New Panama Canal means increased insurance risks

As the Panama Canal prepares to celebrate its 100th anniversary, insurers are warning of the increased risks that will arise from its plan to double the cargo carrying capacity of ships transiting one of the world’s most important waterways. Every year, over 12,000 oceangoing ships navigate the canal, a figure which could increase significantly following the anticipated opening of the new locks in 2015. It is forecast the expansion will enable between 12 and 14 larger vessels per day (approximately 4,750 additional ships per year) to pass through the canal. Significantly, many of these ships are expected to be new-Panamax class container vessels of 12,600 teu, which are far larger than the existing largest vessels able to access the canal (4,400 teu).

AGCS experts warn the increased traffic and larger vessels may challenge the Panama Canal’s improved safety record over the past decade with the risks exacerbated through the initial period of the canal opening. Captain Rahul Khanna, AGCS’s Global Head of Marine Risk Consulting, explains the potential risk management impact of this expansion: “Larger ships automatically pose greater risks. The sheer amount of cargo carried means a serious casualty has the potential to lead to a sizeable loss and greater disruption. For example, a fully-loaded new-Panamax 12,600 teu container ship is as long as four football fields with a beam of up to 160 feet and could have an insured cargo value alone of $250 million.”

AGCS believes training is key to mitigating the new risks involved. As Captain Khanna explains: “The expansion of the Panama Canal will represent a new shipping environment for many mariners. Due to the increase in the number of larger vessels passing through this important waterway the level of training provided to pilots will be extremely important. Attempting to maneuver one of these vessels through such a restricted space in itself creates a much bigger hazard.”

The Panama Canal Authority has invested heavily in training, including plans to charter a post-Panamax ship to practice manoeuvers through the new lane.

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