UP IN FLAMES: THE EXPLOSIVE RISKS OF MISDECLARED HAZARDOUS CARGO IN SHIPPING CONTAINERS FOLLOWING THE MAERSK HONAM FIRE.

AuthorBrennan, Kyle
  1. Introduction 259 II. Regulation of Hazardous Goods at Sea 261 III. Casualty Studies Involving Hazardous Goods 266 a. M/V Sea Elegance (2003) 266 b. M/V ZIM Haifa (2007) 267 c. M/V Hyundai Fortune (2006) 267 d. M/V Rickmers Genoa (2005) 268 IV.Risk Exposure, Liability & Supply Chain Complexity 269 a. The Carrier 270 i. The Carrier 270 ii. The Cargo Interests 270 iii. The Shipper and Intermediaries 270 b. Case Law Studies 271 i. M/V DG HARMONY 271 ii. M/V MSC Flaminia 273 c. Supply Chain Fact Pattern 279 V. Possible Solutions 281 a. Insurance 281 b. Blockchain and Electronic Bills of Lading 282 VI. Conclusion 285 I. INTRODUCTION

    On March 6, 2018, the Maersk Honam, a 2017-built, Singaporean-flagged, 15,262-TEU Ultra Large Container Vessel (ULCV) caught fire in the Gulf of Aden while traveling from Asia to Europe.(1) The vessel was carrying 7,860 containers and 27 crewmembers.(2) The fire tore through most of the containers in the forward part of the ship, along with some of the accommodation block.(3) Five crewmembers perished.(4) Preliminary estimates suggest that damage from this fire exceeded $1,000,000,000 USD.(5)

    Maersk, as vessel owner, declared general average on March 9.(6) General average is a remedy available to vessel owners to obtain monetary contributions from owners of cargo on board their vessel for either (a) a sacrifice on the part of the ship or its cargo to preserve the voyage or (b) an extraordinary expense for the joint benefit of the ship and its cargo.(7) As a result, owners of cargo on board the Maersk Honam had to post a general average and salvage security bond equivalent to 54% of their total cargo's value before they could receive their container from the port of refuge in the United Arab Emirates.(8) Authorities are in the midst of an investigation and the cause of the fire remains unknown.(9) However, these types of large-scale, unexplained fires on board containerships can often be traced back to a single plight facing the maritime industry: improperly declared cargo. This is an increasingly prevalent problem. By one estimate, one-third of all containers in transit contain misdeclared cargo.(10) In the age of 18,000-TEU containerships, the hazards posed by this problem, and the specific hazard of misdeclared containerized goods resulting in devastating explosions and fires, cannot be ignored by the maritime industry.

    This article will explain the international regulations governing containerized hazardous cargo and some of the attendant risks when such goods are misdeclared, draw on some recent case studies to examine the liabilities of different parties in a complex supply chain, and then propose some solutions to the problem of misdeclared hazardous goods in containers.

  2. REGULATION OF HAZARDOUS GOODS AT SEA

    The regulation of hazardous containerized goods is governed internationally by the International Maritime Dangerous Goods (IMDG) Code. The IMDG Code is intended to (a) properly lump hazardous goods into classes by the type of risk presented and (b) provide safe handling instructions for each class of hazardous goods. The Code is managed by the International Maritime Organization (IMO) and is published biennially to incorporate developments in the chemical, manufacturing, and maritime industries.(11) The Code is meant to complement both the Safety of Life At Sea (SOLAS) Convention and the International Convention for the Prevention of Pollution from Ships (MARPOL), and is applicable to all ships flying the flag of a signatory nation to the 1973 SOLAS Convention.(12)

    The IMDG Code arranges hazardous goods into nine classes and sub-classes based on the type of risk posed by the substance's chemical composition and reactivity. These classes are Explosives (Class 1), Dangerous Gases (Class 2), Flammable Liquids (Class 3), Flammable Solids (Class 4), Oxidizing Substances and Organic Peroxides (Class 5), Toxic and Infectious Substances (Class 6), Radioactive Materials (Class 7), Corrosive Substances (Class 8), and a catch-all "Miscellaneous Dangerous Goods" category (Class 9).(13) All hazardous substances are listed by class type in Volume Two of the IMDG Code and are given a "Proper Shipping Name" and a four-digit United Nations (UN) number to ensure (at least in theory) that they are universally labeled correctly.(14)

