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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, 24 August 17
SUPRAMAX: LOW $10K FOR INDO COAL TRIPS TO INDIA; AROUND $10K FOR INDO TO CHINA TRIPS - FEARNLEYS
Supramax
This week Supras from the Black Sea on fhaul have seen numerous orders and improving rates.
53-57k dwt vessels have been fixed at e ...
Wednesday, 23 August 17
THE STRONG IRON ORE TRADE ROUTES SUPPORT CAPESIZE SEGMENT - INTERMODAL
The upward trend in the Capesize segment is definitely being supported by the strong momentum in the key iron ore trade routes. The price of high-q ...
Tuesday, 22 August 17
WHAT IS A RELEASE CALL?
KNOWLEDGE TO ELEVATE
Joining a mutual P&I Club means each Member shares in the fortunes of that Club and its membership. The continuity of ...
Tuesday, 22 August 17
THOSE DOG DAYS OF SUMMER STEEL PRODUCTION IN CHINA - COMMODORE
COALspot.com: One popular but inaccurate narrative that makes the rounds every June and July (and occurred again this year) is that China’s s ...
Monday, 21 August 17
BANPU REVEALS FIRST HALF 2017 WITH STRONG RESULTS; SUPPORTED BY HIGHER COAL PRICES
Banpu Reveals First Half 2017 with Strong Results from Higher Coal Prices Gearing Up to the Era of New Energy with Banpu Greener & Smarter Stra ...
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Showing 1961 to 1965 news of total 6871 |
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- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
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