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
- 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.
- The M/V MSC Jasmine unloads cargo from the M/V MSC Sabrina through the night.
- Wait for high tides and freshnets to come in the river to aide in the re-floating process.
- 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
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- The M/V MSC Sabrina shrouded in mist as she gets stuck in the hard clay of the St. Lawrence River.
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- The M/V MSC Sabrina spends a month stuck in the ice and mud in March of 2008.
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- M/V MSC Sabrina remains stuck as crews plan out a rescue.
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- So close to port, yet unable to reach it.
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- The ice melts, but the M/V MSC Sabrina remains stuck in the hard clay of the river.
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- tugboats move out to assess the situation.
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- Tugboats try to rescue the M/V MSC Sabrina.
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- After unsuccessful attempts, a new plan of action must be taken.
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- The M/V MSC Jasmine heads over to take on some cargo.
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- The M/V MSC Jasmine pulls up alongside the M/V MSC Sabrina.
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- The M/V MSC Jasmine prepares to transfer cargo from the M/V MSC Sabrina.
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- The transfer of cargo begins between the M/V MSC Jasmine and the M/V MSC Sabrina.
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- The cargo transfer continues into the night.
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- The M/V MSC Jasmine moves to the other side to take on more cargo.
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- The M/V MSC Jasmine heads back to port with the rescued containers.
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- Loaded M/V MSC Jasmine anchors off the quay with 400 rescued containers.
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- The M/V MSC Sabrina awaits the next stage of her rescue,
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- Tugboats gather around the M/V MSC Sabrina to rescue her from the mud.
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- Now lightened, the M/V MSC Sabrina has a better chance of getting free from the mud.
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- The tugboats continue to work on getting the M/V MSC Sabrina out of the mud.
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- Tugboats are able to begin guiding the M/V MSC Sabrina to port.
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- With a month of delays, the M/V MSC Sabrina declared General Average.
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- The M/V MSC Sabrina is able to make her way to port.
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- The M/V MSC Sabrina finally makes it to port after spending a month stuck.
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
