March 4, 2019
General Average and Procedures
On January 25, 2019, Hapag-Lloyd formally declared General Average for the container ship MS Yantian Express due to a deck fire that spread to containers. The fire which broke out on January 3, 2019, took days to contain and damaged many of the containers onboard. The towed vessel is now in Freeport in The Bahamas where the containers will be unloaded and the damage will be accessed and costs determined. This marks the second incident within a year that a container ship fire has led to the apportionment of damage costs among a voyages cargo owners.
When General Average is Declared
A principle of maritime law, General Average occurs when a voluntary sacrifice is made to safeguard the vessel, cargo or crew from a common peril as in this case fire. If the sacrifice is successful, all parties contribute to the loss based on their cargos value whether their shipment was damaged or not. Appointed Average adjusters will access the value of each shipment on board and apply a formula that determines the financial contribution of each cargo owner.
If youre a cargo owner with shipments on board a declared General Average vessel, the likely-hood of having your cargo release timely is dependent on how soon you can post a security. The security must be in the form of a cash deposit, bank guarantee or bond. If the cargo owner has cargo insurance, the Average Guarantee is posted by the insurance company. Having cargo insurance is beneficial to cargo owners as it not only provides coverage for damaged goods but it facilitates the release of their cargo.
General Average Claim Procedures for Yantian Express
Avalon has been advised that Richards Hogg Lindley, General Average and Salvage Adjusters have been appointed as collecting agents to prepare and collect General Average and Salvage securities from each of the parties concerned in the cargo on board. They have stated that cargo will only be released upon provision of the required security.
Richards Hogg Lindley requires the following forms:
- A copy of the cargo invoice
- An Average Bond form to be completed and signed by the owners of the cargo
- An Average Guarantee form to be completed, signed or stamped by the insurance company
The Average Bond and the Average Guarantee form should be sent to the insurer along with the bill of lading and commercial invoice for any insured shipment. If you are the NVOCC or Forwarder, you should pass along any General Average paperwork to the cargo owners and advise them to contact their cargo insurers to arrange the Guarantee.
For uninsured shipments, a cash deposit will be required in place of an insurers Average Guarantee. Adjusters will advise the amount of the cash deposit required. Detailed procedures and contact information for Richards Hogg Lindley are provided in the General Average Declaration Notice. The firm also provides an FAQ to assist the parties involved.
If you are filing a claim with Avalon, documents can be emailed to our Transportation Claims Department at firstname.lastname@example.org. If you have additional questions, you can contact your local Avalon representative, a listing can be found here.