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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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Wednesday, 19 July 17
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Referring back to a previous Intermodal insight that was written in the first quarter of 2017, the author at the time had claimed that MR tanker ra ...
Tuesday, 18 July 17
CHINA'S ECONOMY HAS BOOSTED OPTIMISM IN THE MARKET - GEORGE LAZARIDIS
COALspot.com: China’s economy has boosted optimism in the market as its recently announced GDP growth for the second quarter of the year exce ...
Friday, 14 July 17
IMPORTED COAL IS STILL A SAFE AND RELIABLE SOURCE OF ENERGY IN GERMANY - VDKI
COALspot.com: Imported coal is still a safe and reliable source of energy in Germany. World coal mining has reached a high plateau, but not yet a t ...
Friday, 14 July 17
U.S. WEEKLY COAL-OUTPUT IN SIGNIFICANT DECLINE, EIA FIGURES SHOW
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 13.4 million short tonn ...
Thursday, 13 July 17
BELT AND ROAD SHIPPING INDICES OFFICIALLY RELEASED - XINHUA
COALspot.com: The Shanghai Shipping Exchange (SSE) Tuesday officially launched the Belt and Road shipping indices to track freight trade data among ...
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Showing 2001 to 2005 news of total 6871 |
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- Mercator Lines Limited - India
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- White Energy Company Limited
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
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