Declare general average

As the aftermath of the Baltimore Bridge collapse continues to unfold, it is increasingly likely that the owner of the container ship "DALI" will declare "general average"...

It is reported that attorneys for Grace Ocean, the owner of the DALI ship, and Synergy, the operator, have submitted a petition to the District Court of Maryland, claiming that they are not responsible for the accident, and stating that if the ship owner and operator should still be held responsible, The amount of compensation should also be limited.

"The shipowner stated that if the court finds that the shipowner and/or cooperating companies are liable, such liability will be limited to the value of the vessel and pending freight charges associated with the voyage."

Grace Ocean and Synergy want damages capped at $43.67 million, based on a $42.5 million valuation of the DALI round and $1.17 million in unpaid freight.

While the ship's owners and operators are working to set a cap on potential liability, they stress that the accident is not attributable to the ship - "the injuries and deaths were not due to the petitioner, the vessel or any individual for whose actions the petitioner may be responsible" or any fault or negligence of the entity.”

In this regard, insurance claims company "WK Webster" pointed out: "Based on the initial report, this incident is very likely to trigger a declaration of general average. After further review and evaluation, given that the cost to be paid is too large, we now believe that the declaration General average is more likely.”

A declaration of general average is highly likely

Last Tuesday, the "DALI" container ship with a capacity of up to 9,000TEU unfortunately collapsed the famous "Francis Scott Key" Bridge, causing the channel into the port to be forced to close, and both the ship and the cargo suffered serious damage.

Reuters reported that Marcos Alvarez, managing director of DBRS Morningstar Global Insurance Ratings, said the accident "could result in insurance losses totaling between $2 billion and $4 billion."

Maritime claims adviser WK Webster said: "Following further review it is now more likely that a declaration of general average will be made."

General average is a basic principle in the maritime field, that is, during maritime navigation, all relevant parties should share the losses caused by common dangerous accidents. The share paid by the shipper is related to the share of the cargo, and shipowners, managers and charterers will also bear part of the responsibility.

Patrizia Kern, chief insurance officer at insurance provider Breeze, said it was one of the most complex procedures in insurance. When faced with such a situation, insurance companies need to accurately calculate the value of all cargo on board the ship in order to reasonably determine the amount each shipper should pay.

"The biggest problem is determining the value of the goods because we don't know the specific type of goods loaded in each container." She added that historical data shows that this process usually takes four to five years.

Insurance claims company "WK Webster" believes that the reason for the possible declaration of general average this time is the scale of the disaster.

"Given the significant costs involved in extricating the vessel from its current position and bringing it to safety, the likelihood of a declaration of general average has now increased significantly," the company said.

"All cargo on board will inevitably be subject to significant delays, but also containers on shore awaiting shipment, as inbound vessels are now unable to reach ports, so cargo may need to be diverted to other ports before shipment. In this case , any cargo that is temperature or time sensitive could result in losses."

Despite several high-profile general casualties in recent years, casualties declaring general average are still rare in the shipping industry and many shippers are unaware of them, let alone insured.

“Every time general average is declared, it reveals how many people are not insured,” Kern said. “A large amount of cargo on board ships is uninsured because these shippers mistakenly believe that the freight forwarder or shipping company will insure them. "

While the freight forwarder or carrier may have some coverage for the cargo under their Standard Trading Conditions (STC), these only cover the shipping costs per kilogram of the cargo and not the actual value of the cargo, for which these cargo owners will be left with huge compensation. cost.

In fact, insurance claims company "WK Webster" has warned its clients: "It may be some time before the incident is resolved and the ship is safely towed from its current position. After that, detailed inspections of the ship and cargo are also expected." It must be done.”

In addition, general average charges may also be used to pay for bridge reconstruction and related costs, which undoubtedly adds to the overall financial burden. Kern concluded: "Such a claim is undoubtedly the result of multiple unfortunate circumstances, and ultimately someone will have to bear a heavy price."

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