general average and the large container ship · 2009-05-05 · general average and the large...
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GENERAL AVERAGE AND THE LARGE
CONTAINER SHIPPaul Silver - Director
Charles Taylor Adjusting & Richards Hogg Lindley1
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The story so far – a case study
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CASE STUDY
•Voyage from Asia to Europe
•8 Consortium members
•3173 Containers = 5171 TEU
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After the position had stabilised!
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GENERAL AVERAGE
• Sacrifice of ship and cargo
• Lloyds Open Form (LOF) salvage
• Port of refuge expenses
• Transshipment expenses
• Forwarding expenses
Action for the common safety
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4th April - GA declaration notice distributed to cargo.
11th - Owners provide ISU2 to salvors to enable
landed cargo to be transhipped.
17th - Berthed at Salalah.
19th - Discharge of 2249 intact containers
completed, leaving burnt out containers on
board.
20th April/ - All cargo forwarded on four transhipping
20th May vessels including damaged cargo.
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CASE STUDY
•All cargo (including Total Losses)
•1808 ocean Bills of Lading
•4436 interests (3173 Containers/5171
TEU)
•Delivered cargo:
•203 groupage containers
•403 cash deposits collected
•Sound value US$145m or
US$45,370/TEU 9
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“EMMA MAERSK” - 400
meters long, 13 000 Containers
Now and the future
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EXPOSURES
• US$1 billion cargo is possible
• Known risks for container ships (e.g mis-
declaration of cargo)
•Limitations in salvage equipment
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APL PANAMA
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EXPOSURES
• US$1 billion cargo is possible
• Known risks for container ships (e.g mis-
declaration of cargo)
•Limitations in salvage equipment
•Port facilities
•Limited dry dock repair facilities
•10-15,000 tons of bunkers on board13
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COMMERCIAL CONCERNS
Dealing with 10,000 interests:-
Property - Speed of delivery
Insurers - Aggregation of risks/cost
Salvors - Costs/time to collect
All - Rational, equitable and commercial system
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MANAGING CASUALTIES
• No easy solutions
• Status quo – pay as you go under the
LOF and general average models
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INSURANCE OPTIONS
Owners/operators pay:
- 100% of general average and salvage under
hull & machinery policy absorption clause.
- special covers supplementing h & m
absorption clause.
- special covers by charterers / slot – charterers
But in the economic climate of 2009?
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DON’T PANIC!
• Lloyd’ Open Form and General Average has worked and does work
• Collection of security can be done, but our maximum to date is 5,900 TEU
• Degree of difficulty determined by circumstances as well as size
BUT:
- marine community could consider improvements in the current system
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CUT OUT LOWER VALUED CARGO
Value all cargo - US$437mNumber of interests - 3,084
Omit < $30k interests
Value - US$421m
Interests - 1,900
Lose 1,100 interests and US$16m from fund.
On 2% they would have paid US$320,000
Remainder pay US$167 each extra. 18
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CUT OUT LOWER VALUED CARGO
(2)
• Saves some actual costs and unquantifiable
aggravation
• But at present open to attack at arbitration
• Could this be achieved through LOF
contract
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SALVORS
• Amount of LOF security
Too little - exposure for salvors
Too much - creates aggravation
- abandonment of cargo
- commercially damaging
• The values problem – how much is the cargo
worth?
• Should they be entitled to uplift of 30% within
say 30 days of first demand?20
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CONTAINER OPERATORS
Post casualty clash of interests and separate representation for consortium members.
Common contingency plans:
• Responsibility for holding/releasing cargo
• Providing ISU2
• Port of refuge costs etc.
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CONSOLIDATORS
At present
• Responsibility to provide security rests with
individual parcels undertakings on case by
case basis
Future
• Insure and pay for their customer’s salvage
liability?
(Another insurers’ opportunity)22
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GENERAL AVERAGE - THE
LARGE CONTAINER SHIP
• Increased exposures
• General average can cope
• Exercise insurance options
• Lose the low values
• Re-consider contractual background
• More planning together23
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GENERAL AVERAGE AND THE LARGE
CONTAINER SHIPPaul Silver - Director
Charles Taylor Adjusting & Richards Hogg Lindley24
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LE RENDEZ-VOUS DE L’ASSURANCE TRANSPORTS
Cannes
28th and 29th April 2009
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