The grounding of the Ever Given super container ship in the Suez canal continues to have extensive ripple effects in the global shipping industry beyond the backlog of container ships with delayed deliveries that needed to finally make it to their destination ports. While it was eventually re-floated, it is now in the Great Bitter Lake next to the canal and has been impounded by Egyptian authorities while the investigation into the incident continues. The issue making waves this time is insurance, specifically cargo insurance for all the containers onboard the ship as the shipowner has declared “general average”.
The Ever Given was transporting 20,000 containers when the incident occurred and the cargo in those containers might have up to 20 interests which, as you can imagine, is shaping up to make the situation incredibly complicated.
What is General Average
General average is a legal principle of maritime law where all cargo owners have to contribute to insurance regardless of whether their cargo was damaged during shipping or not. The average adjuster in charge of the case will have to locate each cargo interest and ascertain its insurance status before the cargo can be released.
Those who have insured their shipment should have no problem getting hold of it as the amount they are liable for will be included in their insurance. However, anyone with uninsured cargo will have to pay a cash deposit before their shipment can be released. Therefore, as we can clearly see, getting cargo insurance for your shipment is an absolutely vital step in the freight forwarding process.
Here is what you need to know about the importance of cargo insurance when shipping goods internationally.
Importance of Cargo Insurance
Transporting goods by ocean freight is a pretty risky operation at the best of times. Your cargo doesn’t need to be on a container ship the size of the Ever Given to be in danger of things going awry. Any number of things can go wrong during an ocean voyage, such as damage to cargo or even cargo loss due to heavy weather conditions. Insuring against these kinds of events is highly recommended because there is an element of unpredictability with shipping goods internationally, so it is better to be prepared for all eventualities.
Why You Shouldn’t Forget About General Average
However, things become a little more complex when it comes to general average. In this situation, you, as the cargo interest, will have to contribute to the cost of the loss, even if your cargo has not suffered any damage. If you have cargo insurance for your goods, you will be covered for this, making the whole process of recovering your freight far speedier.
Benefits of Insuring Cargo
If you have not received the payment for the shipment yet or if you have already paid for all or part of it, you will be covered in the event of loss or damage to cargo and won’t suffer any unforeseen financial loss that will affect your bottom line. The cost of insurance will be a small percentage of the value of the freight and is well worth the price when you consider that shipments can contain thousands of dollars’ worth of cargo.
It makes sense to factor insurance into your cargo shipping budget. It is an extra layer of protection after you have already employed the services of experienced freight forwarders such as Texas International Freight. There is always an insurance plan to suit your budget and, after all, you can’t put a price on peace of mind. Contact Texas Freight International for expert advice on the whole process.