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We recently informed Members about the Maersk Honan so this seems an opportune time to re-publish information on this subject as part of on-going advice to BIFA members on such legal matters that may arise.
General Average is best described as an ancient unwritten law of marine insurance. It is a process whereby the parties whose interests have been sacrificed or who have incurred extra expense, are recompensed by the contribution of those whose interests have been saved. A simple example would be where to save a ship and her crew a fire is put out which ruins half the cargo, all owners of cargo aboard will share the costs incurred to save the venture.
So a General Average has been declared and you have been asked for an indemnity or a deposit. What should you do?
Any standard marine policy will include General Average losses so if the goods have been insured the importer should obtain a General Average guarantee from the insurers.
If no insurance has been organised then a cash deposit will be needed.
Whatever the position your first action upon receiving notification that a General Average has been declared for a vessel is to give immediate notice to the importer. The appointed average adjusters will need to be in possession of completed guarantees and bond forms or cash deposit before release of cargo so it is vital that the importer takes immediate action.
Finally remember that if you have incorporated the BIFA Standard Trading Conditions into your contract that there is an indemnity for you concerning General Average in Clause 22.
TAPA’s Incident Information Service released data showing a 10.3 percent rise in recorded cargo crimes in the region in 2017 – 2,880 incidents with a total loss exceeding EUR105 million.
TAPA recorded a 16.6 percent increase in the number of Facility Security Requirements (FSR) certifications, and a 41.5 percent growth in companies with Trucking Security Requirements (TSR) certifications. At the end of 2017, there were 645 FSR locations in the EMEA region and 126 companies meeting the TSR security standards.
TAPA EMEA’s Standards Lead, Mark Gruentjes, added: “The number of TAPA FSR and TSR certifications in the EMEA region is now higher than at any time in our 20-year history.
“More companies are recognising the value of operating TAPA-approved facilities and trucking services to combat crime. The increase in uptake is also due to more manufacturers requiring their logistics service providers to meet the requirements of TAPA Security Standards.”
Another factor contributing towards the increase is TAPA’s ‘STEP UP, STAND OUT’ campaign, which was launched two years ago. Since the programme’s start, FSR certifications have increased by 46.6 percent and TSR certifications by 85.3 percent.
In a bid to continue minimising cargo losses from the supply chain, TAPA EMEA will – later this year – initiate a new Parking Security Requirements (PSR) security standard to help build a network of secure parking places for trucks – especially in Europe.
TAPA reported that in 2017, 89.9 percent of the recorded losses occurred when trucks stopped in unsecured parking locations.
Maersk declared General Average (GA) on 9 March and appointed Liverpool-based average adjuster Richards Hogg Lindley to collect the necessary GA security. Maersk confirm that cargo owners have been advised, including 2M partner MSC, of its decision to declare GA.
MSC have requested its customers to contact their insurance company “so that your cargo can be released without delay”, adding: “We have not received any reliable information regarding the condition of your cargo, but we will be sure to inform you after we are notified”.
According to the Indian coastguard pictures, hundreds of containers in the fore section of the Ultra Large Container Vessel (ULCV) would seem to be a total loss, but boxes stowed behind the superstructure and in the aft section appear intact. Also, it should be noted that at the time of reporting no port has stated that it will accept the damaged vessel.
The research is part of the British Ports Association’s ‘Port Futures’ programme and was undertaken by Moffatt & Nichol. It captures significant schemes all over the UK and highlights how ports in all parts of the UK are investing in new facilities to foster growth in the UK market. You can read the report here.
Welcoming the report, Mark Simmonds, the British Ports Association’s Policy Manager and BPA Port Futures programme coordinator said:
“Ports are doing their bit but we rely on Government to ensure that road and rail connections from the port gate are fit for purpose. The terrestrial and marine planning and consenting process is also cumbersome and costly and often holds back or even prevents some sustainable port development. We hope that this report helps Government to develop an accurate picture of the investment that industry is making when developing its policies and making its own investment decisions regarding infrastructure”
“This research demonstrates that UK ports are investing in new infrastructure to keep goods and people moving as efficiently as possible. The UK ports industry operates in a competitive and commercial environment, independently of Government, so this significant investment is at no cost to the taxpayer.”
The research was carried out by Joseph Collins, of Moffatt & Nichol. Commenting on the report, Joseph said:
“This report focusses on developments which have been announced in the press in the last 12months and provides a snapshot of shows the potential scale of UK ports’ investment in infrastructure. and Despite there being no guarantee that all of these projects will be fully realised, with greater engagement between key stakeholders such as Government, the Ports, Investors and Statutory Bodies, the realisation of these developments has the best chance of success. It’s also likely that there are a many more privately financed infrastructure projects planned or underway all around the country, which haven’t been discussed in public yet. Together, these projects help ensure that the 95% of UK trade that moves through our ports continues to do so as efficiently as possible.”
