The fast-changing geopolitical landscape is creating new risks and challenges for a shipping industry already juggling the energy transition and the legacy of the COVID-19 pandemic, according to Allianz Commercial’s Safety and Shipping Review.
The shipping industry faces an increasingly volatile and complex operating environment, marked by attacks against shipping, vessel detentions, sanctions, as well as the fall-out from incidents involving damage to critical sub-sea cables. Furthermore, the ripple effect of increasing protectionism and tariffs threatens to remake supply chains and shake up established trade relations.
Given that 90% of international trade is transported across oceans, those developments are concerning, especially as the industry continues to see the potential for large claims from traditional risks such as fires, collisions and groundings, which are still the main drivers for total losses of large vessels. However, there is also good news. The shipping industry has made significant improvements when it comes to maritime safety in recent years. During the 1990s the global fleet was losing 200+ vessels a year. This total had halved 10 years ago and is now down to a record low of 27 as of the end of 2024 (from 35 in 2023).
“The relevance of political risk and conflict as a potential cause of maritime loss is increasing with heightened geopolitical tensions. Total losses from traditional causes may have reduced over time, but we could be in a position where this positive trend is potentially offset by war and other political-related exposures. As an industry, we are in a better position with regards to traditional risks, but there is a renewed focus on geopolitical risks,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting, Allianz Commercial.
An emerging issue that is posing an increasing challenge for the maritime and insurance industries is the shadow fleet. Since the start of the war in Ukraine, the size of the shadow fleet has grown significantly. Today, around 17% of the world tanker fleet is thought to belong to the shadow fleet: estimates indicate there are close to 600 tankers trading Russian oil alone. Shadow fleet vessels have been involved in tens of incidents around the world including fires, collisions and oil spills. “Although recent sanctions are making it harder for these vessels to trade, the shadow fleet continues to pose a serious risk to maritime safety and the environment, as many are likely to be older vessels that are poorly maintained and inadequately insured,” says Justus Heinrich, Global Product Leader, Marine Hull, Allianz Commercial.
