Preface:
In the context of the global greenhouse gas emission reduction strategy, the shipping industry is accelerating the pace of green transformation, and making full use of the knowledge accumulated by the shipping industry and the resources, technology, equipment and management methods at this stage to explore actionable methods to achieve decarbonization, and actively explore and realize green and low-carbon transformation to achieve decarbonization goals. At the 81st meeting of the IMO Marine Environment Protection Committee (MEPC 81) held in March 2024, the topic of the IMO emission reduction strategy was further discussed, and a number of medium-term emission reduction measures were proposed by the participants, and at the MEPC 82 meeting in October 2024, the IMO net-zero emission framework agreed at the 81st meeting of the MEPC was further promoted.
With multiple factors such as geopolitics, economic turmoil, and global climate change, the challenges facing the shipping market are becoming the new normal, and their impact is becoming increasingly unpredictable. In the face of the green, intelligent and efficient development trend of the shipping industry, practitioners need to work together to cope with challenges, embrace changes, adapt to the new normal, and lead the high-quality development of the shipping industry with green, low-carbon and intelligent by deepening innovation and strengthening cooperation, and create a better future in the maritime field.
1. Commentary on the shipping safety industry
Geopolitical risks have become the biggest threat to the shipping industry
According to Lloyd’s List’s December 2024 Outlook survey on the major issues facing the shipping industry, about 47% of respondents said geopolitical risks are the biggest risk to the shipping industry in the next two years (compared to 30% last year), and 16% cited the growth of the “shadow fleet” as the biggest risk to the shipping industry in the next two years, alongside protectionism and tariff growth (also 16%).
Pay attention to the safety of maritime traffic
The United Nations Trade and Development Commission (UNCTAD) “Maritime Review 2024” report released on October 22, 2024, highlights that shipping is the backbone of global trade, and unimpeded access through maritime chokelines is crucial. The Panama Canal and the Suez Canal are important arteries for global trade, and the water level of the Panama Canal has dropped due to dry weather, as well as conflicts in the Red Sea region, which have affected the navigation of the Suez Canal. By mid-2024, traffic on these two canals had declined by more than 50% compared to their peak, and the tonnage of ships crossing the Gulf of Aden and the Suez Canal had plummeted by 76% and 70%, respectively, compared to the end of 2023.
The importance of loss prevention to decarbonize shipping
On September 16, 2024, the International Marine Insurance Union (IUMI) held its 150th annual meeting in Berlin, Germany, where in addition to focusing on hot issues, IUMI emphasized the important role of loss prevention in achieving industry-wide decarbonization goals. Pascal Dubois, chairman of the IUMI Loss Prevention Committee, said that unless society has a well-developed loss prevention mechanism to combat climate change, it is likely to be hit by various challenges. Without corresponding loss prevention measures, capital investment will be pulled up and policy support may be weakened. Pascal Dubois points out that the importance of loss prevention is becoming increasingly prominent, and with the right measures, we will stay ahead of the curve in the journey towards a low-carbon future.
The trend of ship insurance claims has skyrocketed
According to the Nordic Maritime Insurance Association (Cefor) 2023 and 2024 Mid-Sea Marine Insurance Trends Report, single-hull insurance claims due to ship fires soared to their highest level in more than a decade, exceeding $50 million for the first time. The report shows that as of 2023, the frequency of claims and the cost of claims for a single vessel are on the rise. Statistics show that in 2022 and 2023, the frequency of machine damage claims exceeding $500,000 was about 20% higher than in previous years.
The energy transition of shipping is approaching
In October 2024, DNV released the “Energy Transition Outlook 2024” report, stating that starting from 2024, the proportion of oil-based fuels will begin to decline and gradually shift to low-carbon and zero-carbon fuels. The DNV report predicts that by 2050, the shipping industry will account for 24% of ammonia fuels, 12% of electro-methanol-based electric-based fuels, and 11% of biofuels. LNG and LPG fuels are expected to maintain their growth momentum through 2040, but their share will decline by 2050 due to the inability to carry out deep decarbonization. Since the application scope of electric propulsion is limited to small ships sailing short distances, the proportion is expected to remain at a low level of around 4%. For nuclear-powered ships, DNV expects commercial nuclear-powered ships to appear by 2045 at the earliest, and the proportion is expected to reach 6% by 2050.
Ship safety remains a challenge
According to the Allianz Insurance Group (AGCS) Safety and Shipping Report 2024 in May 2024, although the shipping industry has made significant progress in security, it still faces a series of challenges, such as war and geopolitical events, climate change, piracy, etc.
