The safety of ships carrying dangerous goods has always been a
concern for the shipping community. To improve the security and
safety of such carriage, international conventions and individual
countries/territories have constructed a series of laws and
regulations in terms of ship structure, personnel requirements,
mechanism establishment, emergency disposal, DG warehouse and port
facilities, etc. The ISPS code (International Ship and Port
Facility Security) by International Maritime Organisation (IMO)
entered into force in 2004, as the basis for a comprehensive
mandatory security regime for international shipping. The purpose
of the security measures is to prevent and obstruct
security-related incidents that may damage the ports, the port
facilities or the ships that call in to such ports.
Such industry regulation highlights the importance of
identifying potential risks and where possible, mitigating
mishandling risk proactively. One possible way is by harnessing the
value of big data with relevant data sets. For example, maritime
and international trade datasets allow analysts to identify
patterns of dangerous cargo and typical related commodities, the
trade routes and locations involved, and the vessels and facility
compliance status. In addition, logistics visibility may help track
real-time shipment statuses to prepare in advance and prompt
on-time data filing, while also aiding risk alerts and better
operational efficiency.
In this article, we explore characteristics relevant to
dangerous cargo and how maritime and trade data can help industry
stakeholders assess and mitigate risks inherent to dangerous goods
shipping.
Referencing international trade data by Global Trade Analytics Suite
(GTAS), U.S. waterborne export shipments to mainland China YTD
through August 2022 flagged as hazardous ‘dangerous goods’ (DG) are
relatively concentrated at certain HS2 chapters. Chemical products
(including organic, inorganic and miscellaneous) is the largest
broad category across three HS chapters (HS 38, 28 and 29),
accounting for 27%,15%, and 13.4% respectively, of all DG-marked
shipments, followed by petrochemical-related or derivatives such as
soaps and essential oils.
(HS Chapter Descriptions see Table 1)
To validate another way that these commodities do feature
‘dangerous goods’, a reverse analysis on DG percentage in
individual commodities’ total shipments shows that nearly all of
the chemical-related commodities are marked with a Dangerous Goods
flag (95% – 99%), indicating strong consistency in HS mapping to
DG.
While spotting these HS Codes at 2-digit Chapter level is
relatively straightforward and it might be obvious in the general
view, when comes to practical risk identification method, the
2-digit HS code level could be too broad and may result in false
positives. Therefore, for operational risk management, breaking
further down into 4-digit HS code level or even lower could more
accurate. In doing so, we found a list of items, mostly commodities
related to chemicals, clays, petroleum and cosmetics, among those
with most DG shipments. As the below table shows, almost all of
these top 20 commodities should be shipped with the DG flag.
Another possible strategy is to ‘advance monitor’ by identifying
the origination location of such DG shipments.
Though the U.S. has over 300 ports, export records destined for
mainland China in 2022 shows that only around 30 ports had shipped
out DG. When looking closer at those with the most frequent
loadings, New York ranked first place in the list with 5,713 DG
shipments in 2022 loaded, representing 13.3% of all NY-departed
cargo. Although Houston ranked 2nd in shipment counts at 5,664, the
percentage of its total loaded cargo is higher at 25.96%.
Port profiles also facilitate such understanding. Revealed by
analysis of port data within S&P Global’s Maritime Intelligence Risk
Suite (MIRS), there are around 76 U.S. ports (including
sub-ports) that are ISPS compliant; those with frequent DG
shipments loaded are among them.
China Customs recently reinstated the requirement of advance
filing of electronic manifest data for imported dangerous goods.
The requirement covers both the timing and the data elements to be
submitted. Specifically for maritime trade, cargo imported on
container ships shall be filed 24 hours prior to cargo loaded at
the origination port; in the case of transhipment, it should be 24
hours prior to the loading at the last transhipment place. For
non-container ships, the timing is 24 hours before arriving at the
first domestic port.
Actually, this is not a new requirement. With the introducing of
electronic filing system and digitalised data exchange, many other
major authorities globally have enforced similar if not same
advanced reporting rules for imported cargo and vessels. Various
countries require the submission of detailed cargo information
prior to vessel sailing (24-hour security initiatives) and/or prior
to arrival at destination to local customs and port authorities.