Moffatt & Nichol undertook the assessment using publicly sourced data taken from the last 12months.
The British Ports Association will be writing to the Infrastructure Projects Authority to ensure that officials have a clear picture of industry investment, highlighting significant projects such as Aberdeen’s £350m new ‘south harbour’ project and the Port of Tyne’s £38m investment in in support of an overall £300m development of a new biomass plant. There are over a dozen other significant port projects listed in the research. These projects were not included in the most recent ‘pipeline’ report from the Infrastructure and Projects Authority, but demonstrate great optimism in infrastructure development and growth in the port sector.
The British Ports Association will also be working with its wide range of port members and will be keeping the list of investment up to date as new projects are announced.
Source: British Ports Association
The container shipping industry is “near end game for consolidation among major carriers,” but perhaps as many as 30 percent of the 100 largest regional or niche carriers may disappear in the next five years due to mergers and acquisitions.
The consultancy firm also forecast that while there may be an upturn in freight rates this year and in 2019 as a result of tightening capacity, a downturn in the industry in 2020 seems likely as additional capacity enters the world fleet.
Container shipping is dominated by seven global “super-carriers,” which include Maersk Line; Mediterranean Shipping Co (MSC): CMA CGM; COSCO, Hapag-Lloyd; the Ocean Network Express (ONE); and Evergreen Line. These carriers have arranged themselves into three large alliances along with Yang Ming and Hyundai Merchant Marine (HMM).
With mergers among the largest carriers expected to end soon, consolidation among smaller carriers – where 15 of the top 50 carriers have disappeared in the past five years – is expected to rise.
Seaintelligence Consulting’s ceo, Lars Jensen reported that many niche carriers are increasing the size of vessels they are operating. While that may make them more efficient, they are bringing in too much capacity and “there is not enough room for all of them to play the scale game.”
From reports received from BIFA Members this week, there seems to have been an escalation of Clandestine activity and attacks on drivers in the Dunkirk / Calais areas.
Referring to one specific incident, the member reported that their driver in the Dunkirk area was attacked with stones and boulders. The driver reported that at least three/four other vehicles in front of him had their windows smashed.
BIFA is led to understand that police did attend the scene but arrived after the situation had calmed down. BIFA has also had reports of increased migrant related attacks in Belgium, specifically in and around the Brussels area.
Maersk Line said this morning the ship was “still on fire” and the situation was “critical”.
The vessel (pictured above on its maiden voyage) was on a loop of Maersk Line and MSC’s 2M Asia-West Mediterranean service carrying 7,860 containers.
According to Maersk, the fire on the 2017-build vessel was first reported at 3.20pm yesterday in the Arabian Sea, with the ship en route from Singapore to Suez.
The carrier said the crew had sent out a distress signal after firefighting efforts were unsuccessful.
The Indian coastguard service swiftly responded and said that MRCC Mumbai coordinated the immediate rescue of 23 out of 27 crew through merchant vessels in the area.”
Soren Toft, Maersk’s chief operating officer, said: “We received the news of Maersk Honam and the four missing crew members with the deepest regret and are now doing our upmost to continue ongoing search and rescue operations.” said
Maersk said the cause of the fire was currently unknown, but it is likely to have emanated from a container of misdeclared cargo.
The Maersk Honam is the biggest containership so far to have been the subject of a serious fire, but the industry has suffered a number of such incidents, including the 6,750 teu MSC Flaminia which in July 2012 claimed the lives of three crew members.
And as containerships have almost trebled in size in the past 20 years, insurers have become increasingly concerned at the risk from rogue containers.
Indeed, such is the limited transparency of the container industry that nobody, including shipping lines and the masters of vessels, knows for sure what has actually been loaded into the millions of boxes being transported around the world every year.
Moreover, speaking to The Loadstar recently, TT Club risk management director Peregrine Storrs-Fox said that beside the serious risk of the non-declaration of hazardous cargo, there was a secondary threat that had been identified.
“Counterfeiting is adding further risk, with issues surrounding composition, declaration and packaging of cargo,” he said.
And of course, how to deal with a fire in a container buried deep in the hold of an ultra-large container vessel (ULCV) is a concern that has been voiced many times in the past few years by the International Union of Marine Insurance (IUMI).
Noting that containerships “have changed quite drastically over the past few years”, IUMI has flagged up the increased difficulty of fighting fires on ULCVs. It said that as opposed to other shipping sectors, CO2 cannot be used to fight fires on container vessels as there is no direct access to the cargo.
“Firefighting operations on container vessels are limited to allowing the containers to burn out in a controlled manner in such a way that the fire cannot spread further,” said IUMI.
“This approach is still correct and reasonable, but in view of the rapid pace of development towards ever-larger ships, new technical solutions are also required.” said IUMI.
The union has called for further dialogue with the IMO, classification societies, shipbuilders and shipping lines “to further improve firefighting capabilities onboard containerships”.
Source: The Loadstar