A real life example of General Average with the M/V MSC Sabrina.

A Story of General Average and the M/V MSC Sabrina

by | Sep 8, 2016 | Marine Cargo Insurance, Shipping Disasters, Supply Chain Security

It can be difficult to understand the concept of General Average in international trade, especially when you have not yet experienced this type of claim for yourself. Read this real-life example of General Average to understand the unexpected dangers of trade.

In March of 2008, the M/V MSC Sabrina ran aground in the St. Lawrence River near Trois-Rivières, Quebec, Canada. Tugboats made initial attempts to free the vessel, but they were ultimately unsuccessful as the 243-meter container ship had become stuck in two feet of clay.

In order to rescue the ship and her US$100M worth of cargo, a plan was prepared by Mediterranean Shipping Company to lighten the load and free the M/V MSC Sabrina from the clay. However, before the plan could be put into action, it would need to be submitted and approved by Transport Canada and the Canadian Coast Guard. The entire process left the ship stranded in the St. Lawrence River for a total of one month.

The Rescue Plan

  1. M/V MSC Jasmine arrives on the scene with it’s own onboard cranes to unload approximately 400 containers in an attempt to lighten the M/V MSC Sabrina and refloat her.
  2. The M/V MSC Jasmine unloads cargo from the M/V MSC Sabrina through the night.
  3. Wait for high tides and freshnets to come in the river to aide in the re-floating process.
  4. The M/V Ocean Delta and four other tugboats pull the M/V MSC Sabrina free from the mud.

A Successful Rescue

The rescue plan from Mediterranean Shipping Company was a complete success with the safe recovery of the M/V MSC Sabrina and all of her cargo. The ship finally reached its port of destination on April 4, 2008. This is not only an example of a great rescue operation, but it is also a cautionary tale of how unpredictable international trade can be.

After spending a month stuck in the hard clay at the bottom of the St. Lawrence River, the ship’s owners declared General Average.

See Pictures as the Story of the M/V MSC Sabrina Unfolded

Declaration of General Average and its Effect on Importers

This incident involving the M/V MSC Sabrina is a great example of a General Average claim and how unpredictable this type of situation is for importers. General Average can be declared in any situation that the master of the vessel has to take action to make an extraordinary sacrifice for the common safety of the vessel, and all that is within her. The most common example of this is the jettison of cargo during a storm to lighten the load and save the voyage. However, as you can see, General Average can be applied to a wide variety of unpredictable situations.

In this example, importers with cargo abroad the M/V MSC Sabrina were stuck waiting a month for their goods and then had to wait even longer if they didn’t have Marine Cargo Insurance that covered General Average. Many importers were outraged by the delay, but in the end, every voyage is susceptible to the unpredictability and dangers of nature.

The Importance of Having All-Risk Cargo Insurance

There is only one way to protect yourself from situations that result in the declaration of General Average; have quality All-Risk Marine Cargo Insurance. In the event that a ship master declares General Average on a vessel carrying cargo you own, a cash bond will have to be made before the goods will be released to you. However, this is not the case when an importer has Cargo Insurance that includes a General Average Guarantee.

For a frame of reference, one company with cargo aboard the M/V MSC Sabrina when it grounded in the St. Lawrence River was required to post a US$125,000 Average Bond to receive its cargo valued at US$110,000.

With the proper Marine Cargo Insurance in place, the insurance company will provide a financial guarantee that eliminates the need for the importer to make any type of cash deposit. Therefore, the goods can be released immediately.

The insurance company will also cover the General Average contribution of the insured, which can reach alarmingly high amounts and is beyond the control of the insured.

All photos and statistics for this story gathered from Cargo Law

Download a complete guide on Marine Cargo Insurance from Trade Risk Guaranty.

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