The global maritime fleet is aging seriously
The United Nations Trade and Development Commission (UNCTAD) “Maritime Review 2024” report released on October 22, 2024, highlights that shipping is the backbone of global trade, and unimpeded access through maritime chokelines is crucial. The Panama Canal and the Suez Canal are important arteries for global trade, and the water level of the Panama Canal has dropped due to dry weather, as well as conflicts in the Red Sea region, which have affected the navigation of the Suez Canal. By mid-2024, traffic on these two canals had declined by more than 50% compared to their peak, and the tonnage of ships crossing the Gulf of Aden and the Suez Canal had plummeted by 76% and 70%, respectively, compared to the end of 2023.
2. Shipping safety risk outlook
In the context of severe climate change challenges facing the world, the decarbonization transformation of the shipping industry has become an international consensus and urgent need. The International Maritime Organization (IMO) has an ambitious decarbonization strategy for the shipping industry, according to which by 2030, the total annual greenhouse gas emissions of international maritime transport will be reduced by at least 20% compared to 2008, and strive to reduce it by 30%; By 2040, the total annual greenhouse gas emissions of international maritime transport will be reduced by at least 70% compared to 2008, and strive to reduce it by 80%; Reach net zero emissions around 2050.
The shipping industry is actively responding to the improvement of environmental awareness and the strictness of environmental regulations, promoting the realization of low-carbon and zero-emission goals through technological innovation, international cooperation, policy support and other efforts, and responding to the challenge of global climate change with green transformation. At the same time, the shipping industry is facing uncertainties from geopolitics, aging and large-scale ships, new technology applications, climate change, cybersecurity, and regulatory regulations.
In the future, the shipping industry needs to have an overall understanding of ship safety risks, continue to innovate response strategies, and continuously improve its risk resistance to better adapt to the complex and volatile geopolitical and maritime risk environment, and ensure the resilience, stability and sustainable development of the maritime safety system.
3. Data analysis of ship accidents of 3,000 gross tons and above from 2014 to 2024
Analysis of ship damage accidents
Statistics show that in the past decade, the number of ship damage accidents and the proportion of annual accidents have shown an increasing trend, accounting for 58% of comprehensive accidents in 2024. Ship damage accidents are a major threat to the safe navigation of ships, seriously affecting the ship’s drive, control, navigation, communication and other functions, and may cause catastrophic accidents such as hull structure damage, fire, explosion, oil spill or sinking, seriously endangering the life safety of crew members and the safety of ship property. Once a ship has an engine damage accident during navigation, it not only brings great risks to itself, but also poses a safety threat to other ships, personnel and facilities, and adversely affects the navigation efficiency of ports.
Ship fire accident analysis
Statistics show that 165 ship fire accidents were reported globally in 2024, a year-on-year increase of 27%, the highest in 10 years, and the second leading cause of accidents. Especially in recent years, accidents such as fires and explosions on container ships have occurred frequently, causing huge property losses and becoming huge hidden dangers that endanger ship safety and port safety.
Analysis of ship collision and touch accidents
Statistics show that although the probability of ship collisions and collision accidents has remained stable in recent years, the overall proportion in 2024 will exceed 14%. With the enlargement and modernization of ships, the risk and harm caused by ship collision and touch accidents are more significant, and the risk of cargo loss and environmental pollution caused by shipboard fuel leakage is more worthy of attention.
Fourth, the focus of ship safety risks
The threat of ship electromechanical failure attracts attention
Ship electromechanical failure accidents are a major threat to the safe navigation of ships, especially on March 26, 2024, when the Singaporean-flagged ship “DALI” collided with the Francis Scott Key Bridge in Baltimore City due to an electromechanical fault, causing the bridge to collapse. With the advancement of the decarbonization process of the shipping industry, the threat of ship mechanical and electrical failure accidents not only affects the green and low-carbon development of ships, but also directly relates to the safe navigation of ships and the safety of crew life and property.
The risk of container ship fire has become the focus
Once a fire occurs in a shipping container, it is difficult to detect it in time (especially in the cabin) due to the transportation mode of the container, and the relatively simple means of emergency response at sea have aggravated the difficulty of detecting and emergency response to ship fire accidents. In recent years, with the vigorous development of the new energy industry, the shipping volume of lithium batteries, new energy vehicles and photovoltaics has increased significantly, bringing complex new transportation risks. The 2024 Allianz Safety and Shipping Assessment Report highlights that fires are the leading cause of crashes on large container ships, noting that the adequacy of firefighting capabilities remains a concern as ships scale up. Fires inside containers can spread quickly and get out of control, causing crew members to abandon the vessel, exacerbating the damage.
