The ports most at risk from being affected by natural disasters have been revealed in a report by the RMS, the world’s leading catastrophe risk management firm.
The report shows that six of the top ten at-risk ports are in the US but the top two are Nagoya, Japan and Guangzhou, China.
It is not just the largest ports in the top ten, but also smaller ports due to the nature of their cargo and the natural hazards they face.
Concerns can be raised by the study for insurers, who are at risk of suffering billions in losses.
Chris Folkman, Director of Product Management at RMS, said: “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.
“Our analysis proves what we’ve long suspected — that outdated techniques and incomplete data have obscured many high-risk locations. The industry needs to cease its guessing game when determining catastrophe risk and port accumulations.”
The predictions are primarily based on Cargo type (e.g. autos, bulk grains, electronics,) precise location, storage infrastructure and the dwell time.
The increased presence of the larger ships, especially the introduction of the mega ship, has forced more and more sea traffic to rely on the more vulnerable sea ports; many sea ports are built on landfill making them vulnerable to earthquake
Folkman said: “The value of global catastrophe-exposed cargo is huge and is expected to continue growing.”
Folkman concluded: “After so much catastrophe loss to the cargo line since 2011, it is clear that ‘good enough’ modelling techniques are no longer fit for purpose. Better data and modelling will enable more effective portfolio management and underwriting for this dynamic line of business.”
The study comes almost a year after the Tianjin disaster in China on August 12, 2015, which caused the deaths of a 173 people and approximately $3 billion in damages.