Six of the 10 global ports at highest risk for cat loss in US

Six of the 10 global ports at highest risk for cat loss in US

Six of the 10 global ports at highest risk for cat loss in US Newark, CA-based catastrophe modeler Risk Management Solutions Inc. (RMS) revealed Monday that six of the ten ports at greatest risk for catastrophe loss in the world are all located in the U.S.
RMS also warned that the same risk extends to smaller ports, as well.

The modelers’ findings were based on four years of catastrophes that have caused billions of dollars in marine insurance costs. Catastrophes the study considered include the 2015 Tianjin explosion that cost an estimated $3 billion to $6 billion in losses, and the 2012 Superstorm Sandy which created an estimated $3 billion in losses.

The top two riskiest ports, according to the RMS, are in Nagoya, Japan and Guangzhou, China—their estimated losses in the event of a catastrophe are $2.3 billion and $2 billion, respectively.

The port in Plaquemines, Louisiana came in at third with $1.5 billion in estimated losses. At fifth was New Orleans, at $1 billion, followed by Pascagoula, Mississippi, at $1 billion. Beaumont, Texas is next, at $90 million, succeeded by Baton Rouge, Louisiana, at $80 million, and Houston at $80 million.

The analysis by RMS also noted that port size does not matter.

“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,” said product management director Chris Folkman. “Our analysis proves what we've long suspected — that outdated techniques and incomplete data have obscured many high-risk locations.”

RMS noted that while shipping containers have helped the global economy, they have indirectly increased catastrophic risk exposures. Bigger boats were needed to transport the containers, and because these boats cannot enter river ports, they have to dock at seaside ports which are more vulnerable to hurricanes, typhoons and storm surge. Such seaside ports are also typically built on landfill, making them especially vulnerable to earthquakes.

Related stories:
Insurance impact of South China Sea ruling
New container rules to boost short-term rates on cargo, insurers say