The International Union of Marine Insurance (IUMI) will celebrate its 150th anniversary this year and all eyes will be on its annual conference in September.
Berlin will host the event and secretary general Lars Lange (below) announced the theme of the event in London this week.
“It will be building on 150 years of enabling global trade,” he said. “Marine was the oldest insurance product and we want to celebrate the work we have done in the past 150 years.”
Lange is right that marine insurance supports the movements of the vast majority of global goods around the world, but the organisations’ winter meeting in London this week was forced to concentrate on the darker side of the industry at present.
From the Panama Canal, the Black Sea to the Red Sea the maritime sector is beset with major challenges. It is fair to say that if one of these challenges occurred it would be deemed to be a crisis for the sector. The fact that the trio are ongoing simultaneously and the geography involved has the potential to be catastrophic.
Geopolitical risks are behind the Black Sea and Red Sea events with the threat of attack to vessels transiting the area real.
There is a concern that the US led coalition which is taking military action against the Houthi militia which is attacking shipping transiting the Red Sea will be unable to degrade the capabilities to the point where they lose the ability to mount assaults.
It has seen the number of vessels looking to use the Suez Canal reduce by 50% as vessels looks for other routes.
One of those routes would very, likely have been the Panama Canal but climate not conflict has impacted the vital routes between Pacific and Atlantic. The vita rainy season saw average rainfall reduce by 30% and the lake that feeds the locks along the canal is not at 50% of the level that would be needed to operate the canal during the annual dry season. The authorities have a truly life or death decisions to make as the lake is also the source of water for half the country’s population so the canal is competing with the need as of 2 million people.
The response has been to reduce the size of the vessels and the numbers able to transit the canal from around 40 a day to under 20.
In any other year the response from those using Asian ports to switch from Panama to the Suez, but this year the option comes with a huge risk.
Instead road and rail options are being considered by some but for others it is the long trek around the Cape of Good Hope and with it almost double the journey time has the ability to use either canal been a viable one.
It has reached a point where there are suggestions that the world will need toi change its supply chain operations, moving away from just in time to a more conservative just in case approach with businesses already scrambling to shorten supply chains and source goods and materials from far closer to home.
IUMI celebrates 150 years in 2024 but its members may not feel like celebrating until one or both of the world’s major trade routes are able to return to business as usual.
Editor, Emerging Risks