The trend of cargo claims is flat
According to the Global Marine Insurance Market Analysis Report released by IUMI in 2024, in 2023, the number of cases with cargo claims exceeding $250,000 decreased to 535, with a total claim amount of $590 million, continuing the downward trend since the epidemic, with the only exception being an increase in the number and amount of claims in 2022 due to global inflation. This decline is somewhat unexpected, considering that global inflation is still around 5% in 2023 and the risk of fires is higher, but the relatively stable trend suggests that future cargo damage claims may also stabilize at an average of $1.1 million per incident. Statistics show that cargo fire damage remains the leading cause of claims in 2023, and industry data reflects the same trend. The risk of cargo fire loss is broad and severe, encompassing not only ocean-going cargo but also cargo stored in ports, inland facilities and waterways.
The potential threat of the “shadow fleet”
As Western countries impose sanctions on Russia’s actions in Ukraine, especially price caps on Russian oil exports, the “shadow fleet” has become one of the important means to circumvent sanctions. According to the latest report, since the outbreak of the Russia-Ukraine conflict, the size of Russia’s “shadow fleet” has shown a significant growth trend, and the current fleet size is roughly between 600 and 1,400 tankers. According to information disclosed by Allianz Commercial Insurance in May 2024, these ships have experienced at least 50 accidents of various types, involving serious problems such as fires, engine failures, ship collisions, steering gear failures, and oil leaks. The Allianz report also shows that when older vessels traverse challenging maritime chokepoints under opaque conditions and under questionable insurance conditions, it will be difficult to determine who will bear the financial losses in the event of accidents and oil spills. The Finnish Energy and Clean Air Research Center (CREA) said the shadow fleet’s continued expansion and uncertainty about its regulation and insurance foreshadowed a “catastrophic” ecological event as a matter of time.
Cybersecurity threats are on the rise
According to DNV’s Maritime Cyber Priorities 2024-2025: Managing Cyber Risk for Innovation, a majority (61%) of professionals in the maritime industry believe that the maritime industry should embrace the increased cyber risks brought about by digitalization while enabling innovation and new technologies. The report believes that the maritime industry is significantly higher than other critical infrastructure industries such as energy, manufacturing, and healthcare in terms of the need to cope with emerging risks brought about by digital transformation. Knutrbeck-Nilssen, CEO of DNV Marine, said, “Cyberattacks are a growing threat to the security of today’s maritime industry. We can innovate, we can progress, and we can lead the way in ensuring business and social resilience, but only if we can truly manage cyber risk. ”
5. Embrace change and adapt to the new normal
With the acceleration of the decarbonization process of the shipping industry, more and more alternative fuels have begun to be applied on board. Achieving net-zero emissions in the shipping industry by 2050 requires a combination of all feasible approaches, including the use of sustainable fuels.
With the adoption of new technologies and the transition to low-carbon and near-zero carbon fuels, the shipping industry faces many new opportunities. The shipping industry faces many challenges, including geopolitical tensions, the impact of climate change on shipping lanes, and the pressure of aging ships and low-carbon transition. While the challenges remain daunting, human courage, creativity, and endless exploration will once again lead us to a green, intelligent shipping future. Through scientific and technological innovation and international cooperation, the shipping industry will overcome these challenges and achieve sustainable development.
In the face of the uncertainty brought about by tightening international and regional regulations on ship operations, the shipping industry needs to pay close attention to the policy trends of regulatory bodies such as the International Maritime Organization (IMO) and the European Union to determine the trends and risks in the macro environment. The shipping industry should also take the initiative to embrace change, respond to external uncertainties through the certainty of its own sustainable development, and ensure the stability of the global supply chain, so as to become a stability and deterministic factor in global economy and trade, and maintain competitiveness in the fierce market competition.
The decarbonization transformation of the shipping industry is at a critical time, requiring the active embrace of new technologies to address the global challenges of climate change and ensure the industry’s competitive advantage in the green economy of the future. The transformation of the shipping industry requires policy support, technological innovation, international cooperation, and sensitivity to market and regulatory changes to ensure a competitive advantage in the long-term game of decarbonization and a green, smart shipping future.
epilogue
Currently, the shipping industry is in an unprecedented stage of innovation, with various new technologies and fuels being developed, tested and implemented. Given the existing market dynamics, technological advancements, and regulatory evolution, it is foreseeable that the energy transition in the shipping industry is moving towards a more mature stage, albeit at a slightly slower pace. Despite the current economic downturn, geopolitical tensions and environmental crises, the global shipping industry is steadily developing and continues to drive the movement of essential goods around the world. In the future, with the popularization of energy-saving technologies, the advancement of ship modification and the gradual application of alternative fuels, the shipping industry will usher in an all-round green revolution.
