Responding to previously realised risks is one thing and most organisations understand that there is no excuse for not putting procedures in place to refrain from repeating an avoidable scenario, but are we doing enough to predict how developments in our technology, operations or operating environment could lead to new risks? Are we exploring the risks we may face in the future? And if we are, how do we safeguard against events that have never happened?
We only have to look at the shipping industry to see how developments in vessel size, geo-political instability, changing weather patterns and the nature of the cargo all present emerging risks that are only starting to be considered.
The shipping industry already has a greater propensity for significant incidents than oil and gas exploration, as there are many more variables affecting risk, i.e., the cargo is more diverse, and the scale of operations is much larger. For example, in February this year, the 60,000 gt car carrier, Felicity Ace, caught fire and burned for over a week before recovery teams could board. While being towed to safety, the ship sunk and is now two miles beneath the surface of the Atlantic Ocean. The vessel was carrying thousands of cars equipped with lithium-ion batteries, as well as thousands of gallons of oil and gas, posing a very real threat to the marine environment for years to come. The shipping industry recognises that there is still limited data concerning electric vehicles and their potential fire risk, which means the ship’s crews may not have the right tools or training to fight these fires. Should the nature of the cargo mean additional safety measures and changes in ship design are put in place?
Another emerging threat that is yet to be properly discussed is autonomous vessels. While there is no doubt that autonomous solutions are key to achieving shipping’s zero-emission ambitions, ensuring these vessels have the requisite safeguards on board to deal with challenges such as cyber security, or increasingly extreme weather conditions is paramount. Regulation is too often reactive so are we placing too much faith in the industry to put the environment first?
Standard P&I club warns that the frequency and ferocity of the storms are increasing year on year, causing much more damage and a greater risk of incidents. Are autonomous vessels able to respond to freak weather in the same way manned vessels are? Is the AI that is managing their transit developed enough to ensure environmental safety trumps operational performance or should they be regulated to guarantee this is the case?
The World Shipping Council’s 2022 report noted an ‘unusually high’ number of incidents, with estimates that an average of 3,113 containers were lost at sea in the two-year period of 2020-2021. The report takes into account significant events such as the One Apus stack collapse in December 2020 that resulted in the loss of more than 1,800 containers in one incident alone. In addition to the significant pollution hazard containers present through dangerous cargo and hazardous and noxious substances (HNS), they are themselves a navigation hazard and could cause an oil spill incident through a collision.
Incidents such as the grounding of ships pose significant risk and are often caused by human error, sometimes inadequate information related to the port or supply chain pressures, resulting in ships entering unfamiliar ports. Manoeuvring inattention and improper navigational operations should also be listed as common causes of major ship grounding accidents, which was the case in the recent Suez incident with the Evergreen vessel.
The vast majority of international oil companies (IOCs) have pledged to reduce their carbon footprint to zero by 2050. Meeting this target means a variety of approaches will be required, and this potentially includes pulling out of hydrocarbons completely or minimising future exploration projects. The US Energy Information Administration estimates that energy demand will increase 47% in the next 30 years so it can be argued that we will likely see an energy gap as the world struggles to match supply with demand. Smaller, independent oil companies are already acquiring assets being divested by IOCs. It’s normal that these smaller players, take on ageing infrastructure, but when taking on these assets they must recognise that each asset has a design life and need a greater degree of maintenance to ensure asset integrity and avoid a major incident.
Smaller oil companies may choose not to go beyond the legal minimums in terms of safety standards and not necessarily have deep enough pockets or the structures in place to deal with a major blowout effectively. In many countries, the government stipulates minimum insurance levels to allow for this, but this doesn’t necessarily occur everywhere.
Lastly, The current situation in Russia is a good example of where political instability can affect risk and further information can be found in our Thought Leadership article entitled ‘Russian Sanctions and the Laws of Unintended Consequences’.