The large container ship Maersk Honam was not even a year old when it caught fire on its way from Singapore to Suez in 2018. The blaze spread quickly and could only be put out. after weeks. Five crew members were killed in the disaster. It was one of the biggest boating accidents in recent times – and unfortunately it was not an isolated incident. The number of fires aboard container ships has increased significantly in recent years, complains Allianz Global Corporate & Specialty (AGCS), the industrial insurer of the Allianz group, in the latest report on safety in shipping.
2019 marked a record: fires broke out 40 times on board container ships. There was a little relaxation last year, but there were also fewer ships during the Corona 2020 year. And: On average, a fire was still burning on a freighter every two weeks. This worries insurers. “Fires on board ships can quickly become very costly,” said Justus Heinrich, Allianz ship expert. If there is a fire in the engine room, for example, the damage can easily reach tens of millions. If the fire spreads to the whole ship, as it did with the Maersk Honam, it becomes significantly more expensive. Above all, damages of more than 500,000 euros are more and more frequent.
Overall, shipping has become increasingly secure over the years. The number of total casualties was 49 last year, the second lowest level this century. For insurers, however, the many costly partial losses are a problem, as ship insurance premiums are barely high enough to be able to work profitably anyway.
Biggest Problem: Misreported Cargo
The greatest risk of devastating fires on container ships is improperly declared cargo. If steel crates contain dangerous goods such as highly flammable chemicals or are not properly stowed on board the vessel, spontaneous combustion and fires can occur which are difficult to extinguish, especially on large vessels. “If an incorrectly declared container is on board, you are almost lost,” said Anastasios Leonburg, shipping expert at AGCS. Shipowners also see it as a major cause of fires on board. “We urge that this security gap be closed,” said Ralf Nagel, managing director of the German Shipowners Association. “The crew, ship and other cargo must not be endangered by this.”
The sharp increase in the size of the vessels also plays a role. The larger a ship, the greater the risk of fire and the more difficult it is to extinguish the fire. Because: The more containers there are on board, the greater the risk that one of them will be wrongly declared and catch fire. In addition, it is more difficult to find the home. At Maersk Honam, for example, the cause of the fire could never be fully elucidated; the ship and the cargo were too damaged for that. However, authorities in Singapore suspect that a chemical used in bleach and detergents was the trigger.
Growing container ships are worrying insurers for other reasons as well. The container ship Ever Given, which ran aground in the Suez Canal, recently demonstrated the consequences of these mega-freighters. The waterway, extremely important to global supply chains, was then blocked for several days. If the salvage company had not refloated the vessel, it would have had to be unloaded on site. Special cranes would have been needed for this, which the rescue company would have had to bring to the site first. The Suez Canal would then have been inaccessible for a long time.
The corona pandemic represents an additional risk for shipowners and insurers. Although it has so far caused little direct damage to navigation, AGCS fears indirect consequences, for example in the situation of ship crews. You will have to stay on board longer due to the pandemic. As of March, around 200,000 sailors were on board ships that were unable to return home due to Covid-19 restrictions, according to the GATS report. The insurer is concerned that the mental fatigue of many crew members could lead to bad decisions and therefore more damage. “Even before Covid, 80 to 90% of the problems on board were caused by humans,” said AGCS expert Leonburg, who used to go to sea as a captain.