Fire growing risk to shipping from lithium-ion batteries, says Allianz

Fire has always been a peril to shipping, but the advent of lithium-ion batteries has raised the risk to the point that it is now the costliest cause of loss for the industry, according to a new newsletter issued by Allianz Global Corporate & Specialty.

Randall Lund, senior maritime risk consultant for AGCS, said the combination of ever-larger ships and more dangerous cargoes is resulting in “astronomical” losses for insurers. Fires/explosions were the costliest cause of marine losses in 2021, accounting for 18% of $9.2 billion in total losses, according to an analysis of 240,000 marine losses over the past five years.

Lund said “without a doubt” the risk of fires at sea will continue to grow.

“The increase in the volume of electric vehicles transiting our oceans and global demand continues to increase,” he said. “Everyone is looking for the most durable batteries. It just means that there is a lot more energy stored in that battery which will be released if something goes wrong.

Damaged or defective lithium-ion batteries can undergo a chemical reaction known as thermal runaway which generates heat and can ignite surrounding materials. Lund said batteries can be damaged while charging and quietly burn out without being noticed.

The large size of modern container ships and car carriers makes detecting and fighting fires more difficult. According to AGCS, container carrying capacity has increased by around 1,500% since 1968 and has nearly doubled over the past decade.

Lund said it could take several hours to get to the base of a fire on a container ship that has 20,000 containers on board, stacked tenfold.

Fires in electric vehicles equipped with lithium-ion batteries burn more ferociously, are difficult to extinguish and can reignite spontaneously hours or even days after they are extinguished, the bulletin said.

Car carriers that are loaded and unloaded by vehicles rolling on and off them present unique safety issues that result in “disproportionate losses,” according to the bulletin. Lund said electric car batteries are almost always carried on the bottom of the vehicles, which can hit any protrusions exiting the vessel.

Often, fires on ships result in a total loss. In 2021, fire was the cause of eight of the 54 reported total losses, second only to sinking, with 12 losses, as the most frequent cause.

High-profile losses continued into 2022. In February, a fire that broke out on the Felicity Ace as the car transporter crossed the Atlantic Ocean caused her to sink in 10,000 feet of water. Many Porsches, Bentleys and a few Lamborghinis went down with the ship. Russell Group, a London-based risk consultant, estimated total losses at more than $400 million.

The cause of the fire is unknown. Lund said that’s a common problem with fires started by lithium-ion batteries. The fires burn so intensely that all evidence is lost.

Lund said AGCS first issued a bulletin on the risk posed by lithium-ion batteries in 2017. He said the carrier decided to follow up on the report this month due to the increasing frequency high losses.

Currently, there is no unified legislation for the safe storage of lithium-ion batteries. Additionally, fire testing has been limited as the technology is constantly evolving.

Lund said loss control measures will improve over time and awareness of fire risk will increase. He said quite a few new products are being developed. Car transporters are exploring the use of “fire blankets” that can be thrown over an electric vehicle with batteries that experience thermal runaway.

In the meantime, AGCS offers these tips to avoid losses:

Only carry batteries from reputable manufacturers to avoid inferior products, which are known to ignite on their own.

Make sure the batteries carried are at a 30% to 50% state of charge, the exact amount depending on the manufacturer’s recommendation.

Beware of short circuits that can occur when protection between cathodes and anodes is compromised.

Follow packing instructions and train personnel on dangerous goods recommendations.

About the photo: In this undated photo provided by the Portuguese Navy, smoke rises from the burning car transport vessel Felicity Ace, seen from the Portuguese Navy NPR Setubal vessel southeast of the Portuguese Islands from the Azores to the middle of the Atlantic. (Portuguese Navy via AP)

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