iContainers: Maersk Honam Fire Underscores Importance of Cargo Insurance
- Business & Finance
The Maersk Honam fire from earlier this month serves as a reminder of the importance of cargo insurance, says online freight forwarder iContainers.
“Given that Maersk has now declared general average, which means that the surviving cargo has to pay a share of the cost for the vessel damage, the tow, clean up, legal settlements, etc,” Klaus Lysdal, Vice President of Sales and Operations at iContainers, said.
By law, all shipping carriers are obliged to offer a minimum amount of insurance, but it offers limited coverage. Hence, shippers need to invest in additional coverage to protect themselves from worst-case scenarios, the freight forwarder noted.
Based on the latest update, Maersk Line’s ultra large containership will be towed to Jebel Ali, the UAE, where its cargo will be off-loaded.
However, the estimated time of arrival (ETA) is still to be confirmed and may be approximately two weeks from now, Mediterranean Shipping Company (MSC) said citing its 2M alliance partner.
Most containers located in front of the accommodation area are feared to be damaged by fire, heat or the water used to fight the fire.
Furthermore, before the fire-stricken vessel is allowed to berth, port authorities will want to make sure that all fire on board have been extinguished and determine the condition of the Honam, which is a process that could still drag on, iContainers added.
“For clients who have insurance, filing the claim with their insurance will help speed up the process of releasing their cargo,” explains Lysdal.
“Plus, claims are generally processed quicker through insurance companies. Without insurance, you may be stuck with the carrier’s liability which is listed on the back of the Bill of Lading: USD 500 per unit.”
Since Maersk Line has declared general average, shippers who did not purchase a general average coverage insurance will be liable to pay a proportional portion of the damage.
“Without cargo insurance, your cargo is likely to be held hostage for payment of those charges. Simply said, without insurance, you stand to gain nothing or next to nothing at most,” Lysdal added.