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MARINE | Mega Container Vessels In association with AIG
Rapid growth in containership size has brought industry concerns over the accumulation of value on mega container vessels (those with capacity of more than 10,000 Transport Equivalent Units or TEU), the concentration of value flowing through a limited number of ports and along just a few routes, and the potential for major losses impacting multiple lines of business. Dr Nick Chapman, Marine Loss Control Manager UK at AIG, looks at whether these concerns are supported by existing data and what the future direction of mega container vessel growth might mean for the London marine insurance market The first containership, the Ideal X, held just 58 containers. Today’s largest mega container vessel has a capacity of 23,992 TEU and much of that growth is recent. According to the 2021 UNCTAD Review of Maritime Transport within the last ten years the number of mega container vessels grew from around 60 to more than 600, of which over 500 were 10,000-19,990 TEU. Within the last five years, 74 new ships were 20,000 TEU and above. Bigger vessels are due for delivery this year and at least another 3.9 million TEU is scheduled for delivery in 2023-24.
MORE MAJOR LOSSES?
Lloyds List Intelligence Data and IUMI Statistics for 2021 indicate that large loss frequency is down and total losses were halved in the past ten years. In addition, the number of groundings has decreased since 2010. Two separate studies spanning 2000 to 2019 found that mega container vessels had far fewer fire losses than smaller container vessels. And until recently, World Shipping Council data showed that the average number of containers lost at sea each year had been on a downward trend. Despite this encouraging picture, recent high-profile incidents have demonstrated that mega container vessels are still incurring major losses for the London market. The Ever Given grounding in the Suez Canal highlighted the fine margins for mega vessel navigation at choke points on major shipping routes, as well as the vulnerability of global supply chains to such an event. And a closer look at the above fire study data reveals that the frequency of containership fires drastically increased since 2010, with an upward trend for those occurring on mega vessels, as was seen on the Maersk Honam. In addition, in the last couple of years there have been several container-stow stack collapse incidents on mega vessels, such as the One Apus. This has contributed to a 7-year spike in the number of containers lost overboard, with 4,000 containers lost from January 2020 to April 2021 reported by Bloomberg, The Marine Insurer | March 2022
Is bigger always better? compared to an annual average of around 1,382 according to the World Shipping Council. So, are the mega containership concerns starting to be substantiated or are these recent major losses driven by something other than size? There are various narratives and theories being put forward, but the reality is to answer accurately we need better data.
THE DATA GAPS?
Efforts were made in 2018 through Lloyd’s and the Cambridge Centre for Risk Studies to adjust the modelling of marine exposure for mega vessel losses and the industry must now update its expected loss scenarios. In the last two years, there has been unprecedented supply chain disruption, leading to congestion and long delays at anchorage or in port. Consequently, a navigational incident (eg grounding) or natural catastrophe (eg typhoon) at a key port on the Asia-US trade lane today, affecting two mega container vessels at full capacity with a significant cargo value on board and in port, could now be a $5bn incident that the London market needs to better understand. Mis-declared dangerous goods (DG) containers have been identified as causal in several recent containership fires. As many as 57% of DG containers inspected in a US study by the National Cargo Bureau were found to have been incorrectly secured, labelled or declared. Not all of these deficiencies would necessarily give rise to a serious fire or explosion incident, but many will be at increased risk of doing so. This is especially true for the 6.5% of mis-declared DG cargoes which could be incorrectly treated as normal ‘safe’ cargo by the port or vessel. Simply having larger numbers of containers aggregated on a single mega vessel, or stored within a port awaiting such a vessel, could therefore increase the likelihood of one or more of those mis-declared containers being present and thus also a
