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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, 06 July 17
SUPRAMAX: INDO TO INDIA TRIPS WITH DELIVERY THAILAND RANGE IS GIVING OWNERS AROUND MID $8000 - FEARNLEYS
Supramax
Another slow start to the week with somewhat softening rates and few fixtures.
According to Fearnleys Weekly Dry bulk report, the N ...
Thursday, 06 July 17
UNEXPECTED MOVE FROM CHINA BOOSTS COAL PRICES - OIL PRICE
Coal prices have been cooling the last few months — after a spectacular run last year. But news late last week suggests the market is about t ...
Wednesday, 05 July 17
COAL PRICES ROSE IN CHINA, JAPAN AND EUROPE IN 2016 - BP
COALspot.com: Coal prices rose in China, Japan and Europe in 2016 after four years of price declines.
According to bp, the rise in coal prices ...
Wednesday, 05 July 17
TANKER MARKET INSIGHT - KATERINA RESTIS
A war of words blasted last month as the UAE, S. Arabia, Egypt and Bahrain revealed that they are experiencing severe diplomatic issues with the st ...
Wednesday, 05 July 17
TROUBLE SEEMS TO BE LOOMING ONCE MORE IN THE STEEL INDUSTRY - GEORGE LAZARIDIS
Trouble seems to be looming once more in the steel industry as US President Trump puts forth his plans for specialist protectionist measures for th ...
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Showing 2011 to 2015 news of total 6871 |
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- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Minerals Council of Australia
- Australian Coal Association
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
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