Risk Landscape of Maritime Trade
- Climate change is causing more frequent and intense natural disasters, such as tsunamis, hurricanes, and flooding, which can lead to delays and damage to ships and cargo.
- Rough seas, storms, and earthquakes pose a significant risk to global shipping flows.
- Severe flooding and hail events are increasing on land, posing a significant risk to cargo and vessels.
The maritime transport sector plays a critical role in the global economy, with 90% of the world’s products transported via oceans and riverways. However, the industry is facing significant risks due to climate change, global trade wars, and heightened geopolitical tension. As a result, maritime insurance plays a crucial role in ensuring the sustainability of this industry.
Climate Change Impact on Maritime Trade
Climate change is having a profound impact on the maritime transport sector, with more frequent and intense natural disasters, such as tsunamis, hurricanes, and flooding, leading to delays and damage to ships and cargo.
For example, the KZN floods in 2022 resulted in significant damage to maritime cargo stored in warehouses on land. This highlights the need for proactive risk management and mitigation strategies to minimize the impact of climate-related risks.
Global Trade Wars and Geopolitical Tension
Global trade wars and heightened geopolitical tension are also driving significant supply chain uncertainty, particularly in key thoroughfares such as the Red Sea.
A recent example is the Houthi rebel activity in the Red Sea, which necessitated that ships reroute significantly further via South Africa to get to destinations.
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