Air or maybe even land transport is fast, but the maritime industry is responsible for 90% of global trade. As of January 2019, some 53,000 merchant vessels are at sea, powering the world economy and making sure that goods are delivered from one port to another. Of these, more than 11,500 are bulk carriers, and nearly 17,000 are general cargo ships. Other types of boats include oil tankers, chemical tankers, container ships, natural gas tankers, and passenger ships.
Every time you click a button on Amazon, Alibaba, Etsy, or whatever online eCommerce platform you use, you sometimes forget that cargo ships are partly responsible for getting that latest iPad by your doorstep. You might be even more oblivious to the many problems and challenges faced by the men and women at sea and the maritime industry in general.
The maritime industry drags new employees on a daily basis. In order to help with their smooth mixture into the maritime world and to encourage them to work more efficiently faster; Maritime Academy gives this initial course for newcomers into the industry. Past participants have discovered it a very helpful initiation and were immediately able to understand much of the new terminology and achieve a clearer recognition of their new functioning environment.
Have you ever wondered what kind of marine insurance contract will cover an attack by thieves? Are ransom payments covered under claims on a policy?
Despite its contribution to the world economy, the maritime industry is currently facing a difficult situation because of global economic conditions as well as threats from criminal elements.
Here are some of the top challenges in the maritime industry:
The threat of theft is just one of the problems. The political instability of a nation, dropping price rates, and the pressure to act on climate change and reduce carbon emission are some of the challenges. The maritime industry at present handling a broad range of challenges arising from geopolitical developments, the new IMO guidance, technological development including AI that is Artificial Intelligence, warnings to trade increase and the need for more sustainability. While the world is experiencing a profound change, we consider these developments as bringing luck, especially from the aspect of sustainability. Here are a few more important hurdles for the shipping industry:
1. Carbon emissions:
One of the leaders of the maritime risk management services states that decarbonization or creating greater dependency on “carbon neutral fuels” as one of the critical challenges in the shipping industry today. The International Maritime Organization (IMO) has set a target of reducing greenhouse gas emissions by 50% come 2050.
International maritime, such as other business sectors, meet a dual test in respect of weather change: the obligation to decrease its carbon emissions and, at the very time, change to the potentially broad-ranging consequences of climatic variations. Given the essential meaning of international marine transportation for global business, facing the climate change challenge is important. With 80% of the amount of world trade transported by sea, worldwide shipping and ports give important linkages in global stock-chains and are required for the capacity of all countries, which includes those that are landlocked, to access global sales.
2. Regulation compliance:
With the challenge of decarbonization, stricter regulations naturally follow. These more stringent regulations imply that shipping companies are exposed to more significant liabilities and claims for damages on goods, theft, or delays in shipping. It is, therefore, critical for the industry to obtain the services of maritime insurers for protection.
3. Economic uncertainty:
The domestic maritime industry in the U.S. contributes more than $150 billion to the economy. This, of course, directly impacts the state of the global industry. While the U.S. economy is showing positive signs, the prospect for the overall maritime sector might be uncertain, at least for the next two years. The ongoing tariff war between China and the US is undoubtedly undermining growth potentials.
The maritime industry at present been staggering under the influence of the continuing economic disaster. It is assumed to undergo a few years of deterioration due to the high capacity of ships, and a large reduction of shipment, following in a drop in rates. Overall, the shipping industry is seeing a new trend of concentration. Smaller companies, which are asset-huge, are uniting with larger organizations in order to endure these tough times.
The 2013 Tom Hanks film “Captain Philips,” might have brought to mainstream consciousness the problem of pirates forcibly taking over the ship, Maersk Alabama. But they aren’t the only threats. Some people can hijack a ship’s GPS, Automatic Identification System, and Electronic Chart Display and Information System. This opens the possibility of data theft, which undermines national data privacy laws.
Some of these challenges can be addressed by inter-governmental cooperation and agreements. Others will be dependent on developing new technologies (e.g., to address decarbonization). Insurers will also play a significant role in mitigating losses and threats to keep the maritime industry afloat for years to come.