Grounding of Rena off New Zealand coast – Is your cargo insured?
The recent high profile grounding of Rena off the New Zealand coast has served as a further reminder as to the importance of cargo insurance.
On 4 October 2011, the Rena came into contact with the Astrolabe Reef near Tauranga Harbour, New Zealand. The main concern for the salvage team was that the vessel may break apart and also the huge loss of oil from the vessel. The secondary concern was the salvaging of the containers. Charges have now been laid against the Master and the Second Officer, however this is of little comfort to those who have lost their cargo and are not insured.
As a cargo owner you should consider the 4 main reasons for having insurance and the peace of mind that comes with it.
Damage – The containers may be lost overboard or significantly damaged due to the collapse of the container stack.
General Average -The shipowner will most likely declare General Average. General Average is declared when the journey of the vessel is being threatened by a major peril. All parties involved in the voyage (including the cargo owners) must pay their share of the cost of saving the vessel and its cargo, even if the individual cargo is not damaged or lost. This means that cargo owners cannot pick up their cargo until security has been provided, even if their cargo is not damaged. If you are insured the insurance company will promptly issue an Average Guarantee whilst you provide an Average Bond. This will result in the prompt release of your cargo whilst your insurer handles the General Average contribution. Without adequate insurance, the adjusters will most likely request a cash deposit of a proportion of your cargo value, and the cargo will be held in trust until the necessary contribution is paid. This can takes months and even years.
Recovery - If a cargo owner has incurred a loss, then they will be wishing to seek recovery from whoever they believe responsible. The carrier will often seek to defend themselves against such a claim or avoid paying altogether, and will try to apply their limitation. If you are insured the insurer will take up the recovery of your claim to ensure the responsible parties pays their share of the loss.
Uncertainty – When a vessel is stranded, shippers and receivers alike will experience the uncertainty of not knowing the situation with their cargo. To compound this, shippers may find themselves with the additional uncertainty of delays in retrieving their cargo or handling their claim. Marine insurance is a specialized industry where the processes involved can be complicated, and requests and terminology difficult to understand.
Contact your Account Manager for further details regarding insurance.
Vessel operating costs to rise
Vessel operating costs are expected to rise by 3.8 percent in 2011 and by 3.7 percent in 2012, with lube expenditure and crew costs identified as the categories most likely to produce the highest levels of increase, according to a new survey by consultants Moore Stephens.
The survey is based on responses from key players in the international shipping industry, predominantly ship-owners and managers in Europe and Asia.
