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