Mega-containerships Could Be "Nightmares" For Insurers

Larger containerships are at larger risk of disastrous accidents, which may leads to billions in losses.

The industry move towards larger and larger containerships has heightened insurer's fears that along with bigger sizes comes a bigger risk of disastrous accidents, The Wall Street Journal reports. 

Box shippers have looked to reduce their per TEU operating costs by increasing ship sizes to 18,000 TEU and above, stoking worries of potential disasters that may cause billions in insured losses. 

A containership accident such as the sinking of the Costa Concordia cruise ship last year "is one of our nightmares at the moment," said Capt. Rahul Khanna, a marine risk consultant at insurer Allianz SE's Allianz Global Corporate & Specialty unit. 

The sinking of the cruise ship led to losses of approximately $2 billion, while the sinking of the 8,000 TEU containership MOL Comfort in 2013 has already proved that even smaller containership losses are costly.

Despite the fact that the ship was only half full at the time of its sinking, insured losses are thought to have amounted to $523 million, according to Allianz figures. 

The risk of accidents is also higher in recent times because of "cost cutting measures such as reducing crew numbers, overworking and lack of training," according to Jonathan Moss, head of transport at London law firm DWF.

Potential blockages due to collisions in major waterways such as the Suez Canal is also a worry, as some canals are not structurally built to accommodate mega-ships.

Last year Ship & Bunker experts suggested that increasing insurance costs for the ever-larger box ships could ultimately be the deciding factor that caps containership size.

The largest containerships on order at the moment is thought to be Mitsui O.S.K. Lines' (MOL) 20,000 TEU vessels, which the company said earlier this year would be part of its strategy to revitalize the business.