Waiting game begins as general average is declared

Cargo owners have begun

counting the costs after the

owners of Liberian-flagged

cargo vessel APL Austria

declared general average (GA)

last Friday.

The vessel was en route

from Singapore to Cape Town

when a fire broke out on board

on Sunday (February 12). It

was granted permission to

dock alongside berth D103

at the Port of Ngqura, and

thanks to a concerted effort

by the port, the SA Maritime

Safety Authority and

National Sea Rescue Institute

among others, the fire was

extinguished on Wednesday

evening.

Confirming the general

average announcement,

Maersk Line southern Africa

managing director Jonathan

Horn told FTW the company

was in contact with the

owners.

“Advisories have gone out to

our customers and our claims

team can provide guidelines

for any questions from

cargo owners – we certainly

understand the difficult

situation that cargo owners

find themselves in and we are

communicating what we are

able to, but we have limited

definitive answers at present.

We will continue to keep our

customers informed as soon

as updated information comes

to hand.”

Horn said that the Maersk

Group had several hundred

containers on board, not all of

which were destined for South

African receivers. Some were

bound for customers in West

Africa.

“The priority for the owners

at present is to make sure that

the incident is totally cleared

up, and that the vessel and the

cargo are secured.”

While the cause of the

fire was still unconfirmed

when this issue went to press,

Samsa principal officer for

the southern region, Captain

Daron Burgess, told FTW

last week that there had been

several containers carrying

hazardous cargo on deck above

No 43 cargo hold, but that

none of them had caught fire.

For cargo owners, it’s a

waiting game. “We’ve just

heard from the line that

they’ve declared general

average,” Craig Banks of

Traxys told FTW last week.

His company had 250 tons of

cargo on board. “We have put

our insurers on notice and as

soon as we have any further

information we’ll follow due

process.”

General average is one

of the nightmares of the

industry, according to Mike

Brews, director of Horizon

Underwriting Managers – and

often takes up to seven years

or longer to resolve.

“It’s a complex process,” he

told FTW. “To begin with we

will look at what costs have

been incurred to save the

voyage – and that includes port

charges, towing, fire-fighting,

stevedoring etc. These costs

then get divided among

everything that was saved, and

everything gets a value – the

cargo on board, the containers

themselves, the vessel, the

bunker fuel etc. This ratio is

roughly the GA percentage

declared – and to have your

cargo released by the shipping

line, the cargo owners or their

insurers must put forward a

guarantee of this percentage of

the value of the cargo.

“For example if the value

of everything is R500m and

the cost was R100m, 20% of

the costs will be shared by

everything that was saved.

“It’s a very complicated

mathematical equation – and

the costs tend to escalate.

Effectively for us if we have

a container on board worth

R10m and they pay general

average of 20% we put up a

guarantee of 20% of the value

of everything saved on our

behalf.”

It’s also a very lengthy

procedure.

“We put up guarantees

that whatever the final

calculation we will make

the payment (usually quite

a long way down the line).

The cargo is then released

and the guarantee sits as a

claim in our system until

final payment. If the cargo

is damaged it reduces the

value of what was saved and

therefore the percentage you

would pay is on a lower value

– which can go down to zero

in the event your cargo is a

total loss. Our share of that is

based on that value.

“Because it’s so complex,

we often get lawyers and

mathematicians involved to

get the final value – and it

often ends up in court.”

CAPTION

The APL Austria, docked in the Port of Ngqura last week … the fire was extinguished last

Wednesday.