Container ship insurers ignoring the warning signs?

Since my last blog in December on the growing problem of container ship sizes chasing the economies of scale ("Container ship sizes need rethink") the problem has been emphasised by more worrying container losses at sea, which now far exceed the average annual loss of 778 over the three-year period 2017-2019. On January 16 the 13,100 TEU-capacity Maersk Essen, on route from China to Los Angeles, lost 720 containers in severe weather. This comes only one month after the ONE Apus lost 1,816 containers overboard, also after hitting stormy weather on a similar Pacific voyage.

Evidently insurance companies have become complacent over containers lost at sea because they represent less than 1,000th of 1% of the roughly 226 million sea-borne containers transported in 2019. While it is true that such losses can be diminished by toughening up on cargo securing equipment and practices, et al, marine insurers are now worried that more action is needed to reduce container stack heights but are they oblivious to the signs blowing in the wind? If growing container ship sizes of 20,000+ TEU containers combine with climate changes' taste for more and greater storms abetted by rogue monster waves, believed to be the major cause in many such mysterious losses with all hands, then the marine insurance market must expect much diminished reserves to come.

About two thirds of the world container ship trade passes through the South China Sea, an area highly prone to typhoons and earthquake-generated tsunamis. The latter can generate waves over 100ft high, leaving container ships at high risk of capsize. Such waves are also quite able to punch a hole through both sides of the hull. The total loss of a 20,000 TEU container ship with, perhaps, many smart mobile 'phones on board could easily run to well over £10 billion losses.

If the marine insurance industry does not call time soon on the unwise pursuit of ever-bigger container ships chasing the economies of scale then they will have only themselves to blame for the inevitable mega losses to come, especially as they should have the same concerns for mega cruise ships also drunk on the lure of economies of scale

 

The Maersk Essen loses 720 containers to Davy Jones' bosom

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