Panama Canal expansion to reduce cargo losses - Allianz consultant

The expansion of the Panama Canal will reduce the risk of damage or loss to cargo for transport companies and shipping lines using the waterway, senior marine risk consultant for Allianz Risk Consulting, Capt. Andrew Kinsey, told BNamericas.

"The longer you can keep a container aboard the vessel, the less chance you have for damage or loss," said Kinsey. "You reduce the exposure to risk."

Currently, vessels which are too large for the canal offload eastbound cargo on the west coast and transport it overland on trains to the east coast. During times of peak volume, this can increase the risk of losses; for example, when controlled atmosphere containers are not plugged in at transfer stations, leading to spoilage.

The reduced exposure to risk should result in reduced claims for insurers, said Kinsey.

But potential losses when an accident occurs will be far greater, as the capacity of ships traversing the canal after the expansion will increase to 12,600 TEUs from 4,400 TEUs.

"When dealing with vessels and cargoes of this magnitude - not necessarily in the canal itself, but in the other ports they'll be using and in the arrivals and departure lanes - then you're dealing with a huge increase in potential losses," said the captain.

"There's the potential for a US$400mn to US$1.7bn-plus exposure from the collision of two of these large container vessels... ships of this size are limited to a smaller number of deepwater ports, which can result in an increased concentration of risk [throughout the shipping supply chain.]"