The vessel’s owner, Shoe Kisen, declared General Average last week, ensuring the Ever Given’s cargo owners will pay an amount of the costs associated with rescuing the vessel before their goods will be released.
The investigation into the grounding of the Ever Given in the Suez Canal has begun, and shippers with cargo onboard have received some expected (and expensive) news- General Average has been declared.
The law of General Average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. Today, when General Average is declared, not only are ocean carriers not liable for loss or damage to cargo, but every cargo owner with goods on that ship becomes fiscally responsible for the ship itself.
In the Ever Given’s situation, the vessel required 11 tugs and two dredgers in a rescue operation that lasted six days. While there is no reported damage to the cargo onboard the vessel, the cost of the rescue and the potential compensation claims to shipping companies and the Suez Canal Authority will no doubt mean a sizeable bill for shippers.
The last time General Average was declared was following the 2018 fire on board the Maersk Honam. In this scenario, the adjustor fixed the salvage security at 42.5% of cargo value and 11.5% as a General Average deposit. A shipper with a cargo worth $100,000 onboard had to pay a deposit of $54,000 in order to get its shipment released.
The potential financial hardship brought on by General Average makes it clear that having the right insurance plan isn’t just smart- it’s essential.
TLR offers a free risk assessment of your current cargo insurance plan. We will look for any gaps in coverage and help you understand your policy so you can rest assured your cargo is protected and potential disruptions in your supply chain are minimized. Our goal is to make sure you are covered from warehouse to warehouse, giving you the confidence that your cargo is safe, secure, and free from any liability.
To learn more, email BD@Shiptlr.com.