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PCB Freight Management’s logistics blog is a valuable resource for shippers, carriers, industry professionals and other supply chain partners navigating global trade. With the many regulations governing trade, it aims to help readers lower their freight costs, increase shipping efficiencies, address industry issues and manage their logistics activities. Several leading experts serve as blog columnists covering topics from freight, compliance and transportation to 3PL trends and warehousing.

Why Cargo Insurance Could Save You Against General Average Loss

Container Ship


Anytime you deal with international freight, you assess the risks and make important decisions to keep you and your cargo safe. Which carrier do you choose? Will there be delays? Which Incoterms® is best? Do you obtain cargo insurance? Does my cargo insurance cover General Average? These decisions all carry risks, some more costly than others. In this blog, you will take a look at shipping insurance and how shipping insurance can protect you against General Average loss. On March 6 2018, tragedy struck a Maersk Line container ship. Dangerous cargo started a fire onboard and five members of the crew passed away. To compound this, less than 10 days later another fire broke out in a container on a smaller Maersk container ship.

General Average Loss Cases

The world’s largest container shipping company has had two fires on board their vessels in the past two weeks. This has become a trend that has shippers looking to mitigate the risk of placing their goods on a ship without cargo insurance. The scale of the problem is what’s frightening. Fires are becoming more and more commonplace on container ships. Last month there was a container ship fire off the coast of British Columbia, Canada. Another fire broke out in April of last year off the coast of Sri Lanka. February of last year there was another fire off the coast of South Africa due to hazardous material. Insurance companies are expecting hundreds of millions of dollars worth of claims.

What is General Average and Who Can Claim General Average?

On the recent container ship fire Maersk has declared General Average. The shipping line appoints General Average to cover the cost of the damage to the vessel. It is a process where the party who incurs a loss or extra expense (the shipping line) is re-compensated by the contribution of those parties interests that have been saved (the other companies who have cargo on the vessel).

When is General Average Declared?

The shipping line will asses the damage and arrive at a total cost of repair or loss. They will then allocate this cost among the companies which had cargo on the vessel, regardless of whether their goods caused the damage or not. If no insurance has been organized, then a cash deposit will be needed before your shipment will be released by the shipping line. To safeguard yourself from loss it is important to set yourself up with an all risks policy. Some shippers do not realize that not all policies cover General Average. This can be especially painful to a shipper who thinks their policy covers them, only to discover they do not have an all risks policy that will cover General Average. PCB Freight provides shippers solutions by only offering AAA rated insurers that can guarantee you will be covered for all policies, including General Average. This shows why it is important for shippers to insure their freight. Companies throughout the supply chain work hard to make sure your goods arrive safely, but things happen. You never know how, why, or when an unforeseen circumstance could put you on the hook for General Average. Save yourself the risk and make sure you have the proper international insurance to save you from disaster. It could save your business. To have PCB Freight Management help you with your next shipment, including cargo insurance, please click on the "request a quote" button below to get an experienced, trusted, expert on your side.
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