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Is the Shipping industry at risk?

Posted on - Sep 28,2022


Is the Shipping industry at risk?

Do you often wonder about the risk involved in the shipping industry? How are such risks managed? Or do we think the shipping industry is all about transporting goods and making money? if your thought belongs to the latter kind of thinking then you got it all wrong. The shipping industry is filled with a lot of risk ranging from natural disasters, theft by both internal and external sources, piracy and etc. which is faced on a daily basis.

Natural disasters, mechanical failures, and human errors are the most common and predictable shipping risks. Cyber risks and piracy are part of the many risks faced by the shipping company since the introduction of technology into the shipping world.

As mentioned earlier, the major risks in the shipping industry are;

Natural disasters: sea storms, rise in sea level, floods, bushfires, are all natural disasters which in one way or the other affects the shipping industry. The growth of natural weather in recent years have made the shipping industry unpredictable which calls for preparation for storms at the sea or port. A clear example of this is Hurricane Irma in the United States that led to a poor performance in the gasoline market and this led to higher demand for transportation fuels. Natural disaster has its way of hurting the cargo shipping supply.

Piracy or Hijacking: Piracy or hijacking is robbery on the high sea with the goal of stealing cargo and other valuable goods from the ship. Piracy is still a very active threat for cargo ships at sea and this could lead to danger to the crews on the ships, delay of ships as well as damages to the vessel and cargo. In order to curb piracy shipping companies employ different tactics such as rerouting their ships, investing in armed guards, electric fencing, razor wire, water cannons and other weaponry.

Cyber Risks: Since the cargo industry has been connected digitally by technology cyber risks have become one of the top threats in this industry and when the security of a vessel is threatened by a circumstance or event this leads to security failures as a result of valid information or systems being corrupted, lost or compromised and this is sometimes done by aggrieved or dissatisfied employees who would want to steal or cause harm to the company.

Human Error: This is an unintentional action / decision or deliberately doing the wrong thing  that can cause or allow security breach. Human errors is one large category with a few issues which includes;

a.      Not providing enough protection against cargo theft

b.      Misrouted or diverted goods

c.       Delayed of faulty delivery

It is encouraging to know that despite all the risks involved Cargo ships are part of the global economy backbone. The international cargo shipping industry transports goods with an estimated value of 4.5trillion dollars on an annual basis and this is expected to rise within the coming year.