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World Maritime Day highlights the challenges for seafarers and insurers alike


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World Maritime Day 2021, marked on 30 September, honours seafarers and highlights the struggles they face in bringing us the commodities we want and need – challenges that insurers, too, must contend with.


                        Portrait of Cynthia Nanthalall, head of Marine at Hollard Insure.

Cynthia Nanthalall, head of Marine at Hollard Insure


It has been a brutal time for seafarers, who have faced unprecedented hardship caused by the ongoing COVID-19 pandemic. Thousands of seafarers across the globe have spent extended times stuck at sea, unable to go to shore, repatriate and change crews. The United Nations has dubbed this a “humanitarian crisis that jeopardises the safety and the future of shipping”.

Their job was hard enough before the pandemic – physically coping with shift work, varied weather conditions across different time zones, the dangers of working onboard a ship and mentally coping with their living and social conditions on board. The pandemic brought isolation into the equation, leaving seafarers stranded and away from their families for extended periods of time, suffering from loneliness and anxiety about their own safety and that of their families back home.

Even so, seafarers have continued to play a pivotal role as essential workers, responsible for keeping global supply chains functioning.

The current landscape

The COVID-19 lockdowns have been a watershed event for traders across the world. This includes Hollard’s clients across industry sectors here in South Africa. The global economy took a serious knock when international trade plunged, and foreign direct investment flows fell markedly. Global FDI declined by up to 40% in 2020 and further in 2021 as greenfield projects and mergers and acquisitions were suspended or shelved. These FDI flows are only projected to recover in 2022.

During lockdowns, trade patterns were changed significantly. The abrupt halting of industry sent shockwaves throughout the global supply chain and damaged the economies of some of the world’s leading nations, such as China and the United States.

At the outset of the pandemic, both supply and demand shifted as countries stockpiled essentials such as food and medical supplies.

COVID-19 also led to a sharp increase in business closures and job losses. South Africa is now regarded as the nation with the highest unemployment rate in the world at 34.4%, painting a very bleak picture domestically.

Lockdowns continue to hinder the movement of people and goods, as well as compulsory components in global supply chain operations. As new variants emerge that challenge vaccine efficacy and trigger a resurgence in COVID-19 cases, we may find ourselves in repeated cycles of lockdown, which will deal further blows to economies and trade throughout the world.

Port congestion

The effect of COVID-19 on port logistics has been debilitating. Port operations took devastating strain, with fewer vessels calling in port, huge delays in port turnaround times, terrible port congestion or sometimes closures, inoperative port equipment, labour absences and ineffective crew changes. These were further aggravated by landside difficulties, including restrictions on inland transportation of non-essential goods and lengthy border queues coupled with border closures.

As we speak, shipping delays have become the norm and freight costs continue to escalate due to the global shortage of shipping containers. These containers have been stuck at ports during lockdowns, causing a demand for containers at unprecedented and extraordinary prices. According to data from research company Drewry Shipping’s world container index, the composite cost of shipping a 40-foot container on eight major East-West routes hit $10 374.64 (about £7 618) in the week to September 16, up 323% from a year ago. Is it any wonder, then, that the reliability and sustainability of the global supply chain in supporting lives and livelihoods is very much in the spotlight?

The impact on insurance

It is a concern for Marine insurers when vessels aggregate at ports. The biggest challenge is the possibility of vast losses if all those vessels are affected by a natural catastrophe at the same time when they are in proximity to one another.

Another concern would be the increased risk to time-sensitive or perishable cargo that may be delayed for extended periods of time, or the increase in claim costs due to a spike in shipping costs such as that associated with the current global container shortage.

Way forward

With time, the global supply chain has evolved to embrace best practices, such as “just-in-time” inventory management and other lean practices, but in doing so has made it more vulnerable to supply chain shocks such as pandemics, severe weather events, cyber-crime, blocked sea routes, trade tension or other significant events that disrupt the global supply chain. A number of shocks occurring at once make this worse.

Now more than ever, stakeholders in the supply chain need to learn from the experiences during this pandemic and start considering supplementary strategies in supply chain management that may ease the vulnerability of world trade to these systemic shocks.

As a result of the lockdowns, technology has been adopted more readily. In the insurance industry, it has led to new ways of working remotely, and trends show that the hybrid work model will continue long after the pandemic is over.

Going forward, strategies need to be formed early in the day to counter the threat of cyber-crime that lurks around every digital advancement. 

Systemic shocks such as these are not easily overcome, and it will take time for global trade to return to familiar patterns. In the meantime, we take our hats off to seafarers worldwide who – against all odds – persevere in truly difficult times.

By Cynthia Nanthalall, head of Marine at Hollard Insure.


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