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Ahead of the official opening of the $5.25bn expanded Panama Canal this Sunday, the insurance industry is preparing itself for a big hike in risk from the increase in the value of insured goods as a consequence of the larger ships that will be transiting the waterway.
The new locks, which will create a third lane of traffic for larger neo-Panamax ships of up to around 13,000 teu, will allow more transits and potentially double the capacity of the canal, according to the Panama Canal Authority (ACP).
Andrew Kinsey, senior marine risk consultant at Allianz Global, said: “The expansion is significant because it impacts the size and frequency of vessels that call on the US east and Gulf Coast ports.”
A report by the insurer said that larger ships and more frequent transits could mean that up to an additional $1.25bn of insured goods would be passing through the canal in any given day.
“With the increase in size of vessels transiting the canal, you have a corresponding increase in operational, environmental and commercial risks,” explained Mr Kinsey.
The report noted that “bigger ships automatically pose greater risks” in that the sheer amount of cargo carried “dictates that a serious casualty has the potential to lead to a sizeable loss”.
The sinking of the 8,100 teu MOL Comfort after it broke its back in adverse weather off the Yemen coast in July 2013, is to date the largest containership to be recorded as a total loss.
The hull and machinery of the 2008-built ship were insured for $66m, but the biggest hit for insurers came from the 4,300 containers, where contents were reported to have had an insured value of between $50,000 and $1m, taking the estimated cargo claims to between $300m and $400m.
The 9,472 teu Cosco Shipping Panama, with a length of 300 metres and beam 48.25 metres will make the inaugural transit of the expanded Panama Canal on Sunday 26 June.
Prior to the expansion the maximum size of vessel able to navigate the canal was restricted by the 35-metre width of the locks allowing Panamax containerships of only up to around 5,100 teu to transit.
Toll revenues from Panama Canal transits were up 4.4% in 2015, compared to the previous year, at $1.994bn.
Since the canal first opened in 1914 more than 815,000 vessels have transited the waterway.