A Refresher on General Average and Why Shippers Should be Knowledgeable and Prepared

 

The General Average topic recently resurfaced in the news when the cargo ship “ONE Apus” suffered the second most significant cargo loss in history. The 14,000 TEU vessel experienced a massive container stack collapse en route to Long Beach from Hawaii on Nov. 30, 2020, with expected damages and losses to exceed $200 million.

Now is a good time for a refresher on General Average and what it means for shippers.

What is General Average?

The York-Antwerp agreements of 1890 established the General Average rule. In days when triple-masted sailing ships carried cargo, a ship’s crew might physically toss cargo overboard to lighten a ship’s load to avoid disaster.

General Average applies liability for the loss proportionally to all shippers according to the percentage of the overall ship’s capacity. The idea was to avoid the need to decide, in the heat of the moment, whose cargo should stay or go. The York-Antwerp Rules of 1890 were amended in 1994, providing uniform rules for International shipments, parties’ rights, and obligations.

How Will General Average Affect My Shipments?

General Average declaration on a voyage means you are responsible for your prorated portion of the ship’s loss –even if your cargo is undamaged.

All-Risk Marine Insurance covers General Average

If you are insured, you’re covered. If not, you will need to post a bond before receiving your shipment.

After General Average is Declared

The decision to declare General Average ultimately resides with the captain. Some examples of incidents that may cause loss of cargo include:

• Fire
• Mechanical engine failure
• Ship running aground
• Piracy/ransom
• Caught in a storm and the search for safe harbor

Shippers have a lot on the line in the event of cargo loss.

Cargo Insurance is Essential

Cargo insurance protects your shipments and covers the full cost of loss regardless of the carrier liability. Shippers need to weigh the low cost of insurance with the potential losses of a General Average declaration.

Dedola Provides the Best Cargo Insurance

At Dedola, we use the safest shipping providers possible and provide reliable insurance to give you full peace of mind. Our insurance options include all-risk and specialty coverage for various risks events, including:

• Weather-related incidents
• Malicious damage and theft
• Explosion and fire
• Sinking and stranding
• Strikes, riots, and civil commotions

Cargo insurance is an excellent value that protects your business from catastrophic losses. We strongly recommend cargo insurance, even though it’s optional, no matter how near or far your destination is.  Our experts can help you pick the right cargo insurance plan for you.

The Bottom Line

Over the years, DGL has served over 100 industries, 20,000 customers and has transported over 1 million full container loads.

DGL’s mission is to optimize your supply chain. We provide industry-leading customer service and give you access to unparalleled logistics expertise so you can focus on leveling up your business.

You deserve a reliable, customer-focused logistics provider that is actively looking out for your best interests. Switch to DGL and discover the Dedola Difference

For a free consultation to discuss your freight forwarding needs, call 800-516-3099 today.

Read our last Blog: Common Problems Shippers and Forwarders Experience Uncovered and Explained by Dedola