Shipowners warned on risks of carrying lithium-ion batteries

The Standard Club is warning shipowners to be carerful when transporting lithium-ion batteries in the wake of widespread reports of many Samsung Galaxy Note 7 phones self-igniting.

“The exposure to members arising from carriage of these batteries is potentially wide and includes claims in respect of damage to cargo and hull by fire, personal injury, deviation, storage and disposal costs, pollution, salvage or even wreck removal,” the P&I club noted in an alert to members.

Lithium-ion batteries are classified as Class 9 goods (under UN numbers 3480 and 3481) in the International Maritime Dangerous Goods (IMDG) Code due to the dual hazard properties associated with their chemical and electrical content:

The IMDG Code expressly cautions that “electrical lithium batteries may cause fire due to an explosive rupture of the body caused by improper construction or reaction with contaminants”.

Pursuant to the IMDG Code, shippers are obliged to furnish a vessel with a completed Dangerous Good (DG) cargo declaration.

Additionally, each vessel has a Document of Compliance (DOC) for dangerous cargo which indicates where the batteries can be safely stowed on board. To ensure full compliance during a particular voyage, the classification, packaging and stowage of dangerous goods is governed by laws of the flag state, the countries of the load and discharge ports as well as the laws of any country which the vessel enters while in transit.

The Standard Club said anyone agreeing to carry this cargo are recommended to comply with the following additional precautions:

• Container inspection (for sealed and unsealed packages) be carried out to ensure conformance with the instructions (P903, P908, P909, LP903 and LP904) of the IMDG Code; and

• In the case of used and recalled batteries being shipped, to obtain confirmation in writing from the shippers that the batteries have been discharged to 0% before shipment.

Used batteries may also be considered as hazardous waste. The shipper is obliged to provide a written declaration to the carrier if in fact the batteries are not considered waste, failing which the carrier runs the risk of the batteries being treated as ‘waste cargo’ pursuant to the guidelines set out in the Basel Convention. The consequence of this may include the batteries being rejected at the discharge port because the cargo was misdeclared.

In such cases, it is not unusual to hear of the shipper/consignee abandoning the cargo and leaving the carrier to bear the storage and disposal costs. Usually, returning the cargo to the load port is not a practical or commercially viable option for the carrier.

The club recommends that members insist that the shipper provides evidence of written consent from the authorities in the place of export, import and transit in accordance with the provisions of the Basel Convention before agreeing to carry the batteries.

Most contracts of carriage evidenced by the bills of lading provide for some form of indemnity in favour of the carrier in respect of the carriage of dangerous cargo. Shipowners should review and ensure strict compliance with the provisions of the indemnity clause when agreeing to carry the batteries in order not to waive or compromise its rights of recourse against the cargo interests by way of the indemnity, the club suggested. Alternatively, if an owner has sufficient commercial bargaining power, it may insist on provision of security by way of a bank guarantee or letter of indemnity from a creditworthy charterer/ shipper or consignee.

“Provided that carriage of the batteries complies with all of the above mentioned requirements imposed by the applicable law(s) and international conventions, club cover remains in place. Conversely, the member’s failure to comply with the provisions of the applicable regimes and the guidelines may compromise member’s cover,” Standard stressed.