Your container arrives safely after a shipboard emergency, but the shipping line won’t release it until you provide financial security.
This can happen when a vessel owner declares General Average (GA). Even if your goods are undamaged, you may have to contribute to the cost of saving the ship and its cargo.
Here’s what that means for your shipment, your insurance, and the steps you need to take.
What Is General Average in Shipping?
General Average is a maritime principle. It requires shipowners and cargo owners to share certain extraordinary losses and expenses incurred to protect a vessel and its cargo from a common danger.
For example, a container ship catches fire at sea. The crew diverts the vessel to a nearby port and arranges emergency firefighting and salvage operations. If the incident qualifies for General Average, the parties share the eligible costs according to their respective interests.
General Average covers sacrifices and expenses made to protect the voyage, not ordinary damage to individual shipments.
Why Do Cargo Owners Have to Pay?
When a qualifying emergency threatens a vessel and its cargo, the costs of protecting them may benefit everyone involved.
A cargo owner can therefore face a General Average contribution even when their container arrives intact.
The amount is not simply divided equally among containers. A General Average adjuster reviews the circumstances, determines which expenses qualify, and calculates contributions based on the applicable rules and values of the interests involved.
Generally, the final adjustment can take considerable time. Meanwhile, the shipping line may require security before releasing the cargo.
What Happens to Your Cargo After a Declaration?
A General Average declaration doesn’t mean you must pay your final contribution immediately. The shipowner or appointed adjuster usually requests financial security before cargo release.
You may need to provide:
- General Average bond: A written commitment to pay your share once the adjuster determines the final amount.
- General Average guarantee: A guarantee from your cargo insurer, if your policy covers the incident.
- Cash deposit: An alternative when you cannot arrange an acceptable insurance guarantee.
- Cargo valuation documents: Commercial invoices and other records that confirm your shipment’s value.
Requirements vary by incident. Until the adjuster accepts the necessary security, the shipping line may hold your cargo, even if it arrives undamaged.
Does Cargo Insurance Cover General Average?
Many marine cargo insurance policies cover General Average contributions and related expenses. However, coverage depends on your policy terms, exclusions, and the circumstances of the incident.
| If your cargo is insured | If your cargo is uninsured |
|---|---|
| Contact your insurer immediately | Contact the appointed adjuster |
| Your insurer may arrange a guarantee if your policy covers the event | You may need to provide a cash deposit or other security |
| Your policy determines the extent of coverage | You must cover your own financial obligations |
Don’t assume the shipping line’s insurance protects your goods. Vessel insurance and cargo insurance serve different purposes.
Before your next shipment, review your coverage for General Average and salvage charges. Explore ASLG’s cargo insurance options to learn more.
What Should You Do If You Receive a General Average Notice?
The notice should identify the appointed adjuster and explain the security requirements. Take these steps to avoid unnecessary delays.
- Contact your cargo insurer
Send the notice and supporting documents to your insurer or broker. Confirm your coverage and ask whether they can arrange a guarantee.
- Prepare your shipping documents
Gather your bill of lading, commercial invoice, packing list, insurance certificate, and any forms the adjuster requests.
- Confirm cargo release requirements
Ask the adjuster which documents or guarantees you need to submit and how to confirm acceptance.
- Update your logistics partners
Inform your freight forwarder, consignee, and delivery partners about potential delays. Plan cargo collection and onward transport once the shipping line authorizes release.
- Monitor additional costs
Track storage, demurrage, and other charges during the delay. Your insurance may not cover all these expenses.
The appointed adjuster calculates the final contribution. Your insurer or maritime adviser can help you review the assessment.
Can You Avoid General Average Charges?
You may still have to contribute to General Average even if your cargo arrives undamaged. Once a valid declaration applies to your shipment, you generally cannot avoid your share of the costs.
While you can’t prevent every maritime emergency, you can reduce your financial exposure. Before shipping, check whether your cargo insurance covers General Average and salvage charges. Keep accurate cargo values and shipping records to help your insurer handle any future claim.
Planning Your Next Ocean Shipment?
Shipping from China involves more than choosing a sailing schedule. Delays, emergencies, and unexpected costs can affect even well-planned deliveries. Airsupply offers one-stop ocean freight and can explore cargo insurance options for your shipment.
