Cargo fires, such as those that resulted in total losses of the roll-on roll-off (ro-ro) car carrier Felicity Ace and the container ship X-Press Pearl, are a priority concern for vessel owners and marine insurers.
The growing number of electric vehicles transported by sea are also exacerbating the problem.
This is according to marine insurer Allianz Global Corporate & Specialty’s (AGCS) Safety & Shipping Review 2022 report released recently. The report noted that there had been 70 reported fires on container ships alone in the past five years.
“Fires often start in containers, which can be the result of non/mis-declaration of hazardous cargo, such as chemicals and batteries. Around 5% of containers shipped may consist of undeclared dangerous goods. Fires on large vessels can spread quickly and be difficult to control, often resulting in the crew abandoning ship, which can significantly increase the final cost of an incident,” the Allianz report said.
Fires have also become a major loss driver for car carriers. Among other causes, they can start in cargo holds, caused by malfunctions or electrical short circuits in vehicles, while the open decks can allow them to spread quickly.
“The growing numbers of electric vehicles (EVs) transported by sea brings further challenges, given existing counter-measure systems may not respond effectively in the event of an EV blaze. Losses can be expensive, given the value of the car cargo and the cost of wreck removal and pollution mitigation,” Allianz said.
When large vessels get into trouble at sea, it can be a challenge receiving an emergency response and finding a port of refuge. Specialist salvage equipment, tugs, cranes, barges and port infrastructure are required, which adds time and cost to a response.
The X-Press Pearl, which sank after it was refused refuge by two ports following a fire – the ports were unable or unwilling to discharge a leaking cargo of nitric acid – represents one of several incidents where container ships have had difficulty finding a safe haven. The salvage operation for the car carrier Golden Ray, which capsized in the US in 2019, took almost two years and cost in excess of $800 million.
Allianz Global head of Marine Risk Consulting at AGCS Rahul Khanna said that what should be a manageable incident on a large vessel could end in a total loss.
“Salvage is a growing concern. Environmental concerns are contributing to rising salvage and wreck removal costs as ship owners and insurers are expected to go the extra mile to protect the environment and local economies," Khanna said.
“Previously, a wreck might have been left in-situ if it posed no danger to navigation. Now, authorities want wrecks removed and the marine environment restored, irrespective of cost.”
Higher salvage costs, along with the burden of larger losses more generally, are a cost increasingly borne by cargo owners and their insurers.
“’General average’, the legal process by which cargo owners proportionately share losses and the cost of saving a maritime venture, has become a frequent event, as well as a severity event, with the increase in the number of large ships involved in fires, groundings and container losses at sea compared with five years ago,” Régis Broudin, global head of marine claims at AGCS said.
It was declared in both the Ever Forward and Ever Given incidents. The large container ship Ever Forward ran aground in the US in March 2022, and was stuck for more than a month before it was freed.
