Safety in Shipping Report Highlights Developing Risks, Changing Landscape

2023 safety shipping review summary. Image via Allianz.

New risks are emerging in the shipping industry—from excess capacity, economic factors, decarbonization and increased fire perils driven by changing cargo trends—countering the upsides of a continued long-term drop in vessel losses due to improvements in safety and ship design.

These developing trends, detailed in a new report from global insurer Allianz, are worth watching for West Coast shippers as part of various changes that promise to reshape the global shipping landscape.

The upside of this year’s Allianz Global Corporate & Specialty Safety and Shipping Review, an annual look at losses and safety trends in shipping, is the continuation of a decade-plus drop in total losses of vessels over 100 gross tonnage.

These losses were down 36% in 2022 from a year earlier. The 38 total losses of vessels last year represent a 65% decline from the 109 losses incurred in 2013. The Allianz report attributes the decline to increased safety efforts, improved ship design and new technology, as well as advances in risk management.

“Shipping losses are now at the lowest level that we have seen in the 12‐year history of our annual review, reflecting the positive impact safety programs, trainings, changes in ship design and regulation have had over time,” Allianz Global Head of Marine Ulrich Kadow stated in the report.

Regionally, South China, Indochina, Indonesia and the Philippines, East Mediterranean and Black Sea, and Japan, Korea and North China accounted for roughly half of the global vessel losses in 2022. The report shows one loss in the Canadian Arctic and Alaska region, which was unchanged from a year earlier.

There were 10 cargo vessels lost last year, accounting for one-quarter of last year’s total losses of vessels, followed by six fishing and five passenger vessels lost.

The primary cause of total loss across all vessel types was sinking or submerging. The most frequent contributing factors included bad weather, poor visibility, flooding and machinery breakdown. Fire/explosion, followed by vessel collision, were the next most frequent causes of total losses of vessels, according to the report. 


While total losses of vessels fell, the report shows the number of shipping casualties/incidents remined largely unchanged: 3,032 in 2022 vs. 3,000 in 2021.

The North American West Coast region added 148 casualties/incidents to 2022’s tally, up 10 from 2021. The South China, Indochina, Indonesia and Philippines region saw the largest annual drop, at minus-34.

Nearly half of all reported global casualties/incidents were machinery damage or failure. The 209 fire incidents in 2022 were the highest recorded total for that peril in a decade, making fire the third leading cause of incidents, the report shows. The 17% year-to-year increase in fire incidents reflects growing concern over wildfire peril in the report.

The report focuses on safety and losses, but it offers an economic outlook potentially hindered by falling demand and new vessels adding to excess capacity. The report also calls out the impact of global decarbonization on shipping, which appears to be directly and indirectly changing the nature of risks in the industry in several ways.


A direct impact of decarbonization on shipping is the increase in the transport of EVs and battery-powered goods, which pose greater fire hazards aboard ships.

“Hazardous and combustible goods are increasingly transported by containers, while the prevalence of lithium‐ion batteries poses a growing risk for container shipping and car carriers—this market is expected to grow by over 30% annually over the next decade,” the report states.

The Global EV Outlook 2022 from the International Energy Agency shows electric vehicle (EV) sales doubled in 2021 from the previous year to 6.6 million. The EV segment is four times its 2019 market share.

A source of the fire danger is a phenomenon referred to as “thermal runaway,” in which lithium‐ion cell self-heating causes venting, high temperatures or fire. Additionally, an EV fire may be harder to extinguish, according to the report.

“Most ships lack the suitable fire protection, firefighting capabilities, and detection systems to tackle such fires at sea,” the report states. It advises pre‐emptive measures such as crew training, improving early detection systems and developing emergency plans.

The global decarbonization push is expected to add to excess capacity and may ultimately lead to a rise in claims severity through increased production of larger and more efficient ships, which tend to suffer higher losses when something goes wrong.

Large ships are expected to soon dominate the global fleet. More than 50 ships with 21,000-TEU capacity or greater were built in the past five years, while 65% of fleet growth in the next two years will be ships larger than 15,000 TEUs, according to the report.

Tackling greenhouse gas emissions (GHG) by reducing voyages with larger capacity ships may be greener, but the vessels carry more cargo, compounding fire risks. Having more cargo on a ship also may multiply losses from potential groundings and port blockages, the report states.

Yet another potential impact of decarbonization efforts, which the report calls “by far the sector’s biggest challenge,” are required technology developments to reduce emissions, necessitating more investments in ship design to meet global GHG standards. A brief from analysts at the Global Maritime Forum in 2020 estimated at the time that adapting to these standards could cost from $1 trillion to $1.4 trillion.

“Transitioning away from carbon‐based shipping will involve a challenging period of adjustment and change, taking years to build the scale of infrastructure required,” the report states. “A mix of fuels is likely to exist for the next five to 10 years posing challenges for ship owners, operators and ports.”

Excess Capacity 

Decarbonization, the push to build more ships in recent years to handle the pent-up demand of the COVID-19 pandemic and economic trends continue to put downward pressure on shipping rates, according to the report. 

The cost of shipping a container between Asia and the U.S. as of April was 80% lower than last year. The declining freight rates come as new vessels ordered to deal with the pandemic will add an estimated 19% to the fleet size.

Historically, such economic pressure has impacted investments in maintenance and safety, harbingers that don’t portend well for future losses and claims, according to the report.

“Prior downturns have impacted investment in vessel maintenance, leading to losses and an uptick in machinery damage claims,” the report states. “Such conditions could also jeopardize vital investments in fire safety and the industry’s decarbonization targets as record profits for the container industry supported innovation in these areas. If the market comes under pressure, there is a risk such initiatives will lose momentum.”

Piracy, Cyberattacks

The report also breaks down losses from piracy and touches on cyberattacks.

Increased prices and higher labor costs, as well as supply=chain disruption, are affecting marine insurance claims trends, with hull or machinery claims at roughly twice what they were pre-pandemic.

Estimates in the report show an 18% inflationary increase in ship repair costs from 2020 to 2022.

Fire was the most expensive cause of claims, followed by shipping incidents, damaged goods, machinery breakdown and natural catastrophes, according to the report.

The report shows that piracy, a significant problem in years past, is on a downward trend. Piracy is at its lowest level in years, with 115 incidents reported in 2022, down from 138 in the first six months of 2013.

However, the risk from cyberattacks on shippers bears watching due to greater connectivity in shipping and geopolitical conflict that involves cyber space actions, the report notes.

Examples cited in the report include a January incident in which a ransomware attack disrupted a Norwegian shipping society’s systems and impacted 1,000 vessels, and an April event in which several ports suffered a denial‐of‐service attack. 

Don Jergler has been a professional journalist for more than 25 years, covering insurance, real estate and other topics. He spent two decades as a reporter at several daily newspapers, then entered business-to-business reporting. His freelance work has appeared in the Los Angeles Times, Long Beach Post, Orange County Register and numerous B2B publications. He’s currently the Western Region editor of Insurance Journal.