Port Risk Accumulation

Transcription

1 Image: used under license from shutterstock.com Port Risk Accumulation PIAM Marine Insurance Knowledge Seminar Kuala Lumpur 10 th November 2016 Michael Hauer

2 Agenda 1. World Trade 2. World s largest ports 3. Malaysia s largest ports 4. Major Port Losses 5. Port accumulation risks 6. Cargo Modelling 7. The Future of Marine Cargo Modelling

3 1World trade Image: used under license from shutterstock.com

4 Global growth Percentage change from previous year GDP real growth forecast * 2017* 2018* World Advanced economies Emerging markets and developing economies (EMDEs) Estimated growth in 2016: Global growth: 2.4% Advanced economies: 1.7% EMDEs: 3.5% Commodity exporting EMDEs: 0.4% Commodity importing EMDEs: 5.8% *2016: Estimation: : Forecast regularly updated by the World Bank Source: World Bank Global Economic Prospects, June

5 World trade growth Annual change in % Historical growth of volume of world merchandise export and GDP until Export GDP USD 16.2 tn Value of merchandise exports of WTO members in 2015 Trade growth averaged just 1% per year from 2012 to 2014 Value of merchandise trade declined in 2015 following modest growth in 2012 to 2014 Trade value in 2015 nearly twice as high as in 2005 Share of world trade in GDP grew from 20% in 1995 to 30% in 2014 in value terms Source: World Trade Organization International Trade Statistics

6 Economies by size of merchandise trade, 2015 Asia, Europe and North America - 88% in total merchandise trade of WTO members over past ten years Share of developing economies in merchandise exports increased to 42% (from 33% in 2005) The top ten merchandise traders accounted for 52% of world s total trade in 2015 Source: World Trade Organization International Trade Statistics

7 Seaborne Trade Seaborne trade selected years 70 Seaborne trade by region 2014 Total: 9.85 bn tons in 2014 Growth of 3.4% in 2014* (same as 2013) Millions of tons loaded % in world tonnage Slowdown in large emerging developing economies Lower oil price levels and new refinery capacity developments Container Other dry cargo Five major bulks Oil and gas Loaded Unloaded Slow-moving and uneven recovery in advanced economies * Preliminary estimates of UNCTAD Source: UN Commission on Trade And Development Report on Maritime Transport

8 2World s ports Image: dpa Picture Alliance / Christian Charisius

9 Evolution of Major Ports 100 years ago Numerous key river ports Manual labor to un/load to noncontiguous warehouse areas Ship capacity: 600 x 60 beam London 100 years ago Today Major ports now on the sea coast Automated un/loading for vast container lots Ship size: 1300 x194 beam: 19,000 TEU Shanghai today Containerization as the main driver for evolution of major ports. Source: IUMI

10 The containerization revolution 60th anniversary in 2016 Malcolm McLean Invented in 1956 the first intermodal shipping container Wikipedia MSC OSCAR over 19,000 TEU capacity Wikipedia Maiden voyage of the Ideal X with 58 metal container boxes onboard The development of the container market was slow until the late 1960s mainly due to a lack of port facilities and the unions resistance 1968 container ship service to the Far East was established After two decades the industry agreed on global container standards Containerization led to dramatic reductions in shipping costs and transport time Increased the demand for trade and bigger ports in metric tons in millions 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Dry cargo loaded 1,1 65 1,8 33 2,2 53 7,

11 Map of 20 largest container ports Hamburg, Germany (15) Rotterdam, Netherlands (11) Antwerp, Belgium (16) Qingdao, China (7) Tianjin, China (10) Dalian, China (14) Los Angeles, USA (19) Busan, Korea (6) Jebel Ali, Dubai, UAE Shanghai, China (1) (9) Ningbo-Zhoushan, China (5) Xiamen, China (17) Kaoshiung, Taiwan (13) Hong Kong, SAR China Port Klang, Malaysia (12) (4) Guangzhou, China (8) Singapore (2) Shenzhen, China (3) Tanjung Pelepas, Malaysia Jakarta, (18) Indonesia (20)

