Despite a decline in losses last year, the shipping industry is facing rising risks from the Ukraine conflict, according to a report published Tuesday by Allianz Global Corporate & Specialty SE.

The Ukraine war has impacted shipping on multiple fronts with the loss of life and vessels in the Black Sea, disruption to trade with Russia and Ukraine, and the growing burden of sanctions, AGCS, a unit of Allianz SE, said in the report.

Insurers are likely to see a number of claims under marine war policies from vessels damaged or lost to sea mines, rocket attacks and bombings in the Black Sea and Sea of Azov, AGCS said.

Insurers could also see claims from vessels and cargo blocked or trapped in Ukrainian ports and coastal waters by the Russian blockade, the report said.

The potential for non-war losses that could develop for vessels caught up in the conflict that are trapped in Ukrainian ports and the Black Sea is likely to create uncertainty.

Claims that arise under hull and cargo policies that are not directly related to the war could be difficult to resolve, AGCS said. Sanctions may prohibit a portion, but not all, of an insurance claim, for example.

Security agencies have also warned of heightened cyber risk due to the Ukraine conflict, warning vessels in the Black Sea of threats from GPS jamming, automatic identification system spoofing, communications jamming and electronic interference, AGCS said.

“Shipping assets and ports could become collateral damage if the conflict in Ukraine results in an increase in cyber activity,” Captain Rahul Khanna, global head of marine risk consulting at AGCS, said during an interview with Business Insurance.

The war is creating an added burden on a shipping industry already dealing with ongoing supply chain disruption, port congestion and a crew crisis caused by the pandemic, Capt. Khanna said.

Some 54 total losses of vessels were reported globally in 2021, down from 65 the previous year. Cargo vessels accounted for half the vessels lost (27), with foundering the most frequent cause of loss, AGCS said.

However, the number of reported shipping casualties or incidents increased to 3,000 in 2021, up from 2,695 in 2020. Machinery damage/failure accounted for more than one-third of these incidents globally, the report said.

The overall improvement in total losses reflects the industry’s ongoing positive safety trend, with annual shipping losses declining by 57% over the past decade, AGCS said.