USCG reports another fire in misdeclared container of scrapped lithium-ion batteries

Members are advised that the US Coast Guard has recently reported another fire in a misdeclared container of scrapped lithium-ion batteries. On 4 March 2022, LA / Long Beach Coast Guard received a report of a shipping container on fire at the San Pedro Bay port complex at LA/Long Beach. The box was due to be loaded on a vessel sailing for China and was waiting on the quay. After a grueling fire-fighting operation which involved 40 fire firefighters from the LA fire department it was noted that the container was misdeclared and whilst the bills of lading indicated that the container was carrying 'synthetic resins' a non-hazardous material, the container in reality held used lithium-ion batteries, which are hazardous materials with a high propensity for fire.

As a precaution, the Coast Guard worked with port officials to find and identify any other shipping containers at the facility that might pose the same risk. Together with stakeholders, the USCG worked to identify and inspect all containers belonging to the same shipper. In addition, the Coast Guard placed a hold on all the shipper's outbound boxes until they can prove that the shipments comply with safety regulations.

This is the second reported incident in the US, and in August 2021, a container containing misdeclared used lithium-ion batteries caught fire whilst en route on a truck to the Port of Virginia for onward shipment to a Chinese port. The bills of lading indicated that the container was carrying 'computer parts' and upon investigation it was noted that the shipper failed to properly placard, label, mark and package the lithium batteries, class 9, UN 3480 and 3481. Causation was attributed to the residual charge/full circuit, which led to a thermal increase.

Following these incidents, The USCG have, on 10 March 2022, released a marine safety alert on lithium- ion battery fires which can be viewed below.

Lithium-ion batteries work within a safety window of temperature and voltage. If the battery goes beyond the safety window it will become thermally unstable when coupled with combustible electrolyte and production of oxygen. Thermal runaway of the lithium-ion battery initiates an unstoppable chain reaction. The temperature rises rapidly within milliseconds and the energy stored in the battery is suddenly released. Temperatures of around 400°C are thus created, the battery becomes gaseous, and a fire erupts that is extremely difficult to extinguish. The hazard such misdeclared containers would present if thermal runaway occurred on board a ship at sea is unprecedented.

The main reason for fraudulent misdeclaration of dangerous cargoes in containers is to save time and money – and because there is a good chance of getting away with it. Fraudulent shippers want to avoid IMDG restrictions on packaging and quantity, avoid additional carrier DG charges, and bypass carrier restrictions & bans on carriage of certain hazardous cargos.

Some of the tactics employed by fraudulent shippers to misdeclare containers include:

• the use of colloquial synonyms instead of the proper shipping name of cargos – in this case 'synthetic resins' and 'computer parts' instead of scrapped lithium-ion batteries
• producing a draft bill of lading much before shipment and carrying out last minute changes in the final bill of lading such as switching cargo description
• producing fraudulent custom and/or laboratory documents
• using multiple freight forwarders to shroud origin of the cargo
• doing last minute bookings and putting commercial pressure on the carrier.

Members are reminded to carry out due diligence on the shipper.

Knowing your customer (KYC) is critical. This must be verified by the booking department of the carrier to prevent fraudulent shippers from booking misdeclared cargos.

Essentially, all booking office staff and agents need to know and trust their customers. This means doing due diligence checks on new customers and their supply chains or, in the case of slot charterers and freight forwarders, confirming what checks they use on their own customers.

Members need to be aware of how brass plate companies operate.

Most brass plate companies use the same (or similar) addresses, and so a list of rejected addresses should be maintained by the carrier.

For ‘new customers’ an enhanced new customer vetting needs to be carried out. The key points to check are if the new customer is a proper legal entity in their home country; that the manufacturer of the goods (if not the customer) is identified and verified, and that the testing laboratory being used is both reputable and independent of the customer or manufacturer.

Needless to emphasise, the tightening, controlling, and streamlining of the booking process is critical in preventing the misdeclaration of dangerous goods. This would include the use of synonym lists through intelligent due diligence softwares. Training of all non-DG and DG staff at the booking office is also key to picking up the first signs of cargo misdeclaration.

For further guidance about preventing misdeclaration of containers, please see the club's guidance published in March 2018 which can be viewed under 'related knowledge and news'.

Category: Loss Prevention