Looking back in 2023, the impact of geopolitical crisis affected and will continue to affect shipping for the foreseeable future. \u00a0The Black Sea grain initiative expired in July and at the same time Russia announced that shipping was from then on, a legitimate target. \u00a0As a consequence, the shipments of grain are greatly reduced and are since using the new western route from Ukraine through Romanian and Bulgarian territorial waters. \u00a0Hugging the coast is not the safest way to travel as it poses risks of groundings etc.<\/p>\n\n\n
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<\/figure>\n<\/div>\n\n\nDue to the sanctions imposed to Russia we are also experiencing the rise of the \u2018\u2019Dark Fleet(ships operating on Paris MoU blacklisted flags of convenience)\u2019\u2019. These vessels are transporting fuel out of Russia and dispensing it out around the world. Some figures suggest that around 10-20% of the world tanker fleet is part of this dark fleet and as a result this means that they are potentially unclassed and uninsured.<\/em><\/p>\n\n\n\n Ships that are part of the dark fleet are usually older tankers that have been saved from scrapping. And what do old tankers have in common? They are generally in poorer condition, more prone to casualties and machinery failure. Additionally ship to ship transfers are also occurring and every time this happens there is a heightened pollution risk.<\/p>\n\n\n As an example, in May 2023, an uninsured tanker exploded in Southeast Asia killing crew. So, there are incidents happening but because we are talking about the dark fleet, we are not seeing the entire scale of the incidents.<\/p>\n\n\n\n Towards the end of the year Hamas attacks Israel and the Houthis attack \u2018\u2019Israeli\u2019\u2019 shipping in the Red Sea in a way to support Hamas. Reacting to this, the big shipping companies like Maersk, MSC, Hapag Lloyd, Evergreen and BP are diverting ships around the Cape of Good Hope, South Africa preferring the longer route instead of the presently more dangerous Suez Canal.<\/p>\n\n\n But going the long way doesn\u2019t come without consequences. It adds additional time to the trip which also comes with additional fuel costs, underwriter risks and more chances of failure along the way. Notably, there are limited bunker and repair ports along the way on the coast of Africa and less frequent safe ports to call into. All that on top of the very severe weather conditions occurring at the Cape of Good Hope in certain periods of the year which could cause problems especially to larger container ships.<\/p>\n\n\n\n In simple terms, this means that maritime risks are increasing as with our local knowledge of S. Africa the infrastructure is not ready to handle the increase traffic. If a couple of big casualties occur in the area salvage capacity might be reached and we could witness a serious situation unravelling.<\/p>\n\n\n\n From the 1st<\/sup> of January 2024, The EU Emissions Trading System has been put in place. Ship operators will need to purchase carbon credits on the EU Emissions Trading System (EU ETS), where the ship calls in at least one EU port.<\/p>\n\n\n\n To begin, operators will need to buy credits reflecting 40% of the ship\u2019s emissions on the voyage, but this percentage will increase year on year until 2027, when operators will in some cases need to buy credits reflecting to 100% of the ship\u2019s emissions on the voyage.<\/p>\n\n\n\n Additionally, the IMO at MEPC 80 last year has changed the previous targets for decarbonisation. They are more stringed now and they have decreased the time limits\/targets that we are going to achieve lower emissions.<\/p>\n\n\n\n A very positive change for the climate but another challenge for shipping in addition to what was already a challenge looking back at the same time last year.<\/p>\n\n\n\n The revised IMO GHG Strategy includes an enhances common ambition to reach net-zero GHG emissions from international shipping by or around, 2050, a commitment to ensure an uptake of alternative zero and near-zero GHG fuels by 2030, as well as indicative checkpoints for 2030 and 2040.<\/p>\n\n\n\n So what are the rules on the Carbon Intensity and Rating System?<\/p>\n\n\n\n From the 1st of January 2024 it is mandatory for all ships to calculate their attained Energy Efficiency Existing Ship Index (EEXI) to measure their energy efficiency and to initiate the collection of data for the reporting of their annual operational carbon intensity indicator (CII) and CII rating.