General Average: Understanding the Hidden Risks and Costs in Maritime Shipping

What is General Average?

General average is a principle of maritime law that allows a vessel owner to force cargo owners to share the financial losses incurred when there's an incident at sea that damages the ship or cargo. The key points to understand are:

• It applies when extraordinary sacrifices or expenditures are made to preserve the vessel and cargo
• All parties involved in the voyage must contribute proportionally to cover the losses
• It can be declared even if your specific cargo was not damaged

In the case of the Ever Given, the ship's owners declared general average to cover the salvage costs and other expenses related to refloating the vessel. This meant cargo owners had to share in these costs before they could retrieve their shipments.

How General Average Works

When general average is declared, here's what typically happens:

1. An adjuster is appointed to determine the total value of the voyage (ship + all cargo)
2. The adjuster calculates each party's contribution based on the value of their interest in the voyage
3. Cargo owners must post a cash deposit or bond before their goods are released
4. The process of calculating and settling all claims can take years

For shippers, this can mean unexpected costs and significant delays in receiving cargo. In some cases, the general average contribution can even exceed the value of the goods being shipped.

Protecting Your Cargo with Insurance

At FreightAmigo, we understand how disruptive general average claims can be to your supply chain. That's why we strongly recommend comprehensive cargo insurance that includes general average coverage. With proper insurance:

• Your insurer will post the required bond or cash deposit
• You can retrieve your cargo without delay
• The insurance company handles the complex claims process
• Your cash flow is protected from unexpected general average costs

Our Digital Platform makes it easy to add cargo insurance when booking shipments. We work with top-rated insurers to offer flexible, affordable coverage options tailored to your needs.

How FreightAmigo Supports Shippers

As your logistics partner, we're committed to helping you navigate the complexities of international shipping. Our Digital Logistics Solution provides:

• Real-time shipment visibility and tracking
• Automated documentation to ensure proper insurance coverage
• Expert support to guide you through any supply chain disruptions
• Data-driven insights to optimize your logistics strategy

While we can't prevent maritime incidents, we can help you be prepared and minimize their impact on your business. Our goal is to make global logistics as seamless and hassle-free as possible.

Conclusion

General average is a complex but important concept in maritime shipping. By understanding the risks and taking proper precautions like comprehensive cargo insurance, shippers can protect themselves from unexpected costs and delays. At FreightAmigo, we're here to support you every step of the way with our innovative Digital Platform and expert logistics guidance.

Don't let hidden risks derail your supply chain. Contact us today to learn more about how our Digital Logistics Solution can help you ship with confidence.