Fire increases shipping risk due to lithium-ion batteries, Allianz says

Fire increases shipping risk due to lithium-ion batteries, Allianz says

Fire has always been a hazard to shipping, but the advent of lithium-ion batteries has increased the risk to the point where it is now the industry’s most expensive loss cause, according to new bulletin issued by Allianz Global Corporate & Specialty.

Randall Lund, senior marine risk adviser at AGCS, said the combination of ever larger ships and more dangerous cargo is causing “astronomical” losses for insurers. According to an analysis of 240,000 marine insurance claims over the past five years, fire/explosion was the most expensive cause of marine claims in 2021, accounting for 18% of total $9.2 billion in claims.

Lund said there is “no doubt” that the risk of fire at sea will continue to rise.

“The increase in the volume of electric vehicles crossing our oceans and the demand for them around the world continue to grow,” he said. “Everyone is looking for the longest lasting batteries. It simply means that there is a lot more energy stored in that battery, which will be released if something goes wrong.”

Damaged or defective lithium-ion batteries can undergo a chemical reaction known as thermal runaway, which generates heat and can ignite surrounding materials. Lund said batteries can be damaged during boot and smolder unnoticed.

The sheer size of modern container ships and car carriers makes it difficult to detect and extinguish fires. AGCS reports that container throughput has increased by about 1500% since 1968 and has nearly doubled in the last decade.

Lund said it could take several hours to get to the fire site on a container ship carrying 20,000 containers stacked in sets of ten.

The bulletin says that fires in lithium-ion battery-powered electric vehicles burn harder, are difficult to extinguish, and can spontaneously re-ignite hours or even days after being extinguished.

According to the bulletin, car transporters being loaded and unloaded by vehicles rolling over them pose unique safety issues that result in “disproportionately high losses.” Lund said that electric vehicle batteries are almost always placed on the bottom of vehicles, which could hit any protrusions coming out of the vessel.

Often, fires on ships lead to complete destruction. In 2021, fire was responsible for eight of the 54 reported losses, second only to flooding, with 12 losses being the most common cause.

Major losses continued into 2022. In February, a fire that broke out on the Felicity Ace while crossing the Atlantic Ocean sank it in 10,000 feet of water. Numerous Porsches, Bentleys and several Lamborghinis sank along with the ship. The Russell Group, a London-based risk consultant, estimated total losses at more than $400 million.

The cause of the fire is unknown. Lund said this is a common problem with fires caused by lithium-ion batteries. The fires burn so intensely that all evidence is lost.

Lund said the AGCS first issued a risk bulletin related to lithium-ion batteries in 2017. He said that this month the carrier decided to finalize the report due to the growing frequency of large losses.

Currently, there is no uniform legislation for the safe storage of lithium-ion batteries. What’s more, fire testing has been limited as the technology is constantly evolving.

Lund said loss control measures will improve over time and awareness of the fire risk will increase. He said that quite a few new products are being developed. Car carrier operators are exploring the use of “fire blankets” that can be thrown over an electric vehicle with batteries undergoing thermal runaway.

In the meantime, AGCS offers the following loss prevention tips:

Only ship batteries from reputable manufacturers to avoid poor quality products known to ignite spontaneously.

Ensure that the batteries being transported are between 30% and 50% charged, the exact amount depends on the manufacturer’s recommendation.

Beware of short circuits that may occur when the protection between cathodes and anodes is broken.

Follow packing instructions and educate staff on dangerous goods recommendations.

About the photo: In this undated photograph provided by the Portuguese Navy, smoke from the burning motor transport ship Felicity Ace is visible from the NPR Setubal of the Portuguese Navy, southeast of the Portuguese Azores in the mid-Atlantic. (Portuguese Navy via AP)

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