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 add 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 the 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.”

A fire onboard 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 onboard 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 make fire detection and fighting more challenging than traditional shipping, and once the crew is 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.”

Safety & Shipping Review analysis shows there have been over 70 reported fires onboard container ships alone in the past five years, including incidents such as the 

Yantian Express (2019), and the Maersk Honam(2018), made headlines around the world. More recently, a fire broke out onboard the large container ship Zim Kingston 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

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 the crew faces considerable risks when tackling a container fire, and are often unable to do so successfully.

“The X-Press Pearl 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 ), ship owners’ associations, and the flag states of Germany and the 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 onboard large container ships. We hope the IMO will soon come up with revised safety regulations with enhanced fire protection measures for large container ships.”

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 catches 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 is-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 onboard ships contain declared dangerous cargo. However, around 5% of containers shipped consist of undeclared dangerous goods — either due to administrative error or being deliberately is-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.

Car carriers, the largest of which can hold as many as 8,000 vehicles, are susceptible to stability issues and fires, explains Justus Heinrich, Global Product Leader Marine Hull at AGCS. “Ro-ro vessels were already under scrutiny following a string of incidents, including the Golden Ray [13], which reports indicate are set to cost the insurance industry more than $800mn. And now we have the Felicity Ace. These casualties are very complex and expensive to resolve.”

Fires have become a consistent loss driver for car carriers over the past decade. In many cases, fires involving vehicle cargos have resulted in the total loss of cargo and the vessel. Grande America sank in 2019 carrying 2,000 cars following a fire.

A few months earlier, in an incident reminiscent of the Felicity Ace, the car carrier Sincerity Ace caught fire and was abandoned whilst transiting to Hawaii from Japan, with the loss of 3,500 new vehicles.

Car carrier fires typically start in cargo holds, caused by malfunctions or electrical short circuits in new or used vehicles. A National Transportation Safety Board (NTSB) incident report into the Hoegh Xiamen incident in June 2020, attributed the fire — which led to the total loss of 2,420 cars — to an improperly disconnected car battery in a used vehicle.

NTSB recommended improvements to car carrier regulations and improved oversight of vehicle loading and training by the ship’s operator.

Vessel design and commercial pressures are key risk factors for car carriers and ro-ro vessels. Vessels are under time pressure and have relatively short turnaround times at port.

However, the stability of these vessels is dependent on complex pre-departure loading and ballast calculations, while vehicle cargos must be made safe and properly secured to reduce the risk of fire or cargo shift.

“The wide-open deck spaces on ro-ro vessels create additional risks for stability and fire, with very little margin for error. Any breach or water ingress will affect the stability of the vessel, while the open decks allow fires to spread quickly.

However, these vessels are under huge commercial pressure with short turnaround times at port, which can result in vessels sailing before the crew has verified ballast calculations or completed lashing and securing watertight doors,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS.

“Fast turnaround times in ports put crews under immense pressure, leaving little or no time to complete critical checks and verifications,” agrees Captain Nitin Chopra, Senior Marine Risk Consultant at AGCS. “Crews often work around malfunctioning instruments or make assumptions in order to keep to schedule, while there are also gaps in maintenance due to time constraints.”

In the case of the Golden Ray, the NTSB accident report concluded that inaccurate stability calculations had probably caused the vessel to capsize. It also found that open watertight doors had allowed flooding into the vessel. It recommended that the ship’s operator revise its safety management system to establish procedures for verifying stability calculations and implement audit procedures.

“Incidents involving car carriers can be very expensive, given the value of cargo, and the cost of wreck removal and pollution mitigation. It’s in the interest of both operators and insurers to address this problem,” says Captain Anastasios Leonburg, Senior Marine Risk Consultant at AGCS.

The fire and subsequent sinking of the ro-ro car carrier Felicity Ace [18] in March 2022, with the loss of some 4,000 vehicles, has further shone the spotlight on risks associated with EVs, and lithium batteries in particular. Given the vessel sank, the exact cause of the fire may never be known. However, it is thought the presence of lithium-ion batteries on board aggravated conditions.

“Lithium-ion batteries are a known issue for the shipping industry and the wider logistics industry, where there have been a number of near-misses in ports and during transport,” explains Régis Broudin, Global Head of Marine Claims at AGCS. “Batteries are not only a potential cause of fire, they also aggravate the problem, as battery fires are very difficult to extinguish and have the potential to reignite, days or weeks later.”

An emerging bank of research in the car manufacturing and shipping industries point to an increased fire risk on car carriers and ro-ro vessels from EVs. Tests carried out by P&I Clubs [19] have shown that ship water sprinkler systems alone are not effective at extinguishing an EV fire.

The growing popularity of EVs over traditional combustion engines will mean more vehicles with lithium-ion batteries transported by sea. Meeting global emission targets in line with the Paris Agreement could see 70 million EVs manufactured by 2025 and 230 million by 2030.

“However, EVs represent a significant change in risk profile for shippers when compared with traditional combustion engine vehicles and may require changes in vessel design, fire detection and fighting capabilities, and cargo loading procedures,” says Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS. “For example, EV batteries could potentially ignite if damaged, and therefore be susceptible to fire during a cargo shift in rough seas, if not adequately secured.

Batteries can also combust with an increase in temperature from a fire in the surrounding area, or during on-board charging of an EV.”

EVs will particularly challenge existing fire detection and fighting capabilities. For example, battery fires require a large volume of water to extinguish and cool the surrounding area, which would endanger the stability of the ship if run-off channels become blocked.

Crews will also need to be specially trained and equipped with appropriate detectors and fire extinguishing equipment, to ensure fires are detected and extinguished quickly.

“While EVs are inherently safe, transporting them is likely to represent an enhanced risk for the maritime industry, at least in the near-term,” says Chris Turberville, Head of Marine Hull and Liabilities UK at AGCS. “As the number of EVs increase, it would be prudent to ask the question if ro-ro car carriers are fit for purpose in terms of fire detection and fighting capabilities. These concerns should be addressed as a matter of urgency.”

Source : Allianz Global Corporate & Specialty (AGCS)