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Misdeclared container cargoes a growing concern for insurers

Misdeclared container cargoes a growing concern for insurers
More than six million containers shipped each year are likely to contain dangerous cargoes that have been misdeclared, according to a loss prevention specialist who addressed the UAE branch of the International Institute of Marine Surveying in Dubai last week.

Capt John Dolan is the Standard Club’s deputy director, Loss Prevention, and the club’s representative at the Cargo Incident Notification System (CINS) forum. He said that the exponential increase in container ship size makes tackling the issue both more urgent and more challenging.

Based on data released by the TT Club, as many as 18,000 containers at sea could contain undeclared or mis-declared cargoes every day, he said. Many shippers fail to declare dangerous cargoes to avoid packaging and volume restrictions required by the International Maritime Dangerous Goods Code or simply to avoid paying additional freight rates for dangerous goods. Lack of appropriate training amongst cargo booking personnel is also a contributing factor.

Dolan told participants that more vigilance is required. Among a series of recommendations, he said that carriers should gain more knowledge of their customers and develop firm relationships; take extra care on due diligence and the closer vetting of new shippers; and pay particular attention to freight forwarders and the booking processes of slot charterers.

Growing concerns

His comments come amid growing insurance industry concerns following a series of fires on large container ships believed to have been caused by misdeclared dangerous cargoes. On average, a serious fire requiring external assistance on such vessels now occurs approximately every 30 days while the TT Club also reports that containership crews themselves are tackling at least one fire per week. These casualties are estimated to be costing the insurance industry more than half a billion dollars a year.

The result is contributing to rising insurance premiums, both for hull and machinery and P&I cover. A recent survey by accountancy services firm, BDO, which recently merged with Moore Stephens, highlighted insurance costs as the most likely cost centre to rise rapidly in 2020 and beyond.

Recent incidents include the fire which ripped through the 15,226 teu Maersk Honam, delivered in 2017, in which five of the 27-person crew perished.

Another container ship, Hapag-Lloyd’s 7,510 teu Yantian Express, also suffered a severe fire on a North Atlantic voyage in January. The container line has now threatened shippers with a hefty $15,000 fine for any box found to contain mis-declared hazardous cargoes. Other container lines are instituting similar penalties.

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