Abstract
Shipping provides essential services even during global pandemics such as SARS-CoV-2 (COVID-19). The present approach estimates the monetary value at risk (MVR) at the global and regional level for the world fleet and quantifies the amount of averted incident costs due to inspections. It also provides an indication of the effect of COVID-19 on both. This information can help maritime stakeholders to better understand their risk exposure and improve mitigation strategies. The analysis is based on the global fleet, using a comprehensive combination of data. The analysis confirms the importance to estimate all components at ship level, as safety qualities differ, and each vessel benefits differently from an inspection. Estimates of MVR were slightly higher than global insurance premiums with USD 13.7 to 17.8 billion. Over half of the MVR was due to other marine liabilities and hull and machinery, with cruise vessels leading to loss of life and injuries and oil tankers leading to pollution. The top 25 flags accounted for 87.9% of MVR with open registries in the lead. In terms of value of MVR per GRT, traditional flags, Non-IACS flags and owners located in low to upper middle-income countries, showed the highest values. Total MVR decreased by 4.18% due to the effects of the pandemic, but pollution risk exposure increased by 6% in 2020 as compared to 2019. Averted yearly incident costs were estimated to be 25% to 40% of global MVR, which highlights the importance of port state control inspection programs, but as inspection coverage decreased, this translated into a reduction of 6 to 11% of averted incident costs.
Highlights
Shipping facilitates global trade even in times of economic downturns, and the pandemic has demonstrated the essential part of the maritime industry
In particular, or a maritime administration maintaining inspection programs to mitigate risk exposure in its Exclusive Economic Zone (EEZ), it is important to understand the magnitude of risk exposure that should be mitigated, since mitigation options should be proportionate to the risk exposure
monetary value at risk (MVR) is defined as the weighted average of potential incident consequences covering various damage types of interest, MVR (TLVSS) was more accurate, as less serious incidents included in MVR (ALL) showed a high degree of under-reporting
Summary
Shipping facilitates global trade even in times of economic downturns, and the pandemic has demonstrated the essential part of the maritime industry. The effect of port state control inspections is measured (Knapp et al [4]) by quantifying the amount of averted or mitigated incident costs, due to inspections This allows maritime administrations to assess the value of their inspection programs and justify them, as well as allocate resources more effectively across various ports within a country or region. Making comparisons between the time periods 2017 to 2019 and 2020, the effect of the SARS-CoV-2 (COVID-19) pandemic on risk exposure and averted incident costs is quantified This allows coastal states and maritime administration to better understand the change of risk exposure due to changes in trade and ship traffic as well as ship risk profiles, and how it affects their respective area of interest as compared to the global situation. SOMRS can estimate probabilities and calculate MVR and the inspection effect at the ship level, which formed the basis of the analysis presented here
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