12 World s container throughput and ports Top 10 countries / territories by container port throughput TEU Millions % 0.23% 8.09% China United States Singapore Republic of Korea Malaysia Hong Kong United Arab Emirates Japan Germany Taiwan Source: UN Commission on Trade And Development Report on Maritime Transport 2015;

13 World s container throughput and ports Millions Top 20 container terminals and their throughput % 12.10% 11.43% These ports accounted for ca. 45.7% of the world container port throughput in 2014 Top 10 ports in Asia % Only 4 ports in developed economies TEU 5 - Biggest increase: Ningbo Biggest decrease: Shanghai Source: UN Commission on Trade And Development Report on Maritime Transport 2015;

14 3Malaysia s largest ports Image 1: dpa Picture Alliance; Images 2, 3, 4: used under license Image: from shutterstock.com; used under license Image from 5: shutterstock.com Anthony West / Corbis

15 PORT KLANG 12 th largest container port in the world Comprises of two separate ports: Northport and Westport 10.9 Mio TEU throughput in 2014 Growth of 5.76% Also handles: Breakbulk Cargo, Dry Bulk Cargo, Wet Bulk Cargo, Cars and Livestock Value in USD any one time: 1.65bn

16 PORT OF TANJUNG PELEPAS 18 th largest container port in the world A 100% container port Container throughput in 2015 of 9.3 Mio. TEU Capacity of 10.5 Mio TEU Value in USD any one time: 1.4bn Source: UNCTAD Report of Maritime Transport 2015; Port Tanjung Pelepas website

17 JOHOR PORT Fully integrated multipurpose port Cargo: Container, Dry Bulk, Break Bulk and Liquid Bulk Largest palm oil terminal in the world Capacity of 1.2 million TEU Value in USD any one time at full capacity: 180 m Source: Johor Port Website

18 4Major Port Losses Source: IUMI

19 Hurricane Sandy s landfall at Port NY and New Jersey In 2012, 14-foot storm surge inundated containers, cars, open lots and other Cargo 16,000 cars were lost 7,500 loaded containers were flooded 100 miles of railcars were damaged Marine claims totaled USD 3 bn Source: IUMI

20 Tianjin Port Explosion On August 12, 2015, a fire broke out at a storage facility causing a first explosion and shortly after followed by a second explosion equaling to 21 tons of TNT. Eight more explosions occurred in the port on August 15, as fires from the original blast spread. Third largest port in the World Main harbor for the whole Beijing region Loss estimate continues to grow CIRC estimate: 70% property loss and 30% marine loss Cars (EUR 1.6bn) / Container Content 304 residential, commercial and industrial buildings damaged Large quantity of cargo containers 800 injuries 176 fatalities approx. new 7,000 cars affected total damage could reach US$ 3-5bn

21 Tianjin Port Explosion Source: Cunningham Source: MR Source: MR Source: MR Source: MR Source: Cunningham Source: Cunningham Source: Cunningham Source: Cunningham

22 5Port accumulation risks Image: dpa Picture Alliance / Christian Charisius

23 Container accumulation - 20 largest ports at any one time Any one time in USD in millions Growth in % Shanghai 4,902 5, Singapore 4,769 5, Shenzhen 3,457 3, Hong Kong 3,483 3, Ningbo 2,361 2, Busan 2,569 2, Guangzhou 2,222 2, Qingdao 2,185 2, Dubai 2,000 2, Tianjin 1,853 2, Rotterdam 1,788 1, Port Klang 1,507 1, Kaohsiung 1,474 1, Dalian 1,215 1, Hamburg 1,336 1, Antwerp 1,301 1, Xiamen 1,085 1, Tanjung Pelepas 1,160 1, Los Angeles 1,217 1, Jakarta High unknown accumulation at any one time Cargo is mobile: at-risk value can be volatile Relative risk of different categories of cargo e.g. cars, electronics, petroleum products, dry bulk High exposure to natural catastrophe risks as seaside ports

24 Largest Auto Import-Export Ports Port Metro Vancouver Port of Los Angeles Port of NY&NJ Port Bremerhaven Port of Zeebrugge Port of Le Havre Port of Dalian Port of Nagoya Port of Tianjin Port of Santos

