Are you opening your own shipping company but you don’t know what are the risk factors of a shipping company?
Well, don’t worry, we are here to tell you about the 5 major risk factors of the shipping company.
Ships account for 90% of global trade and are an important part of the global country’s economic integrity that inspire positive soul sensations to the people. The international shipping industry transfers goods worth an estimated $4.5 trillion per year and is expected to grow at a rate of around 4.7 percent in the coming years.
Natural disasters, mechanical failures, and human error have typically been some of the most common cargo shipping risk management issues.
However, the container shipping industry now faces a new set of risks as a result of the rapid growth of international trade and the introduction of new technologies.
In this article, we will discuss the major risk factors of the shipping industry.
Let’s jump into it!
5 RISK FACTORS OF THE SHIPPING INDUSTRY
Here are the top 5 risk factors:
- Security Threats
Cyberattacks have become one of the most significant threats in virtually every industry, and even more so as the global supply chain has become increasingly digitally available and highly integrated.
While computer systems are auto, they are highly susceptible to security breaches like human mistakes or malicious insiders with their agendas. Cyber threats from outside also are feasible, with the ability to send ships off course on auto-pilot.
- Corruption: The Major Threat
Rooting out corruption is among the most significant roadblocks to the shipping industry’s long-term development. Even though all companies now have an inbuilt defensive system against illegal behaviour, corruption still exists, ranging from falsified certificates and checklists to bribes for safety inspections and so on.
Maritime Anti-Corruption Network (MACN), the winner of the 2018 Sustainability SAFETY4SEA Award, has gathered over 19,000 reports of corrupt demands from around the world.
- Piracy Problems
Counterfeiting remains a significant threat to ships at sea. Historically, shipping theft has been interconnected to maritime piracy, particularly in Southeast Asia. Since the end of the Cold War, countries in the region have begun taking measures to counter theft and piracy, resulting in a reduction in illegal activity such as theft hijackings.
This will not, however, imply that someone in the industry should relax their defence. Piracy will continue to be a threat. When pirates attack a ship on their roster, shipping companies should continue to have contingency plans in place. Retaining a piracy risk analysis plan can help to limit the monetary loss and make a significant contribution to bringing down the cost of piracy.
- Natural Tragedies
Massive losses caused by a series of natural disasters since 2017 notify the industry that it can’t ignore the long-standing risks it’s faced for generations. The increasing magnitude and frequency of natural disasters in recent years have highlighted the importance of preparing for major storms at sea and in ports.
The vulnerability of supply lines was highlighted by the recent hurricane seasons. Natural disasters have negatively affected the shipping industry’s continuous supply chain model, from gasoline markets being disrupted in the southern United States due to the hurricane to logistical difficulties related to higher demand for transportation fuels.
- Autonomous Shipping
Ships have indeed been moving with the additional assistance of autonomy stuff for decades, and are more and more being powered by machines and autonomous shipping methods, just like most other sections of the global freight industry.
While this has allowed shipping firms to concentrate on different aspects of a project, autonomous shipping is still a long way off from becoming the sole mode of transportation.
The main stumbling block to fully transitioning from human maneuvering to autonomous shipping is the completely untested status of putting computers and artificial intelligence in charge of navigation.
TO SUM UP,
To conclude, we can say that if it is a shipping business or a freight business, the risk remains the same. You have to be very careful in managing these risks factors of the shipping business.
Hope this article resonates with you!