A world without safety inspections 

The implications of COVID-19 are reverberating across the globe, impacting every aspect of daily life, including, surprisingly, maritime safety. Among the many impacts of COVID-19 on shipping is a significant reduction in physical safety inspections of ships. Port State Control authorities are only checking high-risk vessels, tankers are missing SIRE inspections, and other surveys are not being performed. While there are attempts to use technology for remote surveys, one thing is clear – it may take a long time until the scope of inspections that predated the virus will return. This will undoubtedly have a significant impact on the maritime ecosystem.

SIRE inspections, for example, are a crucial foundation for every trader which charters vessels to transport cargo. Many large charterers rely on these physical inspections for a qualitative analysis of a vessel’s level of safety operation over the course of the previous six months. 

Double Impact

Shipping and insurance veterans may recall how, in the recessions in 2001 and 2008, many shipping companies were unable to continue to maintain their vessels in the same standard. This, in turn, led to a slow deterioration in the level of maintenance and a rise in incidents. Now, with significantly less SIRE and PSC inspections, these deteriorations will be much harder to spot. 

The potential for an increase in incidents is why Port State Control (PSC) surveys are crucial for maritime safety.  Each year, more than 30,000 ships, which account for over 40% of the world’s merchant fleet, are inspected for compliance with safety standards. The inspection is part of an international regulation known as Port State Control. Ships that fail to meet the safety standards get a list of deficiencies to improve. If the deficiencies found are too severe, ships may be detained as a result. After being detained multiple times, a ship risks being banned from entering certain ports in a particular region. 

In addition to enforcing safety regulations, inspection results are additionally made public by the regional bodies that conduct them. Since inspection data is standardized, that information becomes the only dynamic data source that reflects the current risk of ships. As such, PSC data unlocks a new variety of applications to promote further the safety, security, and efficiency of maritime trade. Today, many organizations – including marine insurers, border protection agencies, and charterers, use PSC records to assess risk for ships and fleets.

The dynamic nature of PSC makes it one of the most important mechanisms for ensuring shipping safety. PSC doesn’t just highlight for shipowners and managers what needs to be fixed within a ship, but also helps the broader ecosystem improve decision making.

Risk Assessments May Become Biased

Without current PSC data, assessments will become increasingly biased over time. It will be harder to distinguish between high and low-risk vessels, and this may create problems of trust and continuity for decision-making. For example, a fleet previously rated “safe” might suddenly find itself rated as “high-risk”, or vice-versa. 

The loss of such important insights could have long-term ramifications for anyone involved in the maritime ecosystem, such as charterers deciding which vessels to charter, insurers determining the appropriate terms and conditions for their insureds, and more.

Ship Safety Records Can Predict Accidents. Industry models that factor in PSC data (in addition to static data, such as age, type, DWT, ownership, and past accidents), predict accidents more accurately than those without PSC data.

A reduction in missing inspections won’t stop models from working all at once, but their effectiveness may decrease over time if a solution is not found The silver lining to COVID-19 is the accelerated innovation and digitization companies are experiencing, meaning that many companies may find new ways to perform old tasks remotely, autonomously, and accurately. 

What Can You Do to Prepare?

While the current shift in maritime inspections caused by COVID-19 may seem daunting, there are ways to prepare your business and ensure you do not risk your operations. The most important thing to do is routinely check how you analyze PSC data in your risk assessment models. Knowing how PSC data impacts your model outputs will help determine areas of vulnerability and recognize in advance potential issues that need escalation. Beyond PSC data, consider adding additional dynamic data sources, such as vessel behavior, to enhance the effectiveness of your risk assessment models. 

Finally, be sure to evaluate how you approach modeling and consider changing the way you examine data. By introducing new modeling approaches and taking into consideration additional dynamic data, businesses will be able to overcome the current strain on maritime inspections, and perhaps even transform the way inspections are managed in the long-run. 

In Summary

1. Check how PSC data is weighted in your models
2. Compare model outputs with and without PSC data, and look for areas of vulnerability.
3. Explore adding new, dynamic data sources to your risk models such as vessel behavior
4. Explore how taking a step up in how you approach modeling can actually go beyond traditional modeling approaches

Nina Waldfogel is Windward’s Brand Strategy Manager