Allianz Highlights Unexpected Safety Implications from Lower Emissions Bunker Fuels

AGCS says that for 2015 it "has seen an increase in machinery claims in relation to fuel."

Allianz Global Corporate & Specialty (AGCS) Monday highlighted what it says is the unexpected safety threat from lower emissions bunker fuels.

Commenting on the findings put forward in its fourth annual Safety and Shipping Review 2016, AGCS said "there have been unexpected safety implications connected with the use of ultra-low sulfur fuel."

"Engine problems and power issues have been reported and such incidents could increase as regulations on sulfur content in fuel tighten further. Generally, AGCS has seen an increase in machinery claims in relation to fuel," said AGCS.

From January 1, 2015 there has been a 0.10 percent sulfur cap for marine fuel used within Emissions Control Areas (ECAs) up from the previous 1.0 percent cap.

As Ship & Bunker has previously reported, this has generally lead to a more complicated ECA fuel switching process between fuel oil and distillate, rather than simply between different fuel oil products.

Overall, AGCS says that for ships of over 100 gross tons it found that 85 large ships were lost worldwide in 2015, a decrease of 45 percent over the past decade, making the year the "safest year in shipping in the last decade."

The improvement in the record is said to be driven by "increasingly robust safety environment and self-regulation," according to the report.

However, risks have increased in some areas, among them mega ship salvage issues; "The industry may need to prepare for a $1bn+ loss in future," AGCS warns.

Cyber Risk, superstorms, and economic pressures were some of the other challenges to shipping safety progress identified in the report.

“The fact that superstorms are causing ships to sink is concerning,” says Sven Gerhard, Global Product Leader Hull & Marine Liabilities, AGCS.

Captain Rahul Khanna, Global Head of Marine Risk Consulting, AGCS, said: "The economic downturn – and its impact on the shipping sector - is likely to have a negative impact on safety.

"Many sectors, such as general cargo, bulk and offshore, are already challenged and any drop in safety standards will be a serious case for concern."

In 2014 Ship & Bunker's Inside Opinion speculated that insurance cost, rather than any physical constraints, would eventually become the limiting factor on containership size.