Maritime shipping is the number one transportation medium through which much of the world’s goods are traded today. There are millions of ships at sea, crisscrossing the world’s oceans from Asia to America, delivering cardboard packages to every remote doorstep. The industry is worth trillions of dollars. It is only expected that such a high-value industry also has some expensive risks associated with it. These are some modern risks every ship owner, cargo distributor, and entrant into the business needs to know about before sending goods out into the sea.
1. Natural disasters
These are some of the most inevitable and oldest known obstacles in shipping history. For thousands of years, humans have weathered storms at sea. What makes this a modern risk then? The cost of natural disasters striking a shipment of goods can be extremely high, destroying cargo, causing spillage, ruining machinery, or, at worse, sinking the ship. Particularly today, the effects of climate change are becoming more and more apparent as there are increasingly devastating storms hitting key shipping routes going through Asia and the Caribbean. Insurance companies are stretched thin trying to cover the losses that come out of each of these events. This is why it is even more important today to get a full coverage hull and machinery insurance policy to protect your ship from disasters at sea.
2. War risk
Wars have also been plaguing human existence since time immemorial. However, every time a spate of war breaks out in modern times, it brings with it skyrocketing prices of insurance premiums. There is a rise in oil prices, too. Recently, there has been some disturbance in the Persian Gulf, with terror attacks carried out on oil tankers. It started more than a month ago, and since then, insurance premiums have risen. The most recent burst of attacks has further escalated these premiums. But even though it is expensive, coming down to hundreds of thousands for large oil tankers, it is still a smart idea to have more insurance in case of conflict breaking out, particularly if your trading routes involve conflict-prone zones such as the Middle East or South China Sea.
Almost any large enough company is facing risks of cyberattacks today. The world of shipping was taken by a storm when a highly publicized cyberattack took place on one of the world’s largest shipping companies, Maersk, which disrupted the entire global supply chain and cost the company millions. The entire attack started as an act of political warfare, and the price fell on the shoulders of shipping companies. For small cargo ship owners and shippers, this meant a huge disruption to their business, and the losses for them were even more devastating. Since then, the shipping world has become much more aware of cyberattacks, particularly with global conflicts and trade wars intensifying.
These are some of the reasons risk management is becoming much more important for shipping companies. There could be natural disasters, conflicts, and cyberattacks at sea. Before starting out, getting a comprehensive insurance policy is a must.