Declaration of General Average leaves shippers with uninsured cargo vulnerable to losing it

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Following the successful re-floating of the Ever Given after it ran aground in the Suez Canal, causing blockage and severe disruptions, the vessels owner has reportedly declared General Average, and the vessel was anchored at the Bitter Lakes Area for technical inspections.

Whilst the reopening of the Suez Canal is welcome news for international trade, it is expected that shippers with cargo aboard the Ever Given will be in for lengthy waits for their containers to be released. The declaration of General Average implies an obligation for shippers to pay a bond on cargo interests before containers can be released from the ship, and the exact costs are expected to take some time to determine. Shippers without appropriate insurance cover will be vulnerable to losing their cargo altogether if they do not pay the required cash bond.

General Average losses are commonly included in standard marine insurance policies, and this situation highlights the importance of ensuring that appropriate insurance cover is taken out. FIATA notes in a release the key role of freight forwarders in this situation, who are able to organise their customers transportation needs, including having the knowledge and access to organise appropriate insurance cover for their customers, and advise on claims handling procedures. For further information, one can consult FIATAs position paper on this matter.

A declaration of General Average leaves shippers with uninsured cargo vulnerable to losing it, as the owner can hold the goods under lien until the deposit is paid. Shippers with insured goods will have those deposits covered by their insurers.

The situation demonstrates the importance of having proper insurance cover, and the crucial role played by freight forwarders. As Architects of Transport, freight forwarders have the knowhow to organise their customers transportation needs. This includes having knowledge and access to organise appropriate insurance policies which cover such losses, and the ability to consult shippers on insurance cover requirements and claim handling procedures. Freight forwarders are advised to act fast to provide notice to their customers and support them in obtaining a General Average guarantee from their insurers, should a relevant insurance policy be in place, the release added.