Insurers are braced for another major boxship claim from the blaze on an X-Press Feeders containership off Sri Lanka.
The eventual claim will depend on the success of the salvors ongoing battle to save the virtually new 2,743-teu X-Press Pearl (built 2020) and its cargo. But experts believe total claims could potentially run in excess of $100m.
The ship's registered owner has declared general average, a legal measure that which divides claims among cargo, protection and indemnity, and hull underwriters.
Smit Salvage has been appointed to lead the salvage operation under a Lloyd’s Open Form (LOF) contract, according to the Lloyd’s Salvage Arbitration Branch.
In some cases, containership fires on larger boxships have taken weeks to fully extinguish. Sri Lanka looks unwilling to offer a port of refuge, and long running LOF salvage operation could become one of the costliest elements of X-Press Pearl claims.
One positive is that as a small feeder vessel, salvors can get easier access to centre of the fire, compared to larger containerships. There are also only 1,486 teu of containers on board, which will limit the potential cargo claim.
But salvage experts believe that as the fire spreads, Smit will still have a major job on its hands to save the ship and its cargo.
In some earlier containership fires the accommodation unit, located in the midships or forward section, has acted as a physical barrier to prevent the spread of the fire.
But in the case of the X-Press Pearl the accommodation unit is at the stern of the vessel and the ship’s entire cargo is exposed to the blaze.
Critical situation
Sri Lanka’s Marine Environment Protection Authority (MEPA) chair, Dharshani Lahandapura, said weather conditions are encouraging the spread of the fire. "The distressed X-Press Pearl is now in a critical situation, where the fire is increasing due to the strong winds," she said.
The firefighting, pollution prevention and towage services will form just a part of the salvage operation.
A significant part of the salvage costs will be related to hazardous waste disposal of burned out and damaged containers and removal of pollutants from the ship.
The X-Press Pearl is carrying nitric acid and other chemical cargoes, so waste disposal will have to be done in line with international regulations once the vessel is eventually taken to dry dock.
The virtually brand-new ship was ordered for $30m, but insurance cover is likely to be closer to its current market value of around $45m.
Even if the hull can be saved, then a major reconstruction job looks likely to replace steel that has been damaged by the intense heat of the fire.
The ship’s P&I cover is with the London P&I Club. The 13 International Group of P&I Clubs members will be concerned this could develop into another shared pool claim.
The International Group members pool claims of more than $10m and are already negotiating the Suez Canal Authority’s $600m claim for the grounding of the 20,388-teu Ever Given (built 2018) in the Suez Canal.
