This article is part of the
Safety and Shipping Review 2023
Ukraine hull and cargo╠řclaims crystalize
More than a year after RussiaÔÇÖs invasion of╠řUkraine, and the ripple effects of the conflict╠řcontinue to be felt by shipping companies╠řand insurers, while embargoes and sanctions╠řseverely limit trade with Russia.╠ř
When Russia invaded Ukraine in February╠ř2022, 112 vessels crewed by more than 2,000╠řseafarers were caught in Ukrainian ports╠řacross the Black Sea and the Sea of Azov. One╠řyear later, and 331 seafarers were still stuck in╠řUkrainian ports.  Some 40╠řor more vessels were believed to still be trapped╠řin the region as of March 2023, in addition to╠řseveral merchant vessels that were damaged or╠řdestroyed in Ukrainian ports in the first months╠řof the war.╠ř
The longer vessels are trapped, the higher╠řthe likely loss for insurers. Owners and╠řoperators have no access to trapped vessels╠řfor maintenance or repairs, while insurers are╠řnot able to carry out loss assessments. With the╠řpassage of time, salvage values decline.╠ř
The one-year mark is an important trigger for╠řmarine insurance policies. Under a marine war╠řrisk policy, a vessel could be considered a total╠řloss when trapped or blocked for a defined╠řperiod, typically one year for a hull policy, but as╠řlittle as six months for cargo.
ÔÇťAs we have passed the 12-month time period,╠řoutstanding claims for trapped vessels have╠řbeen declared as total losses,ÔÇŁ says R├ęgis╠řBroudin, Global Head of Marine Claims at╠řAbout usGlobal Corporate & Specialty (AGCS).╠řÔÇťIn almost 30 years of experience, this is the╠řfirst time I have seen this theoretical total loss╠řscenario realized under a blocking and trapping╠řhull cover. This situation is unprecedented.ÔÇŁ
Insureds would, however, be expected to take╠řreasonable measures to try minimizing the loss╠řor secure the vesselÔÇÖs release, such as making╠řuse of any safe passage agreements. Signed╠řin Istanbul on July 22, 2022, facilitated by the╠řUnited Nations and Turkey, the Black Sea Grain╠řAgreement is intended to create safe passage╠řfor vessels in the Black Sea exporting grain╠řand fertilizer.╠ř
The grain corridor has enabled some vessels╠řtrapped by the war in Ukraine to escape. Vessels╠řusing the corridor are covered by a special╠řinsurance facility.╠ř
Despite the Black Sea Grain Agreement,╠řrisks for shipping in the Black Sea remain at╠řa high level, with an ever-present threat of╠řwar. NATO  recently warned that the threat╠řof collateral damage or direct hits on civilian╠řshipping in the war risk area of the Black Sea╠řremains high, while harassment and diversion╠řof shipping in the area cannot be excluded.╠řThe threat of Global Positioning System (GPS)╠řjamming, Automatic Identification System (AIS)╠řspoofing, communications jamming, electronic╠řinterference and cyber-attacks in the area are╠řalso considered high.╠ř
Mines also continue to pose a threat, and a╠řnumber have been detected and deactivated╠řin the western Black Sea by coastal nationsÔÇÖ╠řauthorities in 2023. During a storm in March╠ř2023, a stray mine drifted ashore and exploded,╠řdamaging the dock at a Ukrainian resort. Last╠řyear a Romanian minesweeper was damaged╠řby a floating mine. ╠ř
ÔÇťFloating mines will continue to pose a risk,╠řeven after the war ends. There is no reliable╠řinformation on where mines are located, and╠řmany can go missing or drift, and that would be╠řa big risk for vessels navigating these waters for╠řsome years,ÔÇŁ says Captain Nitin Chopra, Senior╠řMarine Risk Consultant at AGCS.
