Chinese built ships a poor prospect, according to report

Chinese built ships a poor prospect, according to report | Insurance Business

Chinese built ships a poor prospect, according to report

A data breakdown from Cefor, the Nordic Association of Marine Insurers, has finally proved what has long been suspected to be the case -- Chinese-built ships are more likely to result in insurance claims than the equivalent vessels from South Korea and Japan.

Across the board the frequency of claims for Chinese-built vessels is almost 90% higher than that for those built in the other two countries studied.

The Cefor study analyzed almost 4,500 vessels, 42% of which were Chinese built, 33% of which originated in Korea and 14% of which were built in Japan. The study zeroed in on crude, products and chemical tankers, bulk carriers and containerships built between 2007 and 2015.

While noting the caveat that numerous elements can influence the frequency of claims other than country of build, Cefor concluded that the “observed differences are considerable and unlikely to be purely incidental.”

Any comparison of statistics year on year revealed that Chinese-built vessels almost invariably performed more poorly than their Korean counterparts. Ships from Japan were the best performers of the three.

Chinese ships were responsible for claims of more than $500,000 at a rate 75% higher than that of Korean and Japanese-built vessels put together. For claims in excess of $2m, the frequency is 52% higher for Chinese-built ships than those of its two big Asian shipbuilding rivals.

When it comes to machinery damage claims, 13.7% of Chinese-built vessels produced claims last year, whereas only 5.3% of Korean-built ships did so, while for Japanese-built vessels the figure was 3.6%.

“The rapid growth in new buildings from China — some of them from new yards — has caused insurers to question whether the quality of these vessels represents a higher risk,” noted the report.