Tank container risk analysis reflects supply chain pressures

Transport and logistics insurance mutual TT Club, in its analysis of 2020 claims, noted an increase in impact-related incidents. Corrosion of tank containers’ inner surfaces, and contamination caused by cargoes previously carried, were other significant causes of loss.

The club said that the analysis made clear that the effects of increased volumes of tank containers used to trade chemicals and other liquids on the primary east-west trades had altered the risk profile of damage to such units. While in previous years there had been a consistent dominance of contamination as the major source of losses for tank container operators, the current figures showed impact incidents as the foremost causation.

The primary causes were:

  • impact – 36%;
  • internal pitting (from corrosion) – 27%
  • contamination – 18%.

The regional breakdown of total claims follows broadly the pattern of the trades on which tank containers are employed: 50% in Asia-Pacific; Europe at 36% and 13% in the Americas.

The data generated in its latest analysis of notified claims covers the 2020 policy year. TT’s Managing Director of Loss Prevention Mike Yarwood said that “the most significant trend we see is the relative increase in claims originating from impact incidents and from pitting of the tank’s internal steel surface. Historically we have experienced higher levels of contamination-related claims”.

Yarwood said that the increased occurrence of impacts involving tanks “would seem to be a factor of higher container volumes handled at maritime and intermodal terminals”. About 63% of impact incidents occurred at these locations.

Yarwood noted that volume increases at terminals and the associated congestion put additional pressure on operators of handling equipment to achieve greater throughput levels. This, plus the fact that many tanks are ‘super-heavy’, had elevated risk.”

Road traffic accidents are the second highest cause of impact damage to tank containers with a higher proportion occurring in the Americas (almost 50%) despite this region accounting for only 21% of total impact-related damage incidents.

Claims involving pitting damage were seen mainly in Asia (87%), and the majority involved hazardous material (59%).

Yarwood said that “while there is a plethora of potential causes for this damage, there is currently no identifiable trend causing the increase in claim frequency. It would however be prudent for operators to be mindful of this exposure; ensuring where possible tanks are prioritised for cleaning once in an ‘empty dirty’ state and considering more regular inspections.”

One possible explanation for the lower incidence of contamination-based claims was, said Yarwood, that, given the supply chain constraints, consignees might be more willing to accept cargoes, even where they suspected a negligible contamination issue, “on the basis that replacing the product from its supplier could be complex and time consuming”.