Defining the problem
TT Club records indicate that as much as 66% of incidents related to cargo damage in the intermodal supply chain can be attributed in part to poor practice in the overall packing process, including not just load distribution and cargo securing, but also the workflow from classification and documentation through to declaration and effective data transfer. Critically, many of these attritional incidents could be avoided; these are estimated to cost MAT1
insurers in excess of USD500 million each year.
In the maritime segment of such global chains, sources suggest that container fires may occur on a weekly basis and statistics indicate there is a major container cargo fire at sea roughly every 60 days. There have been several well publicised ship-board explosions and fires involving laden containers over the past few years. The tragedies of ‘MSC Flaminia’ in July 2012 and ‘Maersk Honam’ in March 2018 both sadly cost multiple lives, likely resulting in insured losses in the hundreds of millions of dollars and overall economic loss to the industry of multiples of the insured element.
As the size of container ships increases, so does the potential risk and consequence of a large explosion or fire incident. Despite certain regulatory and technical advances, there is little doubt that the capability to respond to a cargo-related fire at sea has not progressed in proportion to ship capacities and the variety of commodities being carried.
This burden of loss has been tolerated in part because fragmentation in each stakeholder segment means that most entities bear a portion of their own losses within risk appetite, but also because the global intermodal supply chain has developed complex practices, some of which detract from safety and certainty of outcome.
All types of cargo can be mishandled. However, wrongly classified, declared or labelled dangerous goods (DG) are seen as the primary hazard. The representative body of cargo handling and container terminal operators, ICHCA International, has extrapolated statistical evidence of the extent of the problem. It calculates that of an estimated 60 million packed containers moved around the globe each year, 10% are declared to contain DG; that is 6 million containers that need varying degrees of special handling, positioning in terminals and stowage on-board ships.
Information from government inspections, which are biased towards declared DG shipments, suggests that more than 20% to be poorly packed or incorrectly identified in some way. That ratio converts to 1.3 million potentially unstable declared DG loads per year.
And that’s just declared dangerous cargoes. It is more challenging to estimate the amount of DG cargo that goes undeclared. An initiative by Hapag-Lloyd and more lately by IBM, has seen the development of a detection system, Cargo Patrol, which attempts to identify cargoes that may be undeclared DG at the time a shipper books the move with a shipping line, leading to more detailed investigation before acceptance. From the ‘potential hits’ thrown up by the system it would seem that between two and five percent transpire to be more than likely undeclared DG cargoes. Extrapolating these findings across the total annual global container trade, it might be reasonable to estimate that there are some 150,000 ticking container time-bombs each year carrying potentially volatile mis- declared cargo.
Solutions
The Cargo Patrol initiative and the efforts of IBM to make it accessible to all lines is an example of a communal approach to improving safety surrounding the transport of containers both on land and at sea. This sort of cooperation amongst the shipping lines and others (including TT Club) began some seven years ago with the founding, by five of the top liner operators of an organisation aiming to capture key incident data in order to provide an early warning of worrying trends, whether relating to cargoes that display dangerous characteristics or unsafe practices in the container supply chain. The Cargo Incident Notification System or CINS (
www.cinsnet.com) now has a membership that
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