Article Synopsis :
Shipping has always been the backbone for trade and commerce and this is no different today. Our global economy relies on shipping to transport nine out of 10 items on 50,000 merchant ships.
Safety is therefore critically important. While safety has improved – losses fell more than a third (38%) over the past decade – risks cannot be fully mitigated.
Life and losses on the ocean waves
A ‘new Bermuda Triangle’ has been identified between South China, Indochina, Indonesia, and Philippines maritime regions as the number one area worldwide for major shipping incidents in this time.
In 2017, 32% of losses occurred in this region, an increase, year on year of 25%. This is because the seas are busy, and they are prone to tempestuous weather.
Piracy and political tensions contribute to this. Though the number has fallen, they make a powerful combination, with three-quarters of attacks occurring in South East Asia and Africa.
Climate change will shape the future of shipping
However, there are other forces at work that present both opportunities and challenges for global shipping.
The Paris Agreement to reduce carbon emissions will impact ship design and practices. However, it also brings changes in risk profiles and financial challenges.
The industry is looking to technology to reduce emissions, but these bring risks in terms of alternative fuel sources and the adequate training of crews.
There are targets for the reduction of sulphur emissions by 2020, but whether sufficient low sulphur diesel will be available or affordable remains to be seen. Meanwhile, demand for exhaust scrubbing systems outstrips supply and levels of preparation appear low.
Out of sight doesn’t mean lower cyber risk
Cyber risk is undoubtedly a major concern, with the industry seeking solutions and additional, insurance. It also appears to be underreported, though the European Union’s Network and Information Security Directive is set to change that, making any impact of a cyber failure public and more damaging to reputations.
Some companies are splitting IT systems for different functions, such as navigation, propulsion, and loading.
Drones are being used by class societies and marine surveyors to assess vessel damage. In future, they may make a significant contribution to safety and risk management by assessing environmental pollution, monitoring cargo loading and pirate activity along coastlines and carrying out cargo tank inspections. Drones may improve decision-making on board, reducing the impact of any incident.
AI, AI captain
Autonomous shipping continues to progress, just as driverless vehicles are developed for land transport. While the technology moves apace, legal, safety and security obstacles will prove problematic for the growth of crewless vessels.
Replacing crews with AI may reduce the incidence of human error, but humans write the algorithms that determine the decision making process on board. This raises questions – as it does with driverless cars – as to who will be at fault in an accident – the manufacturer, provider or onshore base. Traditional claims may be replaced by cyber or product liability and maintenance of ships will have to be reconsidered.
Greater use of technology means insurers will have to deal with more technical shipping claims.
Link to Full Article:: click here
Digital Insurer's CommentsThe future looks bright for the implementation of technology in the mitigation of risk, yet shipping faces major obstacles in transforming itself to meet the demands of international climate policy.
Its importance to global commerce cannot be understated. While allowances may, ultimately, be made in order to help it to catch up, shipping looks set for nothing short of a sea change – pun intended – in the way it is expected to operate in the modern world.
Link to Source:: click here