Catastrophe modeller RMS has revealed that six of the 10 ports at risk of the highest losses are in the US. While the riskiest two ports are in Japan and China (Nagoya — $2.3bn; and Guangzhou — $2bn), six of the top 10 riskiest ports are in the US. The remaining two are in Europe. Smaller ports in the US such as Plaquemines, LA and Pascagoula, MS, as well as Bremerhaven in Germany feature in the ranking due to their cargo type and the natural hazards they face.
RMS said that “the findings will cause concern among marine insurers and reinsurers coming after four years of marine catastrophes which have generated billions of dollars in marine insurance losses: 2015 Tianjin explosion (more than $3bn), 2012 Superstorm Sandy (est. $3bn marine loss of which approximately $2 bn was cargo loss), and the 2011 Tohoku earthquake and tsunami.
PORTS AT RISK FOR HIGHEST LOSSES
(500 year estimated catastrophe loss for earthquake, wind, and storm surge perils)
Estimated Marine Cargo
1 Nagoya, Japan $2.3bn
2 Guangzhou, China $2.0bn
3 Plaquemines, LA, U.S. $1.5bn
4 Bremerhaven, Germany $1.0bn
5 New Orleans, LA, U.S. $1.0bn
6 Pascagoula, MS, U.S. $1.0bn
7 Beaumont, TX, U.S. $0.9bn
8 Baton Rouge, LA, U.S. $0.8bn
9 Houston, TX, U.S. $0.8bn
10 Le Havre, France $0.7bn
Chris Folkman, director, Product Management at RMS, said: “Surprisingly, a port’s size and its catastrophe loss potential are not strongly correlated. For example, while China may be king for volume of container traffic, our study found that many smaller U.S. ports rank more highly for risk — largely due to hurricanes. Our analysis proves what we’ve long suspected — that outdated techniques and incomplete data have obscured many high-risk locations. The industry needs to cease its guessing game when determining catastrophe risk and port accumulations.”
RMS used the new RMS Marine Cargo Model, to calculate the 1-in-500 year loss for each port.
The modeling capability takes into account:
Cargo type (e.g. autos, bulk grains, electronics, specie)
Precise storage location (e.g. coastal, estuarine, waterside or within dock complex)
Storage type (e.g. open air, warehouse, container — stacked or ground level)
Dwell time (which can vary due to port automation, labor relations and import/export ratios)
The use of containers in shipping has benefited the global economy, but it has also increased catastrophic risk exposures for marine insurers> This is because of the increasing size of ships and the increasing capacities of ports and storage facilities. Larger vessels have rendered many river ports inaccessible. This has forced shippers to rely on seaside ports, which because of their exposed location are more vulnerable to hurricanes, typhoons, and storm surge. Many newer ports are built on landfill, which increases their exposure to earthquake risk.