Minimising the risk in shipping operation. A Case study comparing two Essay

Minimising the risk in shipping operation. A Case study comparing two shipping lines (Maersk and NYK) - Essay Example The risk of piracy has continued to dominate the list of shipping risks for most organisations, sometimes superseding other risks in terms of frequency of occurrence, and the intensity of loss or/and liability. As a direct result of piracy, the costs of operating shipping lines have significantly increased. Insurance costs for sea vessels, for example, have continuously soared to greater heights while vessels are required to install certain security features to help reduce the risk of loss resulting from piracy. Owing to the importance assigned to the shipping industry in international trade, and considering the risks it faces, it would only be wise to consider finding ways of mitigating the effects of such risks or altogether eliminating them. This work is dedicated to the analysis of piracy as a main shipping risk and is aimed at coming up with strategies and techniques for combating this specific risk. According to the International Maritime organisation (IMO), approximately 90 percent of the world’s trade is transported by the international shipping industry. Transportation of bulk raw materials and manufactured goods, and intercontinental trade would practically be impossible without international shipping. Better said, without the international shipping industry, one half of the world would ultimately freeze while the other half would starve. Under close analysis, ships are high value and sophisticated assets. Merchant ships in their annual operations generate income in excess of 380 billion USD dollars in freight rates alone. In reality, this accounts for about five percent of the world’s entire economy. This percentage no shows how vital the industry contributes to investors, governments, employees, organisations and by extension the global economy. In this sense, it is important for all stakeholders to join forces and