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Again in the news, we’re hearing about container collapse and losses on vessels crossing the pacific ocean during rough weather. The World Shipping Council estimates that every year more than 1,300 containers are lost at sea, making 2020 a banner year for container collapses and losses. Just the ONE Apus collapse alone saw more than 1900 containers lost in a storm that hit while the ship was approximately 1600 nautical miles off the coast of Hawaii, en route to Los Angeles. 

Maritime law states, essentially, that the master of the vessel, which we know as the carrier, isn’t responsible for the losses or damages, but instead, the shippers who have a cargo interest aboard the vessel share the loss. This creates a condition called General Average. General average is a declaration ships make during sacrifice or loss at sea, where cargo must be jettisoned to protect the ship and crew, or containers are lost overboard or damaged in storms. This effectively splits the burden among the cargo owners because there is no time or ability to sort through which cargo must be dropped and storms don’t look at a manifest. The burden is placed on the cargo owners to split the loss both in the value of the cargo of other shippers that was lost and in the damages to the vessel itself. 

The most effective way to minimize your risk in this situation is to have adequate insurance coverage for your cargo. Uninsured containers run the risk of being liable for their portion of the General Average and being subject to seizure and delay due to the time it takes to assess damages, recover containers, and repair ships. However, for insured shipments, the insurance guarantor will provide a bond to cover the loss and liability.

If you’re looking for ways to mitigate potential losses and issues that stem from container collapse and ocean vessel trouble, your Coppersmith representative is ready to take a look at your logistics plan and work to help you fill in the gaps in coverage. As we continue to see weather patterns become more severe, the chances for a loss grow greater every year. Don’t let your cargo become a casualty. Consult with Coppersmith today!

Bud Coppersmith

Author Bud Coppersmith

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