Shadow tanker fleet poses╠řsafety and environmental risk
In December 2022, the G7, the European Union╠řand Australia agreed to set a maximum price of╠ř$60 per barrel for seaborne Russian oil products,╠řwith an option to adjust the price cap in the╠řfuture to respond to market developments.╠ř
The price cap, which is in addition to US, UK╠řand EU bans on Russian oil imports, prohibits╠řoperators and service providers in participating╠řcountries ÔÇô including insurers ÔÇô from facilitating╠řthe transportation of Russian oil above the╠řprice cap. Even above the price cap, there is╠řlimited appetite among insurers and reinsurers╠řto underwrite Russian oil trade due to the╠řadministrative burden and enhanced safety and╠řpollution concerns. Where insurance is provided,╠řany breach of the price cap would result in the╠řvessel being uninsured.╠ř
Russia and its allies, however, are seeking to╠řcircumvent these sanctions. According to the╠řInternational Union of Marine Insurance (IUMI),╠řRussia has assembled its own fleet of about 100╠řvessels to transport its oil and may have access╠řto a further 200 vessels from countries like╠řVenezuela and North Korea.  Estimates of the╠řsize of the shadow fleet vary, and range to more╠řthan 600, or roughly a fifth of the overall global╠řcrude oil tanker fleet, according to Reuters. 
This so-called shadow fleet enables Russia to╠řsell its oil effectively without valid insurance.╠řOf the 900 or so very large and ultra large╠řtankers operating worldwide, around 20%╠řwere operating in a way that technically╠řbreaks sanctions against Iran, Venezuela╠řor, increasingly, Russia, according to╠řTankerTrackers.  Some 15% of the suezmax╠řfleet and 11% of the aframax fleet were╠řbreaking rules.╠ř
Sanctions and RussiaÔÇÖs invasion of Ukraine╠řhave caused many leading certification╠řproviders, engine makers and insurers to╠řwithdraw their services from ships carrying oil╠řfrom sanctioned Iran, Russia and Venezuela,╠řresulting in reduced oversight of vessels carrying╠řoil exports from these countries. Vessels in the╠řshadow fleet are more likely to be older ships,╠řoperating under flags of convenience and╠řunder lower maintenance standards, explains╠řJustus Heinrich, Global Product Leader╠řMarine Hull at About usGlobal Corporate &╠řSpecialty (AGCS): ÔÇťThe sanctions environment╠řhas intensified significantly over the past╠řyear and the complexity of doing business╠řfor insurers and customers has increased╠řsignificantly. At the same time, the increase in╠řthe number of shadow tankers is a worrying╠řdevelopment, threatening the world fleet and╠řthe environment.ÔÇŁ
According to analysis  of ship tracking and╠řaccident data, there were at least eight╠řgroundings, collisions or near misses involving╠řtankers carrying sanctioned oil products in 2022╠řÔÇô the same number as in the previous three years╠řcombined. In March last year, shadow tanker╠řArzoyi ran aground off eastern China. Just days╠řlater the Petion was involved in a collision near╠řCuba. In November 2022, oil tanker Linda I was╠řseized in Spain for drifting out of control ÔÇô it was╠řfound to have several deficiencies and was in╠řcontravention of pollution regulations for using╠řhigh-sulphur marine fuel without an exhaust gas╠řcleaning system.
In May 2023, an uninsured, unladen 1997-built╠řtanker, Pablo, exploded in Southeast Asia,╠řreportedly killing three crew and washing oil up╠řon nearby shores. 
ÔÇťAs this incident shows, there are a number╠řof worrying scenarios, such as a collision with╠řan uninsured shadow fleet vessel that causes╠řmajor environmental damage,ÔÇŁ says Captain╠řNitin Chopra, Senior Marine RIsk Consultant╠řat AGCS.
