The impact of surreptitious dangerous goods shipments on marine insurance

The marine insurance sector saw a huge drop last year in the number of total shipping losses but the industry continues to have a problem with shippers trying to sneak hazardous and flammable cargo on board without declaring it.

“Dangerous goods must be appropriately handled and stowed, which is not possible when the contents of containers are mis-declared,” Munich-based Allianz Global Corporate & Specialty (AGCS) said in Safety and Shipping Review 2020, a report released Wednesday

In some cases, when flammable or hazardous cargo is put on a ship without properly declaring it, that is not an oversight but rather a deliberate attempt by the shipper to hide the hazardous nature of the cargo, Captain Andrew Kinsey, senior marine risk consultant at AGCS, said in an interview Wednesday with Canadian Underwriter.

“Calcium hypochlorite is a perfect example,” Kinsey said of the water purification chemical. “They still have to get it from Point A to Point B but if the shippers won’t handle it, then they are going to try to sneak it in.

“The supply chains have gotten so complex right now, and there are so many regulations, and as shipping companies moved to try to limit the dangerous cargo, that actually led to more mis-declared or undeclared.”

In the late 1990s, there were some large losses on container ships arising from fires or explosions involving calcium hypochlorite, insurance carrier Steamship Mutual reported earlier.

A study by the New York-based National Cargo Bureau, which inspects ships for the United States Coast Guard, found the majority of containers it inspected had issues with mis-declared or improperly stowed cargo, AGCS said in its report July 15.

“One thing we press with our insureds is to make sure that the people involved in the stowing and booking have the proper dangerous cargo training that is required by law, so they understand what is needed to properly document it and what needs to be done so it is properly secured,” Kinsey told Canadian Underwriter.

AGCS reported Wednesday there were 2,815 shipping incidents in 2019, up 5% from 2018. Worldwide, the number of total shipping losses was 41 in 2019, down from 53 in 2018 and less than half the rolling 10-year average of 95 per year. AGCS got its data from Lloyd’s List Intelligence Casualty Statistics. The total shipping losses  in the AGCS report apply only to vessels with more than 100 gross tonnage (GT). In a separate report earlier, Steamship Mutual described GT as a function of volume, using a complicated formula intended to measure of overall size of a ship.

“Improved ship design and technology, stepped-up regulation, and risk management advances such as more robust safety management systems and procedures on vessels, are some of the factors behind the long-term improvement in losses,” ACGC said in Safety and Shipping Review 2020.

Feature image via iStock.com/RanieriMeloni