The online supply chain publication, Loadstar, recently wrote about the need for shippers to ensure that their cargo was adequately insured, and quoted the catastrophic mid-Atlantic fire on the Yantian Express vessel in January.
The blaze, which broke out while the vessel was en route to Halifax, Canada, destroyed 202 containers and damaged another 460 that were eventually discharged at Freeport in the Bahamas, with the casualty being subject to General Average (GA).
Under the maritime law of GA, all stakeholders in the voyage (including cargo owners) share the cost of the vessel salvage and other associated expenses.
Shippers that had insured their goods simply referred the GA adjustors to their insurance company for security guarantees, enabling goods to be released for relay to the original destination.
However, shippers with uninsured cargo were required to deposit a GA security of approximately 60% of the CFR value (the cost of the cargo plus sea freight charges) before containers could be released.
The financial implications for shippers with uninsured cargo were extremely serious, not only due to the GA expense, but because the whole process can potentially take several years, which includes security bond refunds.
The GA bond process for the Yantian Express took several months to complete, which was blamed on the number of shippers with uninsured cargo who were unwilling or unable to pay the GA security charge and thus remove the lien from the cargo.
If you would like any assistance with Insurance, either on a shipment by shipment basis, or via an annual goods in transit policy, please contact your local MGL representative and we will be happy to assist you.