How Current Events Are Shaping Risk in the Maritime Industry – BRINK – Conversations and Insights on Global Business

The maritime industry, like many others, continues to view the environmental issues related to the global energy transition as one of the most challenging. At the same time, the Russian-Ukrainian conflict, digitalization, the pandemic and labor shortages remain major areas of concern, according to the Global Maritime Issues Monitor 2022 investigation.

It was the fifth year that the Global Maritime Forum – with support from Marsh and the International Marine Insurance Union – conducted the survey, which looked at the impact, likelihood and preparedness of 18 key maritime issues. As a critical link in global supply chains, how the shipping industry handles these issues matters a great deal.

Although the survey asks respondents to consider risks from a 10-year perspective, it’s no surprise that current events once again played a role in the results.

Decarburization

Decarbonizing shipping and navigating new environmental regulations ranked among the top two issues facing the industry over the next 10 years, the second year in a row. In a positive sign, there has been a slight improvement in the opinion of 2022 respondents on the readiness of the industry to manage these two problems.

Yet failure to mitigate and adapt to climate change remained the third most common issue for which industry is least prepared. It is possible that maritime industry players feel less in control of broader, society-wide climate issues than they do for decarbonization, which is so directly linked to the transition to more fuels. green for maritime transport.

As my colleague, Amy Barnes, head of climate and sustainability strategy at Marsh, said in the report: “The maritime industry is not alone in worrying about preparing for climate change adaptation. . As with other environment, sustainability and governance (ESG) issues, developing a climate change mitigation strategy is often not about awareness, but about action. Many companies are genuinely committed to engaging with environmental and other ESG mattersbut don’t know where to focus their next steps. »

Global Maritime Issues Monitor 2022

Geopolitical tensions

This year, headline-grabbing issues figured prominently in the survey results.

Russia’s invasion of Ukraine was in its third month and rising fuel prices around the world were well underway when the investigation entered the scene. It is therefore not surprising that geopolitical tensions and rising fuel prices are high on the list of concerns. In terms of impact, for example, geopolitical tensions fell from ninth place to third place in 2021, while fuel prices fell from tenth place to fifth place.

Testifying to the industry’s long history and ability to manage conflict, maritime stakeholders indicated that the industry is well prepared to handle both the geopolitical situation and increases in fuel prices. About 35% of survey respondents said the conflict had affected their business or caused them to reassess supply chain resilience, trade routes and/or supplier credit positions. This number likely increased as the conflict continued.

Respondents noted a number of impacts of the conflict. Direct impacts included:

  • Redirect trade routes and modify trade flows for disrupted routes, including stopping calls at Russian and Ukrainian ports
  • Cease trading or terminate other business relationships with Russian stakeholders
  • Crew Challenges, Crew Movement and Other Operational Aspects

Indirect impacts included:

  • Sanctions affecting their business
  • Rising prices and uncertainty
  • Reassessment of how and with whom business is conducted

Labor and skills shortages

The expected impact and likelihood of labor and skills shortages has continued to increase this year, while the level of preparedness has declined.

Indeed, some stakeholders see it as the main threat to the industry over the next decade.

While the need to address labour, skills and talent is widely recognized, the issue is a growing concern. Indeed, some stakeholders see it as the main threat the industry will face over the next decade, a threat that is exacerbated by the COVID-19 lockdowns in China and the Russian-Ukrainian war, which have combined to drastically reduce the supply of skilled seafarers.

One of the critical impacts on the shipping industry of the COVID-19 pandemic has been that thousands of seafarers have been stranded on ships beyond the expiration of their contracts. In turn, the crew change crisis now reinforces the perception that the industry is not well prepared to overcome an impending labor shortage.

Digital and cyber issues

Given the relentless pace of digitalization, exposure to cyber risks is increasing. Initiatives in the shipping industry to increase speed, reduce delays, improve visibility across supply chains and become more efficient are also increasing reliance on technology.

In the 2022 survey, cyberattacks and data theft, big data and artificial intelligence, and autonomy technology again scored high on likelihood and low preparedness . Given the key role the maritime industry plays in the global economy, any disruption could well ripple through global supply chains.

These risks underscore how important it is for maritime industry players to invest in smart digitization strategies that identify and address vulnerabilities, creating a cyber-resilient organization that can withstand and recover from an attack. .

“Changing the industry takes time, but things are moving,” Thomas Bagge, CEO and statutory director of the Digital Container Shipping Association, said in the report. “We have to define the basic numerical bases.”

Pandemic

Attention to the pandemic has diminished in the maritime industry, as in others, amid a general feeling that the worst of COVID-19 is behind us. It was the third year that the “pandemic” had been included in the survey, and respondents continued to view a future pandemic as less likely, ranking it sixteenth in likelihood this year, down from thirteenth in 2021 and tenth in 2020.

It’s worth remembering that even if companies view a pandemic as less likely, they should remain on guard against the possibility of future ones.

As we have seen again this year, new issues will arise and existing ones will change for the marine industry over the next decade, including environmental concerns, labor and skills shortages, cyber risks, geopolitical tensions, etc. While perceptions of the relative impact, likelihood, and preparedness of various issues will change from year to year, industry leaders would do well to continue to discuss and prepare for the full spectrum. risks.