$102m settlement agreed in first case after MV Dali's Baltimore bridge crash
The US has settled its civil case against the owner and operator of the MV ...
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As the fallout from the tragic Baltimore bridge collapse continues, the odds are mounting that box ship Dali’s owner will declare ‘general average’ (GA), forcing cargo owners to pay for the costs of the casualty.
On Tuesday, the 9,000 teu Dali crashed into a support pylon of the Francis Scott Key Bridge, effectively blocking the entrance to the port and causing significant damage to the ship and cargo.
Marine claims consultant WK Webster said: “Having reviewed the position further, the prospect of general average being declared may now be more likely.”
GA is a maritime principle where all parties involved in a sea voyage share any losses incurred. The share a shipper will pay correlates with the share of the cargo. The shipowner, manager and charterer will also be partly liable.
Patrizia Kern, chief insurance officer at embedded cargo insurance provider Breeze, told The Loadstar: “This is one of the most complex procedures in insurance.”
Insurers will need to calculate the value of all the goods onboard the vessel to work out the amount owed by each shipper.
“The big issue is to establish the value, because you don’t know what was inside each of the containers,” Ms Kern explained. She added that, from historical data, this process can often take four to five years.
Indeed, MK Webster warned its customers: “It is likely to be some time before the casualty is secured and the vessel taken to a place of safety following which inspections may be possible.”
Despite several high-profile casualties in recent years, general average remains rare in shipping and something many shippers aren’t aware of, let alone be insured against.
“When you call general average, you see how many people aren’t insured, because everyone has to pay,” Ms Kern told The Loadstar. “There’s a large chunk of cargo on ships not insured, as they think it is covered by their freight forwarders or the shipping company.”
And while there might be some coverage by a freight forwarder or carrier under its standard trading conditions (STCs), Ms Kern explained that these often covered freight per kg, as opposed to the actual value of the goods.
MK Webster said the reason GA was likely to be called was due to the sheer scale of the disaster. It said: “General average being declared may now be more likely, given the apparent significant costs that will need to be incurred to extricate the vessel from its current position and bring it to a place of safety.
“There will inevitably be significant delays to all cargo on board, but also to containers ashore awaiting shipment where inbound vessels are now unable to reach the port, and where in consequence cargo may need to be moved to alternative ports prior to shipment. Any temperature or time sensitive cargo in this situation may result in losses.”
General average costs will also likely be used to cover the bridge reconstruction and associated costs.
“Such a claim will be an accumulation of very unfortunate circumstances, and somebody will have to pay for that,” concluded Ms Kern.
Comment on this article
Alexander George
March 29, 2024 at 12:42 pmGeneral Average happened to me once in the course of my career, about 15 years ago, when a container ship ran a ground at Norfolk, Virginia. The claim against the cargo owners should be limited to the invoice value they declared to have on board, no more. Shipper invoices have to be filed with either the freight forwarder or the shipping line when you ship-so the owners will know exactly what is on board and how much it’s worth. , They will keep your cargo in detention until the bill was paid. This is why it’s important for people to always have all- risk, marine cargo insurance , which will pay that claim. It has always floored me, those people I’ve known who’ve tried to do without because the insurance is basically very cheap . The real thing to watch is whether the ship owners limitation of liability act of 1851 can be invoked? If it can, the ship owners insurance underwriter are going to likely have to pay little. The bridge replacement cost has to be at least USD 2 billion (the new Tappan Zee Bridge cost USD 4 billion and is a double span, so take half that amount for the key bridge as an estimate). When you add in the harbor closure, shipping delays and all the other associated losses, this is going to be a multi billion dollar calculation. It will be up to five years until things are normal again.
Charles Dey
March 31, 2024 at 4:46 pmMy understanding is that General Average is only applicable where there is loss or damage resulting from a deliberate act which was committed to save the whole voyage (i.e. the ship and her cargo). A good example is cargo deliberately thrown off a ship to lighten it after grounding.
This was an accident, I can’t understand how General Average can be implemented under these circumstances. Can an expert help here please?
JOSE CASTELBLANCO
April 02, 2024 at 5:24 pmDe acuerdo con UD. Solo si se trata de un acto deliberado para salvar el buque y su carga, se puede invocar la GA. Otro caso sería y pudo haber ocurrido, si el Capitàn y el Pràctico hubieran podido deliberadamente haber encallado el buque para evitar su colisión (Alison) contra el Francis Scott.
Jesper Thomsen
April 02, 2024 at 7:51 amNo! It is very unlikely General Average will be used to cover the bridge reconstruction and associated costs. This is generally not handled by General Average, but operator/ship owner liability insurance. Liability for damage to third-party property is governed by different legal principles and international conventions.
Dong Li
December 09, 2024 at 9:52 amAssume general average was declared, in addition to US Coast Guard or other authorities’ investigations, are cargo owners and their insurers entitled to send their inspectors or surveyors to board the ship, question the ship’s crew, and collect ship’s documents? If shipowners refuse such requests, and cargo interests file court proceedings asking for an onboard inspection simply because shipowner declared general average, would the court likely grant such requests to the cargo interests and why?