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Cargo owners may face bill for Baltimore bridge collision

Shippers with cargo aboard the Dali face significant financial risks if, as looks increasingly likely, the shipowner declares “general average” due to the huge losses caused by the accident.

General average refers to a legal principle in maritime law under which all stakeholders in a voyage, including the shipowners, operators and cargo owners, proportionately share the losses caused by a voluntary sacrifice of part of a ship or cargo to save the whole in an emergency.

Incidents declaring general average are not common and many cargo owners may not be aware of it and much of the cargo on board may not be insured against it, or even insured at all).

The ship is managed by Synergy Marine Group and owned by Singapore shipowner Grace Ocean Private, and because it is only leased by Maersk, the shipowner bears responsibility.

And despite the Dali’s owners denying liability and insisting that the damage was not due to any fault, neglect, or want of care on their part, there is a good chance they will be liable and cargo owners may be liable too under general average.

In practice, most of the bill will ultimately fall within the marine insurance and indemnity field and the largest liability will be the rebuilding of the bridge, with several parties putting the cost as high as US$600 million.

General Average is one of the most complex procedures in insurance, because insurers will need to calculate the total value of all the goods onboard the Dali to work out the amount owed by each shipper.

With about 4,700 laden containers aboard the Dali at the time of the collision, establishing the value of each container is complex and the process may take several years, with consignees needing to provide security for their cargo’s proportion of the General Average.

Adding another level of complexity is the fact that a large proportion of the cargo aboard is likely to be uninsured, as too many shippers either assume it’s already in place, or covered by their freight forwarders or the shipping line.

In the event of loss or damage during transit your goods are not insured unless specifically advised in writing and will, at best, only be subject to the carriers’ limited liability, which is why we always recommend our customers obtain relevant cargo insurance cover.

Our All Risks policy is the most simple, cost-effective and comprehensive way to cover the full value of your shipments door-to-door, by any mode, for physical loss and damage, as well as other perils, including general average.

EMAIL Colin Redman now to learn more and see how our insurance can protect your supply chain, and solvency.