IUMI flags impact of coronavirus, container growth and geopolitics
Major growth in the overall volume of container shipments, container vessel fleets and ship size has led to higher potential risks and losses in the event of a fire, the International Union of Marine Insurance (IUMI) said at its 2020 Winter meeting on February 12.
Helle Hammer, chair of the IUMI Policy Forum, said that in 2019, the entire container vessel fleet had a cargo capacity of 20 million containers (20ft equivalent units known as TEU) compared to 4.4 million in 2000. This equates to an average capacity of 5,000 TEU per operating vessel in 2019 compared to less than 1,000 TEU in 2000.
In addition to the growing risk linked to growth in containerships, Sean Dalton, chair of the IUMI Cargo Committee, said: “2019 was an unprecedented year for the number of container vessel fires,” as he emphasised the fallout of such fires for the marine underwriting sector. In 2019, losses aboard the Cosco Pacific were said to involve a shipment of mis-declared lithium batteries, which led Dalton to highlight the need for improved cargo screening of dangerous goods and increased physical inspection of containers.
Tense geopolitics between the US and Iran is a product of a 40-year conflict between two ideologies according to Niel Roberts, member of the IUMI Political Forum and head of marine and aviation at LMA. And, the conflict in the Gulf region was raised as an issue for marine underwriters.
“There was a period where no one knew what was going on but we assessed the situation and felt it was necessary for underwriters to be notified of all vessels in the Gulf region. An insurer could then react and this may involve issuing additional premiums,” said Roberts.
Despite the challenges the sector faces, Phil Graham, chair of IUMI Facts and Figures Committee, said that overall marine underwriting was operating in a positive environment, citing a balance on the supply side with charter rates going up. However, he added that, the recent and ongoing outbreak of the coronavirus, now officially named COVID-19, has hit shipping. “There has been without a shadow of a doubt, a negative impact on the demand side of the shipping community. With a fall in tanker rates and uncertainty on the supply of goods”. While he deemed the coronavirus a blackswan event, he confirmed that its impact on the marine and shipping community was evident.
