High rates of infection from the Delta variant and low levels of vaccination in key countries could result in worldwide crew shortages, fatigued and stranded crewmembers, and increased risk of loss for marine re/insurers, according to analysts at PCS.
The firm says that marine re/insurers in particular need to stay vigilant regarding the potential implications for the risk environment, as COVID-19 once again poses an intensifying threat to supply chain resilience.
PCS notes that only a handful of countries produce most of the world’s seafarers, and this concentration risk means that an uptick in symptomatic infection or fatality rates could have profound ramifications for the shipping industry and the supply chain as a whole.
Research suggests that only around 20% of seafarers have been vaccinated, which remains quite low relative to developed market regional targets of generally around 67%.
“When viewed from the perspective of the global supply chain, it’s clear that states with demand for end goods have far higher vaccination rates than the countries providing most of the labor for shipping those goods,” PCS stated. “What results from this imbalance is a clear threat to the flow of goods/ consumption behavior in developed markets, and overall global economic health.”
As many as 200,000 were stranded during the pandemic’s worst effects on the maritime industry, and while the number of crew stranded past their terms currently stands at half that, it could increase the Delta variant’s transmission cycle continues for some time.
What’s more, the situation could worsen if case counts continue to increase in seafarers’ home countries, implying a further threat to the pool of available officers and ratings.
The economic implications of crew shortages are already being felt by businesses and end consumers, from increased shipping costs to higher price tags for goods on shelves.
Some of this simply comes down to the cost of crew, PCS says, but for the global re/insurance industry the risks associated with crew being hired in such an environment can be far more significant.
“The salient imbalance between crew availability and demand would generally be enough for re/insurers to note an increased risk environment,” analysts noted. “A shortage of qualified crew could result in the sorts of situations we’ve seen throughout the pandemic (e.g., stranded beyond one’s term). Fatigue, eroded morale, and a general sense of the unknown could increase the risk of non-elemental loss events.”
“Re/insurers have remained alert to these and related issues in the marine market throughout the pandemic. With low vaccination rates in key countries and increased virus transmission (particularly with the Delta variant), the normal risks associated with crew shortages and suboptimal replacement could spike with little notice. In fact, the imbalances we’re seeing today should serve as the early warning one would hope for.”