    In addition to classifying hazardous substances, the IMDG Code specifies proper packaging, labeling, handling, stowage, and emergency response protocols for every hazardous good listed and requires handlers of hazardous goods at all stages of the supply chain to undergo training on these packaging and carriage rules.(15) The Code also prohibits a carrier from accepting hazardous goods unless a Dangerous Goods Transport Document and a Dangerous Goods Container Packing Certificate accompany every container of hazardous cargo.(16) The Dangerous Goods Transport Document must list the cargo's UN number, Proper Shipping Name, a secondary description of the cargo, a class and division number, and packing instructions for the cargo.(17) It must also certify that the goods are packaged, labeled, and otherwise marked correctly.(18)

    While the IMDG Code is intended to be a comprehensive, user-friendly resource, every new edition introduces greater complexity and inconvenience for shippers.(19) This causes confusion for those who are attempting in good faith to comply with the Code. It also provides unscrupulous shippers with an opportunity to circumvent the rules entirely, perhaps assuming that any downstream party attempting to verify the accuracy of a cargo declaration will themselves be overwhelmed by the Code.

    The complexity of the IMDG Code is perhaps reflected in the most commonly misdeclared types of hazardous goods that pose risk of fire. Common household items like paints and aerosols are among the most routinely misdeclared types of cargo perhaps due to the seemingly innocuous nature of these goods whose true dangers may not be appreciated by infrequent shippers.(20)

    Other hazardous goods may pose patent hazards to carriers, but their true dangers may not be accurately reflected in their IMDG Code classification. Charcoal is one such example. Charcoal, or carbon, is classified under the IMDG Code as a Class 4.2 hazardous material capable of spontaneous combustion.(21) As carbon mixes with oxygen in the air (creating carbon monoxide and carbon dioxide) it produces heat, which may become trapped within a shipping container and self-ignite as both temperature and oxidation rates increase.(22) However, not all charcoal products need be declared as Class 4.2 hazardous materials: if the charcoal was properly heat-treated it may pose little to no risk of self-heating and spontaneous combustion.(23) As a result, shippers, hoping to avoid cumbersome storage and testing documentation requirements for a Class 4.2 substance are incentivized to declare charcoal cargo as non-hazardous cargo bearing no procedural burdens. An example of this occurred in the case of the M/V Berge Charlotte, wherein a shipper declared a shipment of charcoal to be non-self-heating when it had reason to believe that it possessed all the characteristics of self-heating (and thus, hazardous) charcoal.(24)

    Hazardous cargo risks under the IMDG Code involving nascent technology may present similar risks to the maritime industry due to the new and unacknowledged dangers posed by such cargoes. A good example here is lithium-ion batteries, which are the dominant technology in rechargeable batteries used to power most consumer devices ranging from smart phones and laptops to electric vehicles.(25) Lithium-ion batteries are classified as Class 9 ("miscellaneous") hazardous substances under the IMDG Code and consist of densely packed cells of lithium interacting through an anode and a cathode in a very contained medium.(26) For this reason, lithium-ion batteries possess an extraordinary energy potential and thermal runaway is a great possibility.(27) This is especially dangerous because lithium ion fires burn at extremely high temperatures, emit toxic fumes and flaming debris, and can easily reignite after appearing to be fully extinguished.(28) The danger this poses aboard a container ship on the open ocean is obvious. It is therefore imperative that lithiumion batteries be correctly declared, packaged, handled, and stowed in accordance with IMDG protocols.(29)

    This imperative, of course, is not always fully heeded. Take for the example the recent case of the CMA CGM Rossini, which caught fire while transporting a cargo of used lithium-ion batteries.(30) An investigation revealed that the hazardous material declaration did not indicate that the cargo was used.(31) Furthermore, its packaging was inadequate.(32) While only the container of batteries caught fire, the fire burned at very high temperature for no less than four days.(33)

    One of the most frequently shipped (and frequently misclassified) hazardous good that has been implicated in a number of fires and explosions aboard containerships in recent years is calcium hypochlorite. Calcium hypochlorite (Ca(C10)2), or Cal Hypo, is a common water purifier that is labeled as a Class 5.1 oxidizing agent under the IMDG Code.(34) At room temperature, Cal Hypo slowly decomposes, releasing chlorine gas, oxygen, and heat; higher temperatures accelerate this process.(35) If the heat is not able to escape, or if the oxygen is not able to ventilate properly, a chain reaction will cause what is known as "thermal runaway" wherein the substance's composition will continue to break down at an ever-increasing rate eventually resulting in an explosion or fire.(36) Decomposition is also accelerated by exposure to metals, moisture, or organic substances such as oil.(37)

    As a result, the IMDG Code states that Cal Hypo should be stored in a cool, dry, well-ventilated space away from any radiant heat source and should not be exposed to heat in excess of 55[degrees]C...

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