For example, EU Regulation 1875/2006 –Advance
Manifest requires the lodgement of Entry Summary Declarations
(ENS) for inbound cargo effective December 31, 2010. For deep-sea
containerized shipments, i.e. from Americas or Asia to the EU, the
ENS must be lodged at least 24 hours prior to commencement of
loading in each non-EU load port. This is also essential for other
advanced manifest systems e.g., AMS (USA), ACI (Canada) or MX-SAT
(Mexico).
The advance reporting requirements by China Customs have
differentiated containership and non-containership in terms of
submitting data timing and spec. Yet for the EU, the
differentiation is more depending on the cargo rather than ship
type as ‘No matter whether container, including reefer
container, are shipped on container or bulk vessels, the deadline
for transmitting ENS for containerized cargo is 24 hours prior to
loading. Not the vessel type is important but whether the cargo is
containerized or in bulk.’ (According to carriers’ DG shipping
notification.)
For both authorities, it seems a focus is put on containerised
trade. From a fleet analysis practical standpoint, this could be
the reason why the requirements have specifically addressed the
containerised trade reporting formality by regulations.
Containerships do carry a dominant share of DG when counted in
shipments (~96.9%). Other ship types are unsurprisingly
chemical/product tanker, general cargo ships, bulk carrier, LPG, as
well as tanker if we consider the DG commodities to include
petroleum and chemical products.
Nevertheless, from the marine safety perspective, the number of
vessels calling with dangerous goods on board is still of concern.
The percentage by vessels, bulkers and tankers exhibit a higher
prevalence of DG voyages compared to the percentage of raw shipment
counts.
Yet there could be other reasons for the differences. For
example, container vessels usually carry shipments from multiple
shippers and with numerous consignees, while bulk are more
straightforward in terms of shipper-consignee-operator
identification. Another reason for such complexity is, unlike bulk
shipping, container ships consistently make multiple port calls all
along the service string, and in many cases will involve
transhipment, resulting in more challenges in identifying chains of
custody.
Transhipment is a quite normal and frequent practice, referring
to vessels loaded with cargo from a particular loading terminal,
which may not necessarily be the original country of origin.
Therefore, the reporting requirements have highlighted the
importance of chain-of-custody tracking for transshipment
cargo.
This highlights the importance of transhipment location and time
visibility. Yet for different destination ports, the connectivity
of transportation network would result in a pattern still depending
on the location and transport mode of journey that could vary
significantly by individual port pairs. For example, DG cargo
shipping from U.S. to Shanghai is predominantly via direct
shipping; less than 1% of shipments are conducted via transhipment,
which are transhipped via Tanjung, Singapore, Busan etc.
Conversely, direct shipping only accounts for 1/3 of total DG
shipments from U.S. to Qingdao; Bremerhaven and Antwerp were the
most frequent transhipment locations for that route.
Therefore, analysing the complete journey, and verifying with
multi-angle data could be useful in comprehensive awareness.
The business community involved in dangerous goods shipping have
reason to be concerned with the risks inherent in the physical
movements of dangerous goods: ocean carriers, warehouse services,
inland transportation, as well as financial institutions like
insurance and trade finance providers facilitating such trades.
Even the shippers and consignees who are not themselves involved in
DG trade may be impacted by any accidental outbreak on board ships
carrying dangerous goods. News reports appear quite frequently
regarding goods like lithium batteries combusting during ocean
journey (For example, the vessel, Felicity Ace, carrying
about 4,000 vehicles including Porsches, Audis and Bentleys, some
electric with lithium-ion batteries, caught fire in the middle of
the Atlantic Ocean in February 2022). and improper handling of
chemicals at port storage areas causing severe accidents and damage
(such as incident of a chemical cargo ship near Sri Lanka as
reported in https://www.reuters.com/business/environment/disaster-feared-chemical-cargo-ship-sinks-off-sri-lanka-2021-06-02/
). Even when transportation methods themselves are compliant,
operations personnel should remain cautious, enabled in part by a
clear and accurate understanding of the cargo characteristics.
Subscribe to our monthly newsletter
and stay up-to-date with our latest analytics
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
