A fire aboard a car carrier ship that has put hundreds of millions of dollars of luxury vehicles at risk highlights the “precariousness of global supply chains”.
The total amount of goods on board the Felicity Ace, which caught fire on 16 February off Portugal’s Azores Islands, is estimated to be worth $438m, with cars and goods vehicles estimated to make up $401m of that figure, according to insurance analysts Russell Group.
An internal email from Volkswagen US reported in German media showed the ship was carrying 3,965 vehicles of the VW, Porsche, Audi, and Lamborghini brands. Porsche confirmed that 1,100 of its cars were on board the ship.
The fire is expected to generate at least $155m in expected losses for Volkswagen, which owns Porsche, Audi, and Lamborghini, said Russell Group.
Suki Basi, Russell Group MD, said: “These figures showed once again the precariousness of global supply chains. The incident comes at a bad time for global carmakers who are in the middle of a supply chain crisis sourcing semiconductors, resulting in new delays for new cars. An event like this will not do a great deal in instilling trust with consumers.
He said Volkswagen had “a significant exposure to this event, running into the millions”.
“With so much uncertainty in the global trade landscape, our view has always has been those corporate entities and their insurers will need good near real-time data combined with a strong analytical interpretation of those insights to ensure that they navigate a way through potential disruption.”
Mit Gorilovskiy, CEO at supply chain data firm Moeco, said: “It is unclear how much of the 650-foot, 60,000-ton cargo ship’s inventory was lost in the fire. This will be incredibly distressing and frustrating not only for customers waiting for car deliveries but also for the car manufacturers who are currently unaware of the condition of each vehicle on board.
“The incident only underlines the importance of tracking solutions which provide end-to-end visibility and condition monitoring for shipments. By using IoT-based systems, logistics companies can collect information about key shipment metrics including location, shocks, temperature, humidity, and light at every stage of the cargo’s journey. This enables them to reduce the cost of operations, manage risk better and increase revenue per shipment.”
MOL Ship Management, owners of the Felicity Ace, confirmed two tugboats had arrived at the scene from Gibraltar and were spraying the ship with water. The tugboats will also help to control the position of the car carrier before the initial salvage team will be able to carry out inspections.
MOL said there currently is no oil leakage coming from the ship, and it remains “stable”.
It said: “When conditions are safe the salvage team will board the Felicity Ace for an initial assessment of future salvage plans.”
Two salvage ships with additional firefighting and towing capability are due to arrive on Wednesday (23 February) and Friday (26 February).
The Felicity Ace was travelling from Emden, Germany – where Volkswagen has a large factory – to Davisville in Rhode Island, USA.
The ship's 22 crew members have been safely evacuated but the fire has continued to burn for a week, fuelled by lithium-ion batteries inside electric vehicles on board.
Volkswagen has been approached from comment.