The problems with bigger ships...
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- Category: Accidentes
- Published on Wednesday, 24 August 2022 20:43
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Allianz Global
Corporate & Specialty
Large vessels continue to drive ever-higher exposures, with fires, container and carrier losses, hazardous cargo, costlier salvage operations and issues with port of refuge leading to oversized losses and general average becoming more frequent.
While the number of serious shipping accidents worldwide has declined over the long-term, incidents involving large vessels – namely container ships and roll-on roll-off (ro-ro) car carriers – are resulting in disproportionately high losses. In the past year alone, fires on board the car carrier Felicity Ace and container ship X-Press Pearl both resulted in total losses.
Just a few weeks after the sinking of the Felicity Ace in March 2022, ro-ro car carrier Al Salmy 6 capsized and sank in the Persian Gulf in rough seas. Meanwhile, the large container ship Ever Forward ran aground in Chesapeake Bay on the US Eastern Seaboard, and was stuck for over a month, almost a year to the day after its sister vessel the Ever Given ran aground and blocked the Suez Canal for six days in March 2021.
“A number of recurring themes have emerged in major incidents in recent years, many of which are a consequence of the increased size of vessels,” says Justus Heinrich, Global Product Leader Marine Hull at AGCS. “As vessels have grown larger, values at risk have increased, while the environmental bar has been raised. However, regulation, safety management systems and salvage capabilities appear to have not always kept pace.”
Container-carrying capacity has increased by around 1,500% since 1968 and has almost doubled over the past decade. Ever larger vessels are on order.
Cargo fires, in particular, are of growing concern. Mis-declared and dangerous goods are a recurrent issue for container shipping, while lithium batteries are an emerging risk for both container ships and car carriers, which are transporting growing numbers of electric vehicles, given existing counter-measure systems may not respond effectively in the event of a blaze. Cargo fires on board such large vessels can spread quickly and be particularly difficult to control, often resulting in the crew abandoning ship.
A number of recurring themes have emerged in major incidents in recent years, many of which are a consequence of the increased size of vessels
When in trouble, emergency response and finding a port of refuge can be challenging. Large vessels require specialist salvage equipment and port infrastructure, which all adds time and cost to a response. The experience of the container ship X-Press Pearl, which eventually sank after it was refused refuge by two ports following a fire, is a case in point. Too often, what should be a manageable incident on a large vessel ends in a total loss.
Of particular concern is salvage. Re-floating or wreck removal for large vessels is a complex task, requiring specialist equipment, tugs, cranes and barges. The salvage operation for the car carrier Golden Ray, which capsized just outside the US port of Brunswick in 2019, took almost two years and cost in excess of $800mn. Environmental, social and governance (ESG) concerns are also helping drive up costs of salvage and wreck removal as ship owners and their insurers are expected to go the extra mile to protect the environment and local economies.
Higher salvage costs, along with the burden of larger losses more generally, are a cost increasingly borne by cargo interests. General average, the legal process by which cargo owners proportionately share losses and the cost of saving a maritime venture, has become a much more frequent event with the growth in container shipping and increased size of vessels.
Values at risk continue to rise with the size of vessels and inflation, while the costs of responding to incidents and clean-up are now typically many multiples of the ship’s value, explains Captain Khanna, Global Head of Marine Risk Consulting at AGCS. “Larger vessels mean larger losses. An incident involving a workaday container ship or car carrier – like the Golden Ray – can now cost as much as $1bn, once salvage and environmental considerations are factored in. A major incident involving two mega container/passenger vessels in an environmentally-sensitive region could cost in excess of $4bn."
Cargo fires - a burning issue for shipping
Fires on large vessels remain a key cause of major losses, requiring urgent action to improve vessel safety.
A fire on board car carrier Felicity Age [1], beginning in February 2022, led to the vessel sinking in the Atlantic Ocean, along with its cargo of 4,000 vehicles. The incident occurred less than one year after a fire led to the sinking of the large container ship X-Press Pearl [2] in May 2021 off Sri Lanka.
“Fires on board large vessels remain the top issue for the shipping industry. We continue to see major incidents involving fires on large container ships, and now the emphasis is also shifting to car carriers and ro-ro vessels,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS.
Catastrophic fires on large vessels typically begin with combustible cargo, which then spreads rapidly and outpaces the firefighting capabilities of the crew. The size and design of large vessels makes fire detection and fighting more challenging than traditional shipping, and once crew are forced to abandon ship, emergency response and salvage operations become more complex and expensive, and the risk of a major or total loss increases.
“The size and design of large container ships and ro-ro car carrier vessels makes fighting fires extremely challenging. Fires need to be contained quickly, yet it may take several hours to get to the base of a fire on a container ship with as many as 20,000 containers on board, stacked ten high,” says Randy Lund, Senior Marine Risk Consultant at AGCS.
“Fires that result in the capsizing and sinking of a vessel leave a learning void in terms of determining the root cause of the incident, which can help avert similar occurrences in the future,” explains Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS. “Once a vessel has capsized or sunk the forensic fire investigations cannot be conducted and valuable information is lost forever."
