How can you sail when your EV is burning?
Back in 1580AD some or other English scribe penned a memorable nursery rhyme, the first verse of which goes: “London’s burning, London’s burning; fetch the engines, fetch the engines; fire ... fire, fire … fire; pour on water, pour on water”. The rhyme, though nothing in comparison to the works of John Donne or William Shakespeare, turned out to be somewhat predictive, preceding The Great Fire of London by 86-years. Bear with me, dear reader, the link to insurance, insurance broking and risk management will soon become clear.
Ships-a-burning, call your broker!
A couple of decades into the 21st Century global marine insurers and reinsurers will be humming to a different rhyme, replacing the phrases ‘London’s burning’ with ‘ships-a-burning’ and ‘fetch the engines’ with ‘call your broker’ or similar. The reason: today’s mega container ships often go up in smoke, even though they are surrounded by billions of gallons of sea water. This writer got to thinking about fire at sea when he stumbled upon a 27 July 2023 news report by Reuters, headlined: ‘Ship carrying nearly 3000 cars ablaze off Dutch coast, crew member dead’. This is but one of a growing list of similar loss events.
According to the report, a 199-meter-long Panama-registered cargo ship, the Fremantle Highway, caught alight off the Dutch coast while enroute from Germany to Egypt. In a second report carried by Theguardian.com, the owner of the ship speculated that the fire had been caused by one of 25 electric vehicles (EVs) on board. “Fires on vessels remain one of the biggest safety issues for the shipping industry as evidenced by a significant increase in recent incidents,” wrote insurer AGCS in a media statement issued shortly after news of the disaster. Their ‘presser’ contained some fascinating insights into the world of marine losses, fleshed out with commentary from Captain Rahul Khanna, Global Head of Marine Risk Consulting at Allianz Commercial.
Fire ‘gobbles’ 64 ships in just five years
Per Allianz’s Safety and Shipping Review 2023, fire was the second top cause of loss for shipping vessels exceeding 100 gross tons in 2022, with eight vessels lost and more than 200 incidents reported. “Although shipping losses have declined by 65% over the past decade, down from over 100 vessels in 2013 to just 38 in 2022, fire incidents have not followed; we continue to see major events involving large container ships, car carriers and ro-ro vessels,” Khanna said. He added that 64 ships had been lost to fires in the five years to end-2022. For further context, an AGCS analysis of 250000 marine insurance industry claims shows that fire is the most expensive cause of loss, accounting for 18% of the value of all claims analysed.
Catastrophic fires on large vessels typically begin with combustible cargo, with the fire then spreading rapidly, outpacing the firefighting capabilities of the crew. The size and design of large vessels makes fire detection and fighting more challenging; 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. “Fires need to be contained quickly, yet it may take several hours to get to the base of a fire on a large vessel,” Khanna explained. And sometimes, as in the case of the Fremantle Highway, the only option may be to let the blaze run its course. In this case, Theguardian.com reported the Dutch coastguard as saying that “rescue ships were spraying water on to the burning vessel to cool it down, but that using too much water risked its sinking”.
The Fremantle Highway fire is not an isolated incident, nor is it uncommon for batteries to emerge as the likely cause of such loss events. In February 2022, a fire on board car-carrier Felicity Ace led to the vessel sinking in the Atlantic Ocean, along with its cargo of 4000 vehicles. This loss was most likely caused by a lithium-ion battery catching fire. And in June 2020, the Höegh Xiamen caught fire near Jacksonville, Florida, resulting in the total loss of the vessel and its cargo of 2420 used vehicles. An official investigation into this fire identified an improperly disconnected battery as the probable cause.
Allianz Commercial has singled out the misdeclaration of cargo as a serious problem in the marine cargo insurance space. “Industry reporting systems attribute around a quarter of all serious incidents onboard container ships to mis-declared dangerous goods such as batteries, charcoal and chemicals,” Khanna said, adding that failure to properly declare, document and pack hazardous cargo can contribute to blazes or hamper firefighting efforts. The reason that insureds gloss over dangerous cargoes is that buying cover for such cargoes is significantly costlier. In extreme cases, shippers even mis-label fireworks as toys or lithium-ion batteries as computer parts to reduce insurance premiums.
Challenges in shipping lithium-ion batteries
There have been several incidents in recent years where lithium-ion batteries have been reported as contributing to fires on vessels. “These batteries are carried on board ships either as a cargo or as part of the original equipment for EVs; many of these batteries are safely transported every day but fire risks are present in both scenarios, especially if the batteries are used or defective; damaged; or improperly stored, packaged, handled or labelled,” Khanna said. Such batteries pose explosion and fire risks, and in some cases suffer from ‘thermal runaway’ which is described as ‘a rapid self-heating fire that may result in an explosion’.
According to Allianz Commercial, the main causes of lithium-ion battery fires include substandard manufacturing or damaged battery cells or devices, over-charging; and / or short-circuiting. “These batteries are an important source of energy and do not necessarily burn more frequently than other goods; but when they ignite, they are more difficult to extinguish as they can burn more ferociously and are capable of spontaneously reigniting hours or even days after the fire has been put out,” Khanna said.
Large insurers and reinsurers are unlikely to ignore the risks attaching to marine cargos that contain conventional or lithium-ion batteries. Khanna pointed out that fire risks will ease over time as manufacturers, carriers and regulators address the current challenges; in the interim he suggests that stakeholders focus on pre-emptive measures to help mitigate the peril. For example, lithium-ion batteries should only be transported at a state-of-charge of 30-50% of max, and shippers must request proper certification for the batteries they transport. Specific fire risk mitigations include adequate firefighting equipment; early detection systems; fire emergency and hazard control plan; and providing training to ships’ crews. “Several large container shipping companies have turned to technology to address this issue by using cargo screening software to detect suspicious bookings and cargo details, while large container operators are imposing penalties,” he said.
How to mitigate risk when shipping EVs
Allianz Commercial first warned about the risks associated with lithium-ion batteries and EVs in shipping in 2017. It has since published an extensive list of fire risks and loss prevention measures in shipping such cargoes. These measures include: All EVs should display clear and precise identification on the windshield detailing the battery type; EVs with low ground clearance should be clearly labelled; EVs with lithium-ion batteries must have successfully passed pressure, temperature, crush, and impact tests; all EVs must be fully functional, self-propelled, safe to drive and contain an undamaged battery system; and there should be no charging of EVs during the passage.
Writer’s thoughts:
The cost to an insurer of 1000 motor vehicles going up in smoke is staggering, with a South Africa retail value of between ZAR200 million for entry-level hatchbacks to ZAR2 billion for a boatload of Porsche 911 Carreras. Surely, by mid-2023 there is enough technology to reduce such fire loss events to zero. Your view? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected]
Comments
It poses the question whether the behavior of other cargo is.
A further question then is ; does everyone in the long line of handlers understand and respect these trends. Report Abuse