As the investigation begins into the grounding of the Ever Given in the Suez Canal, the vessel’s Japanese owner, Shoe Kisen, has declared the vessel to be a general average.
In the case of general average the York Antwerp Rules state:
‘There is an act of general average when some extraordinary sacrifice or expense has been intentionally and reasonably made or incurred for the common safety, for the purpose of preserving from peril the property engaged in a maritime expedition’.”
And a circular from Evergreen, confirms that Shoe Kisen has this morning appointed Richard Hogg Lindley as adjuster.
For the vessel, now anchored in the Bitter Lakes area to undergo technical inspections, a possible departure date to discharge ports has not yet been set.
And while no cargo damage has been reported, and that of the vessel appeared to be minimal, the cost of the salvage operation, which ultimately required 11 tugs and two dredgers, as well as possible compensation claims by various interests, such as the Suez Canal Authority or the shipping companies caught in the jam, could amount to a considerable sum.
In addition, it is unclear whether there will be a separate salvage claim from the ship’s salvors.
Although the backlog of vessels waiting to transit Suez is expected to be cleared in the next few days, shippers and forwarders with cargo on the Ever Given may have to wait a long time until it is cleared.
The problem for cargo interests, according to insurance sources, is the likelihood that the cost of the incident to their owners will take some time to determine if it involves claims from other parties, meaning that adjusters will still be unable to fix the level of the overall average and salvage guarantees.
The last time Gross Average was declared was following the 2018 fire on board the Maersk Honam. After declaring GA, the adjuster set the salvage guarantee at 42.5% of the cargo value and 11.5% as an AG deposit, this meant that a shipper with a $100,000 cargo needed to pay a combined deposit of $54,000 to get their cargo released.
This makes shippers with unsecured cargo very vulnerable to losing it, as the owner can hold the goods under lien until the deposit is sealed. Shippers with insured cargo will have those deposits covered by their insurers.
According to speakers at a recent webinar on container claims, organized by the London Shipping Law Centre, GAs are only declared in incidents where extraordinary losses have occurred, the general rule being a loss of more than £10 million on a vessel of 15,000 TEU or more.