According to Allianz’s Safety and Shipping Review 2023 report, fire incidents were the second most common cause of vessel loss in the shipping industry last year, with eight ships lost and over 200 incidents reported. This marks the highest number of fire incidents in a decade. Captain Rahul Khanna, global head of marine risk consulting at Allianz Commercial, explained some of the factors contributing to this trend.
Despite a 65 percent decline in shipping losses over the past decade, fire incidents have not followed suit. Major events involving large container ships, car carriers, and ro-ro vessels continue to occur. In 2022 alone, there were over 200 reported fire incidents, with 64 ships lost to fires in the past five years. Fire incidents also account for 18 percent of the total value of all analyzed marine insurance claims. The size and design of large vessels pose challenges for detecting and fighting fires, often requiring several hours to reach the source of the fire. Once the crew abandons ship, emergency response and salvage operations become more complex, expensive, and increase the risk of total loss.
Misdeclaration of cargo is another significant problem in the shipping industry. Around 25 percent of serious incidents on container ships are attributed to misdeclared dangerous goods. The improper declaration, documentation, and packaging of hazardous cargo can contribute to fires or hinder firefighting efforts. Some companies try to circumvent labeling hazardous cargo properly by mislabeling items such as fireworks as toys or lithium-ion batteries as computer parts. Lithium-ion batteries, whether transported as cargo or as part of an electric vehicle (EV), are moved safely daily. However, when these batteries ignite, they can be challenging to extinguish and may spontaneously reignite hours or days later. Many ships lack the appropriate fire protection, firefighting capabilities, and detection systems to handle such fires at sea. Malfunctioning or damaged batteries have been identified as contributing factors in recent fire incidents.
To combat the issue of misdeclared hazardous cargo, some large container shipping companies are utilizing technology, such as cargo screening software, to detect suspicious bookings and cargo details. Additionally, penalties for misdeclaration are being imposed, but unified requirements and penalties would be welcome. From an insurance perspective, there are debates about the need for dedicated vessels for transporting EVs to substantially reduce the risk of fire. Some shipping companies have already halted the transportation of EVs on their ships due to fire risks. In conclusion, the increasing number of fire incidents in the shipping industry highlights the need for improved safety measures and stricter regulations to prevent future losses.
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