major shipping incidents over last decade.

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Allianz: Shipping losses in Asia buck global trends and continues to rise, making it top region worldwide for major shipping incidents over last decade.
  • Safety & Shipping Review 2018: Globally 94 large ships lost in 2017, down by more than a third over 10 years. Bad weather involved in 1 in 4 losses. Asia top global loss region accounting for 38% of shipping losses in 2017.
  • In South China and South East Asian waters, losses are up 25% (30 ships) annually with foundering/sinking accounting for 80% of claims. Typhoons, traffic, political risk, and safety on Asian routes are major loss factors.  Japan, Korea and North China ranks joint fourth top loss location globally, and third highest over a decade.
  • Globally human error is still a major driver of incidents. Big data analysis of crew behavior and near-misses could help prevent disasters.
  • “Mega ship” fires, emissions rules, climate change and autonomous shipping pose new risk challenges. Insurers expect to see more losses from cyber incidents and technological defects.

Large shipping losses have declined by more than a third (38%) globally over the past decade, according to Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2018, with this downward trend continuing in 2017.

Yet, incidents in the South China, Indochina, Indonesia and Philippine maritime region rose by 25% in the past year and remain the number one area worldwide for major shipping incidents for the past decade leading it to be dubbed the “new Bermuda Triangle” by some media commentators.

In 2017, almost a third of losses globally (32%) occurred here, driven by activity in Vietnamese waters. The major loss factors include weather — Typhoon Hato and Typhoon Damrey caused more than six losses — busy seas and lower safety standards on some domestic routes.

There were 94 total losses reported around the shipping world in 2017, down 4% year-on-year (98) — the second lowest in 10 years after 2014. Bad weather, such as typhoons in Asia and hurricanes in the US, contributed to the loss of more than 20 vessels, according to the annual review, which analyzes reported shipping losses over 100 gross tons (GT).

“Globally, the decline in frequency and severity of total losses over the past year continues the positive trend of the past decade. Insurance claims have been relatively benign, reflecting improved ship design and the positive effects of risk management policy and safety regulation over time,” says Baptiste Ossena, Global Product Leader Hull & Marine Liabilities, AGCS.

However, disparities remain as losses in Asia rose year-on-year. The region continues to be the top global loss area accounting for more than 1 in 3 of shipping losses in 2017. The East Mediterranean and Black Sea region is the second major loss hotspot (17) followed by the British Isles (8). There was also a 29% annual increase in reported shipping incidents in Arctic Circle waters (71), according to AGCS analysis.

Dangerous Seas, Friday 13th and the unluckiest ship 

Political tensions around major shipping routes in Asia are leading to disruption and a potential heightened risk of collision. Already a key transit route for east-west trade from China, South Korea and Japan and accounting for one-third of global shipping trade, the South China Sea is also the cause of territorial disputes between several countries within the region.

These territorial disputes have resulted in an increasing military presence in the South China Sea, with the US and China conducting naval exercises. Last year saw two major collisions between US naval ships and commercial vessels. The US-guided missile destroyer USS Fitzgerald collided with a container ship off Japan while another destroyer, the USS John S. McCain struck an oil tanker off Singapore.

“The territorial claims and disputes may have larger implications long term and threaten the very freedom of the seas and navigation in South East Asia, with far reaching implications for trade with Asia. A growing concentration of trade and political tensions makes for a volatile situation in the region that could create safety issues,” said Andrew Kinsley, Senior Marine Risk Consultant AGCS

Piracy, the long-time bane of the maritime industry has hit record lows globally but across Asia and Africa the threat remains high with regional waters accounting for three-quarters of all piracy incidents around the globe. Southeast Asia had 76 incidents in 2017 up 11% compared with a year earlier while Indonesia continues to be global hotspot for piracy with 43 attacks. The number of attacks in the Philippines more than doubled year-on-year from 10 in 2016 to 22 in 2017[1].

 Analysis also shows Friday is the most dangerous day at sea — 175 losses of 1,129 total losses reported have occurred on this day over the past decade. Friday 13th really can be unlucky — three ships were lost on this day in 2012 including Costa Concordia, the largest-ever marine insurance loss.  The unluckiest ship of the past year is a passenger ferry operating in the East Mediterranean and Black Sea region that was involved in seven accidents in 12 months. For Asia, November is the busiest month for losses over the past decade with 36 ships lost during this month, a third of which were caused by typhoons (12).

