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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, 13 July 17
SUPRAMAX: NICKEL ORE TRIPS TO CHINA VIA PHILIPPINES WITH DELIVERY S. CHINA IS PAYING AROUND MID $9000 - FEARNLEYS
Supramax
COALspot.com: Another slow start to the week with somewhat softening rates and few fixtures.
Nickel Ore trips to China via the Phil ...
Wednesday, 12 July 17
COAL HAS CONTINUED A STELLAR RUN OVER THE PAST YEAR GAINING ~10% OVER THE PAST QUARTER AND ~41% OVER THE PAST YEAR - LINOS KOGEVINAS
Having just passed the second quarter of 2017, it is interesting to take a look at the performance of the commodity market and how certain commodit ...
Monday, 10 July 17
A ROLLERCOASTER YEAR FOR COAL PRICES; ICPR ROSE 4.62% M/M
COALspot.com: Indonesian coal benchmark price rose 4.62% in July, government data showed.
The benchmark price of Indonesian thermal c ...
Monday, 10 July 17
THE FREIGHT MARKET WAS SHOWS A NEGATIVE TREND WEEK OVER WEEK
COALspot.com: The Freight market decline this past week compared to the previous week, as BDI and Cape indexes show a negative trend week over week ...
Friday, 07 July 17
EIA ESTIMATES SHOW U.S WEEKLY COAL PRODUCTION UP 1.7 PERCENT
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.9 million short tonn ...
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Showing 2006 to 2010 news of total 6871 |
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- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- PTC India Limited - India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Parliament of New Zealand
- MS Steel International - UAE
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
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