By Paul Morgan (gCaptain) – Every year, Allianz Commercial publishes its Safety and Shipping Review, and every year the shipping industry’s commentators reach for the same headline: the long-term decline in total losses, the improving safety record, the falling incident numbers.
All of that is true, and none of it should be dismissed. But the 2026 edition of the review, published against a backdrop of war in the Persian Gulf and the closure of the Strait of Hormuz, contains a finding that deserves considerably more attention than it typically receives. Machinery damage or failure was the cause of more than half of all reported shipping incidents globally in 2025.
Not fire, not collision, not grounding. Machinery. It has been the dominant cause of shipping incidents for the entire past decade, and the financial consequences of that dominance are getting worse, not better.
The raw numbers, drawn from Lloyd’s List Intelligence casualty statistics, are clear. Of the 2,818 reported incidents on vessels over 100GT recorded during 2025, machinery damage or failure accounted for 1,505, or 53 per cent of the total. Over the full decade from 2016 to 2025, the picture is consistent: machinery damage and failure caused 12,991 incidents from a global total of 28,660, representing 45 per cent of all reported casualties over ten years. No other single cause comes close. Vessel collision, the second most frequent category, accounted for 2,822 incidents over the same decade.
Fire and explosion, which attracts far more column inches and regulatory attention, accounted for 1,952. The machinery problem dwarfs them both, and it has done so year after year, in every region of the world.
The reason that this matters beyond the incident count, is cost. Machinery claims inflation has not returned to pre-Covid-19 levels. That statement, contained in the Allianz review with characteristic understatement, conceals a financial reality that every technical superintendent and hull underwriter is already living with. According to Cefor, the Nordic Association of Marine Insurers, ocean hull claims costs per vessel in 2024 and 2025 remained 33 per cent above both pre-pandemic and 2021 levels.
The International Union of Marine Insurance projects that average hull claim costs will increase by a further seven to 22 per cent over the next five years. For anyone currently negotiating hull and machinery renewals, those are not comfortable numbers.
The factors driving this inflation are structural, and the Allianz review is honest about the fact that they show no sign of resolving. The global shortage of quality marine engineers and technicians pushes up the cost of every repair that requires specialist attendance. Lead times for major engine components, including crankshafts, bearings and fuel injection equipment, remain extended. Workshop rates have risen alongside energy prices and steel costs.
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Shipyard capacity, already constrained by sustained demand for new vessels and retrofitting work, leaves limited berth availability for machinery repairs that require drydocking. None of these pressures are easing. Several of them are actively worsening, and the conflict in the Middle East has added a further layer of supply chain disruption and energy cost inflation to a picture that was already concerning before a single shot was fired in the Persian Gulf.
That conflict, and specifically the closure of the Strait of Hormuz that followed the US-Iran confrontation beginning in February 2026, is directly relevant to the machinery risk picture in ways that go beyond macroeconomic inflation. At the peak of the blockade in May 2026, more than 1,500 vessels were trapped in the Persian Gulf. Twenty thousand seafarers were aboard those vessels.
The operational reality for the engineering departments of those ships deserves to be stated plainly: they were required to maintain a state of full readiness, with complete crew complements, in a conflict zone, while simultaneously facing critical shortages of food, water, fuel and spare parts, and while their crews operated under the constant psychological pressure of potential attack.
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Maintenance schedules, which in normal operations represent the primary defence against machinery breakdown, were severely disrupted. Spare parts deliveries, already subject to extended lead times in the pre-conflict environment, became unreliable or impossible. The Allianz review is direct on the consequences: trapped vessels face heightened risk of machinery breakdown, and the implications for claims are expected to be substantial and prolonged.
The biofouling dimension adds a further machinery and propulsion risk specific to the Persian Gulf situation. One vessel that recently departed the region was found to have marine growth covering 40 per cent of its underwater hull and its entire propeller. Biofouling of that severity does not merely increase fuel consumption and reduce speed; it changes propeller load characteristics in ways that place abnormal stress on shafting, bearings and the main engine itself.
A propeller encrusted with barnacles delivers thrust inefficiently and unevenly. The main engine must work harder, at higher torque, to achieve reduced speed. The thermal and mechanical consequences for engine components that are already operating with deferred maintenance and potentially non-OEM replacement parts are not difficult to foresee.
The non-OEM parts question is one the Allianz review addresses with appropriate directness. Many shipowners are reporting an increasing incidence of blackouts attributed to the use of non-original equipment manufacturer components for vessel repairs and maintenance.
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The commercial logic is understandable: OEM parts may not be available within an acceptable timeframe, and the price differential between OEM and non-OEM components has widened significantly as hull and machinery claims inflation has pushed up demand for genuine parts while constrained supply chains have reduced availability. But the consequences of substituting non-OEM electrical and mechanical components into safety-critical systems can be severe, and the 2024 allision of the container ship Dali with the Francis Scott Key Bridge in Baltimore illustrates exactly what is at stake.
