Ports in Japan and China top the list of ten ports in the world with the highest catastrophe risk, according to analysis released by California-based catastrophe risk management firm RMS.
According to the analysis, the port of Nagoya in Japan could cause a USD 2.3 billion cost to insurers from a 1-in-500-year catastrophe event and the port of Guangzhou in China a cost of USD 2 billion.
Following the first two ports, six of the top ten ports are in the US, with the remaining two in Europe. These ports include Plaquemines (US), Bremerhaven (Germany), New Orleans (US), Pascagoula (US), Beaumont (US), Baton Rouge (US), Houston (US) and Le Havre (France).
In addition, RMS’ findings show that a port’s size and its catastrophe loss potential are not in a strong correlation.
“Surprisingly, it is not just the biggest container hubs that have a high risk of loss. Smaller ports in the U.S. such as Plaquemines, LA and Pascagoula, MS, as well as Bremerhaven in Germany also feature in the ranking due to their cargo type and the natural hazards they face,” RMS said.
While the use of containers in shipping has hugely benefitted the global economy, it has increased catastrophic risk exposures for marine insurers due to the increasing size of ships and the increasing capacities of ports and storage facilities.
Larger vessels have rendered many river ports inaccessible forcing shippers to rely on seaside ports, which are more vulnerable to hurricanes, typhoons, and storm surge. Furthermore, many ports are built on landfill, amplifying their vulnerability to earthquake risk, according to RMS.
“The value of global catastrophe-exposed cargo is huge and is expected to continue growing,” Chris Folkman, director, Product Management at RMS, said.
RMS published the analysis a year after the Tianjin port explosion in China that caused more than USD 3 billion damage.