<\/p>\n\n\n\n This is a topic that keeps coming up almost every year but upon researching this year we\u2019ve bumped onto some pretty astonishing figures. \u00a0There is an estimate that by 2026 we are going to be short of 56,000 traditionally educated\/trained ship officers. Not to mention the new skills and technology requirements for new fuels and technology.<\/p>\n\n\n\n The reason? People don\u2019t want to go to sea anymore. From what we previously discussed at this point in time,<\/ins> going to sea and passing through the Suez Canal could by a direct threat to your life. Adding to that piracy and high threats of litigation imposed on the ship officers \u00a0the long time and distances away from their families and not even being recognised as key workers,<\/ins> who can blame them?<\/p>\n\n\n\n From an insurers perspective educated and experienced crews are very important to reduce the risk of losses at sea so this is an insurance crisis as well.<\/p>\n\n\n\n So, what is the solution to the crewing crisis? One solution would be to move more quickly to autonomous ships, or crewing them remotely with the assistance of AI. This has been talked about over the last few years but in the past year we saw AI really come to the forefront with the different GPT tools.<\/p>\n\n\n Autonomous ships with AI are becoming increasingly feasible and we should expect this situation to move rapidly. Especially in conjunction with the lack of crew available this is becoming more and more a conceivable alternative.<\/p>\n\n\n\n The current estimate is that there are over 1000 remote and autonomous vessels operating around the world at this time.<\/p>\n\n\n\n As we have explored, the maritime industry is currently navigating through a sea of challenges and changes driven by geopolitical shifts and regulatory changes. The impact of these factors on maritime risk cannot be understated. From the operational disruptions caused by the expiration of the Black Sea grain initiative and the advent of the ‘Dark Fleet’, to the strategic adjustments in response to heightened regional conflicts and the redirection of major shipping routes, the industry faces a complex and evolving risk landscape.<\/p>\n\n\n\n The introduction of stringent environmental regulations and the shift towards green shipping practices represent a pivotal step towards decarbonising shipping, yet they bring their own set of challenges and compliance requirements. The looming crewing crisis, compounded by a global shortage of skilled personnel and the potential of AI-driven autonomous vessels, underscores a critical juncture in the industry’s future.<\/p>\n\n\n\n Moving forward, it is imperative for stakeholders across the maritime sector \u2014 from shipping companies to insurers and regulators \u2014 to stay agile and responsive to these changes. The ability to adapt to the shifting geopolitical and regulatory environment, to innovate in the face of technological advancements, and to manage the increasing risks with foresight and resilience will be key to navigating the uncertain waters ahead. The maritime industry’s journey through 2024 and beyond will undoubtedly be marked by these challenges, but also by the opportunities they present for growth, innovation, and sustainable progress.<\/p>\n\n\n\n And to close some positive news\u2026<\/p>\n\n\n We are now witnessing the dawn of Green Container Shipping, with the alternative fuels that are coming our way. Although we are not going to go into detail, it\u2019s worth mentioning the Laura Maersk, which was launched in 2023 is the world first container ship with the ability to be powered by a methanol-fuel engine.<\/p>\n\n\n\n By Paul Hill<\/strong><\/p>\n\n\n\n Global Technical Director, Maritime, ABL Group <\/p>\n\n\n\nWhat does this mean to underwriters?<\/h3>\n\n\n\n
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<\/figure>\n<\/div>\n\n\nNew and amended shipping regulations and the rise of Green Shipping<\/strong><\/h2>\n\n\n\n
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Resourcing and Skills Shortage<\/strong><\/h2>\n\n\n\n
Crewing Crisis or Autonomous vessels driven by AI?<\/strong><\/h3>\n\n\n\n
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<\/figure>\n<\/div>\n\n\nConclusion<\/strong><\/h2>\n\n\n\n
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