Zim Kingston the container ship bound for Vancouver, Canada, that lost 100 containers overboard, has declared General Average.
What is General Average and what does it mean for your cargo?
General Average is a principle of maritime law that essentially establishes that all sea cargo stakeholders (owner, shipper, etc.) evenly share any damage or losses that may occur as a result of voluntary sacrifice of part of the vessel or cargo to save the whole in an emergency. The basis behind this principle is that a party who has suffered extreme financial loss in order to save property belonging to others has the right to be compensated for such loss. The origins of General Average date back to the York-Antwerp Rules of 1890, but have obviously been modified numerous times since to adapt to modern supply chain conditions, most recently in 2004.
The rule states “There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure.” (York-Antwerp Rules, 2016 update) From this, General Average is calculated, and each party who suffered a loss will be credited for the value of said loss, and will be charged a percentage of their own interests’ value to pay for shared costs and others’ loss of interests.
Once a vessel owner declares General Average, a neutral third-party (the General Average adjuster) appointed by the vessel owner, will determine the applicable costs owed to and by each stakeholder involved in the vessel voyage. The adjuster will determine which losses qualify for General Average, total costs of the incident, as well as the amount each party owes, etc.
After the maritime incident (like the recent news of the Ever Given), stakeholders with cargo/cargoes aboard the ship will need to provide General Average guarantees. Any affected cargo will not be released to the cargo owner until the General Average guarantee has been provided.
Cargo owners carrying cargo insurance should notify their Underwriters immediately so the guarantee is paid by the Insurance Company or will be faced with making payment on their own.
General Average Adjustors message:
m.v. "ZIM KINGSTON" - October 2021 Container stack collapse, containers overboard and fire off Vancouver
Please note that the m.v. “ZIM KINGSTON” was on a laden voyage with containerized cargo from the port of Kaohsiung, Taiwan, several ports in China, and Busan, South Korea to Vancouver, Canada when she lost several containers overboard during heavy weather. Preliminary information is that about 1.965 containers were stowed on board at the time of the incident. A fire broke out on deck on 23rd October 2021 during the voyage to Vancouver. Professional Salvors, Resolve Marine, have been contracted on the basis of a BIMCO Wreckhire 2010 contract to extinguish the fire and deal with the casualty situation. Rather substantial damages to cargo/containers as a result of the fire and contact with water are anticipated. The vessel is presently anchored at Constance Bank, Victoria, Canada.
In view of extraordinary expenditure incurred/to be incurred and sacrifice damages to property, the Shipowners have declared General Average and Albatross Adjusters Limited have been appointed as Average Adjusters. The Adjusters have also been instructed to arrange for collection of securities from parties concerned in cargo and containers.
At the port of Vancouver, the cargo and containers will only be released / delivered to Receivers once satisfactory General Average security, as well as supporting shipping documents, have been provided to the full satisfaction of Shipowners.
Credit DBP international for General Average explanation.