Marine insurers have long been concerned and cautious about international trade patterns. The latest March 2024 UNCTAD report shows a slow but steady increase in international cargo volume exchanges. This is encouraging as the rate of inflation is slowing and even experiencing a downturn in some important trading areas. Are we now facing the end of the dark phase which started with the outbreak of the Russian/Ukraine war and which has weakened international shipping and transport activities ever since?
It might be too soon to tell.
Geopolitical tensions heavily influence international commercial cycles and can seriously threaten the dynamics of supply and demand across overseas markets driving the need for international shipping and marine insurance. Indeed, at the time of writing, there are no clear signals which could support the belief that the Ukraine/Russia war might reach an end. Unfortunately this could mean the risk of an extension of the crisis in Europe (to include Georgia or the Baltic Sea) which could further complicate international trade.
The ongoing Red Sea crisis is also a huge question mark for the coming months. Container vessel transits of the Suez Canal have drastically reduced and many are routing around Africa instead of using the Bab El Mandeb Straits due to the Houthis attacks on shipping. The shortest shipping route between Europe and Asia is no longer safe and geopolitical tensions have expanded into the Persian Gulf. This adds costs to shipments to or from Asia and could, to some extent, increase the final prices of those goods originating from those parts of the world. It has also generated major losses for shipping with damage to ships and cargoes or detainment of various vessels. IUMI will remain vigilant and continue to report to our professional community and other impacted stakeholders.
Many other issues have been under scrutiny by IUMI and will need close analysis to allow marine insurance professionals and their partners to fully understand how planned changes might affect their business and marine risks insured. One of these issues is Lloyd’s Open Form (LOF).
LOF and the LOF salvage branch in London are amongst those important maritime institutions which went through a review, beginning more than two years ago, to find a closer fit to today’s industry needs. Amendments to the LOF general set up have just been released and this will be another opportunity for IUMI to inform and explain those changes and their potential consequences to marine insurers globally – see a related article in the newsletter.
These issues together with ESG matters (including the new Emission Trading System now in force in Europe) and other technological and digital innovations will be tackled during the various workshops at our 150th anniversary conference. The Berlin meeting will be a fantastic opportunity to reflect and review our professional history and consider the importance of marine insurance for the shipping business whose future is now facing huge challenges. Insurers will have to embrace these changes to remain a relevant facilitator of international economic wealth and development for the next 150 years.
I look forward to meeting you and discussing this in Berlin!
