Over the past two months, shippers, carriers and insurers have been rocked by two major losses on the transpacific caused by severe storms at sea. When cargo is lost at sea, marine cargo insurance protects the cargo owner from exposure to general average claims and ensures they are made whole in the event of a partial or total loss.
During severe weather on the night of November 30th, the 14,00 TEU ONE Apus was approximately 1,600 nautical miles northwest of Hawaii when it lost more than 1,800 containers at sea. The ship returned to Kobe, Japan rather than continuing on to the US West Coast. Because of the damage and the way the stacks were leaning, surveyors anticipate it will still be a number of weeks before the ship is fully unloaded.
Just this week, the Maersk Essen was also stricken by a storm at sea, losing 750 containers overboard. The Essen, rather than continuing to Los Angeles has diverted to Mexico, planning to call APM Terminals in Lazaro Cardenas instead on or about January 29th.
In both cases, the losses are not the carrier’s fault because of prevailing admiralty laws and will be borne by all cargo interests on the vessel.
When incidents like this happen, carriers declare a condition called General Average, defined by Mirriam-Webster’s dictionary as, “a loss that arises from the voluntary sacrifice of part of a ship or cargo to save the residue of the ship or cargo or from extraordinary expenses incurred in protecting the interests involved under pressure of a common risk and that is shared proportionally by all parties concerned.”
Carrier liability is limited and determined by the Terms and Conditions (T&C) on the back of the ocean bill of lading. In most cases, carriers limit their liability to $500 per declared package. This means that a shipper with 20 supersacks of sand, for instance, would be at most able to collect $10,000. Further, shippers who did not lose cargo in the loss will be required to post a cash bond to help cover all the losses and potential repairs to the vessel.
The best way shippers can insulate themselves from exposure to losses while goods are in transit is through cargo insurance. Alba offers cargo insurance through our open marine cargo policy that covers the goods while in transit across all modes including sea, air, rail and road between a named origin and destination.
For more information including rate quotes, inclusions and exclusions and how to bind coverage, contact your Alba Wheels Up representative today.
- Posted by Joe DeSilvetri
- On January 22, 2021
- 0 Comments