Lithium Batteries, Hot Fires, & Cargo Insurance

Thinking of capitalizing on the increasing lithium battery demand? Wade into the business slow, there are perils you should be aware of.  Lithium batteries run everything from pacemakers to automobiles and store our solar energy.  The applications lithium batteries can be used for are almost endless.  Comparing lithium batteries side by side to traditional lead-acid batteries, lithium batteries are the clear winner. From depth of charge, capacity, life span, to efficiency, lithium batteries have turned their acid-lead batteries into dinosaurs.

Since most lithium batteries are made in China, if we want them, we must get them here. That sets up increased opportunities for transportation intermediaries to jump to serve the market, or US based importers, who manage to find a supply of lithium batteries in Asia, to import them.  To both the transportation intermediaries and the importers I say, use caution before plowing ahead. There are dangers related to transporting and storing lithium batteries, and they should be considered.    

Okay, I am not suggesting you throw your mobile phone out the window or abandon your electric vehicle in Walmart’s parking lot, but when it comes to transporting and storing certain types of lithium batteries in quantity, there is a reason the US government regulates the transport. As a Class 9 hazardous goods category ground transport commodity, lithium batteries don’t get much more attention than ammonium nitrate-based fertilizer. Both commodities get moved day in and day out. Why do marine cargo insurers dislike lithium batteries so much?

Like ammonium nitrate-based fertilizer, when things go bad with lithium batteries, they go very bad. In the case of ammonium nitrate-based fertilizer, if there is enough of it, and it gets hot and compressed enough, it blows up. Does it happen often? Heavens no, but consider this, 2,750 tons of it was stored improperly in Beirut in August 2020, and it exploded with the force of 2 million pounds of TNT and left a crater 460 feet wide.  An estimated 215 people lost their lives and 7,500 were injured. Something similar happened in the USA in 1947 when a fire broke out on board the vessel Grandcamp as she was loading ammonium nitrate-based fertilizer in the port of Texas City, TX. The commodity exploded and about 600 people lost their lives.

Is your EV battery going to get hot in your garage and blow-up taking out your whole neighborhood? No, but the batteries can catch fire. Lithium batteries, unlike alkaline batteries, can contain flammable electrolytes and have a super high energy density.  The lithium batteries burn super-hot and are very difficult to extinguish.  The reasons for a lithium battery catching fire can include physical damage, improper design or assembly, or excessive heat which can create thermal runaway.  

What happens when one or more lithium batteries ignite? In June 2020 in my home port here in Jacksonville, FL, an electric vehicle battery ignited on the Hoegh Xiamen taking out 2,420 used vehicles and the entire vessel with it. It should be noted, lithium-ion batteries do not have to start a fire to be a danger, they can also be considered one of the best fuels to feed existing flames.  In February 2022 a fire on board car carrier Felicity Age led to the vessel sinking in the Atlantic, along with its 4,000 vehicles on board. Lithium-ion batteries were cited as being a factor in keeping the fire ablaze. Whether on the ocean, on the ground, or in the air, transporting and storing lithium batteries comes with risk.  The more lithium batteries are used in our daily lives, the more fires can result from their transportation in storage. Ground truck shipments are not immune. I have an old friend in my industry that recalls when a lithium battery shipment by truck overturned. Of course, the batteries self-ignited and burned like the inside of Hell for two hours while the fire fighters sat and watched as that was the only thing they could do.

Does the fire risk of lithium batteries mean they will be banished from being used like the legendary game of ‘Lawn Darts’ was banished? Oh.. heck no. They work to well and people are making money. I would dare to say electric cars would not even be remotely practical if it wasn’t for lithium batteries. Until something better comes along than lithium, which some day it will, lithium owns the market.  But lithium is what has got us this far, and I don’t suspect will be going away anytime soon. Too many politicians own EV and lithium mine stock for any changes in the near future.

By the way, if you don’t know what ‘Lawn Darts’ are, look it up on Google. Essentially, an original Lawn Dart was like giant version of regular dartboard pointed dart but were designed to be thrown outdoors similar to how horseshoes or cornhole bags are thrown, except at a higher trajectory since the goal was to stab the dart into the ground within a small circle the opposing team stood near.

