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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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- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- The University of Queensland
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Parliament of New Zealand
- Bhatia International Limited - India
- Planning Commission, India
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Minerals Council of Australia
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
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