International shipping and supply chains are increasingly exposed to geopolitical risks, with notable hotspots in the Middle East and South China Sea, says Allianz Global Corporate & Specialty (AGCS) in its latest Safety Shipping Review 2018.
AGCS said that security risk manifested in many forms, from piracy and terrorism through to war. Ships and their crews were at risk of physical damage and hijacking in Africa and the Middle East, while potentially heightened political tensions around major shipping routes in Asia could lead to disruption and a heightened risk of collision.
“Political risk on the seas is increasing with rising tensions in the Middle East and South China Seas, as well as the ongoing threat of piracy in Africa and Asia,” said Andrew Kinsey, AGCS Senior Marine Risk Consultant – North America.
On April 3rd this year Houthi rebels attacked a Saudi-flagged oil tanker, Abqaiq in the Red Sea, causing damage to its hull before a coalition warship intervened. Later that month, there were numerous reports of 19 oil tankers being held hostage off the Yemeni coast.
In January 2018 Houthi rebels attacked another tanker using a remotely-controlled speed boat packed with explosives. The rebels had previously threatened to disrupt or block international navigation in the Red Sea if the Saudis and their allies did not withdraw from the area around the last rebel-held port city of Al Hodeidah.
Since 2016, the group had used drone ships, anti-ship missiles and sea mines to attack warships and commercial vessels, said AGCS. “The security situation in the Bab-el- Mandeb strait has not improved and may even be heightened. There were further attacks in the first months of 2018 as Houthi rebels threaten to block commercial traffic through the Red Sea,” said Kinsey. Another potential security hotspot for international shipping was the South China Sea, a key transit route for east– west trade from China, South Korea and Japan. China is embroiled in a territorial dispute with its neighbours and continues to militarize the South China Sea and expand its zone of influence. “While the situation in the Middle East and Yemen is concerning, the territorial claims and disputes in the South China Sea may have bigger implications long-term. Tensions in the South China Sea could threaten the very freedom of the seas and navigation in South East Asia, with far-reaching implications for trade with Asia,” said Kinsey.
Territorial disputes have resulted in an increasing military presence in the South China Sea, with the US and China conducting naval exercises.