Over the past three decades, the cargo ships that have transported most of the world’s goods have undergone an incredible growth spurt.
In the 1970s, the largest container ships available could carry up to 2500 containers (also known as teu).
Today, the largest ships have space for more than seven times that many containers; by 2018, they could be almost 10 times larger.
Known as megaships, these leviathans are increasingly popular because of the economies of scale they offer ship operators.
For example, the 400m-long Mærsk Mc-Kinney Møller, the first ever Triple-E class ship constructed, can carry 18,000 containers and is credited with reducing fuel use and emissions per container moved by up to half.
However, Allianz Global Corporate and Specialty (AGCS) Pacific Region Marine Manager Ron Johnson says the risk exposure grows with the size of the ships.
“Events involving serious casualties in remote locations could involve unprecedented and complex salvage operations,” he says, adding that their size means there are limited ports or refuge and repair facilities to handle such vessels.
“The arrival of these megaships could heighten the risk to cargo owners. And there are even larger vessels capable of up to 24,000 teu on the horizon and which are expected to come into service in 2018.”
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Dr Sven Gerhard, AGCS’ Hull and Marine Liabilities Global Product Leader, says the size of megaships can turn even minor incidents into major claims.
He gives the example of 15,000-plus teu Emma Mærsk.
In February 2013, the ship suffered propeller damage just after beginning its transit through the Suez Canal.
Water flooded into the engine room and there were concerns the vessel could sink, which would block one of the world’s busiest trading routes.
Fortunately, it was able change course and instead dock at a nearby Egyptian port to unload much of its cargo and undergo repairs.
“Port infrastructure to load and unload such vessels is very limited, there are perhaps eight or nine ports in the world where the Emma Mærsk can be unloaded and I doubt this will grow beyond say 16 in the next five to seven years,” Gerhard says.
“The large loss potential has increased for events which are not extraordinary on these big ships.”
Too big to sink
Matthew O’Sullivan – Zurich Australia’s Head of Marine, Property and Engineering Lines – says the largest container ships currently in operation usually operate on the Asia-Europe-US trade routes.
“These vessels do not operate out of Australia, more due to the volume of container traffic rather than the infrastructure,” he says.
“We do not at present have the ability to cater for them.
“These vessels, however, do carry a significant amount of Australian goods, as cargo is often transhipped in the large ports such as Hong Kong and Singapore.
So, for example, containers from Australia would travel on a smaller container vessel to Singapore, then be transferred to the larger vessels for onward transit to Europe.”
O’Sullivan says the biggest risk with megaships is the accumulation of cargo.
“As a rough guide, the market tends to look at an average value of US$100,000 per container,” he says.
“So, a fully laden Triple-E class vessel has the potential for carrying US$1.8b in cargo. Together with the hull value and P&I exposures, a total loss would be a multibillion dollar event.”