Emerging risks poses challenges and leads to losses

There are multiple new risk exposures for the shipping sector: Ever-larger container ships — longer than the length of four football fields — pose fire containment and salvage issues, while the changing climate brings new route risks, with fast-changing conditions in Arctic and North Atlantic waters posing new hazards. Environmental scrutiny is also growing as the industry seeks to cut emissions, bringing new technical risks and the threat of machinery damage incidents at the same time.

Shippers also continue to grapple with balancing the benefits and risks of increasing automation on board. Recent events such as the NotPetya malware on harbor logistics that caused cargo delays and congestion at nearly 80 ports, underline that the shipping sector is being tested by a number of emerging risk challenges, in addition to traditional ones.

Human error still a big issue. Data can help.

Despite decades of safety improvements, the shipping industry has no room for complacency. Fatal accidents such as the “Sanchi” oil tanker sinking off Shanghai waters in January 2018 and the two collisions involving the USS Fitzgerald and the USS John S McCain navy ships in Asia persist with human often a factor. Just this week, a cargo ship collided with a chemical tanker, off Shanghai and subsequently sank with 10 of its 13 crew members missing. Estimates indicate that 75% to 96% of shipping accidents involve human error[2]. It is also behind 75% of 15,000 marine liability insurance industry claims analyzed by AGCS — costing $1.6bn[3].

“Human error continues to be a major driver of incidents,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting, AGCS. “Inadequate shore-side support and commercial pressures have an important role to play in maritime safety and risk exposure. Tight schedules can have a detrimental impact on safety culture and decision-making.”

The mass amount of data produced by the industry is currently underutilized, and better use of data and analytics to produce real-time findings and alerts could help in reducing incidents, Khanna believes. “By analyzing data 24/7 we can gain new insights from crew behavior and near-misses that can identify trends. The shipping industry has learned from losses in the past but predictive analysis could be the difference between a safe voyage and a disaster.”

Container ship fire struggles continue: While container-carrying capacity has increased by almost 1,500% in 50 years, fire-fighting capabilities have not necessary kept pace with increasing vessel sizes. Today’s “mega-ships” create new risk exposures and there have been a number of fires at sea in recent years.

Climate change brings new route risks: Climate change is impacting ice hazards for shipping, freeing up new trade routes in some areas, while increasing the risk of collisions with ice in others. China has plans for an “Artic Silk Road” developing new shipping lanes opened up by global warming and will encourage infrastructure development as well as conduct commercial trial voyages in Artic waters with the intention to build its first polar expedition cruise ship by 2019.

Emissions rules bring problems: Estimates suggest that the shipping sector’s emissions levels are as high as Germany’s, ranked sixth in the world[4], prompting a recent pledge to reduce all emissions by 50% in the long-term, alongside existing commitments to reduce sulphur oxide emissions by 2020. As the industry looks to technical solutions to achieve these aims, there could be accompanying risk issues with engines and bunkering of biofuels, as well as operator training.

Autonomous shipping and drones: Legal, safety and cyber security issues are likely to limit widespread growth of crewless ships for now. Human error risk will still be present in decision-making algorithms and onshore monitoring bases. Technology has the potential to eliminate human error as expected, but could end up merely transposing the point of occurrence,” says Captain Nitin Chopra, a Senior Marine Risk Consultant at AGCS, based in Singapore. “It is difficult to imagine that unmanned ships calling at automated ports will not be marred by loss events. On the contrary, due to absence of manpower, the immediate response to mitigate loss could be delayed.”

Drones and submersibles have the potential to make a significant contribution to shipping safety and risk management, with future uses including pollution assessment, cargo tank inspections, monitoring pirates and assessment of the condition of a ship’s hull in a grounding incident. The Maritime Port Authority of Singapore plans to introduce autonomous harbor ships in future for a number of operations such as berthing, mooring and towing.

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UK fishing sector sees more job losses if post-Brexit export troubles not tackled soon

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UK fishing sector sees more job losses if post-Brexit export troubles not tackled soon 1

By Maytaal Angel

LONDON (Reuters) – Britain could lose more jobs in its fishing sector if the current delays and increased costs involved in exporting to the EU post-Brexit are not ironed out soon, industry groups told British government officials on Tuesday.

Speaking at an Environment, Food and Rural Affairs (EFRA) select committee inquiry, representatives of Britain’s fishing sector said small to medium-sized enterprises were especially at risk and called on the government to urgently negotiate new export rules with the EU.

