Understanding General Average

A real risk not to take lightly

Much of Maritime Law was written over 100 years ago. By nature, it overwhelmingly favors shipowners and vessel operators with many peculiar laws which further emphasize the need for comprehensive insurance.

General Average (GA) is an example. GA is the principle where all parties involved in a sea voyage share any losses incurred. The share a shipper will pay correlates with the share of the cargo. Aside from having no claim against the carrier for the loss of their cargo, shippers could be liable for tens of thousands of dollars if they have cargo on a vessel where GA has been invoked.

Think it can’t happen to you?

Don’t be so sure.

There have been 8 general average claims in the past 20 years and a claim every year since 2020.

In every case, cargo owners, including those who lost their cargo completely, have been required to post bonds that exceed $100,000.

  • Hyundai Fortune / March 2006

    5,551 TEUs

    Improperly declared cargo on board caused an explosion, resulting in a fire. The estimated combined cost of the ship and lost cargo: $800 million

  • MSC Sabrina / March, 2008

    10,000 TEUs

    The MSC Sabrina ran aground on the muddy shoals of the St. Lawrence river off Trois-Rivières. MSC had to dispatch the MSC Jasmine, a ship outfitted with cranes, to unload approximately 400 containers to lighten and refloat the Sabrina. Five tug boats operated by Group Ocean were dispatched to free her.

  • Hanjin Osaka / January, 2012

    4,024 TEUs

    Following an explosion in the engine room, General Average was declared

  • Maersk Honam / March 2018

    14,000 TEUs

    A massive fire broke out in the Maersk Honam’s cargo hold resulting in the deaths of 5 crew members, loss of cargo, and a massive rescue effort to suppress the fire.

  • Northern Jupiter / January 2020

    8,400 TEUs

    Following an engine fire, the owners of the Northern Jupiter filed a General Average Claim

  • Ever Given / March, 2021

    20,124 TEUs

    While passing through the Suez Canal, the Ever Given was hit by a sudden strong wind and became stuck with her bow wedged in one bank of the canal and stern nearly touching the other.

    During the six days in which eight tugboats. and excavators on both shores worked to free the ship, a traffic jam of 200 vessels amassed on either side of the Ever Given. With the Suez Canal completely blocked, many vessels were rerouted around the Cape of Good Hope resulting in increased costs and global transits and a massive disruption of the global supply chain.

    The ship was seized and over $900 million. in damages were declared.

  • Ever Forward / March 2022

    12,000 TEUs

    The Ever Forward ran aground in 15 feet of mud in the Chesapeake Bay off the coast of Baltimore. Barges with cranes had to remove 500 containers while dredging operations worked for weeks to increase the depth to re-float the vessel and relocate her back to the port of Baltimore.

  • MV Dali / March 2024

    4,700 TEUs

    Shortly after leaving the port of Baltimore, the Dali lost power and collided with a support pillar of the Francis Scott Key Bridge. The collision resulted in the death of 6 people and the partial collapse of the bridge onto the Dali’s forecastle resulting in severe damage to the ship and massive loss of cargo.

    Aside from these losses, the ship owners are being held responsible for the damage to the bridge and a portion of the salvage costs as well as other financial losses.

The risk of General Average claims have and will continue to increase

Here’s why:

  • As global trade accelerates, container ships are growing in size at an unprecedented rate. Since the early 2000s, when the 8,500 TEU Post Panamax II vessels were introduced, the scale of container ships has expanded dramatically. The 18,000-21,000 TEU ULCVs (Ultra Large Container Vessels) of 2013 are now giving way to 25,000 TEU MGX-24 vessels.

    These larger ships, with longer hulls and deeper drafts, challenge the capabilities of existing infrastructure, pushing the limits of bridges, canals, harbors, and ports. As ship sizes continue to outpace infrastructure upgrades, the risks of vessels running aground, blocking canals, and colliding with bridges are becoming more pronounced.

  • In 2023, the Panama Canal faced its second driest year on record, causing water levels in Gatún Lake, a vital part of the canal system, to drop significantly. To manage the reduced water supply, the Panama Canal Authority (ACP) restricted daily ship transits from 38 to 24, beginning in November. This led to delays, a sharp rise in shipping rates, and an increased risk of larger, heavily-laden vessels running aground.

    The Suez Canal has encountered similar challenges with low water levels, raising comparable risks.

    In response, some carriers opted for alternative routes around the Cape of Good Hope in Africa or Cape Horn in Chile—both known for high winds and rough seas. Each year, hundreds of containers are lost on these treacherous passages. As vessels grow taller, the risk of capsizing in such extreme conditions also escalates..

  • Escalating conflicts in the Red Sea and Black Sea, along with heightened tensions in the Persian Gulf and Taiwan Strait, have created hazardous conditions for commercial vessels. Between October 19, 2023, and October 19, 2024, approximately 30 to 50 merchant ships were attacked.

    Additionally, increased pirate activity by Somali groups between the Arabian Sea and the Gulf of Aden has led to hundreds of attacks on merchant vessels, resulting in billions in losses.

    Although none of these incidents have yet triggered a General Average claim, the marked rise in their frequency indicates that a catastrophic loss is not only possible but increasingly likely.

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