High-profile maritime disasters like the loss of the cruise liner Costa Concordia off the coast of Italy make headline news, but the ramifications continue long after the media interest has moved on.
None of us who saw the news coverage will forget the shocking images of the huge ship lying on her side near the tiny harbour on the island of Giglio, or the hundreds of passengers stranded on the overturned hull. The accident cost the lives of 32 people and left many more traumatised by their experience.
As well as the high personal cost there are also serious consequences for the shipping industry, not least in terms of the potential impact on the complex area of marine insurance. This specialist cover plays a critical role in underpinning all of our maritime trade and leisure activities.
The 114,500 ton Costa Concordia is the largest and most expensive maritime recovery of all time. Re-floating her was an incredibly complicated procedure with huge watertight steel tanks the height of an 11 storey building being welded to the hull to help get the ship upright. The vessel was then strengthened before being towed 191 nautical miles to Genoa where the dismantling and recycling is expected to take 2 years.
Attempts to salvage the liner proved impossible and it was declared a Constructive Total Loss (CTL), although the Italian authorities naturally insisted that the wreck was removed despite the enormous technical challenges involved in the process.
According to the Lloyds Intelligence List, there are around 1,000 serious marine incidents each year, but in most cases effective salvage enables the ship to return to normal service. Where this is not the case and the cost of repair is unattractive it is declared a CTL.
Vessels are getting bigger all the time and salvage operations becoming more complex and expensive. The latest estimates suggest that the Costa Concordia involved a hull loss of around $500m and a liability loss of upwards of $1.5bn.
A recent survey found that the cost of salvaging and removing wrecks increased fivefold between 2005 and 2012, and although the specialists working in marine insurance may not have been surprised that the bill for a single incident could ever exceed $1bn, they were certainly not expecting the dramatic increase in protection and indemnity liabilities.
One of the main factors behind this is the increased level of intervention by governments and other authorities. This reflects the growing awareness of the potential impact of maritime disasters on the environment and the need to remove wrecks in such a way as to minimise the collateral damage.
Lawyers dealing with the aftermath of the Costa Concordia have received a €30m claim for damages from Tuscany to redress the impact on its reputation as a tourist destination. The little island of Giglio has dwarfed this with a demand for €189m to compensate it for the effect on its holiday image and loss of earnings for local businesses.
It is not just cruise liners that are getting bigger with 2013 marking the arrival of the largest container vessel on record. The Mrsk’s Triple-E class is over 400 meters long and can carry more than 18,000 20-foot containers. With over 90% of the world’s trade reliant on seaborne transportation it is a critical component of the global economy.
The specialists at Lloyds have put together a detailed report on the challenges and implications of removing shipwrecks in the 21st Century. It is hoped that the text will encourage discussions among the key stakeholders and thereby help to find a solution to the growing cost of wreck removal operations and the threat this poses to world trade.
[Source:modestmoney.com]Sourse: Thefinancebucks.com
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