The behemoth in the basin

Big ships, like Maersk's Triple E, bring big insurance headaches for ports Big ships, like Maersk's Triple E, bring big insurance headaches for ports

Any senior manager who feels satisfied with the risk management system in his or her port almost certainly needs to think again - big is on the agenda and ports need to be prepared for the ensuing risks.

Beyond the substantial safety challenges that have been prudently addressed by many businesses in the last few years, ports and terminals now have to get to grips with the questions of scale posed by the latest trends in container transport.

In the last few weeks we have had a series of announcements involving huge increases in port capacity and the creation of capacious berths ready for the incoming generation of boxships.

Within a few days, for example, it was revealed that the World Bank is to finance a doubling of capacity to 500,000 teu at Tecon Salvador, Brazil; that DP World is increasing capacity by 1m teu to 15m teu annually at Jebel Ali; and that Felixstowe South Terminal has become the only facility in the UK able to handle ships of 18,000 teu, as part of its strategy to stop lines defecting to European mainland ports.

Ships of 10,000 teu and above now comprise in capacity nearly half the global order book, with containership deliveries set to reach a record 1.55m teu in 2012, according to Clarkson Research.

While the operators of such giant ships are invariably well managed companies, it has to be remembered that insurers have for some time been expressing concern about developments in an industry-wide context. As the ships have got bigger, the crewing has got smaller, the supply of officers qualified to run specialist ships more limited, and reliance on sophisticated technology to run almost every aspect of vessels has grown.

An accident at sea or in port involving such vessels could saddle ship owners or port enterprises with massive liabilities. To be stuck with a disabled ship blocking one of the new mega-berths, even for a short time, hardly bears thinking about. Nor do the implications of a crane toppling on to one of these giant ships and paralysing loading or discharge operations in an era when turn-round times are key.

It is the job of port insurers and brokers to work with clients to develop loss prevention structures and to mitigate the consequences of unthinkable scenarios. It has been traditional to view port risk from a quayside perspective, but now is the time to assess, as the cliché has it, the elephant in the room, or more prosaically the behemoth in the basin of the big ports.

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