A loose wire in the ship’s electrical system caused two successive blackouts, loss of propulsion and loss of steering. Six highway workers were killed. The National Transportation Safety Board confirmed the loose wire as the primary cause in its November 2025 report. The Allianz review makes the additional point that use of non-OEM parts can affect insurance coverage and the admissibility of claims, a fact that ought to concentrate minds in technical departments and at board level.
The aging of the global fleet provides the broader structural context within which all of these machinery risks operate. The average age of the global shipping fleet reached 23 years in 2025, up from approximately 20 years at the onset of the pandemic. Vessels over 20 years of age now account for almost a quarter of the global container ship fleet, the highest proportion since the early 1970s.
The Allianz data is unequivocal on the safety implications: vessels over 20 years old account for more than half of all safety incidents. The relationship between age and machinery failure is not merely statistical. It reflects the progressive degradation of structural integrity, the accumulation of deferred maintenance decisions made during low-freight-rate periods, the retirement or redeployment of experienced engineering staff as vessels age into secondary trades, and the increasing difficulty of sourcing original spare parts for machinery that has been out of production for a decade or more.
The geopolitical drivers of fleet ageing are, if anything, making the situation worse. Conflict in the Middle East has generated demand for additional tonne-miles as tankers and container ships reroute around the Cape of Good Hope, extending the economic lives of vessels that would otherwise have been candidates for scrapping.
The shadow fleet of tankers trading oil subject to Western sanctions relies disproportionately on older tonnage, precisely because those vessels are cheaper to acquire and their operators are less concerned with the maintenance standards and flag state oversight that govern legitimate trading. The shadow fleet operates largely beyond the reach of the port state control inspections and P&I club requirements that provide at least some check on the condition of legitimately trading vessels. When a shadow fleet vessel suffers a catastrophic machinery failure in a sensitive location, the consequences extend well beyond the vessel itself.
The emergence of dual-fuel propulsion as the industry’s primary response to decarbonisation pressure adds a new chapter to the machinery risk story. The number of dual-fuel vessels in operation has doubled since 2024. At the end of 2025, there were 1,126 dual-fuel container ships and vehicle carriers either in operation or on order. More than half of all container ships currently on order are capable of using alternative fuels.
The Allianz review is measured but clear about the risk implications. Dual-fuel engines require additional procedures and a level of crew familiarity that takes time to develop. Lack of familiarity with systems increases the complexity of operations and increases the possibility of human error, particularly during machinery breakdowns.
Alternative fuels carry their own specific risks: biofuels have a short shelf life compared with conventional heavy fuel oil, creating contamination and degradation claims; ammonia is toxic and corrosive, requiring specialist handling that introduces new failure modes; the limited global availability of some alternative fuel types and their associated spare parts constrains the maintenance and repair options available to crews operating far from major bunkering hubs.
Even the quality of the current range of HFO and MDO fuels are causing significant mechanical issues due to the more efficient refining processes extracting more ‘valuable’ elements from every barrel of crude, and the use of cutter stocks etc.
There is a thread connecting all of these issues that the Allianz review does not spell out explicitly, but to any engineer who has served at sea, the problems are entirely evident.
The machinery problem is, at its root, a resourcing problem. Ships are being operated with smaller crews than at any point in the industry’s modern history. The engineering watchkeeping arrangements on many vessels would have been considered dangerously undermanned by a previous generation of Chief Engineers.
The justification has always been automation, and automation has genuinely reduced the requirement for round-the-clock manual oversight of machinery spaces. But automation does not maintain itself. Automated systems generate alarms and require responses. Planned maintenance systems generate job lists and require execution. The spare parts required to execute that maintenance require procurement, storage, and timely delivery.
All of these functions require people with the technical knowledge to perform them competently, and the industry has been systematically reducing the number of those people aboard its vessels for thirty years in the name of cost efficiency.
The Allianz review’s projection that machinery claims inflation will continue to rise, compounded now by the direct and indirect consequences of the Middle East conflict, is a signal that the cost of that efficiency is coming due. The question for shipowners, managers, insurers and regulators is whether they are prepared to address the structural causes, or whether they will continue to treat each individual machinery failure as an isolated technical event rather than as a symptom of a system under sustained and increasing pressure.
The long-term trend in total shipping losses remains positive. The Allianz data confirms genuine progress on safety over the past decade, and that progress should be acknowledged. But machinery damage and failure has been the leading cause of shipping incidents, by a considerable margin, for as long as the data has been collected.
It remains so today, its financial consequences are worsening, and the combination of an ageing fleet, constrained repair capacity, non-OEM component proliferation, conflict-driven maintenance disruption and dual-fuel transition complexity means there is no credible case for expecting improvement in the near term. The engine room problem is the industry’s most persistent, most expensive and most consequential safety challenge. It deserves to be treated as such.
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