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Why cargo insurance is a good investment

     Container ship swamped

On October 22, 2021, the Zim Kingston vessel was engulfed in flames off the coast of Vancouver.  Severe weather caused a collapse of containers, sweeping more than 100 containers overboard.  Ensuing damage ignited a fire in other containers with hazardous materials that quickly spread throughout the vessel.  The salvaging of lost containers and the assessment of damages had begun.

Subsequent to this, on November 1st, the owners of the MV Zim Kingston, declared “General Average”.  This is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. 

Examples of General Average include:

  • Jettison of cargo
  • Hull and engine damage, caused by efforts to refloat the vessel
  • Vessel assistance from tugs or other vessels
  • Discharge and reloading of cargo at a port of refuge
  • Damages to a vessel or cargo caused by firefighting

Losses covered by a General Average declaration are shared by every shipper that has freight on the vessel.  The cost per uninsured shipper can be catastrophic.  Moreover, uninsured shippers are unable to receive any surviving cargo until they have posted an Average Bond.  In contrast, shippers with proper cargo insurance suffer little or no loss.

If you have questions about cargo insurance or if you want Universal Logistics to place cargo insurance on your behalf, please contact Debbie McGuire, Director – Freight Solutions.

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