Cargo Owners Warned As General Average Invoked After Container Ship Fire

BAHAMAS – GERMANY – CANADA – As the Yantian Express inches her way to Freeport under her own power after the fire which devastated the 7,501 TEU container ship as detailed in our previous story, so a General Average has been declared by operators Hapag Lloyd, meaning certain of the losses undoubtedly incurred by some parties will be mitigated by apportioning a percentage of the costs between freight owners and their cargo insurers, and the shipping company alike.

As ever in these situations, and this is the second time in a year that a container vessel has seen such action, the ramifications for insurers and insured are likely to be extensive. In March 2018 the tragic events during fire aboard the 15,262 TEU Maersk Honam set the ball rolling for potentially ‘hundreds of millions of dollars in claims’ according to BIFA. The complexity of these situations has increased of late as the vessel sharing arrangements, such as those between Hapag Lloyd and the Ocean Network Express (ONE) means a variety of shipping companies may have contracted with shippers for the cargo affected.

As in the case of the Maersk Honam the appointed General Average and Salvage Adjusters will be Liverpool headquartered Richards Hogg Lindley, and full details of the situation can be obtained by downloading the relevant documents from the appropriate portion of the Hapag Lloyd website.

Hapag Lloyd is keen to point out that, whether cargo is insured or not, only the adjusters are in a position to clarify the matter. As is ever the case, cargo owners who wish to claim their goods when the tally is pronounced in Freeport will doubtless be asked to pay the delegated proportion of General Average costs prior to release of the freight. Doubtless most of the affected cargo will then need to be shipped to Halifax, the original destination of the Yantian Express on her ill-fated voyage.

The York Antwerp Rules which outline the details of General Average are complex to say the least. Dependant on the precise nature of the event which prompted invocation of the rules certain expenses can be passed on, in whole or in part, to those affected. The rules covering GA, as it is universally known were drawn up in 1890, subsequently seeing several updates and with the latest set of amendments in 2004.

Photo: The Yantian Express taken on January 15 from a passing US merchant ship. © Cameron Brunick, a midshipman undergoing shipboard training whilst attending the United States Merchant Marine Academy at Kings Point, New York.