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June01, 2015

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30 THE JOURNAL OF COMMERCE TOP 100 IMPORTERS AND EXPORTERS 2015 JUNE 1.2015 By Peter T. Leach MARINE INSURERS THAT underwrite policies for ultra-large con- tainer ships are assessing the many problems they present, and question whether they can handle potential losses. As most major global container lines order vessels capable of carrying up to 20,000 20-foot-equivalent units, the scale of poten- tial risk has increased exponentially. "The resulting claims could be astronomical," said Chris Smith, senior vice president of ocean marine at Endurance Insurance. "Pick a figure: $2 billion, $3 billion, $4 billion. A grounding by an ultra-large container ship with a large capacity cannot be ruled out, and the loss could be $4 billion." When the 3,351-TEU container ship Rena grounded in Tauranga Bay off New Zealand in 2011, the resulting cargo losses totaled $1 billion, and the salvage operation took seven months. "It would be a monumental task to safely remove 20,000 containers from a grounded ultra-large container ship, let alone salvage the wreck," Smith told a May 14 seminar held in New York by the American Institute of Marine Underwriters. "The Rena, next to an ultra-large container ship, would be like an average-sized 2-year-old next to Shaquille O'Neal," he said. "But the main question is: Can the industry handle it." Ultra-large container ships also magnify the risk of accidents from misdeclared cargo. With so many more containers aboard an ultra-large ship, the odds that one or more of them might contain undeclared hazardous material increase dramatically, increasing the risk of fi re or explosion. "The risk grows as ship size grows," said Capt. James McNamara, former president of the National Cargo Bureau. The container shipping industry, he said, doesn't pay enough attention to the safety of its crews at sea. "The industry doesn't seem to get it when it comes to safety," McNamara said. As an example, he cited the JOC's 15th Annual TPM Conference in Long Beach in March. "There were many good speakers, but the focus was on making money, on productivity and improv- ing service. There wasn't one speaker who addressed safety concerns and haz- m at concer n s ," McNa- mara said. With containers with hazardous materials accounting for 5 to 10 per- cent of the container trade, "to me it was shocking that in this big conference, not one speaker was concerned about safety." Containers with unde- clared hazardous materials pose dangers to a container ship because those materi- Bigger Ships, Bigger Risks Marine insurers worry about their ability to meet obligations if catastrophe strikes a mega-vessel "The industry doesn't seem to get it when it comes to safety."

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