“(Even) if we get (export) systems sorted, we will still have cost implications. In the medium term, small companies will stop trade to Europe and it may even be their demise,” said Donna Fordyce, chief executive of Seafood Scotland.

“It’s a real worry. These people can’t see a future.”

Under a Brexit deal reached late last year, British trade with the EU remains free of tariffs and quotas. But the establishment of a full customs border means goods must be checked and paperwork filled in, damaging express delivery systems.

Fresh food sectors like fishing and meat have been particularly hard hit, with export paperwork costs soaring and delivery delays prompting EU buyers to reject British produce or to pay less for it.

Sarah Horsfall, co-chief executive of the Shellfish Association of Great Britain, said some British shellfish companies had already shut their doors, buckling under the pressure of the COVID-19 pandemic, and then Brexit.

She said paperwork costs per consignment have increased by 400-600 pounds. On top of that, companies often need to hire two or three extra staff just to fill in the paperwork, adding to costs.

Another point of contention for the British seafood sector is that EU exporters are currently not facing increased costs or delays in sending goods to Britain because the UK has postponed introducing reciprocal customs checks by three to six months.

“Exporters we deal with are considering relocating to the EU. We have to address this urgently if we want to grow, because at the moment we are at the risk of doing the opposite,” said Martyn Youell, senior manager of fisheries and quotas at fishing company Waterdance.

(Reporting by Maytaal Angel; Editing by Sonya Hepinstall)

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Fall in UK economic activity bottoms out in February – PMI

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Fall in UK economic activity bottoms out in February - PMI 2

LONDON (Reuters) – British economic output stabilised in February after a sharp fall the month before, as many businesses continued to suffer from lockdown restrictions affecting hospitality and other face-to-face services, a closely watched survey showed on Wednesday.

Hours before finance minister Rishi Sunak is due to set out his economic plans for the coming year, the IHS Markit/CIPS composite Purchasing Managers’ Index gave a reading of 49.6 for February, up from an eight-month low of 41.2 in January.

The figure means businesses reported broadly stable activity for last month after a steep deterioration early in the year, and is little changed from an initial flash estimate of 49.8.

The PMI for the services sector alone rose to a four-month high of 49.5 in February from January’s eight-month low of 39.5, again in line with the initial flash estimate.

“Restrictions on travel, leisure and hospitality due to the national lockdown continued to curtail overall activity, but there were some pockets of growth in technology and business services,” financial data company IHS Markit said.

Britain entered its third national coronavirus lockdown in early January, closing schools, non-essential shops and most other businesses open to the public, though people can still travel to work if needed.

Last week Prime Minister Boris Johnson set out a path for easing the lockdown in England as vaccinations roll out rapidly. Schools will reopen next week but full restrictions on hospitality venues will not go until late June at the earliest.

Sunak is expected to set out further spending plans in a budget statement around 1230 GMT after providing almost 300 billion pounds of support during the past year.

Business optimism in the services PMI has risen to its highest since 2006 due to expectations of a return to normality. But many firms still reported difficulties from new, post-Brexit trading restrictions that took effect on Jan. 1.

(Reporting by David Milliken; Editing by Catherine Evans)

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Japan’s SMFG likely to halt all new lending to coal-powered plants, sources say

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Japan's SMFG likely to halt all new lending to coal-powered plants, sources say 3

By Takashi Umekawa

TOKYO (Reuters) – Japan’s Sumitomo Mitsui Financial Group is likely to halt all new financing to coal-fired power plants, including the most efficient ones, two sources said, reflecting growing pressure from investors and environmentalists on Japan’s lenders to cut funding to coal.

While SMFG has said it would not finance new coal-fired power plants in principle, up until now it hasn’t ruled out funding projects seen as more environmentally friendly, such as so-called “ultra-supercritical (USC) power plants” that burn coal more efficiently than older designs.

It is now likely to remove that exception from its lending policy, meaning a complete halt to new finance for coal plants, said the sources, who declined to be named as the information is not public.

Japan’s biggest banks are under increasing pressure from global investors and environmental groups over their long involvement in funding coal projects. Prime Minister Yoshihide Suga has also pushed to achieve zero greenhouse gas emissions, on a net basis, by 2050.

“It’s a fact that the criticism from environmental groups has become so strong,” said one of the sources.

A spokesman for SMFG said nothing had been decided.

(Reporting by Takashi Umekawa; Editing by David Dolan and Edmund Blair)

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