6 U.S. ports among top 10 at risk for biggest cat lossesReprints
Six of the 10 ports at greatest risk for catastrophe loss in the world are in the United States, Newark, California-based catastrophe modeler Risk Management Solutions Inc. said Monday, and warned that the risk extends to smaller ports.
RMS said the two riskiest ports are in Nagoya, Japan, with an estimated catastrophe loss of $2.3 billion and Guangzhou, China, with an estimated cat loss of $2 billion.
Plaquemines, Louisiana, was third, with $1.5 billion estimated losses. New Orleans was fifth at $1 billion, followed by Pascagoula, Mississippi, at $1 billion; Beaumont, Texas, at $90 million; Baton Rouge, Louisiana, at $80 million; and Houston at $80 million.
RMS's analysis also found that port size doesn't matter. Plaquemines and Pascagoula, as well as Bremerhaven in Germany, make the ranking because of the type of cargo they handle and the natural hazards they face.
“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,” Chris Folkman, director, product management at RMS, said in a statement. “Our analysis proves what we've long suspected — that outdated techniques and incomplete data have obscured many high-risk locations.”
RMS noted that the findings follow four years of catastrophes that have generated billions of dollars in marine insurance losses, such as the 2015 Tianjin, China, explosion, resulting in an estimated $3 billion to $6 billion in losses; and the 2012 Superstorm Sandy in the U.S. with an estimated $3 billion in losses.
RMS said that while the use of containers in shipping has helped the global economy, it has increased catastrophic risk exposures for marine insurers because ships, ports and storage facilities are getting bigger.
Larger vessels have rendered many river ports inaccessible, RMS said, forcing shippers to rely on seaside ports, which are more vulnerable to hurricanes, typhoons and storm surge. In addition, many ports are built on landfill, amplifying their vulnerability to earthquake risk.
The analysis used the RMS Marine Cargo Model to calculate the 1-in-500-year loss for each port. The modeling capability, which RMS said was the first of its kind, takes into account such factors as cargo type, precise storage location, storage type and how long cargo stored.