Espirito Santo Express: most cargo likely lost
The Espirito Santo Express fire is now a claims problem, and the clock is running
Hapag-Lloyd and Ocean Network Express (ONE) have told customers to expect the worst. In an advisory reported by The Maritime Executive on 2 November, the two carriers said they expect “the vast majority of the cargo to be either severely damaged by the fire or a total loss.” The ship is the Espirito Santo Express, an 11,800 TEU containership built in 2018 and owned by Seaspan. It caught fire on 15 October in the middle of the South Atlantic, on its way from Asia to Brazil.
Our view is simple. There is little left to save on board. What is left to save is time and money for the cargo owners. The forwarders who get their customers’ claims and paperwork in order this week will spare them a long and costly wait later.
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What happened
The ship left Singapore on 25 September, rounded the Cape of Good Hope on 10 October and was heading for Santos, Brazil, according to The Maritime Executive’s report of 19 October. Prensa Mercosur, citing MásContainer, said it was sailing on the AS2 rotation. That loop links Busan, Shanghai, Ningbo, Shekou, Hong Kong and Singapore with the east coast of South America. Cargo on board was also bound for Paranaguá, Navegantes and Rio Grande in Brazil, and for Montevideo and Buenos Aires. Prensa Mercosur said the ship was reportedly fully loaded.
On the night of 15 October the ship slowed and dropped off AIS, the tracking system ships use to broadcast their position. A possible explosion and fire were reported about 1,700 km east of Rio de Janeiro. Seaspan later said smoke and then fire came from cargo in the hold forward of the accommodation block, The Maritime Executive reported on 23 October.
All 28 crew abandoned ship, 19 in a lifeboat and nine in a life raft. They were picked up by a passing bulk carrier, the Aeolian Arrow. The rescue came at a cost. The bulker’s chief officer was thrown from the rescue boat, which was then swamped and lost. He “was tragically lost as the rescue operation was being completed,” according to The Maritime Executive.
The ship has drifted since then. A team from salvage firm SMIT reached it. Seaspan has told the carriers the fire is under control. But claims consultant WK Webster said it had been told of fires and explosions on board, and that as of 28 October it understood the ship was still burning. No port of refuge — a safe harbour where a damaged ship can be brought in and assessed — has been named. The carriers say it “will take considerable time to bring the vessel into a port of refuge and assess the damage in more detail.”
The cause is not known. The Maritime Executive noted that it could have started in the containers, where misdeclared dangerous goods are a known risk, or in the engine room or elsewhere.
Why we think the cargo story is mostly over
Carriers do not normally write off most of a ship’s cargo in a customer note. They are careful with words, because those words get read later by lawyers. When Hapag-Lloyd and ONE say “the vast majority” is severely damaged or a total loss, we read that as a clear signal: shippers should plan as if their goods are not coming.
Three facts back this up. First, the fire has run for weeks, not days. Second, there have been reports of explosions on board. Third, the ship is still at sea, far from any port, with no refuge named. Even boxes that escape the flames can be ruined by heat, smoke and the water used to fight the fire.
That shifts the problem from operations to finance. The questions now are who pays, how much, and how fast.
It is also not the only fire on the way to Brazil this autumn. The HMM Platinum, carrying about 2,300 TEU to Brazil, caught fire around the end of September off the southern coast of Madagascar, The Maritime Executive reported. HMM said that fire was brought under control with SMIT’s help, and the ship is now anchored off Durban waiting for a berth so it can be surveyed. Its crew is reported safe. Two burning ships on lanes into South America within weeks of each other is a reminder that box fires are not rare events. Our view is that shippers on these lanes should treat cargo insurance as a standing cost, not an optional extra.
What general average means for your customers
The likely next step is general average. This is an old rule of sea law. When a ship’s master or owner spends money or sacrifices cargo to save the voyage — salvage fees, towing, firefighting — every party with a stake in the voyage shares that cost. That includes the owners of cargo that came through unharmed.
In practice, cargo owners get a letter. Before their surviving goods are released, they must post security. That usually means a general average guarantee from their insurer, or a cash deposit if they have no cover. A separate salvage security is often required too, to cover the salvor’s reward.
A useful guide is an earlier fire on a Hapag-Lloyd ship. The Yantian Express, a 7,500 TEU vessel, caught fire on 3 January 2019 off Canada’s east coast. By 28 January, gCaptain reported that Hapag-Lloyd had declared general average. Its customer advisory said: “Cargo interests (or their insurance companies) should plan to contact the average adjusters directly once they are appointed.” Average adjusters are the specialists who work out each party’s share.
The bill was heavy. The Maritime Executive reported in May 2019 that the salvage guarantee covered cargo owners’ liability up to 32.5% of the CIF value of the cargo (cost, insurance and freight). Uninsured cargo had to post a general average cash deposit of 28% of its value. All told, deposits topped 60% of cargo value, though some might be refunded later. Four months after the fire, ONE said security had “still not been posted for about one third” of the surviving containers. Those boxes sat waiting.
What forwarders should do now
Our view: assume general average will come, and act before the letter arrives.
- Find every booking on board. Check house bills across all the AS2 discharge ports, not just Santos.
- Tell each customer to notify their cargo insurer now, in writing. Late notice can complicate a claim.
- Find out who is uninsured. These shippers face the biggest shock. A cash deposit at Yantian Express levels could be a quarter or more of their cargo value, on top of the loss itself.
- Gather the papers: commercial invoices, packing lists, bills of lading and proof of value. Adjusters will ask for them.
- Rebook replacement stock. Goods meant for shelves in Brazil, Uruguay and Argentina before Christmas will need a new sailing. Prensa Mercosur also reported that a rate increase of US$1,000 per container on Asia to East Coast South America had been in effect since 15 October, so replacement freight may cost more than the original booking.
- Warn customers about time. A ship that is still burning has to be put out, towed to a port, unloaded and surveyed. Yantian Express went to Freeport, Bahamas, and was still waiting to sail on months later.
There is also a selling point here. Many small shippers skip cargo insurance to save a few dollars. A live case like this is the clearest argument a forwarder will get for offering all-risks cover on every shipment.
What happens next
The carriers have not yet declared general average. Prensa Mercosur called it a possible outcome. We think it is close to certain. The salvage effort alone, with a SMIT team on a ship in the middle of the ocean for weeks, will run up costs that owners will want to share.
There is a second risk for the cargo owners whose goods do survive. If most of the cargo is lost, the costs of the rescue will be shared across a smaller pool of saved value. Our view is that this could make each surviving box’s share larger than usual. We cannot yet put a figure on it, and nobody can until the ship is in port and surveyed.
Our prediction: general average will be declared on the Espirito Santo Express by 15 December 2026, with salvage security demanded at the same time. We expect combined security requests for uninsured cargo to be in the same range as Yantian Express — above 50% of cargo value — and we expect fewer than half the surviving boxes on board to be delivered to their owners before the end of February 2027.
Sources
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