Cargo shipping is the foundation on which global commerce is built upon. Container and tanker vessels ply the world’s waterways, transporting goods from manufacturing and processing centers to ports in every corner of the globe. Millions of seagoing miles are traveled each year, and hundreds of millions of tons of cargo are transported by ships on an annual basis. As such, the risks of sea pollution caused by commercial maritime vessels loom large. Pollution risks are often covered by specialized commercial marine insurance policies, but as a risk management step, cargo shipping operations must do their part to minimize the chances of a sea pollution incident. Here’s how.
How Big is the Cargo Shipping Pollution Problem?
When many people think of sea pollution, stories of oil or fuel tankers discharging their loads into waterways are the first thought. While these pollution events can be devastating to the environment, they are relatively rare in comparison to the many other discharges cargo vessels have been implicated in.
Pollution can come from many sources at sea. The cargo shipping industry is one of the largest industry-level producers of carbon emissions; according to industry regulators, the shipping industry releases almost as much carbon dioxide into the atmosphere as the countries of Germany or Japan annually. In other words, cargo shipping is the sixth-largest contributor of greenhouse gases on the planet, releasing in excess of one billion metric tons of carbon dioxide each year.
Sulfur oxides are another environmental pollution contributor; the use of high-sulfur bunker fuels acidifies the oceans and represents a health risk for humans and for wildlife. The International Maritime Organization (IMO) implemented regulations slashing global shipping’s sulfur emissions with a rule that went into effect on January 1, 2020. With the high volumes of shipping, however, sulfur emissions continue to negatively impact ocean ecosystems.
Other sources of sea pollution from cargo ships include:
- Fluids contaminated with oil or fuel pumped from bilges and discharged overboard.
- Refuse and recyclables thrown or washed overboard or intentionally discharged into waterways.
- Sewage from leaking holding tanks or by intentional discharge.
- Shipping containers, sometimes containing volatile or corrosive materials, being lost at sea.
Regulatory and Liability Considerations for Cargo Shipping Operations
An environmental spill caused by a cargo ship can have several profound effects beyond the damage such a spill causes to fragile marine ecosystems. First, the regulatory penalties associated with a sea pollution discharge event can be crippling, even for the largest cargo shippers. Penalties may be in the millions of dollars. Excessive insurance claims against pollution liability insurance policies drive up policy premiums, contributing to spiraling overhead costs. Finally, the expenses associated with pollution cleanup can cost hundreds of thousands, millions, or even billions of dollars. As an example, the highly-publicized Exxon Valdez oil spill in 1989 cost over $2.5 billion in cleanup expensesalone. Litigation and punitive damages and regulatory penalties cost an additional $5 billion. If a similar spill were to happen today, the costs would be staggering, overwhelming even the most robust insurance policies.
Pollution Avoidance Best Practices for Cargo Shipping Operations
Faced with the prospect of devastating costs and environmental damage, how can cargo shipping operations mitigate the risks associated with sea pollution? Help has come from numerous environmental and regulatory organizations, including the Marine Environmental Protection Committee (MEPC). These groups have put together guidelines for reducing shipboard wastes and pollution sources.
Best practices established by the MEPC, regulators, and environmental groups include:
- Managing shipboard refuse and recycling through proper handling and storage. This includes adherence to MARPOL regulations forbidding overboard dumping of garbage.
- Reducing single-use materials and seeking ways of reducing the generation of garbage aboard ships.
- Implementing shipboard recycling programs, including plastics, paper, and metals in addition to electronic components and batteries which may harm the environment without proper handling and disposal.
- Maintaining bilge and pumping equipment to prevent leaks or pollution spills.
- Inspecting equipment routinely to detect potential sources of sea pollution before a discharge may occur.
- Adhering to bunker fuel sulfur caps imposed by the IMO 2020 regulations.
- Maintaining adequate insurance coverage against pollution liabilities.
- Creating shipboard and operational policies governing responses to pollutions spills, and training all personnel in the steps required to begin the pollution mitigation process.
About Merrimac Marine Insurance
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