Yeah, lawn darts were banned. No one ever thought of trying to see how high we could fling a lawn dart straight up in the air or threw them at each other, that would be dangerous.  It’s amazing no one took us from our parents when we were young considering what our parents allowed us to do as long as we remained out of doors.

Okay, if I have not dissuaded you from importing and or shipping lithium batteries yet, read on.  Below is a little advice from the cargo insurance and risk mitigation department aka TJO Cargo.

Goods Declaration

For heaven’s sake, if you are going to ship lithium batteries, don’t mis declare the commodity.  There are a few shippers out there who believe they can hack the system to save themselves a few bucks by not declaring hazardous cargo. This is not a new problem, way back in 2018 I wrote an article citing the same concern. The link to the article is (https://www.linkedin.com/pulse/little-white-lies-danger-sea-tom-o-malley).  Ocean, air, and ground carriers, as well as warehouses, depend on correct declarations to tell them how to handle and store certain types of cargo. If you attempt to not declare their dangerous goods properly, if there is an incident with the cargo, they will have to rewrite the definition of the word ‘trouble’ to describe how much trouble you would be in. Do you recall the truckload of lithium batteries that tipped over and burned for two hours I mentioned earlier? It turned out, the owner of the goods mis declared the commodity and collected zero cargo insurance money for the loss.  

Speaking of Cargo Insurance

Many cargo insurance underwriters exclude lithium batteries or limit the size and or volume of the batteries if they do cover them. If you have a yearly policy, double check with your insurer if your specific lithium batteries are covered under the policy.  If you purchase your cargo insurance as needed per shipment, make sure the provider knows the commodity is lithium batteries, what type, dimensions of each battery, and the total volume. It can make a difference.  

Even if your cargo insurance covers lithium batteries, there is one more risk you have. Any damage caused by the nature of the insured goods themselves, especially if the carrier or insurer can prove, and you can’t disprove, that the goods were faulty and that caused the loss, are often excluded.  If one or more faulty batteries self-ignite within a container or truck, it would be assumed they were faulty. Get your checkbook out.

Speaking of Checkbook, What About Peripheral Damages Liability

Okay, you have confirmed with the cargo insurance provider that your cargo insurance covers your specific lithium battery shipment and have eliminated any exclusions of concern. You have even gone through the trouble of getting your seller to agree to be responsible for any damage to the cargo because of one or more faulty lithium batteries in the shipment or improper packaging. If you have gotten this far, you have done better than many.  

Cargo insurance is a great tool to protect cargo owners from the financial burden resulting from the physical loss of the cargo whether it be damage, destruction, or theft and non-delivery. Do you know what cargo insurance does not cover? It does not cover general liability, even if damage to, or loss of, the cargo created a loss of anything other than the cargo itself.  In the event your shipment of lithium batteries self-ignite, burns all your lithium batteries to cinders, the lithium battery shipment will also take out whatever is around it. Lithium batteries burn hot, hard, and are difficult to put out. Adding water just makes the fire angrier.

Even if your properly declared containerized shipment of lithium batteries is well placed on a vessel to allow quick jettison, it will burn surrounding containers at the very least, and that is an optimist’s view.  Your cargo insurance will not help with these peripheral losses.  Be sure to talk to your insurance provider about general liability insurance designed to cover losses to anything other than your cargo during transit, including at sea. Losses can be quite steep and can include shipping line containers, other shipper’s cargos, damages to the vessel, cleaning of the vessel, and that is if you are lucky. If the container contents were mis declared and not placed well, you could be paying for the whole vessel and possibly carry the burden of fault for loss of life at sea, which is something that cannot be undone with a payoff, no matter how much money you have.

The goal of this article is not to convince you to never deal in, or transport, lithium batteries. The objective is to convey the commodity can be dangerous, is not just another commodity, and cannot be treated that way. While transporting and storing lithium batteries may not be as dangerous as playing Lawn Darts, it comes pretty darn close. There are guidelines and best practice for the transport and storage of lithium batteries. Moreover, there are fine companies out there that make their living handling the commodity to transport it and store it in the safest way possible. They may seem a little higher priced than normal transportation and storage professionals, but they are well worth the investment.