Container Ship Fires and Ports of Refuge for the Big Ship Era

This article highlights why it is wise for ship owners, charterers, salvors and insurers to have a Port of Refuge procedure in place should an incident arise. 

“Fire in container!” Not words a shipowner or insurers want to hear from a vessel at sea. The risk of container ship fires is, however, a problem that is not going away. We have seen a number of salient, recent examples of fires and explosions posing threats to vessels, their crew, their cargo and the environment. Some of these have resulted in total losses, almost all have incurred significant losses determined before the courts and appellate courts.

Once a salvage contract is in place and firefighting operations are underway, attention will turn to locating a port of refuge (POR). Since the advent of shipping, ships of all sizes and trades have needed to take immediate measures to save life, avoid pollution, or mitigate further loss by finding a POR. But the advent of larger container ships, involving more parties, ever-more Dangerous Goods (DG) onboard, and the logistical challenges this presents, can cause enormous headaches when considering PORs.

Selection

Important decisions need to be taken early. This requires prompt assessment of the immediate dangers being faced, the vessel’s location, her intended destination, POR options nearby, whether they can be reached safely, and the attitude of any local authority on site.

Who makes these decisions? Where a Lloyd’s Standard Form of Salvage Agreement (LOF) has been agreed, as is often the case on large-scale container ship fires,  the salvage master will have ultimate command of the casualty. The shipowner will make the formal application for entry and their insurers of course have a very obvious interest. So too will the time charterer, whose name may be on the side of the vessel. There may also be alliance partners exposed to customers with cargo onboard. Flag and Class must be consulted too. The short answer is that the decision-making process should be a joint one. Where casualties are handled efficiently, it is because salvors, shipowners, charterers and their respective insurers work together. This includes setting up daily meetings and sharing documents, such as cargo and DG manifests, to assist operational decisions on safety. This approach is also borne out in the LOF clauses, which make clear it is the responsibility of all owners of property to assist salvors in obtaining entry to the place of safety.

Permission to enter

The reality of calling at a POR varies significantly from port to port and the approach taken by the different stakeholders should reflect that.

Signatory coastal States are encouraged to follow IMO Resolution A.1184(33) – Guidelines on Places of Refuge for Ships in Need of Assistance (the Guidelines), adopted on 6 December 2023 and revising the previous guidelines published in 2003. These confirm that when a ship has suffered an incident, the best way of preventing damage or pollution is to stabilise the situation including lightening cargo and bunkers and repairing the damage. The Guidelines provide a common, operational framework on what is expected of the parties involved and encourage coastal States to welcome ships, especially when their own coastlines are at risk. However, the Guidelines – and they are just that – also acknowledge that accepting a casualty can only be considered on a case-by-case basis and that States are under no obligation to receive vessels. They require only an “objective analysis” to be made.

In practice, issues of NIMBY-ism often play out. Despite many coastal States establishing maritime assistance services, as recommended by another IMO Resolution A.950(23), designating competent authorities with expertise and authority to take independent decisions, and declaring a willingness to assist casualties, this often fails to disseminate down to those signing-off on the port entry book, who might have their own reasons for saying no. There are also examples of States, contrary to the Guidelines, pressuring neighbours to likewise refuse entry. Casualties can swiftly become the proverbial pariah of the seas. All the while, they remain at risk of secondary fire and degrading cargo. There are exceptions of course. Some regions are acutely aware of the potential revenue to local port economies from accepting a casualty, where the Guidelines do not address, or confine States, on the issue of compensation. Ultimately, States will weigh the risks against the rewards.

Consideration should be given to identifying and approaching key decision makers within authorities, as well as commercial parties or contractors with influence. There is no substitute for early, face-to-face meetings to build trust. One thing is also certain: authorities do not like casualties arriving within territorial waters unannounced. It is therefore never too early to open dialogue with potential PORs.

Shoreside considerations

POR operations should also involve a plan for dealing with cargo remaining onboard. There may be hundreds of containers and cargoes, above and below deck, damaged as a result of fire spread or firefighting water. Some may now be recognisable only as scrap metal, burnt material or debris. Reefer units may also have been powered off during salvage operations.

Cargo handling operations have become increasingly expensive in recent years and, depending on the situation, are likely to exceed the cost of vessel repairs. Damaged cargo or debris cannot simply be dumped on a quayside and taken away to landfill. International conventions, local legislation, and ESG considerations now rightly take centre stage. Damaged cargo must be removed, decontaminated, segregated, recycled and disposed of (if necessary) in a compliant manner.

Whose responsibility is this? That depends on the contractual terms between the parties, although the position can often be unclear following a casualty. Either way, it is again important that all stakeholders – without prejudice to any rights of recourse – cooperate to negotiate a technically and commercially viable solution in good time.

There are obvious benefits to an integrated solution at a single POR. If that is not possible, parties will need to pay particular attention when exporting the damaged cargo elsewhere, in case it falls within the definition of waste and the wide reach of The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal.

Hull and Machinery (or Loss of Hire) underwriters might well consider that all shoreside decisions are for the P&I Club. In reality, where the removal, extraction and disposal of cargo is intrinsically linked to the vessel’s ability to carry out repairs and return to service, a constructive approach between insurers is key.

Conclusion

Where container ship fires remain a concern to the industry, shipowners and insurers would be wise to have a POR procedure in place should such a scenario arise. In the event, the process will run much smoother by opening dialogue with authorities as early as possible, working with them when applying for entry, appointing a site team, considering an integrated ship/shoreside solution, and ensuring constant dialogue between all stakeholders.

HFW have been involved in a large number of major container ship fires over the past decade and have significant experience handling POR issues. We would be happy to discuss any issues raised in this article.