Progress made in fighting╠řpiracy but recent activity shows╠řno room for complacency
There were just 115 recorded piracy incidents╠řduring 2022, down from 132 in 2021 according╠řto the International Maritime Bureau.  Ten╠řyears ago there were 138 incidents recorded in╠řthe first six months of 2013 alone.╠ř
The overall reduction in piracy activity in the╠řhigh-risk waters of the Gulf of Guinea ÔÇô down╠řfrom 35 incidents in 2021 to 19 in 2022 ÔÇô is a╠řsignificant contributor to this decreased activity╠řoverall. In 2019, the Gulf of Guinea was the╠řglobal piracy hotspot, accounting for 90% of╠řglobal kidnappings reported at sea, with the╠řnumber of crew taken increasing by more than╠ř50% to 121. Today, piracy is at a near three╠řdecade low in the region.
The prompt and decisive actions and╠řcollaboration between international navies╠řand regional authorities and navies in╠řthe region, such as the Nigerian Maritime╠řAdministration and Safety Agency (NIMASA)╠řand initiatives such as the Gulf of Guinea╠řMaritime Collaboration Forum SHADE (which╠řwas established to implement more effective╠řoperational counter piracy cooperation between╠řnavies, both regional and international, as well╠řas the shipping industry and reporting centers)╠řhave positively contributed to the drop in╠řreported incidents.╠ř
ÔÇťHowever, sustained efforts are needed to╠řensure the continued safety of seafarers in╠řthe Gulf of Guinea region. Piracy is tied to╠řunderlying social, political and economic╠řproblems, which could deteriorate further.╠řThe region remains dangerous,ÔÇŁ says Captain╠řRahul Khanna, Global Head of Marine Risk╠řConsulting at About usGlobal Corporate &╠řSpecialty (AGCS). Two incidents were reported╠řin the last quarter of 2022. In March 2023╠řpirates boarded a product tanker off the coast╠řof Democratic Republic of the Congo, while in╠řApril another tanker was boarded about 300╠řnautical miles southwest of Abidjan, Ivory Coast╠řÔÇô all crew were later reported safe with the oil╠řcargo the target . Seafarers are encouraged╠řto follow industry best management practice╠řrecommendations in these waters.╠ř
Developments outside of the Gulf of Guinea╠řshould remain on the risk radar. A third of all╠řincidents reported globally in 2022 were in╠řthe Singapore Strait with underway vessels╠řsuccessfully boarded in all 38 incidents. These╠řincidents fall under the definition of armed╠řrobbery, but crews continue to be at risk. In╠řFebruary 2023, the Regional Cooperation╠řAgreement on Combating Piracy and Armed╠řRobbery against Ships in Asia Information╠řSharing Centre (ReCAAP ISC) reported nine╠řincidents of armed robbery against ships in Asia╠ř(8 in the Straits of Malacca and Singapore). 
Armed robbery is distinguished from piracy╠řin that the former occurs in internal waters,╠řarchipelagic waters and territorial seas, rather╠řthan on the international high seas.╠ř
Shipping continues to fall╠řvictim to cyber-attacks
In January 2023, DNV,  a Norwegian shipping╠řclassification society confirmed its systems╠řhad been disrupted by a ransomware attack,╠řaffecting around 1,000 vessels that rely on╠řits technology. In April 2023, several ports╠řin Canada including Halifax, Montreal, and╠řQu├ębec, suffered multiple cyber-attacks after╠řbeing targeted by a distributed denial-of-service╠řattack (DDOS) which caused their websites to╠řcrash. Reports indicated that a pro-Russian╠řhacking group had claimed responsibility. 
