When something goes wrong at sea, the costs can be exorbitant. General average is a maritime law principle where all parties with cargo or financial interest share the cost of losses from a voluntary sacrifice to save the ship and remaining goods.
Recently, general average claims have been on the rise after a lull period. What is causing this increase? Here is a breakdown of this upward trend of incidents and what it means for brokers.
Hiatus Followed by Surge
Over the past few years, general average incidents have seen a lull. This decrease may be partly attributed to the global slowdown in shipping during the height of the COVID-19 pandemic. Vessel movements were reduced, supply chains were disrupted, and many operations were temporarily scaled back.
This quiet period didn’t last. As global trade rebounded, so did the number of GA incidents. Today, we’re seeing a noticeable uptick, driven by more frequent vessel casualties, rising repair and salvage expenses, and heightened risk across global trade routes.
Key Factors Behind This Increase
1. Rise in Attacks & Geopolitical Risks
Conflict zones like the Red and Black Seas have elevated risk, prompting more GA declarations due to rerouting, security measures, or even offloading cargo during intense situations.
Vessels rerouting around high-risk areas, like the Cape of Good Hope, are exposed to longer voyages and more severe sea conditions, increasing the likelihood of GA declarations.
2. Increased Size of Container Vessels
The increasing size of container vessels raises concerns about seaworthiness. Many vessels may not be fully sea-trialed under actual operating conditions. Combined with the lack of experience handling issues such as parametric rolling, the risk of GA events is heightened.
3. Severe Weather Events and Climate Change
Changing climate conditions have introduced new challenges:
- Steady increase in wave heights, particularly in the South Pacific and along South America’s west coast
- Increased winter storm volatility in the North Pacific
- More frequent exposure to extreme conditions during re-routed voyages
These conditions contribute to equipment damage, cargo loss, and onboard incidents.
4. COVID‑19
Maritime activity slowed drastically in early 2020: port berthing times jumped. The average anchoring time went up by around 62%. Additionally, blank sailings, quarantines, and labor constraints (800,000 seafarers stuck aboard) reduced logistics reliability.
5. Deferred Vessel Maintenance
Pandemic-driven delays have also led many operators to postpone maintenance. This deferred upkeep may now contribute to higher mechanical failures and more GA claims.
6. Rising Repair Costs
Post-COVID inflation has made parts, labor, and dry-docking significantly more expensive. When GA incidents occur, the cost of salvage, repairs, and port charges escalate.
7. Container Lashing System Limitations
Despite increasing vessel size, improvements in container lashing systems have lagged. Inadequate lashing increases the risk of container loss and cargo damage—both common causes of GA.
8. Misdeclared Cargo and Onboard Fires
While container loss is a known GA trigger, fires onboard vessels are now a leading cause. A key contributor: misdeclared cargo and weight. Despite regulations like Verified Gross Mass (VGM), improper declarations continue to lead to hazardous conditions and marine casualties.
9. Rising Repair Costs and Deferred Maintenance
The cost of dry-docking, parts, and labor has surged post-COVID. As a result, some operators have delayed necessary repairs and maintenance, increasing the likelihood of mechanical failure at sea.
10. Industry Shift to Lower Emissions
Efforts to reduce emissions, such as alternative fuels and slower steaming, can reduce vessel maneuverability in heavy seas. This can cause increased stress on ship systems and a higher likelihood of mechanical incidents contributing to GA.
Why Marine Cargo Insurance is Essential
When a general average is declared, cargo owners are legally required to contribute to the shared costs, even if their cargo wasn’t damaged. These expenses can be significant, and without marine cargo insurance, shippers are personally liable for their portion.
Marine cargo insurance not only covers GA contributions but also issues guarantee requirements to release cargo promptly. Without it, shipments can be delayed, and companies may face costly, out-of-pocket surprises. As GA incidents and repair costs rise, this coverage is more critical than ever.
Key Takeaways
General average is more relevant than ever in today’s volatile shipping environment. With rising incident rates, costly repairs, and increasing global risk, cargo owners face greater exposure to unexpected financial losses, even if their goods arrive safely.
Help your clients stay protected from rising general average risks. Contact us today to ensure the cargo policies you place include comprehensive general average coverage. One uncovered incident could cost far more than a premium.