25 Largest Car Import-Export Ports Port No. Of Cars The Port of New York and New Jersey Handled annually Port of Nagoya Yearly exports Port Metro Vancouver Handled annually Port of Zeebrugge Yearly export/import Port Bremerhaven Yearly export/import Port of Le Havre Handled annually Port of Tianjin 1, Yearly export/import Port of Shanghai Handled annually Port of Santos Handled annually Image: used under license from shutterstock.com

26 Considering cargo accumulation risks STORAGE Stacked containers vulnerable to wind but protected from storm surge Cars in open lots vulnerable to hail SALVAGED VALUE Jewelry vs electronics: different salvaged value after inundation by a storm surge Cargo policy conditions, e.g. brand protection clause PACKAGING & PROTECTION OF CARGO Strict and standardized packaging Storage procedures REGIONAL VULNERABILITY Port procedures Construction standards of storage facilities Regional and national disaster preparedness

27 Considering cargo accumulation risks Vulnerability by region Dry bulk stored in Silos Source: RMS

28 Considering cargo accumulation risks SPATIAL DISTRIBUTION OF CARGO Different terminals Different types of terminals - Cargo terminals, tank farms TRADE SEASONALITY Retail cargo busiest before the holiday season Petroleum and bulk commodities more constant trading pattern PORT CHARACTERISTICS Terminal specific storage structures Elevation Geotechnical profile Multistory warehouses CARGO DWELL TIME Automation Import/export ratio Storage and demurrage

29 Considering cargo accumulation risks Cargo Dwell Time Averages by Commodity Type Source: RMS

30 6Cargo Modelling Image: dpa Picture Alliance / Christian Charisius

31 NatCat scenario development Source: IUMI

32 Cargo Modelling Challenges Vulnerability CHALLENGE Vulnerability SOLUTION Vulnerability varies with type of cargo (Auto, ipad, Food, Fine Art ) Vulnerability depends on type of storage (Container, Warehouse, Open lot, tank ) Exposure Currently Cat Models: assume that Cargo & Specie exposure remains the same over time, but Exposure can move location frequently unknown Values change over time Different cat perils at different locations while exposure moves Develop cargo-type specific vulnerability curves Implement secondary modifiers to fine tune curves Give underwriters ability to account for specific knowledge Account for different storage facilities Exposure Develop Hi-Res Port exposure database Values by cargo type Values and cargo type by storage facility Location elevation and lat/long coordinates Perform detailed market share analyses of key ports Source: IUMI

33 Underwriting consideration for NatCat exposures in ports Understand the natural catastrophe risk of a port (EQ, Wind, Surge, Hail, Flood ) Quantify the risk of specific storage locations and facilities Low elevation (surge risk) Poor soil (liquefaction risk in EQ prone areas) Poor construction E.g. brick warehouse (EQ risk) E.g. light metal (wind risk) Riskiest facilities: a function of location, construction, elevation and other site specific characteristics Incorporate risk information into Port planning Avoid storing high value items in high risk locations (e.g. no autos in low elevation open storage lots) Prepare for approaching wind/surge event based on prevalent risk of Port and locations Monitor potential Port exposures to avoid a Tianjin Source: IUMI

34 Benefits of better Cargo catastrophe management Portfolio Management Holistic view of Cat risk including Marine (5%-15% of Property Cat) Include Marine Cat in economic capital modeling (Lloyds RDS, Solvency II) Improve decisions around reinsurance needs Improve exposure management (no more Tianjin surprises) Cargo Underwriting Incorporate/improve pricing of Cat component of Cargo Pricing models specific to cargo type will improve competitiveness and risk selection Better risk selection and pricing, leads to increased premiums and more profitable Cargo book 24. Oktober

35 The future of Marine Cargo 7Modelling Image: dpa Picture Alliance / Christian Charisius

36 The future of Marine Cargo Modelling Cargo Accumulation is an issue beyond ports! Real time vessel tracking Port Disruption Modeling Image: used under license from shutterstock.com 24. Oktober

37 Image: used under license from shutterstock.com Thank you for your attention Michael Hauer Head of Marine - Asia Pacific Munich Reinsurance Company Michael-Hauer 2015 Münchener Rückversicherungs-Gesellschaft 2015 Munich Reinsurance Company