Lost and damaged container costs mount, says AGCS

Although it not uncommon for containers to be lost at sea, the risks posed by heavy weather, inadequate stowing and lashing and even environmental concerns means this issue is a growing concern, says AGCS, the commercial insurance division of Allianz.

On January 2nd this year, amid heavy weather, the 19,000 teu container ship MSC Zoe lost hundreds of containers off the German island of Borkum.

At least 345 containers went missing and a further 450 were damaged but remained on board.

The contents of some containers, which included toxic substances, were washed up on a number of Dutch islands, raising environmental concerns. Owner MSC promised to recover every missing container and clean any affected beaches.

The salvage operation used a drone to locate and retrieve the containers and their spilled contents from the seafloor and navigation channel.

AGCS observed that a common cause of cargo incidents at sea was heavy weather and lashing failures. In heavy seas, container lashing comes under strain as a vessel heels or tilts. In very large container ships, where boxes are stacked high above the water line, the motion is accentuated, exerting huge pressure on lashings.

“This can potentially push them to breaking point,” said Volker Dierks, Head of Marine Underwriting, Central and Eastern Europe at AGCS. “We will know more once the investigation into the MSC Zoe is completed, but it could be that lashing and stowage procedures will need to be amended for large container ships.”

It is not uncommon for containers to be lost at sea, particularly during extreme weather conditions, but the numbers are relatively small. On average, a total of 1,582 containers are lost at sea each year, according to the World Shipping Council, falling to 568 containers when discounting catastrophic events like sinkings. To put this in context, approximately 130m containers are transported by sea each year, with an estimated value of more than $4trn. Damaged goods, including containers, are one of the most frequent generators of insurance industry claims in the shipping industry, analysis by AGCS shows, accounting for more than one in five claims. (22% of 230,961 marine insurance industry clams analyzed over the past five years).