Allianz: Prevention Measures Crucial to Tackling Risk of Battery Fires in Shipping

August 31, 2022 07:54 AM Eastern Daylight Time NEW YORK--(BUSINESS WIRE)--As a key component of electric vehicles (EVs) or electronic devices, the transport of highly inflammable lithium-ion (Li-ion) batteries is increasingly impacting shipping safety as demonstrated by a number of fires on vessels such as roll-on roll-off (ro-ro) car carriers and container ships. Given the many difficulties involved with suppressing battery fires, particularly at sea, focusing on loss prevention measures is crucial, whether batteries are transported within EVs or as standalone cargo, according to a new report from marine insurer Allianz Global Corporate & Specialty (AGCS) .

'Shipping losses may have more than halved over the past decade1 but fires on board vessels remain among the biggest safety issues for the industry. The potential dangers that the transportation of lithium-ion batteries pose if they are not stored or handled correctly only add to these concerns, and we have already seen a number of incidents,' explains Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS. 'Companies should do all that they possibly can to implement, develop and follow robust loss prevention measures, given the growing popularity of electric vehicles means many more vehicles with lithium-ion batteries will be transported by sea in future.'

Hazards and causes

The report Lithium-ion batteries: Fire risks and loss prevention measures in shipping highlights four main hazards: fire (Li-ion batteries contain electrolyte, an ignitable liquid); explosion (resulting from the release of ignitable vapor/gases in a confined space); thermal runaway (a rapid self-heating fire that can cause an explosion); and the toxic gases that these hazards can produce. The most common causes of these hazards are substandard manufacturing of battery cells/devices; over-charging of the battery cells; over-temperature by short circuiting, and damaged battery cells or devices, which, among other causes, can result from poor packing and handling or cargo shift in rough seas if not adequately secured.

'Batteries are not only a potential cause of fire if damaged, overcharged or subjected to high temperatures, they can also aggravate other causes of fire at sea and are difficult to extinguish as they have the potential to reignite days or even weeks later,' says Khanna. 'In most shipboard incidents a thermal runaway event can be a significant possibility unless immediate action is taken by the crew, such as suppressing a fire with copious amounts of water over a long period of time. However, this can be extremely challenging due to factors such as early detection being difficult, a shortage of crew members on board, and if the vessel's firefighting capabilities are inadequate.'

Loss prevention measures for EVs on car carriers and in containers

The primary focus must therefore be on loss prevention and in the report AGCS experts highlight a number of recommendations for companies to consider, focusing on two areas in particular: storage and in transit.

Among others, recommendations to mitigate the fire risk that can potentially result from Li-ion batteries during the transportation of EVs on car carriers and within freight containers include ensuring staff are trained to follow correct packing and handling procedures and that seafarers have had Li-ion battery firefighting training; checking the battery's state of charge (SOC) is at the optimal level for transportation where possible; ensuring that EVs with low ground clearance are labelled as this can present loading/discharging challenges; and checking all EVs are properly secured to prevent any shifting during transportation. In transit, anything that can aid early detection is critical, including watchkeeping/fire rounds and utilizing thermal scanners, gas detectors, heat/smoke detectors, and CCTV cameras.

The report also highlights a number of measures that can help ensure safe storage of Li-ion batteries in warehouses, noting that large-format batteries, such as those used in EVs, ignite more quickly in a warehouse fire than smaller batteries used in smartphones and laptops. Among others, recommendations include training staff in appropriate packing and handling procedures; establishing an emergency response plan to tackle damaged/overheating batteries and a hazard control plan to manage receiving, storage, dispatch and supervision of packaged Li-ion batteries; preventing the exposure of batteries to high temperatures and ensuring separation from other combustible materials; as well as prompt removal of damaged or defective Li-ion batteries.

'If the maritime industry is to improve its incident record related to the transportation of lithium-ion batteries all parties involved in the supply chain must understand the hazards involved, the most common causes and the problems associated with transporting in commerce,' says Captain Randall Lund, Senior Marine Risk Consultant at AGCS, author of the report together with fellow AGCS marine risk consultants Miguel Herrera and Justin Kersey. 'Regulations and guidance are specific in addressing these batteries to help prevent most incidents, but these can only be effective if they are communicated and enforced. Only through a concerted effort by stakeholders in the supply chain can we hope to reduce the rate of incidents.'

Other relevant findings from the expert risk article accompanying the report:

• Recent incidents in which a battery fire was cited as a possible cause or contributing factor include the March 2022 fire and subsequent sinking of ro-ro carrier Felicity Ace. In the same month, the US Coast Guard issued a safety alert about the risk posed by Li-ion batteries following two separate container fires. In June 2020 a fire on the car carrier Höegh Xiamen in Florida was attributed to a failure to properly disconnect and secure vehicle batteries. In January 2020, a fire on the container ship Cosco Pacific was attributed to the combustion of a Li-ion battery cargo which was not properly declared.
• AGCS analysis of over 240,000 marine insurance industry claims over the past five years (with a value of €9.2bn), shows that fire/explosion (from all causes) is the most expensive cause of loss, accounting for 18% of the value of all claims2.
• The number of fires (from all causes) on board large vessels has increased significantly in recent years. Across all vessel types, fire/explosion was the second top cause of the 54 total losses reported in 2021 (8), second only to foundered (12). Over the past decade fire/explosion ranks as the third top cause of loss overall, accounting for 120 out of 892 reported total losses, behind foundered (465) and wrecked/stranded (164).
• Ro-ro and car carriers can be more exposed to fire and stability issues than other vessels. To facilitate carriage of automobiles the internal spaces are not divided into separate sections like other cargo ships. The lack of internal bulkheads can have an adverse impact on fire safety and a small fire on one vehicle or battery can grow out of control very quickly. Vehicles are not easily accessible once loading has been completed. The large volume of air inside the open cargo decks provides a ready supply of oxygen in case of fire.

The report and further materials are available for download here.

About Allianz Global Corporate & Specialty

Allianz Global Corporate & Specialty (AGCS) is a leading global corporate insurance carrier and a key business unit of Allianz Group. We provide risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across nine dedicated lines of business and six regional hubs.

Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses. Among them are not only the world's largest consumer brands, financial institutions, tech companies and the global aviation and shipping industry, but also satellite operators or Hollywood film productions. They all look to AGCS for smart solutions and global programs to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.

Worldwide, AGCS operates with its own teams in more than 30 countries and through the Allianz Group network and partners in over 200 countries and territories, employing around 4,250 people. As one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial ratings. In 2021, AGCS generated a total of €9.5 billion gross premium globally.

Cautionary Note Regarding Forward-Looking Statements

---

1 AGCS Safety & Shipping Review 2022, 54 total losses (over 100 GT) at end of 2021 compared to 127 at the end of 2012.
2 between January 1, 2017, and December 31, 2021