The digital era may be opening up new possibilities╠řfor the maritime industry but its growing reliance╠řon computer and software and increasing╠řinterconnectivity within the sector is also making it╠řhighly vulnerable. All four of the largest shipping╠řcompanies, Maersk, Cosco, MSC, and CMA CGM╠řhave been victims of cyber-attacks in recent years.╠řAnd according to an industry survey  just under╠řhalf (44%) of maritime professionals reported╠řthat their organization has been the subject of a╠řcyber-attack over a three year period. It also found╠řalmost a third of organizations do not conduct╠řregular cyber security training while 38% do not╠řhave a cyber response plan. To date, most cyber incidents in the shipping╠řindustry have been shore-based, such as╠řransomware and malware attacks against╠řshipping companiesÔÇÖ and portsÔÇÖ database systems.╠řBut with the growing connectivity of shipping,╠řthe fact that geopolitical conflict is increasingly╠řbeing played out in cyber space ÔÇô recent years╠řhave seen a growing number of GPS spoofing╠řincidents, particularly in the Middle East and╠řChina, which can cause vessels to believe they are╠řin a different position than they actually are ÔÇô and╠řwith the advancement of autonomous shipping,╠řthere is little doubt that cyber risk has become an╠řimportant exposure that will require much more╠řdetailed risk assessment going forward.
Fortunately, there are also a growing number╠řof resources available to help mariners learn╠řabout common vulnerabilities. Just one example╠řis the internationally-recognized United States╠řMaritime Resource Center, which assists the╠řindustry in cyber awareness, safety and security╠řthrough evidence-based research. Then there╠řare an increasing number of cyber security╠řguidelines which can be followed, such as those╠řfrom the International Maritime Organization,╠řbut also from other important organizations╠řsuch as the Baltic and International Maritime╠řCouncil (BIMCO), the Cruise Lines International╠řAssociation (CLIA), Intercargo and Intertanko.
ÔÇťThere are also standard practices that can╠řbe implemented to reduce cyber risk, such as╠řdefining personnel roles and responsibilities╠řfor cyber risk management and identifying╠řthe systems, assets and data that, when╠řdisrupted, pose risks to ship operations,ÔÇŁ says╠řCaptain Rahul Khanna, Global Head of╠řMarine Risk Consulting at About usGlobal╠řCorporate & Specialty (AGCS). ÔÇťShipowners╠řalso need to implement risk control processes╠řand contingency planning, developing and╠řimplementing activities necessary to quickly╠řdetect a cyber event. Identifying measures to╠řback up and restore cyber systems impacted by╠řa cyber event is obviously crucial.ÔÇŁ
These are challenging times for the shipping╠řindustry, but it is vital that investment in cyber╠řrisk education and security is not neglected at╠řthis time, despite economic and decarbonization╠řpressures, as this risk has the potential to have╠řcatastrophic consequences, given the right╠řconfluence of events.
 NATO, Risk of collateral damage in the╠řnorthwestern Black Sea area, February 28, 2022
 Romania Journal, Romanian Naval ForcesÔÇÖ╠řminesweeper damaged after being hit by mine,╠řSeptember 9, 2022
 International Union of Marine Insurance, IUMI╠řEye newsletter, March 2023
 Reuters, Oil spills and near misses: more ghost╠řtankers ship sanctioned fuel, March 23, 2023
 Tankertrackers.com, March 10, 2023
 Reuters, Oil spills and near misses: more ghost╠řtankers ship sanctioned fuel, March 23, 2023
 Splash247.com, Pablo explosion a warning sign╠řof worse to come, May 8, 2023
 ICC International Maritime Bureau, Piracy and╠řarmed robbery against ships report, January ÔÇô╠řDecember 2022
 The Maritime Executive, Ongoing incident:╠řPirates board product tanker in the Gulf of╠řGuinea, March 27, 2023
 ReCAAP ISC: Nine incidents of armed robbery╠řagainst ships in Asia in February, March 14, 2023
 DNV, Cyber-attack on ShipManager servers ÔÇô╠řupdate, January 23, 2023
 Port Technology, Pro-Russian hackers suspected╠řin cyber-attacks on Canadian ports, April 14,╠ř2023
 Safety4Sea, Report: Shipowners pay average╠řof $3.1 million as ransoms due to cyber-attacks,╠řMarch 22, 2022