Trond Eilertsen and Chris Grieveson from law firm Wikborg Rein on the ‘very modern nightmare’ that was the fire on the giant MSC Daniela boxship.
The recent fire on the MSC Daniela is a perfect example of a very modern nightmare casualty. A major fire on a fully laden giant boxship, although a dominant fear for owners and underwriters, is a daily risk for the crew. Irrespective of volumes of loading manuals, extensive regulations, and seafarer training the first spark of a catastrophic fire may be well down the supply chain.
Almost any means of transportation of cargo and passengers carries an inherent risk of serious casualty. The regulators are doing their best to improve safety requirements, owners train their crew even better, and the insurers stand behind their members in all segments of shipping. As a consequence the numbers of casualties are reducing; the risk of an accident is dropping. But still the human factor is decisive when it comes to land and sea transport. As new cruise ships, bulkers, and box ships increase their carrying capacity in something of a shipping arms-race, the risk may be decreasing but the cost associated with accidents like this grows exponentially.
Bigger ships, greater supply chain risk
The initial suggestion that the fire on the Daniela was caused by misdeclared cargo is very likely to be true. There is as they say ‘ no smoke without fire’. Having been involved in good number of container ship fires representing shipowners and container lines, we have seen many times the sad truth is that, in the overwhelming majority of cases, the fire is traced back to a container which contains undeclared or mis-declared dangerous goods.
A number of times the non-declaration or mis-declaration seems to have been attributable solely to an unwillingness by the shippers to pay a small freight surcharge for shipping dangerous goods. This is often a sum of money as small as $100. Not every mis-declaration means that the cargo will explode, but it inevitably means the carrying line has no idea what is on-board and how to handle a potentially sensitive cargo properly. So heat sensitive cargo may come to be stored next to heated fuel tanks.
In many cases the true shipper of the goods is hard to track down and will turn out to be a small company, freight forwarder, or consolidator of very small size with likely no, or wholly inadequate, insurance to cover the damage their actions have caused. The increasing complexity (more containers…more complexity) of the global supply chain means that regardless of IMO initiatives around dangerous goods, those who make mistakes or take shortcuts can have a vastly disproportionate impact on a business when things go wrong.
Bigger ships, bigger costs
As containerships get larger, the prospects of dealing with a mega ship casualty of even greater magnitude and seriousness than the MSC Daniela becomes increasingly more likely. Even despite the efforts of the Chinese authorities to crackdown on mis-declarations following the Tianjin explosions of August 2015, and their appalling death toll, there seems little sign of this trend disappearing.
There is a real prospect this phenomenon will eventually lead to a major environmental disaster or a total loss of ship with a number of sea farers live put at risk. The increasing costs of casualties (such as the Rena, Costa Concordia, and Deepwater Horizon), show just how expensive maritime accidents are becoming. Big is not necessarily beautiful, and these new mastodons have given rise to new challenges, both operational and legal. While it is impressive to see such a fully loaded container vessel, a serious casualty involving these ships will have major consequences for marine insurance, and consequently all shipowners in mutual P&I clubs. Just think of the costs involved in discharging a fully laden mastodon in a remote (or worse, urban/seafront) area following a grounding or collision. Everyone will end up paying.