No let-up in container ship fire frequency
Fires on board large container ships are a top concern for marine insurers as a growing number of incidents continue to generate large losses.
Safety & Shipping Review analysis shows there have been over 70 reported fires on board container ships alone in the past five years, including incidents such as the Yantian Express[3] (2019), and the Maersk Honam [4] (2018), which made headlines around the world. More recently, a fire broke out on board the large container ship Zim Kingston [5] in October 2021 after a container of dangerous goods was damaged in a storm.
There have also been many near misses. In 2021, a container of flammable products caused a large fire and explosion at Dubai’s Jebel Ali [6] port. Protection and indemnity insurer Gard estimates that there was at least one fire involving containerized cargo every two weeks in 2020 [7].
Fires can take hold quickly and spread rapidly, yet container ship crews are relatively small in number, while detecting, locating and accessing a fire within a stack of containers is time-consuming. Fire-fighting equipment currently required under the International Convention for the Safety of Life at Sea (SOLAS) means crew face considerable risks when tackling a container fire, and are often unable to do so successfully.
“The X-Press Pearl [8] sinking (off the coast of Sri Lanka in May 2021) demonstrates how a relatively small fire can escalate and result in a total loss,” says Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS. “Despite efforts by the crew to extinguish the fire and previous attempts to discharge the cargo at several ports, fire services were unable to save the vessel.”
Reducing the risk of fire on board large container ships will require a combination of regulatory action and industry initiatives, and there are encouraging signs that these are underway. Following proposals by insurers ( IUMI [9]), ship owners’ associations and the flag states of Germany and Bahamas, the International Maritime Organization’s (IMO’s) Maritime Safety Committee agreed last year to amend SOLAS with the aim of enhancing fire detection and fighting capabilities on new container ships. Although the review was held up by Covid-19, the amendments are expected to enter into force on January 1, 2028.
However, with the regulatory changes some years away, the emphasis will be on the shipping industry to tackle the issue in the short term, says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS:“We now have ships that are almost too large for the crew to fight fires effectively. There needs to be an urgent review of fire detection and fighting protections and equipment on board large container ships. We hope the IMO will soon come up with revised safety regulations with enhanced fire protection measures for large container ships.”
Cargo mis-declaration at heart of problem
Addressing a root cause for fires on board container ships is key to solving the problem.
A number of blazes at sea in recent years have been traced back to combustible or mis-declared cargos in containers, including batteries, charcoal and chemicals such as calcium hypochlorite, an ingredient in cleaning products.
In March 2022, the US Coast Guard [10] (USCG) issued a safety alert about the risk posed by lithium batteries following two separate container fires caused by mis-declared cargo. The first, saw a shipping container waiting to be loaded onto a container ship bound for China catch fire. According to the USCG, the bills of lading indicated that the container was carrying ‘synthetic resins’ when, in fact, it held used lithium-ion batteries.
In a similar incident in August 2021, a container full of discarded lithium batteries caught fire while being transported by road to the Port of Virginia, where it was due to be loaded onto a container ship. The cargo was mis-declared as ‘computer parts’. These incidents would have been potentially “catastrophic” had the containers caught fire after being loaded aboard the container ships, the USCG said.
It is estimated that around 10% of all containers loaded on board ships contain declared dangerous cargo. However, around 5% of containers shipped[11] consists of undeclared dangerous goods — either due to administrative error or being deliberately mis-declared. For example, this would equate to 1,000 teu or more of undeclared dangerous cargo on board a 24,000 teu ultra-large container vessel.
According to Captain Anastasios Leonburg, Senior Marine Risk Consultant at AGCS,regulators and the shipping industry must take urgent action if the problem of container ship fires is to be solved: “The key is to tackle mis-declaration. Some shipping companies are now imposing fines for customers not complying with requirements for declaration, but not all. This is an issue that the IMO could help solve.”
In 2019, the International Union of Marine Insurance (IUMI) and other stakeholders co-sponsored a submission to the International Maritime Organization (IMO) Sub Committee on Carriage of Cargoes and Containers proposing a comprehensive review of the International Maritime Dangerous Goods Code (IMDG Code), which defined and classified dangerous goods, as well as procedures for declaration. At present, some of those commodities are not considered dangerous and do not need to be declared as such by the shipper to the carrier
Some shipping companies are now imposing fines for customers not complying with requirements for declaration, but not a
Car carrier incidents now major cause of loss
Roll-on roll-off (ro-ro) car carriers are back in the spotlight following the total loss of the Felicity Ace. The incident follows the grounding of the Golden Ray, which resulted in one of the costliest marine insurance losses in recent times.
The Felicity Ace[12] sank in March 2022 with 4,000 vehicles worth an estimated $400-$500mn on board while being towed by salvors, two weeks after a fire broke out en route from Germany to Rhode Island, US. The vessel was also carrying electric vehicles, raising concerns about the risks associated with lithium-ion batteries.