Shipping companies in the Black Sea are reportedly facing war-risk premiums as high as $5 million
- Insurance companies are tacking on war-risk premiums, Bloomberg reports.
- Vessels that travel the
Black Seaface an elevated risk of damage from missiles and mines.
War-risk premiums for cargo ships and tankers traveling the Black Sea have made the vessels nearly un-insurable and threaten to send prices even higher.
Insurance companies are tacking on premiums worth as much as 10% of a vessel's value for ships that traverse the Black Sea, according to a recent report from Bloomberg. The publication cited four people involved in the market, who said some underwriters are providing elevated prices in the hopes they are refused, while other insurers have left the market entirely.
Russia's attack on
One of the insurers, who preferred to remain anonymous, told Bloomberg that the freight prices will be unsustainable for customers. Experts have previously told Insider that additional
Vessels traversing the Black Sea face an elevated risk of damage through striking a mine or becoming subject to a missile attack. When Russia first began invading Ukraine, multiple ships were struck by explosives and there were reports of Russia using some of the vessels as a "human shield." The ships could also become detained in the area, forcing the
While shipping companies could choose to go without insurance, the decision could lead to significant risks for costs associated with oil leaks, cargo loss, and crew liability — all issues that could cause shipping company's costs to skyrocket.
Eytan Buchman, the chief marketing officer at Freightos, told Insider that ocean carriers are facing elevated prices from all sides as surging fuel prices are also adding to shipping costs.
"It's a ripple effect. In supply chains as a whole there's very little room for failure. All you need is one screw missing, one hiccup, and you have a problem," Buchman said. "Here we have a situation where logistics companies are facing multiple problems at once," he added.
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