When the mega-ship Ever Given ran aground in the Suez Canal in March, it blocked vessels from using this vital maritime artery for six full days. The toll this incident has taken on global trade is incalculable. Meanwhile, the Suez Canal Authority (SCA) contends that the damages it has suffered — including salvage costs, lost business, and damage to its reputation — are incalculable. Shortly after freeing the nearly fully laden ship, the SCA had the ship impounded, issuing Ever Given’s owners a $900,000,000 fine.
“An Egyptian court has ruled that the SCA has a right to arrest the vessel until it is paid,” Maritime Executive reports. “The SCA says that sum helps cover the revenue lost during the canal blockage, the cost of the rescue mission, and a fee for the damage sustained by the canal’s embankments when the ship became lodged in them.”
Sharing in the Loss
Understandably, shippers that have cargo on the Ever Given are anxious. One month later, it’s still an open question when they’ll be able to take possession of their cargo. But this may be the least of their worries — shippers may have chip in along with ship’s owners to pay that $900 million fee! This is because the ship’s owners have invoked General Average.
General Average is a provision of maritime law that holds all stakeholders—from a vessel’s owner to each individual cargo owner—proportionally liable for a loss at sea. It dates back to a time when carriers had to “jettison” cargo into the sea in order to prevent shipwrecks. Thanks to “averaging,” everyone shared the same risk whether it was their cargo that was actually lost at sea or not. Today, General Average can be invoked in a variety of situations, including fires, collisions, and in this case, grounding.
So if you happened to be one of the thousands of shippers with cargo on the Ever Given, you could be required to provide a guarantee in the form of a bond or cash before retrieving your property. Unless, that is, you had Cargo Insurance.
Covering Your Cargo Assets — and Liability
Cargo Owners’ plight with the Ever Given disaster illustrates how vital cargo insurance is. Most maritime insurance policies include coverage for General Average claims, which can exceed the value of the cargo itself. And General Average declarations occur more often than you might think. It’s only when an extraordinary newsworthy event happens, like the Ever Given, that a cargo owner might become aware of the risk.
But it shouldn’t take a mega-ship blocking the Suez Canal to make the case for Cargo Insurance. Besides General Average coverage, Cargo Insurance protects your valuable cargo from losses that occur during transport. All Risk Cargo Insurance from DB Schenker protects the full invoice value of the cargo, plus shipping costs, insurance costs, an additional 10%. Policies can be written per shipment or as “open” coverage, good for an entire year’s worth of shipments. Policies can also be customized according to your specific needs, providing you with exactly the coverage you need for the most competitive price.
Accidents happen every day. With the next supply chain disruption just waiting to happen, and with port congestion and ocean container shortages constantly creating new headaches for shippers — not to mention the risk of damage or theft — All Risk Cargo Insurance policies are truly worth their weight in gold.
To learn more about DB Schenker’s Cargo Insurance offering, please visit our website.