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Friday, 07 July 17
SHOULD WE BE AVOIDING GENERAL AVERAGE? - ALEX KEMP
 KNOWLEDGE TO ELEVATE
Calls for general average to be abolished are nearly as old as the regime itself. A representative of Lloyd’s attended the eponymous Antwerp Conference in 1873 and latterly described general average as a “a nest of fraud and abuses, a lurking place for speculation and waste”. Even in 1913 commentators were complaining about the increasing size of vessels and the volume of bills of lading they created. The Chairman of the US Association of Average Adjusters said of general average that year “the time, trouble, expense and delay are out of all proportion to the benefit achieved”. These comments are surprisingly familiar and it is interesting to see that the same weakness in general average are made today.
Unsurprisingly those involved in transporting or insuring cargo have little love for the regime, when they are usually the paying party. There have been calls in the past for the loss to simply lie where it falls for the respective hull and cargo insurers to absorb. A key piece of research by Mr Matthew Marshall of the Institute of London Underwriters for the IUMI Tokyo conference in 1994 (updated to 1999) really energized the modern debate. His work highlighted the fact that 10% of the cost of general average was adjusters’ fees and another 10% commission (something that has now been abolished in the most recent rules). Perhaps most importantly it was suggested that the majority of general average events were the fault of the ship owner. This helped lead to the ill-fated York-Antwerp Rules 2004 which have now been replaced.
Whilst the York-Antwerp Rules 2004 may now have been replaced with a more moderate regime, the circumstances which give rise to criticism of general average are more relevant than ever. Many commentators have written about the increasing size of container ships, the increasing complexity of their contracts of carriage and the severe impact this has on the cost and time required to adjust such a general average event. This observations were again aired in the negotiations to the York-Antwerp Rules 2016.
For the time being, at least, general average does not seem to be in any grave threat of abolition and the status quo (broadly speaking) will continue. However, that doesn’t mean to say that the market is not evolving and adapting to meet the reality of modern general average. General average absorption clauses have long been a feature of H&M policies as a way to avoid low value general average events. Their limits have increased as vessel size and casualty complexity has increased. We have seen examples of such limits being as much as US$1 million.
However, more recently parties involved in container shipping have taken even more aggressive steps. Vessel sharing agreements and slot charters used in the management of container ships often now contain provisions which compel the parties to “consult” to determine whether they can absorb all the general average sacrifices and losses and to try and persuade the Owners not to declare general average. Often these agreements go further and compel the parties to absorb general average between the parties up to a limit of say US$0.5 million (this should be distinguished from a general average adsorption clause in a H&M policy). This shows a commercial decision in container shipping that general average, in principle, should be avoided as it is not in the interests of shippers, who are the customers of container lines.
It is easy to see why. With adjuster’s fees, through no fault of their own, to collect security often running into the hundreds of thousands of dollars and adjustments taking anything up to a decade, it is an unattractive way to deal with losses arising from a casualty in complex container casualties. As a result we have seen container lines go further than the provisions in their contractual agreements in the aftermath of a casualty and enter into bespoke agreements resolving to fund all general average expenses and sacrifice on certain terms. More often than not this prevents any need to collect general average security or obtain cargo documentation for the entire manifest. This simply leaves the carriers to deal with cargo claims (be them sacrifice or otherwise) in the usual way. One might say that this places a greater financial burden on the carriers who are absorbing cargo’s proportion of general average from their bottom line (such a voluntary liability would not ordinarily be insured by the carrier) as ordinarily, cargo’s proportion of general average would be reimbursed by cargo insurers. This may simply be the effect of what is undoubtedly an extremely competitive market place for container shipping, notwithstanding recent mergers.
Ultimately, whether parties should be considering more aggressive steps to avoid general average following an incident, will depend upon the nature of the casualty, the scale of expenses/sacrifice, the legal regimes involved and the number parties. Clearly, the benefits of modifying the “usual” general average process will be greatest in a container casualty scenario but that’s not say that it should not be considered when other types of vessel are involved.
By: Alex Kemp, Senior Associate at Solicitors Holman Fenwick Willan LLP and Associate of the Association of Average Adjusters
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Thursday, 27 July 17
A VOLATILE WEEK IN THE CAPE MARKET - FEARNLEYS
Supramax
The black sea still performing well although bit fewer fixtures concluded/reported. Rates lie somewhere around 18 -19 on front-haul . Bo ...
Wednesday, 26 July 17
SHIPPIPNG MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
After an admittedly challenging 2016, the Dry Bulk market kicked off this year on a much more positive note, with all indices steadily increasing u ...
Monday, 24 July 17
THE FREIGHT MARKET ROSE THIS PAST WEEK COMPARED TO THE PREVIOUS WEEK
COALspot.com: The Freight market rose this past week compared to the previous week, as BDI and Cape indexes show a positive trend week over week.
...
Friday, 21 July 17
ESTIMATED WEEKLY U.S. COAL PRODUCTION TOTALED APPROXIMATELY 15.3 MMST; UP 13.5% W/W
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.3 million short tonn ...
Thursday, 20 July 17
SUPRAMAX: INDO COAL ROUNDS ARE TRADING AROUND MID/HIGH $11K WITH SINGAPORE DELIVERY - FEARNLEYS
Supramax
A positive week again in the Pacific with rates moving upwards.
According to Fearnleys Weekly Dry bulk report, Nopac rounds are pay ...
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Showing 1996 to 2000 news of total 6871 |
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- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- The University of Queensland
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
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