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Tanker Shipping & Trade

Tanker Shipping & Trade

A safe bet we wish we had got wrong

Wed 10 Jan 2018 by Edwin Lampert

A safe bet we wish we had got wrong

Last week’s comment piece talked about ‘known and unknowns’ and referred to the near inevitability that the industry would see another major safety incident. There was no way I could have known quite how prophetic that statement would be.

As our news coverage on details, at the beginning of this week, a collision between NITC-owned Sanchi and bulk carrier CF Crystal in the East China Sea resulted in a massive explosion that has burned for days. One fatality has been recorded and 31 crew remain missing.

The incident brings into stark relief the truly hazardous nature of our business. Sanchi is still on fire as a result of the collision, with its cargo of condensate raising concerns around the potential for explosion and pollution.

Analysis of global shipping losses over the last decade has highlighted east/southeast Asian seas as an accident hotspot, with the collision of the oil tanker Sanchi with another ship off the coast of Shanghai as the latest major shipping incident in the region. Marine insurer Allianz Global Corporate & Specialty (AGCS) regularly analyses shipping ‘total loss’ data in its annual Safety and Shipping Reviews. This analysis identifies east/south Asian seas as the top hotspot for shipping losses around the world in 2016, responsible for 34 total losses during this year alone, which equals 40% of all total losses worldwide (85 in 2016). These 34 losses come from the collective maritime zones covering Japan, Korea, North China as well as South China, southeast Asia, Indonesia and the Philippines.

In its 2017 Safety and Shipping Review, AGCS analysed 25,898 shipping incidents including 1,186 ‘total losses’ between January 2007 and December 2016. Over this period, global shipping safety has generally significantly improved – total losses have dropped by 50% globally from 171 ships in 2007 to 85 in 2016. However, the number of total losses in these east/southeast Asian waters have declined far less over this decade, averaging 39 per year which equals one third of all worldwide total losses (33%).

AGCS global head of marine risk consulting Captain Rahul Khanna, who is an ex-tanker captain with over 14 years’ experience at sea, explains “Some have dubbed this wide region as a ‘new Bermuda Triangle’. I wouldn’t go that far but it is certainly the number one region worldwide for major shipping incidents. Not only are the seas here very busy, but they are also prone to bad weather and, although I can’t speculate on this event, some safety standards in the region are not always as high as one would expect from established international standards.”

Collision (involving vessels) is the fourth top cause of shipping losses over the past decade globally (72 losses) accounting for 6% of total losses, after foundering, wrecking and fire/explosion.

In the waters where this incident has taken place, collision is the cause of more than a quarter of all shipping incidents (including total losses) in general over the past decade (1,092 out of 3,915 in this overall region).

Fire/explosion is the cause of 7% of all shipping incidents (including losses) in the east/southeast Asia region over the past decade (269 out of 3,915).

For perspective, the tanker industry has made great strides in safety in recent years, enjoying an extended period of benign loss activity. It has been excellent at pursuing self-regulation and maintaining high safety standards. The tanker sector has seen just 15 total losses over the past decade around the world, according to AGCS analysis.

But that is still cold comfort when incidents – however infrequent – do occur.

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